Analysis of the Brazilian apparel market as a potential export destination for the Sri Lankan apparel sector.

Abstract

Apparel export industry is the most significant and dynamic contributor for Sri Lankan economy. Sri Lanka is among the top apparel producing countries in the world relative to its population. Brazil is one of the countries which is identified as most important with this trade with Sri Lanka. This study specially point outs to identify the opportunities in the Brazil market for Sri Lanka apparel exports, especially considering to the HS code 61 and 62 export items. This study is carried out to verify the requirement of identifying opportunities in the Brazil market in Sri Lankan apparel exports. The required secondary data were extracted from the ITC calculations based on UN COMTRADE statistics. Further, HS code 61 and HS code 62 product items were selected in this study. Descriptive data analysis method was used in this study. It is found that the Brazilians perceive international clothing as very high quality and sophisticated. The countries like Sri Lanka who export to Brazil may have to adapt their clothing selection to the Brazilian culture, demands and needs. The main competitive factors were found to be quality, design, customer service and price. While brand names still play only a minor role in the home textile sector. Brazilians are interested in high quality and are willing to pay higher prices for such products. The main barrier for the Sri Lankan apparel exporters is the high tariff rates imposed by Brazil. Sri Lanka has also not offered any tariff preferences on imported products. Our products are always charged the highest prevailing tariff rate compared to tariff applicable for other countries. Sri Lanka experiences a high tariff rate of 35% for the products. Sri Lankan products have become less competitive in Brazil market due to nonexistence of trade agreements with Brazil. Hence, it is emphasized that we should work closely with relevant agencies such as the Sri Lanka High Commission in Brazil to solve the prevailing issues related to exports and to start discussing the possibility of a bilateral trade agreement with Brazil.