This document analyzes potential future manufacturing locations for the medical supply industry in emerging markets. In Stage 1 of the analysis, 17 countries were scored on economic and political stability indicators related to the medical supply industry. Vietnam, Uzbekistan, Ethiopia, Turkey and Indonesia received the top 5 scores. Stage 2 will analyze these 5 countries in more depth. The analysis methodology, country scores, rankings and indicator data are presented to support the selection of priority countries for further consideration as future manufacturing locations.

1. 1
One stop.
Worldwide sourcing.
Eine Adresse.
Weltweite Märkte.
christian.santner@dragonsourcing.com | Tel: +43 664 88518030

2. About Dragon Sourcing
2
We offer procurement services that deliver value
from emerging markets, both for export and for
localisation requirements
Relevant category experience includes:
Capex, Components, Transportation, Services, Raw
Materials, Packaging, Promotional, & MRO.
Key Services:
• Procurement Intelligence
to deliver insight into categories and markets, and
support effective procurement decisions.
• Global Sourcing
to deliver sustainable value from sourcing goods and
services from emerging markets.
• Procurement Outsourcing
and setup of international procurement offices to
increase productivity and decrease overheads.
• Capability Assessment
of your international procurement operations to
identify and implement practical opportunities for
improvements
• 70 staff globally
• 15 locations across Asia, Latin America,
Middle East, Europe & US.
• Headquarters in Shanghai (45 staff)
• Private ownership since 2004
• Turnover: $7.5m (managed spend ~$1.2b)

3. Our Clients
Food & Beverage Industrial Products
Construction
Government
DIY

4. Our Clients
Service
Retail
Heavy Machinery
Automotive
Packaging
Pharma / Medical
Energy/Chemicals
Consumer Goods

5. Analysis of future manufacturing locations
in the medical supply industry
christian.santner@dragonsourcing.com | Tel: +43 664 88518030

6. Methodology for Stage 1 (of 3 Stages)
§ The following 17 emerging market countries were selected for Stage 1 analysis:
1 Vietnam
2 Uzbekistan
3 Turkmenistan
4 Cambodia
5 India
6 Ethiopia
7 Myanmar
8 Bangladesh
9 China (Xinjiang Province)
10 Brazil
11 Paraguay
12 Bulgaria
13 Sri Lanka
14 Turkey
15 Greece
16 Mexico
17 Indonesia
§ The above countries were scored on a 5 point scale in a score card on the following indicators with their respective weights:
① GDP per capita 30% weight
② Cotton production 30% weight
③ Political stability 20% weight
④ FDI inflow as a % of GDP 20% weight
§ The countries were ranked based on the final scores obtained through a score card.
§ HS Codes:
a. HS 52 Series Cotton
b. HS 56 Series Non woven, felt and wadding
c. HS 55 Series Man-made staple fibers
Ø South America was not considered as a region of focus due to its large distance from the target markets of Europe and Asia.

7. Selected Countries for Analysis
Client’s Current Locations: Austria, Germany, France, UK, Czech Rep, Mexico & China (Hubei Province)
Stage 1 Countries: Vietnam, Uzbekistan, Turkmenistan, Cambodia, India, Ethiopia, Myanmar, Bangladesh, Brazil, Paraguay, Bulgaria, Sri Lanka, Turkey,
Greece, Indonesia, Mexico and China (Xinjiang Province)
Stage 2 Countries: Ethiopia, Indonesia, Uzbekistan, Turkey and Vietnam
China
Bubei Province
Xinjiang Province
India
Sri Lanka
Indonesia
Turkmenistan
Ethiopia
Cambodia
Vietnam
Bangladesh
Myanmar
France
UK
Mexico
Czech Rep
Austria
Germany
Turkey
Bulgaria
Greece
Uzbekistan
Paraguay
Brazil

8. Country Scores & Ranking
Rank1
Rank 2
Rank 3
Rank 4
Rank 5
Rank 6
Rank 7
Vietnam
Uzbekistan
Turkmenistan
Cambodia
India
Ethiopia
Myanmar
Bangladesh
China (Xinjiang Province)
Brazil
Paraguay
Bulgaria
Sri Lanka
Mexico
Turkey
Greece
All countries in the analysis have been ranked based on the final score- higher the score, higher the rank
Indonesia
60
72
60
68
84
60
68
52
60
64
52
40
28
40
56
40
28
0
10
20
30
40
50
60
70
80
90
Vietnam
Uzbekistan
Turkmenistan
Cambodia
India
Indonesia
Ethiopia
Myanmar
Bangladesh
China
(Xinjiang)*
Brazil
Paraguay
Bulgaria
Sri
Lanka
Turkey
Greece
Mexico
Final
Score
on
100
Rank 8
Rank 9

