Threads, soccer jerseys, wool hats, ponchos, nylon garments and even car covers produced in Ecuador gained market share in countries like Colombia, Peru and Bolivia.
Sales of the textile sector reached USD 1,143 million in 2021 , according to the Association of Textile Industrialists of Ecuador (AITE). That equates to a 26% recovery. And compared to 2020, a year hit by the pandemic.
The improvement in sales in the sector is due to the good performance of its exports, which are growing , even compared to levels prior to the Covid-19 pandemic, that is, 2019, explains Javier Díaz, executive president of the AITE.
Kämna wins Stage 4, Carapaz arrives seventh and Juan López is the new leader
Textile exports amounted to USD 139 million. That is equal to a 33% increase compared to 2020.
Compared to 2019, the increase is 32%.
The logistics crisis
Among the products that register an increase in exports are textiles, ready-made articles, abacá, ropes, cords and threads.
“For example, Colombia bought threads from Ecuador because the importation of that input from Asian markets was complicated, especially due to the logistics crisis ,” explains Díaz.
To this is added the first export of car covers from Ecuador, which took place in March 2022. The destination was Peru.
And it is expected that in the coming weeks there will be a new shipment of vehicle covers.
“Exports of this product have been achieved because China cannot supply Peruvians, due to logistical problems,” according to Díaz.
Ecuador has competitive advantages over Colombia, Peru and Bolivia, because its products enter without tariffs , as it is a member of the Andean Community (CAN).
Other textile exports that stand out are soccer jerseys, wool hats, ponchos and nylon garments.
More inventory, suspensions and closures
Not everything is positive. The logistics crisis has caused price increases and shortages of certain inputs and machinery necessary for the clothing industries.
“A company looking to buy a machine from Europe was told it would have to wait 18 months,” says Díaz.
The reason is that, in the midst of the logistics crisis, the world shipping sector has prioritized the maritime routes of the northern hemisphere , where large markets such as the United States, China and the European Union are located.
To avoid shortages, some Ecuadorian companies have increased their inventory, above their sales level, which compromises their income stream and also means cost overruns, due to storage.
There are also firms that have temporarily suspended some production lines and even a few have closed operations.
Questions to China
Like sales, the production of the Ecuadorian textile sector has improved, but not at the same rate. The recovery in production has been 2% between 2021 and 2020.
Textile production grows less than sales because companies have sold the inventory that they had held back since 2020, explains Díaz.
To this is added a greater participation of Chinese inputs in the Ecuadorian market.
The local industry believes that this phenomenon is due, in part, to alleged “under-invoicing,” says Díaz.
Under-invoicing is a practice in which a merchandise declaration is made for a lower value than its transaction, in order to reduce its tax base for the payment of taxes.
Due to this practice, according to Díaz, the price of a kilo of yarn that Ecuador imports from China is USD 1.73, while from the CAN it is USD 6.74, from the European Union it is USD 4.59 and from The United States is trading at USD 11.59.
And the same goes for fabrics and knitwear. For example, in this last segment the price of a kilo of product imported from China is between 30% and 60% lower than in other markets.
In this context, the AITE expects Customs to improve controls for the entry of imports into the country.
