World Footwear

Trade

Heitor Klein, Executive President of Abicalçados, live on World Footwear

Mar 28, 2016 United States
Heitor Klein, Executive President of Abicalçados, live on World Footwear
Aiming to get an updated view of the state of the footwear industry in Brazil, we spoke to the sector's association Abicalçados (Brazilian Shoe Manufacturers Association) and its President
Heitor Klein, who has an academic background in accounting, has been working in the footwear industry for over 30 years. As a consultant, as a director of the FENAC, the entity promoting FIMEC (International Fair of Leather, Chemicals, Components, Machinery and Equipment for Footwear and Leather), and then, since 1992, as Executive Director of Abicalçados. He is the Executive President of the Brazilian Association since 2013.

What are your expectations for the new legislation approved by the Brazilian authorities regarding the Trade Facilitation Agreement?

The agreement will bring important advances in the competitiveness of the Brazilian industry, especially as it will reduce bureaucracy associated to foreign trade. Once the agreement is fully implemented we should be able to reduce the cost of exports, and consequently increase the Gross Domestic Product (GDP).

The existing anti-dumping duty for Chinese Footwear entering Brazil was extended for more five years. In your opinion what are the arguments in favor of this position? What impacts are you expecting for the Brazilian footwear industry?
The adoption of the anti-dumping duties against footwear imported from China is a fight with at least eight years. In 2008, in the midst of an invasion of Chinese products in the domestic retail, we requested, for the first time, the Federal Government to adopt the duty. We have managed to prove China's export dumping practice  though a 40.000 pages document, and a surcharge of 12.47 US dollars per pair was applied, first as a temporary measure from September 2009 onwards, and then for a period of five years from March 2010 onwards, with the rate being updated to 13.85 US dollars.
The effect of the measure was immediate and we assisted to a recovery of over 40 thousand jobs in just six months. We always stressed that we do not oppose to footwear imports, as long as they follow fair trade principles without dumping practices that impact the rules of the World Trade Organization (WTO).
In practical terms, with the surcharge, we increased competitiveness of the Brazilian industry in the domestic market, which absorbs more than 85% of the total footwear produced in the country.
Coming close to end of the period of application of the duty in 2015, we filed a petition with the Ministry of Development, Industry and Foreign Trade (MDIC) for the renewal of the duty. As it was approved, we see it as victory for the national footwear industry, and from the 2nd of March, the surcharge applied to imported Chinese footwear is 10.22 US dollars per pair imported.
In our view, the renewal of the duty will bring more tranquility to national producers who can plan the year ahead. 

According to the World Footwear Yearbook, Brazil was the 4th largest Footwear producer in 2014. Do you have the numbers for 2015? What expectations do you have for 2016?
In 2015, according to data from the Brazilian Institute of Geography and Statistics (IBGE), we had a 7.6% drop in the production of footwear, and we estimate that total production has totaled 850 million pairs, which should guarantee that we keep our current position amongst the main international players. Exports fell by 10% in value, reaching 960.4 million US dollars. The industry has shown a recovery in the last two months of 2015, which minimized the overall fall for the 2015 global figures. Based on this recovery by the end of the year, we expect shipments abroad will increase in 2016. The stronger dollar, which allows a more competitive price for the Brazilian footwear, will certainly be critical for a better performance throughout the year.

What do you think will be the biggest challenges for the footwear industry in the next few years, in Brazil and worldwide?
The challenges are diverse.  The most urgent need is to create mechanisms that allow the industry to be less dependent from unstable macroeconomic scenarios. For this it is necessary to focus on technologies that enhance and qualify productivity in the companies, cutting costs and investing in differentiated products, focusing design and quality, always accommodating the market needs.

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