THE ROADS OF THE BRAZILIAN TEXTILE SECTOR: Lesson of competitiveness with economic freedom

03/06/2018

Prof. Dr. Adilson Caldeira e Prof. Dr. Alberto de Medeiros Jr.


The competitive process challenges organizations to continually seek ways to deliver solutions and products that meet the needs of their customers and win their preference against competitors. One of the agents favoring this preference may be the ability to innovate in products, processes, relationships channels or original forms of service.

In addition to buyers' preferences, competitiveness can also be the result of conditions that provide efficiency and effectiveness, such as productive processes using less resources or superior results in terms of productivity, access to innovative and differentiated resources and technology, or even , additional uses of available resources, such as recycling resources that were previously discarded.

Hayek (1978) proposes that business rivalry encourages the discovery of new means to achieve certain ends. This view considers competition as a mechanism for discovering possibilities not yet imagined, promoting empirical and intuitive actions in search of solutions to ensure that revenues are higher than costs and provide favorable conditions for the construction of the economic value of a business.

Barney and Hesterly (2009) conceptualize economic value as the difference between perceived benefits obtained by a customer who buys a company's products or services and the total cost of those products or services. Therefore, the size of the competitive advantage of a company is determined by the economic value created additionally in comparison with competitors.

According to Mises (2010), one can see if consumers approve a company's initiatives for its profits. The bigger they are, the greater the approval. On the other hand, losses indicate disapproval.

Thus, the visions of Hayek (1978) and Mises (2010) complement each other, given the stimulus provided by competitive dynamics to the approximation between theory and practice, since conceptual models are continually developed by the addition of new knowledge acquired by experience in search of the economic viability of companies.

Some examples of events occurring on the market reflect this condition. This is the case of what has been occurring in the Brazilian textile sector in the last three decades. At the beginning of the 1990s the process of Brazilian economic opening took place, which consisted in the liberalization of imports. This fact facilitated the entrance of external products, triggering a sudden increase in the number of competitors disputing the preference of the customers.

Kon and Coan (2005) affirm that the textile sector was one of the most affected in Brazil since the commercial opening in face of its precarious structure to face the competition of imported products. According to Lopes (2011), the reduction of import rates, the obsolete Brazilian industrial park, the technological lag in relation to the other countries and the elimination of non-tariff barriers resulted in the closure of many manufacturing units during the 1990s. scenario has worsened after the entry of Asian countries, which have become major producers and exporters of this industry.

According to the Brazilian Association of the Textile and Apparel Industry - ABIT (2013), the sector went through a difficult phase for many years thereafter. The significant increase in the volume of imports and the lack of competitive conditions to compensate for the loss of participation in the local market with the conquest of the international, through exports, resulted in a very unfavorable trade balance, which can be considered absurd in the face of structural characteristics and the expressive proportion of the sector in the country's economy.

In Brazil, we have the last complete Textile Chain in the West, from fiber production, such as cotton planting, to fashion shows, spinning, weaving, processing, wholesale and retail.

Even so, the situation of the sector in the current scenario was aggravated by the emergence and rapid growth of Chinese competition, by the consumer crisis in Europe, excessive tax burden and labor costs, among other factors. As a consequence, the drop in market share led to the proportional decrease of the jobs generated by the sector.

At that time, about 23 years after the extinction of the protectionist policy once practiced by the Brazilian government, it was estimated that every second approximately US $ 214 of textiles were imported and made. From the point of view of impacts for the development of the Country and the quality of life of its population, it was worried that, every minute, a job was not generated (ABIT, 2013).

With about 30 thousand companies of the sector in the country, were offered, then, 1.7 million direct jobs. Since the beginning of the crisis started with the commercial opening, the sector is the second largest employer in the manufacturing industry, losing only to food and beverages (together) and is also second among the largest generators of the first job. The sector also deserves to be highlighted as the fourth largest manufacturing productive park and the fifth largest textile producer in the world.

