Peruvian Textiles See Strong Growth on Export Expansion

The fast-growing South American nation forecasts exports will jump 5 percent to $2.2 billion this year.

Guadalajara, Mexico — Peru’s textiles and apparel sector expects to grow strongly in 2013 as it boosts exports to new markets in Latin America, Europe and Asia, according to leading industry executives.

The fast-growing South American nation forecasts exports will jump 5 percent to $2.2 billion this year on the back of a projected increase in U.S. demand in the second half of the year, said Martin Reano, textiles committee director of Peru’s National Association of Industries.

Peruvian exports account for half of the industry, which has a $2 billion local market. In 2013, growth is expected to be sluggish, matching 2012’s growth, due partly to strong Chinese competition, Reano said.

Reano added that a flood of subvalued Chinese garments ($1 billion last year) has stolen $500 million from Peru’s local market since 2008, forcing many companies to transform into exporters to survive.

To tackle the problem, Peruvian trade commission Indecopi is considering launching antidumping measures against China in the short term. If this happens, Reano said, Peru could recover its local market losses by 2017. To achieve this it’s also crucial for the industry to support the creation of design- and fashion-oriented Peruvian brands to persuade consumers to shun Chinese rivals.

Peru must also create brands that can compete in China, Reano said, highlighting Dunkelvolk as an example.

“It’s a spectacular story of a Peruvian brand that has been able to penetrate the Asian giant’s heart and plans to open stores there,” Reano said. “That is what we have to aspire to in Peru.”

“It is time to start ending our fear to China. There are 50 million millionaires there we can target.”

To compete in Asia, Peru plans to position itself in the luxury market by selling apparel made of vicuña (billed as the world’s most expensive fabric [a coat can sell for $25,000]), innovative alpaca varieties and upmarket and pima cotton apparel.

Peru is also hoping a free-trade deal with the European Union will help its exports there. The accord, which Peru is negotiating alongside Colombia, is expected to be implemented in April.

If this and other market expansion efforts succeed, Peruvian exports could grow 5 to 10 percent annually by 2017, Reano forecast.

Igor Rojas, manager of Peruvian export promotion agency Promperu’s textiles division, was equally optimistic. Speaking to WWD during the Intermoda fashion show here last month, he said Peru is making a huge effort to grow international sales.

Boasting a huge Intermoda stand, Peru has recently set its sights on Mexico, Latin America’s second-largest apparel market, where it hopes to elevate sales by 50 percent to around $25 million by next year. Mexican sales to Peru have so far been paltry, however. “They are not yet taking advantage of the opportunity, but there is certainly a market for Mexican denim, dress shirts and business suits in Peru,” Rojas said.

Peru is also looking for new markets in Brazil, Canada and Venezuela. It is also hoping to bolster trade with the Pacific Alliance, a growing free-trade bloc between Mexico, Colombia, Chile and Peru.

In Europe, Peru is focusing on Nordic countries, where per-capita consumption rates are high.

“These countries have high demand for luxury apparel, and they have not suffered from the recession as much as Western Europe,” Rojas noted.

In Asia, Peru is looking for opportunities to sell polo shirts to China’s large golf apparel market. It is also eyeing market niches to sell alpaca and vicuña clothing to the Japanese and South Korean markets.

“It’s cold there and consumers have a high purchasing power,” Rojas said. “We want to sell clothes for their harsh winters.”

Peru has recently promoted a slew of vicuña and alpaca-specialized designers. One such creator is Meche Correa, who closed Intermoda with a runway show of alpaca winter looks.

Correa said she is preparing a vicuña collection to appeal to wealthy Asians next winter.

“My target is going to be China and Asia, where Peru must enter with the top product,” Correa said.
Peru’s Asian entry will be gradual and cautious, however.

“Right now we are exploring the market to adapt our products, which could be a long and complex process,” Rojas said.

Currently, 65 percent of Peruvian exports go to the U.S., while 25 percent ship to South America and 10 percent to Europe and Asia.

Observers expect the U.S. export share will diminish in coming years as Peru leaps into new markets.