Argentina produces all types of textiles: fibres, yarns, fabrics and clothing. It produces mainly for the domestic market: it supplies (and depends on) local demand. How does Argentina fit into the global textile-apparel value chain? What does it sell? What does it buy? And how does this affect its capacity to produce?
Global trade in the textile-apparel chain
Foreign trade is key to understanding any value chain, including the textile-apparel chain. It provides information on the world’s leading countries and the products and stages in which they specialize.
Which countries import textiles and clothing?
Among the main textile-importing countries, China stands out with 8.1% of imports (24 billion dollars per year). It is followed by Vietnam, the United States and Bangladesh.
Most of these are specialized apparel countries that buy inputs for production from other countries.
Among the largest apparel importers are the major developed countries, which have large apparel consumption centres.
The United States is the leading global importer, with 19.7% of the total (US$102 billion per year), followed by Germany, the United Kingdom and France.
Which countries export textiles and apparel?
Between 2013 and 2021, exports of this chain averaged US$800 billion per year and the textile link was responsible for 35% of exports. In this scenario, China has a marked supremacy, with almost 30% of the market. Far behind are the United States, India, Germany, Italy and South Korea.
Textile exports are highly concentrated. At the continental level, there is a clear predominance of Asia, which accounts for 62.8% of the global market, followed by Europe (with 23.7%). The 11 main exporting countries accounted for 70% of world sales.
During the same period, world apparel exports averaged 518 billion dollars per year (65% of the total). In this case, China also leads with 35.3% of the market. It is followed by Bangladesh (6.9%) and Vietnam (5.3%). Developed countries such as Germany (4.3%) and Italy (4%) also stand out.
The concentration of apparel exports is almost identical to the textile segment. Asia has 67.2% of the global market, followed by Europe -with 25%-; and the first 10 exporters concentrate 70% of sales.
Not all producing countries are major exporters
If we look at how much the sector exported of its total production, we see that some countries, such as Cambodia and Vietnam, exported more than 70% of their production. This reflects the eminently export-oriented profile of their chain. Others, such as Brazil and Argentina, have a chain that exports very little (with percentages below 15%) since their production is mainly destined for their domestic markets.
The export or internal-market nature of these chains defines dissimilar chain profiles that have implications for development strategies, the evolution of employment and their prospects.
Does exporting textiles and clothing ensure economic development?
In Bangladesh, Haiti, Cambodia, Pakistan, Honduras, El Salvador and Sri Lanka (all low or lower-middle-income countries), the products of this chain account for more than 30% of their exports. Conversely, in practically all high-income countries, the chain’s products now account for only a small share of exports.
This is evidence that the industrial links of this chain tend to be located in low-income countries since they take advantage of cheap labour. But it does not mean that a high specialization in textile-apparel is detrimental to economic development. Throughout history, in many countries of the world, the transition from exporters of raw materials to textile and apparel products initiated a process of industrialization that later became increasingly complex as they developed production capacities in other, more complex manufacturing sectors.
How is Argentina inserted in the international trade of the textile-industrial chain?
Argentina has local production in all links of this chain. Most of this production is exported as primary goods: mainly cotton fiber and wool. And, despite its productive capacity, there is a significant presence of imported products in the local market, mainly of Asian origin. The fluctuations of the economy, the scale of the market, the much lower costs of the Asian supply and the pendulum swings in the productive policy towards the sector have led the trade balance of this chain to become structurally deficient in the last decades.
What and from where do we import textiles and clothing?
We mainly import products that we cannot produce locally
Almost half (45.9%) of textile imports are explained by synthetic fibres, yarns and fabrics. The main cause lies in the lack of a sufficiently large local scale to motivate the installation of firms willing to compete with the lower costs available in Asia. These inputs are incorporated into the production process of local weaving mills, where they are generally mixed with cotton yarns (usually of national origin) to create various types of fabrics.
