The Retail Textile Industry in Argentina and Brazil

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Table of Contents

Introduction
Brazil: The Retail Textile Industry
Opportunity-Risk Matrix
Market-Penetration Grid 1
References

Introduction

In Argentina, the environment for doing business for the textile industry is favorable which can be seen from the information provided below.

Since 2002, the textile sector has demonstrated considerable growth. In 2004, the annual growth was 75 percent (Kakati, 2008). In the following years, consumption boom preconditioned subsequent growth in the textile industry. Increase in consumption took place due to the improvement of purchasing power of the local population and the steady growth of tourist purchases.

According to Kakati (2008), “the total Argentinean textile market is estimated to be worth US$ 12 Billion… annual production of clothing items is valued at US$2.27 billion. The sector boasts about 11,600 manufacturing and design companies and 30,100 retail stores.” (para. 17). The growing demand for high fashion clothing will stimulate the further growth of the textile industry. Both local and foreign players will find opportunities for gaining increased profits. In addition, cultural assimilation that takes place due to the promotion of the western lifestyle among the young population developed steady brand awareness among consumers (Daniels, Radebaugh & Sullivan, 2013).

Argentinean textile market is characterized by the prevalence of informal activity and small retail forms owned by families and employing up to fifty members of staff. Low supplying and workforce prices allow high profitability of local manufactures. Besides the market has favorable conditions for import. In 2005, clothing import was valued at more than US$ 911.55 million (Kakati, 2008).

Brazil: The Retail Textile Industry

In Brazil, the environment for doing business for the textile industry is rather positive which can be seen from the following data.

With more than 52% of middle class population, Brazil is a very attractive textile market (“Brazil’s textile industry”, 2012). Moreover, the country is the fourth largest textile exporter in the word (“Brazil’s textile industry”, 2012). The overall worth of textile industry is U.S. $63 billion. 30,000 companies are estimated to operate the market (“Brazil’s textile industry”, 2012).

Since the labour and supply costs are high in Brazil, the country has favourable import conditions. In this vein, the total amount of China garment import is U. S. $1.45 billion annually (“Brazil’s textile industry”, 2012). However, Brazilian market is characterized by the high degree of bureaucratization, which creates obstacles for the enterprises entering it (Daniels, Radebaugh & Sullivan, 2013).

Opportunity-Risk Matrix

Argentina

Opportunity	Risk
Opportunity	Very low	Low	Medium	High	Very high
Very high
High	+	+
Medium	+	+	+	+	+
Low	+	+	+	+	+
Very low

Brazil

Opportunity	Risk
Opportunity	Very low	Low	Medium	High	Very high
Very high			+	+
High			+	+	+
Medium			+	+	+
Low		+	+
Very low

Market-Penetration Grid 1

Variables	Argentina	Brazil
Acceptable/Unacceptable	Acceptable	Acceptable
Allowance Allows 100 percentage Allow licensing to Majority- owned subsidiary	No Yes	No Yes
Return a. Size of investment b. Tax rate a. Market size, present b. Market share in 3-10 years c. Market share immediate potential e. Market Share potential 0-2 years f. Share	US$ 3.4 Billion 35% US$ 12 Billion US$ 14 Billion 8% 16% 8%	US$ 15.2 Billion 27.5% US$ 63 Billion US$ 66 Billion 5,17% 14% 6,9%
Risk a. market loss, 3-10 b. Exchange problems c. Political unrest d. Business laws, present e. Business laws, 3-10	5-7% Moderate inflation Low rate Effective legislation system Further improvement expected	3-6% Moderate inflation Low rate Bureaucratic problems are observed Further improvement expected
Total Value	US$ 12 Billion	US$ 63 Billion

References

Brazil’s textile industry: a world of untapped potential. (2012) Guardian Professional. Web.

Daniels, J., Radebaugh, L., & Sullivan, D. (2013). International business, 14th ed. New York: Prentice Hall.

Kakati, W. (2008). Argentine textile industry: An export snapshot. SME Times. Web.

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