9. Score Card Computation- 1
Example China
China
(Xinjiang)
India Brazil Uzbekistan Turkey Turkmenistan Greece
No.
Business
Information
Weight
of
criteria
Scoring
Max Score per
criteria
Max
Points
per
criteria
Score
per
criteria
Points
per
criteria
Score
per
criteria
Points
per
criteria
Score
per
criteria
Points
per
criteria
Score
per
criteria
Points
per
criteria
Score
per
criteria
Points
per
criteria
Score
per
criteria
Points
per
criteria
Score
per
criteria
Points
per
criteria
Score
per
criteria
Points
per
criteria
Scor
e per
criteri
a
Points
per
criteri
a
1
GDP per
Capita
(PPP) in
USD
30%
1 = >10,000
3 = 5,001-10,000
5 = <5,000
5 2.00 5.00 2.00 3.00 1.20 3.00 1.20 5.00 2.00 1.00 0.40 5.00 2.00 1.00 0.40 3.00 1.20 1.00 0.40
2
Cotton
production
in Thousand
480 lb. Bales
30%
1 = <1,000
3 = 1,001-5,000
5= >5,000
5 1.00 5.00 1.00 5.00 1.00 5.00 1.00 5.00 1.00 5.00 1.00 3.00 0.60 3.00 0.60 3.00 0.60 3.00 0.60
3
Political
stability
20%
1 = <-1.0
3= -1 to -0.1
5 = >0
5 1.00 5.00 1.00 3.00 0.60 3.00 0.60 1.00 0.20 5.00 1.00 3.00 0.60 1.00 0.20 5.00 1.00 3.00 0.60
4
FDI Inflow
as % of GDP
20%
1 = <2%
3 = 2%-5%
5 = >5%
5 1.00 5.00 1.00 3.00 0.60 1.00 0.20 1.00 0.20 3.00 0.60 3.00 0.60 3.00 0.60 5.00 1.00 1.00 0.20
TOTAL 100% 20 5.00 20.00 5.00 14.00 3.40 12.00 3.00 12.00 3.40 14.00 3.00 14.00 3.80 8.00 1.80 16.00 3.80 8.00 1.80
Sum up Example China China(Xinjiang) India Brazil Uzbekistan Turkey Turkmenistan Greece
Category Points Points Points Points Points Points Points Points Points
Total points on 5 5.00 3.40 3.00 3.40 3.00 3.80 1.80 3.80 1.80
Total points on
100
100 68 60 68 60 76 36 76 36

10. Score Card Computation- 2
Indonesia Mexico Ethiopia Myanmar Bangladesh Paraguay Vietnam Bulgaria Cambodia Sri Lanka
No.
Business
Information
Weight of
criteria
Scoring
Max
Score
per
criteria
Max
Points
per
criteria
Score
per
criteria
Points
per
criteria
Score per
criteria
Points
per
criteria
Score per
criteria
Points
per
criteria
Score
per
criteria
Points
per
criteria
Score
per
criteria
Points
per
criteria
Score
per
criteria
Points
per
criteria
Score
per
criteria
Points
per
criteria
Score
per
criteria
Points
per
criteria
Score
per
criteria
Points
per
criteria
Score
per
criteria
Points
per
criteria
1
GDP per
Capita (PPP)
in USD
30%
1 = >10,000
3 = 5,001-10,000
5 = <5,000
5 2.00 5.00 2.00 1.00 0.40 5.00 2.00 5.00 2.00 5.00 2.00 3.00 1.20 5.00 2.00 1.00 0.40 5.00 2.00 3.00 1.20
2
Cotton
production in
Thousand
480 lb. Bales
30%
1 = <1,000
3 = 1,001-5,000
5= >5,000
5 1.00 1.00 0.20 1.00 0.20 1.00 0.20 1.00 0.20 1.00 0.20 1.00 0.20 1.00 0.20 1.00 0.20 1.00 0.20 1.00 0.20
3
Political
stability
20%
1 = <-1.0
3= -1 to -0.1
5 = >0
5 1.00 3.00 0.60 3.00 0.60 1.00 0.20 3.00 0.60 3.00 0.60 3.00 0.60 5.00 1.00 5.00 1.00 3.00 0.60 3.00 0.60
4
FDI Inflow as
% of GDP
20%
1 = <2%
3 = 2%-5%
5 = >5%
5 1.00 3.00 0.60 1.00 0.20 3.00 0.60 1.00 0.20 1.00 0.20 1.00 0.20 5.00 1.00 3.00 0.60 5.00 1.00 1.00 0.20
TOTAL 100% 20 5.00 12.00 3.40 6.00 1.40 10.00 3.00 10.00 3.00 10.00 3.00 8.00 2.20
16.0
0
4.20
10.0
0
2.20
14.0
0
3.80 8.00 2.20
Sum up Indonesia Mexico Ethiopia Myanmar Bangladesh Paraguay Vietnam Bulgaria Cambodia Sri Lanka
Category Points Points Points Points Points Points Points Points Points Points
Total points on 5 3.40 1.40 3.00 3.00 3.00 2.20 4.20 2.20 3.80 2.20
Total points on
100
68 28 60 60 60 44 84 44 76 44

11. Country Specific Indicators
Source: IMF Source: Indexmundi
* GDP per capita and Cotton production values are for Chinese Xinjiang province only
$3.788
$3.523
$8.641
$2.395
$3.843
$1.256
$1.400
$1.963
$8.100
$11.747
$6.053
$14.103
$6.046
$14.812
$24.260
$4.923
$15.363
$- $5.000 $10.000 $15.000 $20.000 $25.000 $30.000
Vietnam
Uzbekistan
Turkmenistan
Cambodia
India
Ethiopia
Myanmar
Bangladesh
China (Xinjiang)*
Brazil
Paraguay
Bulgaria
Sri Lanka
Turkey
Greece
Indonesia
Mexico
GDP per Capita (PPP) in USD
(2012)
21
4.250
1.500
2
29.000
170
270
120
13.333
7.400
55
10
5
2.250
1.200
30
790
- 5.000 10.000 15.000 20.000 25.000 30.000 35.000
Vietnam
Uzbekistan
Turkmenistan
Cambodia
India
Ethiopia
Myanmar
Bangladesh
China (Xinjiang)*
Brazil
Paraguay
Bulgaria
Sri Lanka
Turkey
Greece
Indonesia
Mexico
Cotton production in Thousand
480 lb. Bales in 2012

