Brazilian apparel brands are investing in the neighbouring Peru for production of cotton garments using latest machinery and skilled labour.
Brazilian brands like VR Menswear, TNG, Ellus and Richards have slowly stepped up their production in Peru. In doing so, these brands are actually following in the footsteps of global brands like Tommy Hilfiger, Abercrombie & Fitch, Lacoste, Calvin Klein, Armani and Polo Ralph Lauren.
The Brazilian Textile and Apparel Industry Association (ABIT) said it is keeping a watch on the situation.
Peru has signed a free trade agreement (FTA) with Mercosur countries comprising of Argentina, Brazil, Paraguay and Uruguay that allows Peru to export to these four countries without paying any import duty. Thus, Peru has got an advantage compared to China, for instance, which has to pay an import duty up to 35 percent.
In addition, compared to Brazil, Peru has availability of labour at cheaper rates, lower interest rates and even less tax burden. All these make Peru an attractive destination for Brazilian investors, according to ABIT.
From 2009 to 2010, Brazil's textile and apparel imports from Peru increased by 89 percent in value, but only 28 percent in volume, which shows that Brazil imports more of higher value items from its western neighbour.
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