What Textiles Say About The Cost Of Clothing

An important fact: 50% of the sector is an importer.

“Imports must be financed 180 days after nationalization, representing a direct cost of at least 35% in dollars, which goes directly to the price in terms of the final product. So we maintain that. Given the shortage of foreign exchange, we should give priority to the supply of basic raw materials that there is no national manufacturing to produce, This would save foreign exchange and limit the prices of semi-finished products to official dollars and further increase national output and Argentine labor. We are already in a dire situation with some factories that have started reducing production due to lack of inputs, especially in the synthetic sector where the raw materials are of external origin,” Galfion said.

“These circumstances have resulted in a marked reduction in demand, great uncertainty, very volatile prices and it is logical that the consumer waits and does not validate the adjustments. We expect the market to remain stable and stable in the coming months. will start above. All this will establish predictability so that, basically, the producer knows at what price he will be able to get the supply of raw materials for production. This will contribute to stabilizing the prices of the final product, “He concluded.

According to INDEC, clothing It is one of the highest performing industry sectors year-on-year. By June 2022, the manufactured quantity of clothing increased by 28.7% as compared to June 2021. In the first half of the year, production increased by 24% compared to the first half of the previous year.

What do official figures say about imports?

According to the latest report of Argentine Industrial Chamber of Clothing (CIAI), In July – last reported – the dollar for clothing imports registered 71.1% year-on-year growth, totaling USD 24.5 million CIF. Imported kilos rose 80.1%, totaling 1.1 million. For the period January-July 2022, the increase in imports in dollars was 50.3% compared to the same period in 2021. In kg, there was an increase of 37.4% in 2021 over the same period. The average price per kg imported was 21.6. , slightly higher than January-July 2021.

“It is highlighted that the January-July 2021 period has little basis for comparison, so the year-on-year growth is high”, clarify.

From January to July 2022, due to the change in weather, the largest imports were in the “coats” (31.5%) category, followed by pants (15.9%) and sweaters (15.3%). The products with the highest import tariff status for January–July 2022 were “Other coat H of FS or FA” (U$22.5 million), “Other coat M of FS or FA” (U$S17). .6 million) and FS or FA sweater ($15 million).

The main import origin for January-July 2022 turned out to be China, which accounted for 56% of imports measured in dollars, followed by Vietnam with 7.5% and Bangladesh at 5.9%. Peru at 5th place, Brazil at 10th place and Colombia at 15th are the three South American origins that are prominent for the period January–July 2022. Peru and Colombia stand out as origins of outbound purchases with high U$S/KG ratios. Which boasts of high quality of its products as compared to the rest.

How are clothes made?

Depending on the region, the final price is formed as follows:

• Only 8.5% of the window price of premium brand apparel sold in shopping malls is accounted for by the industry. Sector-wise, the shirt-making industry charges only 8.5% which is matched to the cost of manufacturing the finished garment for its final sale. This cost includes the activity of the entire value chain involved in the production of clothing (cotton, wool or synthetic fiber, disassembler, spinning mill, weaver, dry cleaner, laundry, garment manufacturer, etc.).
• The rest of the price component is related to taxes (50.3%), shopping mall rentals (12.7%), logistics (9%), financial costs (12.2%), commercial brands (4.8%), design and advertising (2.8%). ,
• The rental or financial costs of premises in a shopping mall have a greater incidence in the final price of a brand’s apparel in the industry.

What taxes does a brand pay which makes the product more expensive? Taxes correspond to different stages of production and commercialization of apparel. VAT, gross income, income tax and bank debits and credits are considered. The rental of premises includes not only rent but also purchase expenses, initial and monthly advertising funds.

Teddy Karazogian TN Plantex, which manufactures one of the most important inputs for making a garment, indicated that yarn accounts for only 2% of the clothing price and 20% is rented. “The tariff they pay is less than 3% of the final price. Ask importers why they import official and sell in parallel with such high margins,” he said in a letter after INDEC data .