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TRADE PROMOTION SECTION Quarterly Business Newsletter • Issue No Embassy of Brazil in Nairobi TRADE PROMOTION SECTION Quarterly Business Newsletter • Issue No. 19 • 2nd Quarter 2019 This is a quarterly publication by the Embassy of Brazil in Nairobi which aims to create awareness of existing trade and investment opportunities between Brazil and Kenya, Uganda, Rwanda, Somalia and Burundi. Quarterly Business Newsletter • Issue No. 19 • Second Quarter 2019 1 Embassy of Brazil in Nairobi FOOTWEAR INDUSTRY IN BRAZIL 3 Historical Overview 3 Market size for footwear in Brazil 3 Import and Export of footwear 4 Footwear Trade Fairs in Brazil 4 Fashion Footwear in Brazil 5 Brazilian Footwear Industries Association (Abicalçados) 5 THE STATE OF AMAZONAS 6 The Economy 7 The Main Sectors in the State of Amazonas 8 RECENT HIGHLIGHTS 12 BRAZIL’S DEMOGRAPHIC AND ECONOMIC DATA Surface area (Sq. Km) 8,515,770 (IBGE) DEMOGRAPHIC DATA (WORLD BANK/IBGE) Total Population (May 2019- estimate) 209,890,385 Population growth rate (2016) 0.80% per annum Population density (2016) 24 inhabitants/km2 Urban population growth rate (2016) 1.15% per annum ECONOMIC DATA (IBGE DATA) GDP (2017 in US$) 1.731 Trillion Inflation target 2019 4.5% ± 1.5% Inflation (IPCA) March 2019 0.75% 12 month cumulative inflation (Nov 2018) 4.58% Trade Balance (BCB Data) Exports (2018) USD 239.88 billion Imports (2018) USD 185.4 billion Trade surplus (2018) USD 53.6 billion Total trade flow between Brazil and Kenya (2017) USD 125.5 million Financial and Capital Markets) – (BCB Data) Base Lending Rate (Selic Rate – (March 2019) 6.4 %p.a Long term lending rate (TJLP – (March 2019) 7.03 %p.a Stock Market Value (IBOVESPA) (March 2019) USD 838.3 billion Number of companies listed in BOVESPA 336 2 Quarterly Business Newsletter • Issue No. 19 • Second Quarter 2019 Embassy of Brazil in Nairobi FOOTWEAR INDUSTRY IN BRAZIL Historical Overview Market size for footwear in Brazil he economic development process of the Brazil is considered to be the most important TBrazilian footwear industry began in Rio Grande footwear producer outside of Asia. It is responsible do Sul with the arrival of the first German immigrants for 4.6% of the world’s production. In 2016, Brazil in the 1820s as they brought with them their was ranked 4th largest exporter of footwear after culture of leather craftsmanship. This was initially China, India and Vietnam. Brazil was also ranked homemade. However, after the Paraguayan war the 4th largest consumer of footwear in the world. (1864-1870) there was need to increase demand. This was however a reduction from 2014 outputs. In The first Brazilian footwear factory was formed in 2017, the numbers for the Brazilian footwear industry 1888. Rio Grande do Sul State increased the demand were positive, registering a 1.1% production growth for footwear, taking the production to grow year (in pairs) therefore returning the production to a level to year, forming, as the time went by, one of the above 908.9 million pairs. This is almost to the record current largest footwear clusters worldwide. Between of production in 2014 which was (980.8million). the 1920s and the 1960s, the footwear industry in Brazil’s footwear industry solid base is maintained by: Brazil stagnated its production however in the 1960s, shoe sales were dramatically expanded by exports to • Its world renowned reputation, especially overseas markets with the first large-scale Brazilian relating to the high quality and relatively export sales involving shipments to the United States. cheap leather Brazilian domestic production during this decade was • Gradual rise of price of Asian footwear around 80 million pairs of shoes per year. • Expansion of Brazilian footwear market to new countries Source: Abicalçados 25.2% Synthetic Laminate 49.8% Plastic/Rubber 19.6% 4.2% Frabric Leather 1.2% Others Segmentation of the Brazilian footwear production by type of use in pairs (Share in 2017) Quarterly Business Newsletter • Issue No. 19 • Second Quarter 2019 3 Embassy of Brazil in Nairobi Analyzing the Brazilian footwear production in 2017 along gender consumption, women footwear accounted for 69.9% of the total production, whilst men footwear accounted for 24.7% and children footwear for 10.4%. 38.8% comprised of unisex, safety and orthopedic shoes. The Brazilian footwear industry is comprised of over 600 companies, responsible for directly employing over 279,000 people. Source: Abicalçados 24.7% 61.2% 64.9% Men’s Identified Women’s 10.4% Children’s Gender 2015 2016 38.8% Women’s wear 65.1% 65.2% Unidentified (unisex, orthopedic, safety) Men’s wear 23.9% 24.0% Children’s wear 11.0% 10.8% Brazil footwear clusters/poles are regions where there to more than 150 countries, generating around US$ is a great concentration of manufacturing companies 1.09 billion of sales in 2017. This translated to a in nearby locations. Footwear clusters are identified by significant growth of 9.3% in number of pairs when contribution of the region to the national production, compared to the last three years. Top destinations the contribution