 

In this context of intensification of international competition, the Brazilian textile and clothing industry faced the challenge of increasing its competitiveness in order to increase its insertion in the international market and preserve spaces in the domestic market, which led to an awareness of the necessity of the search of changes. For Lopes (2011), challenges related to the development of technology, quality improvement and operational efficiency were faced by national companies, considering the fierce competition from the insertion of new players, companies, products and services in the country.

 

The Brazilian textile industry had to bring innovative technologies to the country to face the international competitors. Of note are the new polyamide 6.6 smart wires, with long infrared ray technology, used in knitted fabrics obtained in a jacquard rectilinear machine, enabling the production of bioactive garments that use the heat of the human body and provide localized compressions to improve performance sports Innovations in textile processing allowed synthetic fibers to reduce body odor retention or to absorb liquids, improving human comfort.

 

At present, the figures show a reversal in the growth curve of the sector, observing the resumption of the growth trend, after a successive drop in market share since the commercial opening of 1990.

 

According to the data presented in Valor Econômico (2018), ABIT projects that the Brazilian textile and clothing sector revenues will grow by 5.5% in 2018, reaching the amount of R $ 152 billion. Also in growth, garment production is expected to be 2.5% larger, with about 6 billion pieces, and fabrics production may advance 4% in the period, reaching something around 1.84 million tons.

 

The scenario for the sector projected by ABIT considers, although the investments could reach R $ 2.25 billion in 2018, an increase of 18.4% over the previous year, surpassing also those verified in 2015 and 2016.

 

With such growth, it is estimated that the textile and clothing industry can open 20 thousand jobs, a factor of extreme relevance considering that in 2017 were generated 3.5 thousand jobs, in 2016 were closed 30 thousand jobs and in 2015, 100 thousand. Once this projection is confirmed, the sector will close 2018 employing 1.5 million workers.

The figures reveal that the sector is on its way to recovery. It is a fact that a protectionist policy practiced by the government for decades has led to the scrapping of the business park and the accommodation of companies in the absence of free competition in the market.

 The exchange of this policy by the opening of the market and the reestablishment of free competition, although it has occasioned initial moments of difficulty for the agents that participate in it, promoted as a result, in the long term, a learning about how to promote the economic and technological development of an entire competitive sector without being dependent on external regulatory bodies. The Brazilian textile sector can therefore commemorate the entry into a new era in which its competence to innovate, create value and thus develop for the sake of Brazil and market freedom is consolidated.

 

Referências

ABIT - Associação Brasileira da Indústria Têxtil. Desenvolvido pela Associação Brasileira da Indústria Têxtil. Apresenta informações atualizadas do setor têxtil. Disponível em: <http://www.abit.org.br/site> Acesso em: 17 dez. 2013.

BARNEY, J.B.; HERSTERLY, W.S. Administração estratégica e vantagem competitiva. São Paulo: Pearson, 2009.

HAYEK, F.A. Competition as a Discovery Procedure. In: New Studies in Philosophy, Politics and Economics, Routledge: London, 1978.

KON, A.; COAN, D. C. Transformações da indústria têxtil brasileira: a transição para a modernização. Revista de Economia Mackenzie, São Paulo, ano 3, n.3, p.11-34, 2005.

LOPES, F. B. Identificação de fatores que impactam a inovação em empresas têxteis brasileiras. 2011, 155p. Dissertação (Mestrado em Engenharia de Produção). Escola Politécnica da Universidade de São Paulo. São Paulo.

MISES, L.V. Ação Humana: Um Tratado de Economia. São Paulo: Instituto Ludwig Von Mises. Brasil, 2010.

VALOR ECONÔMICO. Faturamento do setor têxtil deve subir 5,5% em 2018, aponta Abit. Por Alexandre Melo. Disponível em: <http://www.valor.com.br/empresas/ 5221045/faturamento-do-setor-textil-deve-subir-55-em-2018-aponta-abit> . Acesso em 12/02/2018.