Apparel Textiles Made Next Door in Latin America

Latin America's Role in the Textile and Apparel Industry

Latin America's Role in the Textile and Apparel Industry

Latin America is home to some major textile-producing nations, such as Peru, Brazil, and Colombia. Peru is South America’s biggest clothing exporter, boasting unique domestic raw materials, especially alpaca fiber and Tangüis cotton. Brazil, a BRIC country, has enormous growth potential in both its textile supply chains, natural fibers, and man-made fibers. Colombia is also expected to witness great opportunities in the textile and fashion market.

Meanwhile, the CAFTA-DR countries—Costa Rica, Dominican Republic, El Salvador, Guatemala, Honduras, and Nicaragua—are competing among themselves and against Haiti for niches in the U.S. market.

Buyers’ interest in South America remains strong. In Colombia, for example, garment shipments grew 50% to $900 million in 2021, according to export lobby ProColombia President Lavia Santoro during the latest Colombiatex de las Américas textiles fair in Medellín. The two-day event last month drew 270 companies sourcing a range of textiles, including technical fabrics with antibacterial, solar shielding, and impermeable properties.

Latin America Apparel Exports Expected to Grow by 10%

Latin America’s apparel exports are expected to increase sharply this year as U.S. brands boost orders south of the border to help ease supply chain disruptions.

An estimated 10% increase in apparel sales is expected as U.S. buyers continue to engage in near sourcing and seek competitive markets such as Mexico, which is only 24 hours away by truck. This shift is also lifting demand for Central American and Colombian garments.

For Mexico specifically, shipments could hit $7 billion this year after rising 6-8% in 2021. Brisk sales of knitwear, T-shirts, polo shirts, lingerie, underwear, and socks are seen fueling those gains.

Large & Growing Markets

Latin America and the Caribbean are emerging as potential growth markets, driven by increasing domestic demand, economic growth, and purchasing power. Investment opportunities in Latin American countries, such as Brazil, Mexico, Argentina, Colombia, Venezuela, Chile, Peru, Ecuador, the Dominican Republic, and Uruguay, are abundant.

The popularity of the American lifestyle and the strong influence of the U.S. on the culture and consumption patterns in Latin America have attracted fashion brands like Tommy Hilfiger and Nike, which have launched retail operations in Mexico and Brazil. Spanish fashion verticals, like Inditex and Mango, have changed the way people in Latin America shop, pushing domestic fashion retailers to focus on product quality and offerings.

Key Market Trends in Latin America

1. Increasing Cotton Production

The production of organic cotton has been increasing worldwide, including in Latin America and the Caribbean. The region registered a significant growth rate of 27% during 2018/19 and accounted for around 0.3% of global organic cotton production. Argentina, Brazil, and Peru lead the way in cotton production.

2. Trade-Restrictive Measures in China

The U.S. and Canada are imposing trade-restrictive measures on major suppliers in China in response to concerns about forced labor practices. Additionally, increasing civil and governmental pressures are driving efforts to bring manufacturing and jobs back to or closer to the U.S. and Canadian markets.

3. Post-Pandemic Need for Diversification

A collaborative effort by textile and apparel manufacturers in Mexico, El Salvador, Guatemala, Honduras, Haiti, and the Dominican Republic is leading to a resurgence of investment. Many brands and retailers are restructuring their global supply chains to avoid overexposure in one region.

To address these concerns, businesses are considering:

• A “hub and spoke” sourcing model to manufacture closer to target markets.
• Vertical manufacturing locations in individual countries or regional clusters.
• Sustainable production to meet consumer demands.
• Nearshoring suppliers to meet multiple sourcing objectives.

Conclusion

Latin American countries can take advantage of the evolving situation and become post-pandemic manufacturing destinations by engaging in a collaborative public/private sector effort that includes:

• Demonstrating flexibility and quick response to market circumstances.
• Maintaining versatility in production and supply chains for e-commerce and drop shipment supplies.
• Developing vertical supply chains for yarns, fabrics, and apparel.
• Capitalizing on their proximity to and free trade agreements with the U.S. and Canada.
• Providing complete visibility into their supply chains to demonstrate ethical labor practices.

Other recommendations include accelerated trade lanes for trusted traders, cooperative agreements with the U.S. and Canada for pre-approved customs clearance, regional education and training initiatives, and integrating existing free trade agreement provisions.

About Latin America Sourcing

Latin America Sourcing offers buyers a full-service experience in the origination, sourcing, and management of products. The platform was founded on the idea that curation and service are the most important elements in the buyer’s journey.

Latin America Sourcing is building technology that addresses the challenges of sourcing products internationally at competitive prices.