12. Source: World Bank Source: World Bank
* Political Stability value is for the whole of China and FDI inflow as a % of GDP value is only for Xinjiang province
0,25
-0,52
0,35
-0,14
-1,25
-1,54
-0,96
-1,35
-0,54
0,07
-0,84
0,33
-0,71
-1,19
-0,23
-0,60
-0,67
-2,00 -1,50 -1,00 -0,50 0,00 0,50
Vietnam
Uzbekistan
Turkmenistan
Cambodia
India
Ethiopia
Myanmar
Bangladesh
China (Xinjiang)*
Brazil
Paraguay
Bulgaria
Sri Lanka
Turkey
Greece
Indonesia
Mexico
Political stability (2012)
6,0%
3,1%
11,4%
7,0%
1,7%
2,0%
1,0%
1,0%
0,33%
2,9%
1,6%
3,9%
1,6%
2,1%
0,4%
2,3%
1,9%
0,0% 2,0% 4,0% 6,0% 8,0% 10,0% 12,0%
Vietnam
Uzbekistan
Turkmenistan
Cambodia
India
Ethiopia
Myanmar
Bangladesh
China (Xinjiang)*
Brazil
Paraguay
Bulgaria
Sri Lanka
Turkey
Greece
Indonesia
Mexico
FDI Inflow as % of GDP in 2012
Country Specific Indicators

13. STAGE II ANALYSIS

14. Country Final Score and Ranking
Rank Country
1
2
3
4
5
Vietnam
Uzbekistan
Ethiopia
Turkey
Indonesia
2,62
2,75
2,81
3,02
3,14
2,30 2,40 2,50 2,60 2,70 2,80 2,90 3,00 3,10 3,20
Uzbekistan
Indonesia
Turkey
Ethiopia
Vietnam
Final Scores

15. Country Performance by Main Criteria
Performance by Main Criteria
0,22
0,38
0,14
0,38
0,3
0,26
0,36
0,4
0,32
0,4
0,08
0,14
0,14
0,12
0,14
0,14
0,21
0,22
0,19
0,2
0,45
0,61
0,69
0,75
0,55
1,87
1,05
1,03
1,05
1,55
0
0,5
1
1,5
2
2,5
3
3,5
Ethiopia
Indonesia
Uzbekistan
Turkey
Vietnam
PoliScal
&
Legal
NaSonal
Economics
Social
&
Demographic
Infrastructure
&
Technology
Business
Environment
Business
Expenses

16. Stage II- Scorecard (1/3)
Main
Criteria
Weight
Per
Criteria
Sub-­‐
Criteria
Weight
per
sub-­‐criteria
Indicators
Measure
Ethiopia
Indonesia
Uzbekistan
Turkey
Vietnam
Points
Weight
ed
Avg
Points
Weight
ed
Avg
Points
Weight
ed
Avg
Points
Weight
ed
Avg
Points
Weight
ed
Avg
PoliScal
&
Legal
10%
PoliScal
Stability
2%
PoliScal
Stability
Index-­‐
World
Bank
1
=
<-­‐1.2
3=
-­‐1.2
to
-­‐0.1
5
=
>0
1
0.02
5
0.1
3
0.06
3
0.06
5
0.1
Commitment
to
Reform
2%
Legal
Framework,
Rule
of
Law-­‐
World
Bank
1
=
<
-­‐1
3=
-­‐0.99
to
-­‐0.1
5
=
>
1
3
0.06
3
0.06
1
0.02
5
0.1
3
0.06
CorrupSon
and
Bureaucracy
2%
Transparency
InternaSonal-­‐
CorrupSon
PercepSon
Index
2012
1
=
<
30
3=
30
to
70
5
=
>
70
3
0.06
3
0.06
1
0.02
3
0.06
3
0.06
Legal
Framework
&
Rule
of
Law
2%
World
Bank
Data,
Govt
EffecSveness
1
=
<
-­‐1
3=
-­‐0.99
to
-­‐0.1
5
=
>
1
3
0.06
3
0.06
1
0.02
5
0.1
3
0.06
Human
Rights
2%
Voice
&
Accountability
Index,
World
Bank
1
=
<-­‐1
3=
-­‐1
to
0
5
=
>
0
1
0.02
5
0.1
1
0.02
3
0.06
1
0.02
NaSonal
Economics
10%
NaSonal
Performance
3%
GDP
Growth
Rate
1
=
<5%
3=
5%
to
8%
5
=
>
8%
5
0.15
3
0.09
5
0.15
3
0.09
3
0.09
FDI
as
a
%
of
GDP
2%
FDI
1
=
<2%
3=
2%
to
5%
5
=
>
5%
1
0.02
3
0.06
3
0.06
1
0.02
5
0.1
Financial
SituaSon
3%
InflaSon
1
=
>15%
3=
10%
to
15%
5
=
<
10%
1
0.03
5
0.15
3
0.09
5
0.15
5
0.15
2%
Indebtedness
(External
debt
as
%
of
GDP)
1
=
>30%
3=
10%
to
30%
5
=
<
10%
3
0.06
3
0.06
5
0.1
3
0.06
3
0.06
Social
&
Demographic
4%
EducaSon
2%
World
Economic
Forum-­‐
Global
CompeSSveness
Report
1
=
<3
3=
3
to
4.5
5
=
>
4.5
1
0.02
3
0.06
3
0.06
3
0.06
3
0.06
Labour
ParScipaSon
Rate
1%
World
Bank
Labour
ParScipaSon
Index
1
=
>50
3=
51
to
60
5
=
<60
5
0.05
5
0.05
5
0.05
1
0.01
5
0.05
Human
Development
1%
United
NaSons
Development
Programme
1
=
<0.4
3=
0.4
to
0.7
5
=
>
0.7
1
0.01
3
0.03
3
0.03
5
0.05
3
0.03