In the case of finished garments, as with synthetic yarns, the main reason for importing lies in the lower costs available in Asia, compared to garments manufactured by the formal segment of the local value chain.
Beyond the cost differential, the second largest share are coats, jackets and anoraks (17.4%), items with limited local supply due to their technical complexity and the high labour time required per garment. The local commercial sector tends to import them and focus on the manufacture of less complex items, where a larger scale of production is achieved.
We import mainly from Asia
70.5% of textile imports come from Asia, the world’s main supplier of textile products. China is in first place (with a 49% share), followed by India (10.4%) and Pakistan (3.1%). In second place is the American continent (23.5%), almost all of which comes from Brazil (19%).
As for the apparel link, the predominance of Asia is even more notable (with 84.3% of total imports). China stands out (58.9%), followed by Vietnam (5.5%) and Bangladesh (4.5%).
The origin of apparel imports has changed sharply in recent decades. In the 1960s, the bulk of imports came from Europe and the United States. During the 90’s -at the peak of Mercosur- Brazil became the main supplier of imported clothing to Argentina. During the 21st century, Asia became, by far, the main origin of our country’s imported clothing.
What and to whom do we export textiles and clothing?
We export mainly cotton and wool
Our export insertion has a strong inclination towards the export of primary products with low added value. Almost all sectoral exports (93%) were textile products, mainly cotton fibre (41%) and carded or combed wool (35%).
Apparel exports are very small (only 37 million in 2022). Tights have the largest contribution (19.3%) and are mainly driven by the production and export of Derwill, for Nike.
Argentina exports textiles to Asia and clothing to neighbouring countries
Almost all textile exports are destined for the Asian continent (46.3%). This is because the industrial links of this value chain, which process the raw material sent from countries such as Argentina, are concentrated there.
Almost all of Argentina’s clothing exports are destined for the American continent, particularly neighbouring countries such as Uruguay (26.7%) and Brazil (26.2%). This is largely due to the presence of Argentine brands in those countries, as well as to geographical proximity and the absence of tariffs stipulated for trade between Mercosur partners.
How did the local trade balance evolve?
Argentina’s textile-industry chain is structurally in deficit, although this was not always the case. Until the end of the 1980s, it was in surplus due to relatively low imports and considerable exports of cotton, wool and even some garments. Since the implementation of the Convertibility Plan (in 1991), imports began to grow strongly, resulting in successive trade deficits that have continued to the present day (except for the 1995-1996 biennium).
The size of the deficit is often explained in part by:
- China’s industrial growth and its consolidation as the leading global manufacturer and exporter of textiles and apparel, thanks to its large scale of production and low prices;
- the domestic economic cycle. The more the Argentine economy and garment consumption grow, the more local activity expands, which requires more imports, both of finished garments and productive inputs;
- domestic trade administration policies. In stages of openness, imports grew more easily and replaced part of the local production.
Does importing diminish local productive capacity?
The growth of imports does not always destroy local productive capacity: it is key to know what happens in parallel with the size of the market. If the size of the local market grows in greater proportion, they are compatible. However, if the size of the market is reduced or is relatively stagnant, all the growth in the participation of foreign supply has, as a counterpart, the destruction of the local productive apparatus.
If we look at the evolution of the size of the market (through consumption and the number of local companies) concerning textile and apparel imports, we can differentiate four sub-periods.
- 2003-2011┃During the first years of post-convertibility economic expansion, there was, simultaneously, a growth in local productive capacity and imports, explained by the strong growth of the local market.
- 2012-2015┃The second period of stagnation of the Argentine economy, when the size of the market began to contract, local productive capacity remained relatively stable, and foreign trade management reduced the presence of imported products.
- 2016-2020 ┃The destruction of the local productive fabric coincides, both with the contraction of the market (due to the fall in purchasing power and the increase in unemployment) and due to the greater weight of imported garments.
- 2021-present┃Finally, since 2021 the number of formal companies in the chain has remained stable, due to a slight upturn in the size of the market and a contraction in the share of imports.
