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We are concerned about the protectionism in the region

Jan 3, 2017 / Brazil
We are concerned about the protectionism in the region
The words are from Heitor Klein, Executive President of Abicalçados, the Brazilian Shoe Manufacturers Association, who shared with us some of his views on the Brazilian footwear industry’s current performance and future expectations
wordfootwear.com has talked to Heitor Klein to hear his views on an extensive list of issues currently impacting the footwear industry in Brazil and across the world.

Brazilian footwear industry performance
Mr. Klein is concerned with the performance of the Brazilian footwear industry. Although at the beginning of the year the exchange rate has created positive expectations for exports, these did not bear the expected fruits: “The fact is that a serious political crisis has adversely affected the national economy, further reducing domestic demand which accounts for 87% of footwear sales for the industry. With the exchange rate fluctuation due to this same political crisis and allied to international macroeconomic factors, we have not been able to balance losses in the domestic market with sales abroad”. According to the Brazilian Association, between January and August domestic sales fell by more than 11%. Exports, on the other hand, were stable compared to 2015, but this year has represented the country’s worst performance in more than two decades, so no good goods seem to be on the way for the Brazilian industry. And as such Mr Klein is expecting the year to end on a negative note for the sector: “What we envisage in the domestic market is a slight improvement as a result of Christmas sales - although nothing like in previous years. The international market is already very fearful especially because of obstacles placed by Argentina - our second international market- and Bolivia. The expectation is that, if we match the performance of the previous year in foreign markets, that will be a great result”.

Protectionism in the region
Abicalçados and its representatives have been very active in this topic, asking the local authorities to assist them addressing the issue. The Brazilian Association believes the increasing protectionism in the region is impacting the Brazilian footwear companies and making it harder for them to sell their products in the neighboring countries: “As we have mentioned, we are concerned about protectionism, especially in countries that should be our commercial partners, such as Argentina. The same applies to Bolivia, a major importer of Brazilian footwear. Protectionism, although undeclared and practised informally - delaying the release of licenses or even non-protocol of licenses - is expected to adversely affect the industry at this late year-end”. Abicalçados, as the national representative of the footwear sector, has already raised the issue with the Federal Government which promised measures to tighten negotiations with the neighbouring countries.

The future of the industry
The world has been facing economic slow-down, impacting several economies across the world and companies from all sectors. As a result of a globalized and fast world, political, economic and social changes are occurring rapidly and impacting industries and businesses worldwide. The global footwear market is obviously changing as well. Mr. Klein believes that footwear production, which remains concentrated in China, will  be diverted to other neighbouring countries where labour will continue to be cheaper, which will force companies from other countries to find alternative business models: “We believe that, in order to survive in a world that is increasingly competitive in terms of price, it is important to find new business models, innovative products and new production processes, putting productivity and profitability centre stage and never forgetting economic, environmental and social sustainability. I feel there is a long way to go, but it is heartening to see that, even in the midst of our national economic crisis, we are looking to the future with the knowledge that in the coming years a revolution must take place in the consumer society”.

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