BROUMOV, Czech Republic – When the managers of a textile factory in northern Czech Republic declared they would focus sales on Africa, their bankers, insurers and suppliers shook their heads in disbelief.
A decade later, the decision is paying off. While the textile industry in Europe is under pressure from low-cost competition in Asia, the Czech company Veba is working around the clock to meet demand for the high-quality brocade it ships to Muslims and elites in western Africa.
The textiles are of a better quality than those shipped in from China and have become a favorite among Africa's Mecca-bound pilgrims.
Veba's profits this year could reach $16 million — almost triple those of 2010. And there are no signs of a slowdown. The company employs 1,200 people and, with the help of EU funds, it has become a major employer in this town near the Polish border, where joblessness is over 11 percent — above nation's average of 8.4 percent.
Veba's success defies an overall trend in the local textile industry that exports some 85 percent of its production to western European markets and is expected to stagnate or only grow slightly this year due to the economic crisis.
"There's an advantage other markets cannot beat," Jose Novak, Veba's managing director, told The Associated Press. "Europe is stagnating, the United States is stagnating but Africa is growing."
The Czech region where it is based has a centuries-long textile tradition. African brocade has been made here since the 1960s, but it was of average quality and was delivered to producers in western Europe.
About 10 years ago, Veba's management came up with a new strategy to significantly improve the quality and deliver the brocade, made of 100 percent cotton, directly to Africa, where Veba has distribution partners.
Business has been booming in recent years and this year's net profit is expected to reach 200-300 million koruna ($10.4-15.7 million), up from 160 million ($8.8 million) in 2011 and 105 million ($5.5 million) in 2010.
Some 90 percent of Veba's output is the brocade for African markets.
The Czech economy has been stuck in recession, but Veba's automated looms are busy around the clock to meet the growing appetite for the brocade in its major markets in Mali, Senegal, Ivory Coast, Mauretania, Burkina Faso, Guinea and Nigeria.
"If in the past it was a material which was used for extraordinary events, be it religious, community or family, then in the last few years it has been becoming the clothing for everyday use," Novak said. "And the consumption is on the rise."
Up to 10 meters of the Czech white brocade are used for a traditional costume worn by rich Muslim pilgrims who travel to Mecca, in Saudi Arabia, to perform Hajj, the holy pilgrimage, Novak said. A meter costs about $13 in African stores.
Veba's customers belong to the well off, including the business elite, politicians and artists.
"When they want something extraordinary, they have to pay for it," Novak said.
Besides the quality, the company's success has also been due to the variety of brocade it offers and its flexibility in meeting customer demands in various countries, where business can often be difficult. It still faces hurdles, however.
Sales have been in danger in Mali, one of Veba's key markets, after militants linked to al-Qaida seized control of the northern part of the country. An international military intervention to help Malian forces retake the north from the Islamists has been planned.
"That's bad for business," Novak said. "Business likes peace and order."
To further boost sales despite such conflicts, Veba has recently entered new markets in eastern Africa, and is planning expansion in other Muslim nations outside the continent, including Azerbaijan and even Iran. It invested $10 million last year and another $15.6 million this year to increase its weaving capacity and has created 100 new jobs.
"When we first announced our new strategy, our partners such as banks, insurers and suppliers shook their heads in disbelief and said, 'Africa? There's a risk, isn't there?' Today, we can see risks everywhere: in Europe, in the United States, in the entire world," Novak said. "There're specific risks involved in Africa. You have to work with them, analyze them and control them in a way."