Our Intrix Brazil Country Manager recently made a presentation about Doing Business in Russia to the textile and apparel association. The members of the organization are preparing a mission to Rusia at the end of September with the theme Fashion Brazil. Intrix is also participating in this mission, which has created good expectations among the companies attending. If you want to learn more about our services in Russia please contact amarzall@intrixcorporation.com
Industry News
The future in the textile and apparel industry in Latin America is going to be determined by the multiples trade agreements that are in the Washington Agenda. The CAFTA, the trade agreement with Central American Countries (Honduras, El Salvador, Nicaragua y Guatemala) is expected to be signed before the elections period in November. In addition, Colombia and Peru, members of the ATPA (preferential agreement for the Andean countries) are already negotiating individually Free Trade Agreements with the US, following the steps of Chile, which was the first country in South America to have an FTA.
According to John E. Luke, from Textile World, the advantages of the formation of this free area are going to be beneficial for both sides: the US and the Latin American countries. The US will contribute with investments, ideas and abilities to take risks. It will continue the trend of manufacturing abroad and converting into an economy based on knowledge. On the other hand, all the small Latin American countries will gain more access to the biggest consumer market in the region and follow the steps of Mexico with the Nafta.
With the attraction of investors in technology and gain of capital access the fiber and textile production will increase. The challenge will be the differentiation against lower-cost manufacturing locations such as China. It will be necessary training workers to improve the product development and design areas, key for the brand owners. Intrix believes this is the right time for the manufacturers to learn more about the consumers and being prepared to enter the US market.
Economy in the Region
"Maquilas" (off-shore manufacturing plants) in Mexico are back in the game. After two tough years in the US economy, affecting strongly the Mexican "maquiladoras", there are some initial indications that the sector is coming back to life. Exports are up 20% in June from last year, employment is up 5% after falling to a record low in 2003. The devaluation of peso (8% over the last 12 months) is lowering operations costs and attracting companies, some of them moving back from China. Another reason is the increase of duties in Chinese made TV sets as much as 78.75% to combat dumping. This measure is helping manufacturers established in Tijuana and Ciudad de Juarez.
International Overview
Russia has changed considerably after the reforms of the past decade. One of the main changes is the consumer behavior. Moscow and St. Petersburg are the major consumer centers. Moscow, in comparison with the most important European cities, has by far and away the highest expending rate. It was also recently classified as the third most expensive city in the world. The consumers are also more sophisticated demanding well-known brand products. The high growth in the economy for the last three years is expected to continue converting the 143 million Russians in an attractive market for consumer products.
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