of the production of the state relative for Brazilian footwear include the United States at to the production of the region; and the dispersion of 17.4%, Argentina at 13.5%, Paraguay at 6.8%, Bolivia the production within the state. The largest footwear at 5.9%, and France at 5.4%. producing areas are as follows: In 2017, imports of footwear to Brazil accounted for • Rio Grande do Sul US$340million. The main import destinations include • Santa Catarina Vietnam at 45.7%, China at 23.5% and Indonesia • São Paulo at 16.9%, India at 2.6% at and Paraguay at 2.5%. • Minas Gerais Imports of Chinese footwear fell, as a result of Brazil’s • Ceará anti-dumping measures. Currently, there are 10 footwear poles in Brazil, Some of the popular Brazil footwear brands include: located in the South, Southeast and Northeast Vizzano, Beira Rio Conforto, Moleca, Molekinho, regions. They are: Birigui (SP); Cariri (EC); Franca Modare, Havaianas, Amazonas, Schutz, Sophia (SP); Jaú (SP); Juazeiro do Norte (CE); Nova Serrana Webster, Alexandre Birman, and Alpargatas, among (MG); Novo Hamburgo (RS); Sapucaia do Sul (RS); others. São Leopoldo (RS) and Santa Rita (RS). Footwear Trade Fairs in Brazil Jaú, Franca and Birigui represent 92% of the production of footwear in the State of São Paulo. Jaú Francal São Paulo: 03. - 05. June 2019 | is a reference in the production of women’s shoes; International Shoe and Accessories Fashion Fair Franca, of men; and Birigui, of children’s shoes. The Francal is an international fashion fair for shoes Rio Grande do Sul is one of the largest footwear and accessories. It takes place annually in São Paulo manufacturers in the country. It is the footwear hub and is the largest industry gathering of the year that exports the most production, with a 43.7% share when it comes to the introduction of the new spring- in Brazilian exports. According to Abicalçados, there summer collections. Exhibitors get the opportunity to are 2,700 footwear factories in Rio Grande do Sul, establish new domestic and international business, which generate 96.2 thousand jobs. build partnerships and furthermore strengthen relations with the South American market. Buyers Import and Export of footwear from all over the world find information about the Brazilian footwear is highly sought after worldwide, latest trends and fashion ideas at this fair. as a result of the low prices, high quality and unique Website design. Because of this, Brazilian footwear is exported 4 Quarterly Business Newsletter • Issue No. 19 • Second Quarter 2019 Embassy of Brazil in Nairobi Couromoda São Paulo: 13. - 15. January 2020 | International Trade Fair for Shoes, Sports Items and Leather Goods Couromoda is an international exhibition for shoes, leather goods and sports goods in São Paulo. It provides an overview of current and new trends in the industry. The fair is an ideal platform for retailers, importers and executives to talk about important industry issues and provides the opportunity to create new business contacts or expand existing ones. Website Fashion Footwear in Brazil Design has grown exponentially in Brazil as the Brazilian public and international markets demand have been growing as well. Comfort, style and appeal to different kinds of customers have been contributing factors to this. Brazil has so much knowledge and craftsmanship regarding shoes. Brazilian made footwear is usually handmade, providing the most comfortable experience while using the highest-quality materials available. In general, Brazilians are very creative, so expect a lot of innovation in terms of design. Brazilian footwear such as Vizzano, Moleca, Bieira Rio and Modare have found themselves at the top of the fashion scene competing with well-known brands around the world. Brazilian Footwear Industries Association (Abicalçados) The Brazilian Footwear Industries Association is the entity that represents the national footwear industry, acting in its commercial interest in search of better competitive conditions of production in Brazil. It was founded in 1983 and it is based in Novo Hamburgo (RS). It represents companies from all sizes and states in Brazil. Brazilian exports of footwear are aided by the Brazilian Footwear program. This is an initiative by the Brazilian Association of Footwear Industries (Abicalçados) in partnership with the Brazilian Agency for Promotion of Exports and Investments (Apex-Brazil) created for exporting Brazilian footwear to new markets and promoting it. The purpose of the program are to Increasing exports of Brazilian brands, signal strategic directions for companies in the sector, promoting export, leveraging business opportunities and promoting Brazil, Brazilian footwear, and its brands. Quarterly Business Newsletter • Issue No. 19 • Second Quarter 2019 5 Embassy of Brazil in Nairobi THE STATE OF AMAZONAS Brazil Manaus AMAZONAS Atlantic Ocean mazonas is the largest state in Brazil occupying rivers are at their highest during the wet season and Aa total area of 1.564.445 Km2, an area coverage the terra firme – areas that are never submerged.
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