17. Stage II- Scorecard (2/3)
Main
Criteria
Weight
Per
Criteria
Sub-­‐
Criteria
Weight
per
sub-­‐criteria
Indicators
Measure
Ethiopia
Indonesia
Uzbekistan
Turkey
Vietnam
Points
Weight
ed
Avg
Points
Weight
ed
Avg
Points
Weight
ed
Avg
Points
Weight
ed
Avg
Points
Weight
ed
Avg
Infrastructure,
Technologies,
6%
Quality
of
Infrastructure
2%
World
Economic
Forum-­‐
Global
CompeSSveness
Index-­‐
Overall
Quality
of
Infrastructure
1
=
<3.5
3=
3.5
to
5
5
=
>
5
1
0.02
3
0.06
3
0.06
3
0.06
3
0.06
Energy
and
Power
Supply
1%
World
Bank-­‐
Per
Capita
Electric
Power
ConsumpSon
1
=
<500
3=
500
to
2000
5
=
>
2000
1
0.01
3
0.03
3
0.03
5
0.05
3
0.03
Electricity
Price
1%
DomesSc
Industrial
Electricity
Prices
1
=
>15
3=
8.5
to
15
5
=
<
8.5
5
0.05
3
0.03
5
0.05
1
0.01
5
0.05
LPG
Price
0.5%
DomesSc
Industrial
LPG
Prices
1
=
>1000
3=
500
to
999
5
=
<
500
1
0.005
3
0.015
5
0.025
5
0.025
1
0.005
Coal
Price
0.5%
DomesSc
Coal
Prices
1
=
>250
3=
100
to
250
5
=
<
100
1
0.005
5
0.025
5
0.025
3
0.015
1
0.005
ConservaSon
Policies
1%
CO2
Emissions
(MT
per
capita),
World
Bank
1
=
>5
3=
2
to
5
5
=
<
2
5
0.05
5
0.05
3
0.03
3
0.03
5
0.05
Business
Environment
25%
Foreign
Ownership
Rights
of
CorporaSon
1%
Business
Impact
on
Rules
on
FDI-­‐
Global
CompeSSveness
Index
1
=
<
4
3
=
4
-­‐
5
5=
>
5
3
0.03
3
0.03
3
0.03
3
0.03
3
0.03
Property
Ownership
of
Foreign
Companies
2%
Prevalence
of
Foreign
Ownership-­‐
World
Economic
Forum
1
=
<
4
3
=
4
-­‐
5
5=
>
5
1
0.02
3
0.06
3
0.06
3
0.06
3
0.06
Ease
of
Seing
Up
a
New
Business
3%
World
Economic
Forum-­‐
Global
CompeSSveness
Report-­‐
Number
of
Days
to
Start
a
New
Business
1
=
>
30
3
=
16
-­‐
29
5=
<
15
5
0.15
1
0.03
5
0.15
5
0.15
1
0.03
Business
SophisScaSon
Index
3%
World
Economic
Forum-­‐
Global
CompeSSveness
Report-­‐
Business
SophisScaSon
Index
1
=
<
4
3
=
4
-­‐
5
5=
>
5
1
0.03
3
0.09
1
0.03
3
0.09
1
0.03
No.
of
texSle
manufacturers
in
medical
sector
3%
Approx
number
of
manufacturers
of
texSle
manufacturers
in
the
medical/
healthcare
sector,
listed
in
B2B
sites
1
=
<
5
3
=
5
-­‐
15
5=
>
15
1
0.03
5
0.15
1
0.03
1
0.03
5
0.15
Availability
of
raw
material
10%
Cokon
ProducSon
1
=
<1,000
3
=
1,001-­‐5,000
5=
>5,000
1
0.1
1
0.1
3
0.3
3
0.3
1
0.1
Cost
of
Living
3%
Consumer
Price
Index
1
=
>
100
3
=
50-­‐100
5=
<
50
3
0.09
5
0.15
3
0.09
3
0.09
5
0.15

18. Stage II- Scorecard (3/3)
Main
Criteria
Weight
Per
Criteria
Sub-­‐
Criteria
Weight
per
sub-­‐criteria
Indicators
Measure
Ethiopia
Indonesia
Uzbekistan
Turkey
Vietnam
Points
Weig
hted
Avg
Points
Weig
hted
Avg
Points
Weig
hted
Avg
Points
Weig
hted
Avg
Points
Weig
hted
Avg
Business
Expenses
45%
Total
tax
rate
(TTR)
2%
DomesSc
VAT
1
=
>
15%
3=
8%
to
15%
5
=
<
8%
1
0.02
3
0.06
1
0.02
1
0.02
5
0.1
3%
Total
Tax
Rate
(%
of
Profits)
1
=
>
60
3=
40
to
60
5
=
<
40
5
0.15
5
0.15
1
0.03
3
0.09
5
0.15
Labor
wages
rates
in
LCC
15%
ILO
1
=
>100
3=
50
to
100
5
=
<
50
5
0.75
1
0.15
3
0.45
1
0.15
3
0.45
Trade
Barriers
3%
Prevalence
of
Trade
Barriers,
World
Economic
Forum
1
=
>
4.5
3=
4
to
4.5
5
=
<
4
5
0.15
3
0.09
1
0.03
3
0.09
5
0.15
LogisScs
Costs
5%
Cost
of
transporaSon
of
1
TEU
from
a
port/
capital
city
to
Rokerdam
1
=
>2000
3=
1000
to
2000
5
=
<
1000
3
0.15
1
0.05
1
0.05
5
0.25
3
0.15
Duty
Rates
into
EU
2%
Export
and
Import
duSes
1
=
>
5%
3=
0%
to
5%
5
=
0%
5
0.1
5
0.1
5
0.1
5
0.1
5
0.1
Polyamide
Prices
2.5%
DomesSc
Polyamide
Prices
1
=
>5
3=
3
to
5
5
=
<
3
1
0.025
3
0.075
1
0.025
1
0.025
3
0.075
Viscose
Prices
2.5%
DomesSc
Viscose
Prices
1
=
>3
3=
2
to
3
5
=
<
2
1
0.025
3
0.075
1
0.025
1
0.025
3
0.075
Cokon
Prices
10%
Raw
Cokon
Prices
1
=
>2.2
3=
1.8
to
2.2
5
=
<
1.8
5
0.5
3
0.3
3
0.3
3
0.3
3
0.3
Total
100%
88
3.02
114
2.75
94
2.62
104
2.81
114
3.14

