Argentinian manufacturers look to capitalize on January’s strong apparel exports – Sourcing Journal

When Argentinaclothing shipments jumped 13% in January, hopes have been boosted that its besieged fashion industry could take the turn after a 60 percent contraction last year.

The weakening of the peso and rising demand from the main trading bloc partners, Brazil, Uruguay, Paraguay and Bolivia, propelled the gains. Simultaneously, local manufacturers breathed a sigh of relief as the Chinese yuan appreciated against the peso, undermining dumped clothing imports that had strangled local suppliers for years.

Unfortunately, however, January’s gain was a one-time event. Foreign sales fell 4% in February and are expected to remain stable in March, according to Francisco Roca, chief economist at the main clothing trade lobby CIAI.

As global markets recover from Covid-19 and the peso remains depreciated, Roca expects exports to experience a modest recovery this year, to the tune of 1-2%, but far from the gains seen before the pandemic . Latin America‘sn ° 3 of the economy.

Increasing state funding is one avenue that could help increase exports, Roca said. Buenos Aires recently announced that it would inject $ 26 million into small and medium-sized enterprises or pymes in the sector, in the hope of enabling them to boost exports, especially to China, which has been identified as a promising market for its high-end fashion brands.

“The government financing component is very important with many different lines of credit,” Roca added, noting that the state also removed some export taxes last year, including an export duty with a ad valorem duty of 7 to 8 per cent.

“We need to diversify our exports,” he said. “We can sell our luxury to China. There is a high middle class that has the power of acquisition and seeks the variety and design innovation that our brands can offer. “

Brands such as Gaucho-Buenos Aires, Juana de Arco or Jazmin Chebar, which already export to Japan, should benefit from increased exposure to China, according to Roca.

However, not all companies are eyeing China, Buenos Aires-based Derwill turning to the United States and Europe. The family-owned business recently spent $ 5 million to double production and increase shipments to Nike and Adidas, said founder and owner Marcelo Lopez.

He noted, however, that the bulk of the funding to build a new mill to double the sport socks the annual production of 13 million pairs came mainly from its own cash and not from government coffers.

“This year, we will export $ 12 million, up from $ 5-6 million last year when the plant was much smaller,” the manager revealed, adding that the new site near Buenos Aires has also seen l ‘addition of 200 machines, mainly from Italy. Lonati.

“These machines have the latest technologies for finishes and types of socks this Nike asks us, which are more sophisticated and in line with the latest trends, ”said Lopez.

Derwill, which also counts Under Armor and New Balance as customers, expects demand for its unisex and children’s socks to increase this year, mainly from Argentinian partners in Mercosur but also Chile.

While praising the help of Argentina’s heavily indebted administration, Lopez said companies need to do more to tailor their products to foreign buyers, not just rely on government help.

“Government assistance may not be enough, depending on the market you are in and the prices of your products, but if we can focus everyone more on exporting, there is business to be gained and we have the creative workforce to conquer new markets, ”he added.

Boosting exports will also help Argentina get the funds it badly needs to make investments that can help boost jobs which, at least in the textile channel, fell by around 50% in 2020.

While Economy Minister Martin Guzman said last month that GDP would recover faster than expected to reach at least 7% growth (from a 10% drop in 2020), union officials were not also optimistic about the outlook for the sector.

“We’re still mired in Covid with a very low percentage of incoming vaccines,” said Monica Basterrechea, who heads Satadya, a union representing mom-and-pop sewers in the seaside town of Mar del Plata. “Workers are struggling and jobs haven’t picked up much.”

Local fashion consumption remains anemic as eight million Argentines are said to remain in poverty, struggling with high inflation and a rapidly depreciating currency, she added.

“It is true that the government is more diligent [increasing] exports, but I think we are looking to do more than we can, ”continued Basterrechea. “Our borders are closed with Brazil and we don’t know how the new strains of the virus will affect us. “

About Walter Bartholomew

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