Brazilians love to shop for clothes and accessories; and this is just one of the main reasons why so many local – and especially, foreign – brands are successful in the country.
The days when Brazil was excluded from the global fashion market are gone. The country not only has high consumption levels of clothes and accessories, but it is also one of the main targets for international brands. It is also responsible for exporting a few of its own brands.
The Brazilian market is so powerful and diverse that it has become attractive for companies aiming for different types of consumers. Recently foreign fashion brands like Forever 21 and Topshop have arrived in Brazil, while others like Prada, Chanel and Burberry have continued to expand their operations.
According to research company Ibope, Brazilians spent around BRL 138 billion on fashion in 2014. This figure has been growing, although as seen in many other sectors of the nation’s economy, the rhythm has decreased in the past few years.
However, there is a dispute between local and foreign companies. Brazilians are spending an increasing amount on imported items which is a concern for the national industry which is trying to protect their share of the market through various initiatives, including programs in partnership with the government.
It is difficult for a Brazilian brand to compete with a well-established foreign brand. Their production is often higher, cheaper, and, in some cases, their products are more preferable to Brazilian consumers.
There are exceptions, of course, and there are some genuine Brazilian brands taking over the fashion market in other continents.
The most famous example is Havaianas, a Brazilian brand of flip-flops that are currently sold in more than 100 countries worldwide. Other beachwear brands are also doing well and are known especially for their design and materials used.
In addition, there are Brazilian brands that have participated in important fashion events. Some examples are Carlos Miele, Alexandre Herchcovitch, Osklen and Artur Caliman, whose designs have been seen on runways around the world.
Stimulating the consumption of local brands
The most recent data from Associação Brasileira da Indústria Têxtil e de Confecção, ABIT or Brazilian Association of the Textile Industry, shows that the amount of imported goods in this sector grew 5% between January to November of 2014, in comparison to the previous period. Exports, though, decreased 6,9%.
To reduce the gap between the search for imported and local fashion products, the government launched some measures, associations and company organizations. They all have the same goal: reduce the dependence on imported clothes and accessories and grow the national industry.
There is a specific program by Banco Nacional do Desenvolvimento Econômico e Social, BNDES or National Bank of Social and Economic Development, seeking to increase investment in local fashion. The development bank offer special finance for companies established and headquartered in Brazil who operate in this sector.
There are also programs structured by the federal government in partnership with Agência Brasileira de Promoção de Exportações e Investimentos, Apex-Brasil or Brazilian Agency for Export and Investment Promotion. One of them is Sistema Moda Brasil, which seeks to establish more public-private partnerships to strengthen the fashion market.
Brazilians are known worldwide for their addiction to shopping when travelling abroad. It would not be a surprise if all the brands found in the outlets in Florida and New York arrive in the country, sooner or later.
There are all types of international fashion companies in Brazil: from the luxurious Louis Vuitton and Tory Burch to the less expensive Forever 21.
Among the foreign brands in Brazil some of the most popular are Tommy Hilfiger, Lacoste, GAP, Armani, Ray-Ban and Abercrombie & Fitch although the later does not have a store of its own, and has recently lost some territory.
Many of these brands adapt themselves to the Brazilian market, avoiding failures faced previously by other companies like Sears. Zara and Topshop, for example, raised their prices to seek a different type of consumer to what is normally seen abroad.
Taxes on imported clothes
Imported clothes are taxed just like most products in Brazil. There are basically four major taxes that affect the import process as a whole:
- Import Tax, known as Imposto de Importação or II
- Tax on Industrialized Products, known as Imposto sobre Produtos Industrializados or IPI
- Social Integration Program Contribution, known as Programa de Integração Social or PIS
- Social Security Funding Contribution, known as Contribuição para Financiamento da Seguridade Social or Cofins
Tax rates vary slightly in some cases. For clothes:
- II is usually 35%, but there are variations
- PIS is 1,65%
- Cofins is 8,60%
According to Brazilian legislation, clothes, ties, accessories, hats and other fashion items in general are all exempt from IPI during the import process.