19. Fact Finding Mission to Ethiopia
Analysis of potential production locations
19

20. EXAMPLE SLIDES
20

21. ANALYSIS OF INDUSTRIAL
ZONES IN ETHIOPIA
Section I – Location Analysis
21

22. Textile Industry in Ethiopia – An overview
• According to the German Engineering Association (VDMA) the export value of the Ethiopian Textile and Garment sector reached about USD
111 million in 2013 and they estimate it to reach USD 500 million by 2016.
• For the past 8 years, the export performance of the Textile and Garment sector (yarn, fabric, apparel, handloom products) have been showing
an increasing trend, on average 50% per annum.
• Turkish Investment in Ethiopia:
– Turkish textile Group X, a subsidiary of Istanbul based Y, has invested about one billion Ethiopian Birr (around 42 million Euros) in an
expansion of its current RMG ready-made garment production unit in Alem Gena, 19 km from Addis Ababa as a means to tripling its
exports.
– In August of 2013, around 50 Turkish textile and apparel companies announced their relocation to Ethiopia to establish an industrial zone
around the capital Addis Ababa.
• According to ETGMA (the Ethiopian Textile and Garment Manufacturers’ Association) ten new additional factories with a combined production
capacity of 100 tons a day are expected to have started production in the fiscal year (2013-14), and an additional three new projects in the
next fiscal year.
22
Source: txm.vdma.org, textile-future.com, just-style.com
Few companies already sourcing from Ethiopia
Company Base Country Nature of Business Sourcing From
1 Sweden Clothing Retailer
H is sourcing knitwear from the Textile Factory, based in
Mekele in northern Ethiopia, and part of the K Enterprise
Group
2 UK Clothing Retailer Not Available
3 Ireland Clothing Retailer Not Available
4 USA Clothing Company Not Available
5 UK Supermarket Brand Not Available
6 Germany Beverage, Retailer Not Available

23. Location of Industrial Zones
23
• Addis Ababa is the only International Airport.
There are a total of 85 airports in Ethiopia, 11 of
which have paved runways. The airlines'
international services link the country with more
than 50 cities on all main continents, while
domestic services link 38 airfields and 21 landing
strips with Addis Ababa.
• Djibouti is nearest port.
• Railway connects industrial zones of Addis Ababa
and Dire Dawa.
• It is possible for a company to lease land in any
part of Ethiopia and construct a factory.
However, we focused on Industrial Zones in
that country for the ease it provides in setting
operations.
• Bole-Lemi, the recommended IZ (analysis on why
this IZ is recommended is in the following slides)
has a total of 342 hectares available. Bole-Lemi will
focus on textile, garments and leather product
(including footwear) sectors.
Industrial Zones
Kombolcha
Industrial Zone
Awasa Industrial Zone
International
Airport
Rail route connecting Addis Abba &
Djibouti
Addis Ababa Bole-Lemi
Kilinto
Djibouti Port
Sandafa (Ethio-Turkish Industrial Zone )
Eastern Industry Zone
Bahir Dar
Gonder
Mekelle
Jimma
Diredawa Industrial Zone
Ayka Addis Industrial Zone
Huajian Industrial Zone

24. Industrial Zones
Industrial Zones Current Operational Status
Selected for
next stage of
analysis
1 Operational
2 Operational
3 IZ Under Construction- No companies present yet
4 Govt. studying feasibility- awaiting external funds to commence construction
5 IZ Under Construction- No companies present yet
6 Govt. studying feasibility- awaiting external funds to commence construction
7 Govt. studying feasibility- awaiting external funds to commence construction
8 Govt. studying feasibility- awaiting external funds to commence construction
9 IZ not fully complete- very few companies present
10 Govt. studying feasibility- awaiting external funds to commence construction
11 IZ Under Construction- No companies present yet
12 IZ not fully complete- very few companies present
13 IZ not fully complete- very few companies present
13 Industrial Zones have been identified
but only 2 are operational
24
Selected for further analysis (only IZs already operational)
Not selected for further analysis

