Exporting textile consumer products to Venezuela

Abstract

This Paper presents a comprehensive look at the issues involved in exporting textile consumer products (pantyhose - HS number: 6115.11.0000) from the United States to Venezuela. Venezuela's population is 23.7 million, growing at a rate of 2.0 percent annually. Consumer expenditure in clothing and footwear was almost $ 3,500 million (USD) in 1996, representing 10 percent of the total consumer expenditure. Fashion is very important to the large and affluent Venezuelan middle class, with a preference shown for U.S. marks, labels, styles, designs and quality. Venezuela experienced a dramatic slowdown in economic growth during 1998. Real GDP grew less than 1 percent in 1998 and shrank by 5 percent during 1999. This happened as the result of the drop in oil prices, which is Venezuela's principal exporting product, and the international financial crisis that began in Asia in mid-1997. Despite Venezuela's current economic difficulties, US exports continue to grow and will most likely pass the $ 6 billion (USD) mark in the present year. The domestic consumption of the product is calculated based on the size of the market (women population, which is estimated to be 6.3 million for the year 2000), the quantities of the product imported from all over the world, which was $ 46.9 million (USD) in 1996, and from the amount, in USD figures, expended over the years in clothing and footwear. It is important to mention that the expenditure on clothing and footwear tripled in Venezuela in the 1977-1996 period (going from $ 1,26 million to $ 3.5 million USD). The main domestic competitions brands are Delux, Van Raalte, Marlene, Coqueta and Kentelle. Third country competition comes from the Andean Community of Nations (Bolivia, Colombia, Ecuador and Peru), Jamaica and several Asian countries. The Andean Community of Nations is well known for its high-end apparel products. Jamaica exports a huge amount of textile products through assembly activities (maquiladora industry) on the island. Asia is also considered as competition since there is a significant flow of low quality textile and apparel products coming from that region to all the countries in the hemisphere. Among the issues to consider when entering this very particular market are the long processing times at Venezuelan ports and corruption. Both are particularly important. Long processing times are the norm at Venezuelan ports; payoffs or connections are often the only ways to speed things along. Transparency international Inc. in Berlin reported that Venezuela scored a 2.3 on a scale of 0 to 10 in its Corruption Perception Index. Since a 10 would be given to a very uncorrupted country, this means that there is a lot of corruption going on in Venezuela.