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Trade in the textile and clothing sector is vibrant as Salvadoran exports increase as a result of free trade treaties with the United States and South Korea.
Recently the Chamber of the Textile Industry, Clothing, and Free Zones of El Salvador (Camtex) presented a report that outlined information on Salvadoran exports in the textile and clothing sector.
According to government statistics, during the calendar year 2019, the sector was the source of approximately US $1.5 billion dollars of the nation’s overseas product sales. This figure represents around 30.6% of total Salvadoran exports. Textile exports are expected to grow further in 2020 as a result of opportunities that have been created by the still to be resolved US-China trade dispute.
According to Patricia Figueroa, CEO of Camtex, “Many of the buyers that import clothing and textile products into the United States do so from China. In this regard, Southeast Asia is a great competitor. The fact that tariffs have been applied to some Chinese textile products destined for the American market represents an opportunity for Salvadoran exporters.”
The most frequently exported Salvadoran textile products to the US are cotton t-shirts, men’s and boy’s undergarments, synthetic fiber socks and t-shirts, and cotton sweaters and pullovers. Additional Salvadoran exports of textiles to the United States include women’s bras, synthetic fiber trousers for men and for boys, as well as synthetic fiber shorts for women and girls and cotton socks.
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Value-added and competitive Salvadoran exports
Growth in export sales of value-added products such as jackets and socks that are made of synthetic materials are among the items that position El Salvador’s textile industry as one of the most competitive in the region.
According to Lauro Pesquiera, director of one of the principal textile manufacturers in the country, Hanes Brands, the Central American region is benefitting further from the incorporation of larger and more varied production lines resulting from sizeable investments that have been made by his company’s headquarters, located in Winston-Salem, North Carolina. He went on to say that, “Because of this, our plants in Central America (El Salvador and Honduras) are beginning to manufacture new brands in the region such as Maidenform.”
In addition to the US, Salvadoran exports of textile products from Hanes Brands are now being sent to new destinations such as Brazil, Mexico, Canada, China, India, Australia, and the European Union. This is possible because of El Salvador’s competitive position within the global textile industry.
In order to service these new markets, Hanes Brands recently began employing a new garment dye process utilizing 13 new state-of-the-art, and environmentally friendly machines that fully optimize water and energy use. According to Pesqueira, “Product innovation is essential to our success, as is paying close attention to what the market demands. Our company must be more flexible in its adaptation to shorter and more varied production runs and in better control of its manufacturing processes.”
Salvadoran export strategy and destinations
The main destinations of Salvadoran exports in the textile and clothing sector are the United States with approximately US $1.1 billion; Honduras with US $260.2 million; and Guatemala with US $67.3 million. Other noteworthy purchasers of goods manufactured by El Salvador’s textile industry include Mexico with US $28.5 million; Canada with US $10.4 million; the Dominican Republic with US $5.5 million; and Belgium with US $1.8 million.
According to Patricia Figueroa, CEO of Camtex, “not only must these and other markets be penetrated more fully and successfully, but also, we must devise and implement an offensive strategy, through government and private-sector leadership, to attract more investment into our country’s textile and clothing sector.”
Camtex: El Salvador must attract Korean investment
On August 3, 2019, the National Assembly of South Korea ratified a free trade agreement with El Salvador. This development represents a great opportunity for further Salvadoran exports of textile goods to the Asian nation. It also creates incentives for South Korean companies to make investments in the Central American country.
According to the Commercial Technical Advisor of Camtex, Mauricio Rodriguez, “the Salvadoran textile and clothing sector has bet heavily on the new FTA with South Korea to attract key investments in the industry.” He also went on to state that “Any investment opportunities offered to South Korean businesses must be integrated into an incentive package that is based upon levels of investment, job creation, and innovation.”
Rodriguez went on to conclude that “A strategy for furthering Salvadoran exports and investments in the textile and clothing sector should be built upon the identification of niches that exist in FTAs that the country has entered into. In the case of the free trade agreement with South Korea, significant opportunities may lie in commerce in raw materials and apparel.”
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