25. Of the 2 industrial zones that are immediately operational,
X is the preferred option
25
Parameters X Industrial Zone Y Industry Zone
Developer Government Chinese company Group
Area
Phase I: 156 hectares fully complete and sold out
Phase II: 186 hectares, construction in progress and is expected
to be complete by the end of 2015. Booking open for Phase II
Phase I: 233 hectares
Phase II: IZ in talks with the Govt. for additional 260 hectares
for phase II expansion
Tax Holiday for Investors
Yes
(Up to 2-7 years depending on case-by case approval by Govt.)
Yes
(Up to 2-7 years depending on case-by case approval by
Govt.)
Focus Industries
Textiles, Garments and leather products (including footwear)
sectors
Textiles, Garment, Shoe, Construction materials, Electrical
equipment, Engineering material equipment manufacturing
and Food processing factories
Companies Present 1.
1.
Factory Rent USD 1 per square meter in Phase II (Under construction) USD 2 per square meter
Available buildings for rent (L&R
requires a building with floor
space 20,000 sqm)
2 types of buildings in phase II being constructed: 5,000 sqm area
buildings and 10,100 sqm buildings. No buildings available
anymore of Phase I.
Buildings available with 10,688 sqm area in Phase I.
Closeness to Addis Ababa airport/
Djibouti sea port
15 km East of Addis Ababa 37 Km East of Addis Ababa
Shortlisted Industrial Zone
Recommendation
Yes
(Cheaper rental cost & closer to Addis Ababa)
No
(Rental more expensive, IZ focus is multi industry and
further from Addis Ababa)

26. X - Some Pictures of the Industrial Zone
26
Bole Lemi IZ in 2013

27. Detailed Analysis – Location Analysis of X
(1) Building & (2) Legal Entity (3) Tax and (4) Electricity
27
Parameters Industrial Zone
Section Sub-section X
X - Location
Land Available (hectares) 156 Hectares in Phase I & 186 hectares in Phase II
Location 15 km east to Addis
Developer Ethiopian Government
Time to set up a factory
Six months to a year (estimated time to construct factory by the tenant) from the time
company is registered and lease signed
Special Economic Zone Yes, no import duty and export duty for products manufactured for 100% export.
Monthly Rent per square meter
IZ provides building at a rent of USD 1/m2 for 5 years and for the next 5 years at USD 1.25/
m2. Tenants have the option of building their own plant as well
Floor space of available buildings 2 buildings at 5,000 sqm each and one at 10,100 sqm
Security Deposit USD 25,000
Lease Option
Investing companies have the option of building their own building by leasing land from the
Govt. in X. Land is usually leased out for a period of 70 years at a one time payment of USD
11.55 per square meter (period of lease and price per square meter subject to case by case
approval by the authorities). Price per square meter can be paid in full or over a period of 20
years including interest charges.
Maintenance Cost to the IZ None. All utility costs will be paid by the tenants themselves directly to the service providers
Legal Paper work time for registering company in Ethiopia 10 business days from the time lease is signed
Tax
VAT 15%
Corporate Income Tax Holiday
2-7 years depending on case by case approval by the authorities based on the level of
investment and projection of the growth in exports by the investing company
Expat salary income tax holiday Up to two years
Electricity (Govt. Rates) High voltage Consumers for over 400 KW per month USD 0.038/KW (ETB 0.77/KW)

28. Detailed Analysis – Location Analysis
(6) Workforce – 2/2
Parameters Industrial Zones
Section Sub-section X
Workforce
Termination cost to employer
3 months salary as termination cost to be paid by the employer of 3 months notice not provided- normal
working practice in Ethiopia
Yearly bonus
Depends on the profit gained by the employer and based on its own policy, not stipulated by the
Government
Lean period Major religions are Christianity and Islam - Christmas time and Ramadan time are lean period
Indicative Time to
Recruit a worker
(number of days)
Operator 30-45 days
Technician 30-45 days
Supervisor 30-45 days
Engineer 30-45 days
Manager 30-45 days
Plant Manager 30-45 days
Indicative Total
Cost to the
Company per
worker category in
USD
Operator (2 years experience) USD 50 excluding mandatory 11% pension fund and 3% health insurance
Technician (2 years experience) USD 50 excluding mandatory 11% pension fund and 3% health insurance
Supervisor (3-5 years experience) USD 100 excluding mandatory 11% pension fund and 3% health insurance
Engineer (5 years experience) USD 350 excluding mandatory 11% pension fund and 3% health insurance
Manager (5 years experience) USD 550 excluding mandatory 11% pension fund and 3% health insurance
Plant Manager (5 years experience) USD 550 excluding mandatory 11% pension fund and 3% health insurance
28

29. RFI-RFQ ANALYSIS
Section II – Sourcing Analysis
29

30. 30
Description Composition SKU's SAP #
Actual L&R Price
(€ per kg)
Annual Quantity (Tons) Spec description
Cotton Yarn 100% Cotton 4
47
47
47
47
Viscose Yarn 100% Viscose 2
200
36
Elastane/Spandex
Yarn
74% Polyamide,
26% PUE
1 7
Polyamide yarn 100% Polyamide 2
110
15
The sourcing work focuses on the following yarn specs…

31. 31
Description Size (mm) Colour SKU's SAP # Picture
Annual Quantity
(PCS)
Actual price
(Euro/1000 PCS)
Inner carton
230x115x92 White
2
316,725
135x107x100 White 316,725
Master carton
570x240x237 Brown
2
105,340
535x270x210 Brown 105,340
…and packaging requirements

32. © 2015 Dragon Sourcing. All rights reserved.
32
Executive Summary
Results Recommendation
• Total 31 suppliers identified in Ethiopia for two categories – Yarn (18
suppliers) & Cartons (13 suppliers)
• Information about rejection during phone screening process & RFI-RFQ process
are given in the report
Yarn Category:
• Suppliers responded only with the RFQ & none responded to the RFI.
• From 15 suppliers passed phone screening & RFQ sent, DS received only 3
RFQ’s
• Ethiopian suppliers manufacture only cotton yarn & import polyester/polyamide
yarn mainly from China.
• Procurement intelligence report on Ethiopian spinning mills based on the
analysis from Industry experts given on slide 15.
Carton Category:
• Suppliers responded only with the RFQ & none responded to the RFI.
• From 7 suppliers passed phone screening & RFQ sent, DS received 4 RFQ’s.
• All the carton suppliers have negative savings as compared to current buying
prices.
• Procurement intelligence report on carton manufacturers based on the analysis
from Industry experts given on slide 15.
1. Suppliers will be motivated & might respond
more aggressively once the factory is set up in
Ethiopia.
2. One cannot rely completely on the local cotton
and packaging supply base and should develop
partners outside Ethiopia to import.
3. Polyester & Polyamide yarns can be bought
locally from the importers or should be imported
directly if the volumes are high – min 20ft
container basis.
4. Book fixed capacity of the yarn & carton
suppliers to ensure regular supply & flexible
payment terms.

