The Brazilian fashion industry has begun to gain ground abroad and the forecast for the sector is that it will increase both inside the country and internationally - once people work hard for it. Read on to learn more about it.
Brazilian fashion industry encompasses over 30,000 formal companies that together move BRL 50 billion per year. The employee count is more than 1.7 million, of which 75% are women.
From 2007 to 2012, over USD 10 billion invested in the Brazilian textile industry, which is the 5th largest in the world - while the confection industry is the 4th largest. Approximately 9.8 billion pieces are produced every year in what is the second largest employer of the transformation industry in Brazil.
Even though the fashion sales increased 3.4% in 2012, Abit or Associação Brasileira da Indústria Têxtil, the Brazilian association of textile industry, showed there was a decrease of 4.5% in the textile production of the country, and a 10.5% one in the confections one. The divergence between production and sales is explained by the amount imported, which approximated USD 6.59 billion in 2012. The deficit in the balance of trade for the sector escalated to USD 5.3 billion in 2012 when compared to USD 235 million in 2006.
In 2012, the crisis in the European countries combined with the barriers Argentina imposed on imports were factors which affected the Brazilian fashion industry. According to Abit, Brazilian imports in 2012 increased more than the Brazilian exports - around 9.4% in imports in comparison to approximately 9.3% in exports.
One of the problems this industry deals with, however, is the high taxation applied to the production process. Having a long production chain, it faces a large number of taxes levied in each one of the steps. That's one of the reasons why, even with the large production, the balance sheet ended the year 2012 with a deficit of USD 5.32 billion. Another factor is high logistics costs and labor charges, which impacts the level of increase in the sector.
Not only the cost of production is a deterrent; the competition with imported items helped put the Brazilian fashion market in crisis in 2012 and 2013. There was an increase of 19.6% in the import of products, especially Asian ones, mainly Chinese. Abit claims that China allowed its currency a 30% devaluation in comparison to Brazil’s on purpose, and remember the Chinese have over 27 subsidies from the government in order to produce. Other problems faced by the Brazilian industry are the obsolete machines available and the high cost of work force, which makes the competitiveness decrease. Even the luxury items are affected, since the imported products arrive in the country at cheaper costs in comparison to the national items.
Also, the Brazilians who buy high fashion brands tend to make the purchase abroad, and not in Brazil - since the prices of taxes levied on these products tend to increase their costs in the country.
In partnership with Apex-Brasil, Abit created a program to encourage the exports in the fashion industry through TexBrasil - Programa de Exportação da Indústria da Moda Brasileira, or program of export of the Brazilian fashion industry. TexBrasil started in 2000 in order to support the international businesses of the Brazilian fashion industry in a more efficient way. An agreement was settled in the second semester of 2013, and it was decided that BRL 34.4 million would be invested. With nine target markets - which include the United States, China, Japan, and countries from Europe and South America - and 321 companies registered, the idea of the project is that the Brazilian companies that don't export yet start to do so soon.
Greatest Brazilian Brands
Abroad, the most famous Brazilian brand in this sector is, undoubtedly, Havaianas. Apart from it, however, there are other national brands that are always in the catwalks of the largest fashion weeks in the world. Another company in the footwear sector that has reached the international market is Grendene, whose advertisement girl is Brazilian supermodel Gisele Bündchen - and whose owner recently became of the richest people in the world, according to Forbes.
Brazil’s fashion industry is most commonly known abroad for the beachwear items. One of the largest companies of the sector is Mormaii, specialized in surf products and present in 80 countries. Another company, that in Brazil is known as a surfer’s company, but abroad gained the status of luxury brand, is Osklen. Established in the country in 1989, it currently operates in more than 25 countries.
Another important fashion company is Colcci, established in Brazil in 1986 and present in 31 countries, targeting younger people. Ellus is a jeans brand founded in 1972, also present abroad; other important Brazilian brands are Forum and Triton.
Carlos Miele, Alexandre Herchcovitch, Reinaldo Lourenço and Ronaldo Fraga are brands named after their owners, famous fashion designers in Brazil. All of them are, among others, also present in important fashion weeks around the world, attending to a deluxe public.