SUNS 4288 Friday 25 September 1998
PERU: ASIAN "INVASION" BLIGHTS RAG TRADE
Lima, Sep 23 (IPS/Zoraida Portillo) -- Uncontrolled imports of clothing from Asia are running Peru's clothing industry into the ground - factories are working at 30 percent capacity, and nearly half its
employees have already been laid off.
Many companies are on the verge of bankruptcy. "We've lost 80 percent of the domestic market," said David Lemor, chairman of the National Society of Industries (SNI) Clothes Manufacturing Industry Committee.
Lemor attributed this to an increase of more than 60 percent in textile and clothing imports from Asia, a region desperately fighting to increase exports in order to loosen the grip of the crisis there.
Imports of some articles of clothing from Asia increased more than 100% in 1998 as compared with 1997, he explained. Consignments of knitted singlets, for example, were up 115 percent.
"This, in practice, means imported clothing is being sold upto 30% cheaper than national garments," he said.
In various sales outlets, tee-shirts made in Taiwan are selling at 50 US cents, lightweight Korean shoes at a dollar, Chinese silk blouses at three dollars and padded jackets at 10 dollars.
"We estimate the clothing industry will lose some $700 million this year due to the combined effect of the El Nino phenomenon and the Asian crisis," said Lemor, expressing his surprise at the lack of action taken by the government. "Peru is the only country which does nothing to protect its industry and the results are plain to see. National industry is in decline," he said.
Official forecasts predict only three percent industrial growth this year - half of what was initially expected.
The Alberto Fujimori administration has avoided direct intervention on Asian imports. Industry Minister Gustavo Caillaux said the government will not apply protection mechanisms, but will consider "measures to avoid disloyal competition."
But these devices are ineffective, complain entrepreneurs. "What is important is not whether (the entrepreneurs) like the government measures or not," replied Caillaux, "but what is best for the country, and that is not necessarily what the business community is clamouring for."
According to the National Customs Authority, in the first five months of 1998 alone, imports from Asia were worth $538 million dollars - more than double that of the same period in the previous year - representing 25.29 percent of total Peruvian imports.
Japan heads the list of Asian sales in Peru, followed by South Korea - the source of most of the clothing flooding the local markets. At the same time, Pakistani and Indonesian exports to Peru increased by 284 and 95 percent respectively between 1997 and the first half of this year.
Peru buys a massive range of products from Asia, including vehicles, electrical articles, yarns, tyres, printed fabrics, crude woven polyester, footwear, toys, crockery, sewing machines, textiles,
fluorescent goods, syringes, surgical gloves, computers, clocks and watches. Meanwhile, Peruvian exports to these countries barely reached $244 million in the first five months of 1998 - nearly 20% down on sales in the same period of 1997.
And while the big producers of the SNI find the situation unsustainable, middle-sized and small concerns are stretched to breaking point, with no markets, no finance and facing what they consider disloyal competition.
"Our situation is critical. Sales are down 60% and we had to sack 50% of our workforce. We are having serious problems meeting our financial and tax obligations," said the Coordination of Business people of the Gamarra Emporium.
Gamarra is a poor and densely populated neighbourhood of Lima, and the Coordination represents some 15,000 small businesses within this area, employing 56,000 people. The workers of Gamarra take home 180 million dollars in salaries out of the 800 million dollars made each year on the first rate products made in the area - all the investments made here come from the entrepreneurs themselves with no help from outside.
Two years ago Korean investors tried to take over the Emporium, but the small garment producers turned down the offer. "We are experiencing an enormous crisis. Measures will have to be taken and aggressive promotion programmes created," added the Coordination.
Korean clothing has already invaded the Peruvian market. "Our sales save fallen by at least 70 percent. People see cheap things and buy them. They don't realise the garments have to be thrown away after they've been worn once because they either shrink, stretch or lose their colour," said Alipio Romo, of the Gamarra Emporium.
Following demonstrations and strikes a few days ago, the small entrepreneurs managed to pressurise Congress into banning imports of used clothing and footwear - also mostly from Asia - until Dec 31, 2005. This means the 140 containers of used clothes waiting to enter the country from Miami will have to find another outlet.
However, the entrepreneurs calculate the amount of clothing which had already entered the country in recent weeks could comfortably clothe half the six million people of Lima.
"We have won a battle but not the war. All we ask is for textiles and garments imported from Asia or any other part of the world to be sold at their real prices and to pay the corresponding import tariffs. That is, that they should compete in equal conditions," concluded Romo.