33. 33
We have interviewed industry experts:
Summarized Feedback
Yarn Category:
• Ethiopian spinning mills seem to be producing only 100% cotton yarn or viscose yarn.
• Spinning mills are producing yarn either for self consumption if they are integrated mills or supplying limited volume outside to regular
clients.
• Supply of cotton yarn to the local market is not sufficient hence garment companies or local suppliers are also importing cotton yarn.
30-40% of the cotton processed in Ethiopia is from local suppliers, rest is imported.
• Local cotton price should be competitive, length of fibers and chemical composition often lack in quality.
• Spinning mills are not producing man made yarns like Elastane, Polyamide, etc. so garment companies are directly importing or
buying man made yarns from the local importers.
Corrugated boxes Category:
• Number of manufacturers is limited, small to medium scale manufacturers are available with limited flexibility to make customized size.
• Suppliers’ capacity utilization seems very high leaving little room for new clients.
• Local textile companies are buying the corrugated boxes from local manufacturers only but the supply is not easy and needs to be
followed aggressively to ensure on time delivery.
• Manufacturers requesting 100% payment in advance before starting the production and almost every time do not comply with the
deadline.
• Delays are happening due to frequent power cuts.
General comments
• Ethiopian suppliers speak little English and the communication is mostly happening in local languages.
• Ethiopian suppliers rather want to have face2face B2B relationships, and are rather weak in internet communication.
• Importing yarn to Ethiopia will be cheaper only if the end purpose is for exports as the raw material can be imported under duty & tax
exemption.
• Ethiopian companies are importing yarn from different markets globally.
• Larger textile companies in Ethiopia try to be intensively vertically integrated, due to the difficult local supply situation.

34. ANALYSIS OF TOTAL COSTS IN
ETHIOPIA VS CHINA VS CZECH
REP
Section III – Cost Model
© 2015 Dragon Sourcing. All rights reserved.
34

35. © 2015 Dragon Sourcing. All rights reserved.
35
Level
#
of
staff
CN
CZ
ETH
Weaver
100
Technician
10
Supervisor
10
Engineer
10
Manager
5
STAFF
COMPARISON OF LABOR COST PER MONTH

36. PRODUCT 1
(€ per 100 pcs EXW)
Category Ressource CZ Plant ETH Plant Quantity Unit Comment
Machine MIN Same
Labor MIN 7% labor cost in Ethiopia compared to CZ
Yarn KG Comparable landed cost
Machine MIN Same
Labor MIN 7% labor cost in Ethiopia compared to CZ
Yarn KG Comparable landed cost
Packaging KG Same
Labor MIN 7% labor cost in Ethiopia compared to CZ
Machine MIN Same
Labor MIN 7% labor cost in Ethiopia compared to CZ
Yarn ST Comparable landed cost
Yarn ST Comparable landed cost
Yarn ST Same
Packaging RL Same
Packaging RL Same
Packaging KG Same
Packaging KG Same
Factory overheads 30% fixed, 70% labor cost dependend
Factory overheads 30% fixed, 70% labor cost dependend
Factory overheads 50% of CZ
Machine overheads Same
Machine overheads Same
R&D overheads Same
Packaging Inner Carton € € Imported (incl. 10% handling and logistics)
Packaging Outer Carton € € 100% more expensive in ETH
Sum € €
Transport Transport to EU
Transport cost from ETH to EU will be € 0,383 per 100 pcs (€ 2.316 per container with
54 palettes á 11.200 pcs)
Sum € €
Difference ETH / CZ -13,18%

37. FACT FINDING MISSION
ETHIOPIA
© 2015 Dragon Sourcing. All rights reserved.
37

38. © 2015 Dragon Sourcing. All rights reserved.
38
INTRODUCTION
§ A Fact Finding Mission Ethiopia was undertaken from 9th to 12th of November 2015
§ Main focus of the trip was to gather information:
ü On two Industrial Zones on site (X next to airport, Y 44min/36km Southeast of Addis) and talk to
at least 2 companies on site in each IZ
ü Clarify frame conditions of logistics and customs for import and export
ü Visit local suppliers for packaging and yarn to understand supply options
ü Visit biggest local investor, strongly vertically integrated: A & Investment Group
ü Meet officials and experts for
§ Company foundation
§ Labor & HR
§ Real estate
§ Construction
§ Tax
§ Ethiopian Textile and Garment Authority
§ Cleanroom

39. 39
MEETING 1
COMPANY A ADDIS
A Textile was founded in 1988 in Istanbul / Turkey as a ready-made garment manufacturer and exporter. The youngest
investment is the A Addis Group in Ethiopia, a vertically integrated subsidiary of our company. It is the biggest
international investment in Ethiopia (140 Mio USD in 2010).
Meeting with: X, Management Representative
Meeting notes:
• A does circle knitting only
• Started to operate own truck fleet for inland transport for cost reasons, said “to achieve 50% reductions” through own fleet
• Mentioned high handling fees of containers at the port of Djibouti
• Use 90% 40ft containers for transport
• Have own offset printing machine from company Heidelberg, print 250g carton (both sides white), carton is imported from Turkey -> can
offer inner cartons for Y (most probably only Ethiopian inland supply option)
• Can also offer outer cartons
• To train staff in the beginning A contracted C Jeans Factory to do training for workers, mentioned that this is “expensive, but good
solution”
• A provides bus transport for workers within a radius of 30 to 35km
• A has appr. 6.500 employees total (thereof 150 expats), decreasing because they are pushing for more efficient production
• After 5 years A (later than expected) also has Ethiopian fore workers
• Basic wage level is 45 USD per month, plus meals/transport/medical insurance and health care internally or through clinic contracts it
sums up to 75 USD per month
• “Training is the key” to succeed with the local workforce
• Z accounts for appr. 75% of the turnover of A
• A pays workers on a monthly basis
• With worker’s union A has developed salary system with 15 types of salaries
• Generally wages are 50% depending on how long a worker is with A and 50% performance related

40. © 2015 Dragon Sourcing. All rights reserved.
40
MEETING 1
COMPANY A ADDIS
Meeting notes:
• Garment finishing has appr. 10% absence of workers (1 shift), rest of production is lower at appr. 5%
• Spinning, knitting, dyeing has 3 shifts (on 6 days per week)
• Starting with 10 employees in a company, employees have the right to join a union
• 20-30% of the workers of A are union members
• Workers’ efficiency in Ethiopia is appr. 50% in comparison to Turkey
• More absence of workers at holidays like Easter or Christmas (3-5 days absence)
• No absence during harvest seasons
• No people who cannot read and write basically
• Addis did use the funding of Ethiopian Development Bank (30% equity, 70% loan from EDB at a fixed interest rate of 8,5%)
• Government has installed state run enterprise for purchasing cotton yarn to achieve lower cotton price according to the local demand,
state’s purchasing entity imports cotton for local companies duty free, A gets cotton in exchange for 10% of A’s earnings
• Produce 17 tons of yarn per day with spinning factory 1 and 25 tons of yarn per day with spinning factory 2
• There are no currency restrictions regarding billing
• A has electricity substation in the factory, this is needed as the transmission of electricity is a problem and lines are old, power cuts are
not the problem
• Need 10MW for their plant
• Own sewage treatment is mandatory
• Have own ground water supply from 4 bore wells (no cost for water supply)
• For expats A has dormitory, for managers houses are leased

41. © 2015 Dragon Sourcing. All rights reserved.
41
MEETING 11
A SPINNING FACTORY
A Spinning Factory is the largest spinning company in Ethiopia.
Meeting with:
Meeting notes:
• Made a very open presentation of the company mentioning that they have problems with a high price of local cotton
• Did refuse to get cotton from national buying entity from international markets
• Seek for cooperation and other business options
• Well equipped manufacturing with most machines from German company RIETER
• Made good impression, well organized
• Want to quote on yarns and also cartons (through a sister company)

42. 42
ADDIS ABEBA TO ADAMA
A SPINNING FACTORY

43. 43
Y INDUSTRY ZONE

44. © 2015 Dragon Sourcing. All rights reserved.
44
Y INDUSTRY ZONE

45. © 2015 Dragon Sourcing. All rights reserved.
45
MEETING 5
Y INDUSTRY ZONE MANAGEMENT
Meeting with:
Meeting notes:
• 20 companies in IZ operating, 10 are starting
• Have another 160.000 sqm for sheds finished in 2016
• Loading terminal for train transport is 5km from IZ
• 6000 employees now total working in IZ
• Water well provided by IZ costs 20 USDc per ton, or option is also to drill own well(s)
• Lease contract is for a duration of 90 years
• Have one Indian company, one company from Holland (), some local companies, Unilever starts for washing powder manufacturing

46. 46
RAILWAY PLAN
© 2015 Dragon Sourcing. All rights reserved.

47. © 2015 Dragon Sourcing. All rights reserved.
47
MEETING 16
INDUSTRY MINISTER
Meeting with: Tadesse HAILE, State Minister, Ministry of Industry
Meeting notes:
• Goal is to make cotton available at a competitive price from in and outside of Ethiopia
• New railway will bring “50% improvement of land transport price”
• 80% of Ethiopian people live in the highlands
• Proposed to move into Awassa IZ, there are 34 sheds under construction and already 22 of them are occupied/booked
• There are only 12 sheds remaining for new investors
• In order to get the sheds, the investor needs to submit its proposal
• Government wants to subsidize the transport to Awassa, so that cost is similar than from Addis
• Comparable quality and quantity of labor available in Awassa
• Airport in Awassa needs 1,5 years to be finished
• IZ in Awassa will be finished mid of 2016
• 8 Companies which have booked in Awassa:
1. PVH - US - Garments
2. Arvind - India - Garments
3. Wuxi - China
4. …

48. One stop.
Worldwide sourcing.
Eine Adresse.
Weltweite Märkte.
DI (FH) Christian Santner
Director Germany, Austria and Switzerland
christian.santner@dragonsourcing.com
Dragon Sourcing
Germany, Austria and Switzerland
Tobis 3 | 8504 Preding | Austria
T: +43 664 88518030
F: +43 316 2311238882
Dragon Sourcing Ltd. Headquarter
7/F Hong Kong Trade Centre
161-7 Des Voeux Rd Central
Hong Kong SAR
T: +852 91 80 40 57
F: +852 25 80 24 26
www.dragonsourcing.com