MercoPress. South Atlantic News Agency

Chinese exports displace Brazilian goods overseas and at home

The Fiesp report is critical of the strong Brazilian currency Real

Brazil lost an estimated 12.6 billion US dollars in exports between 2004 and 2009 because of Chinese penetration in the country’s main international markets according to a report from the powerful Federation of Sao Paulo States industries, FIESP, released Wednesday.

The report points out that the net losses to Brazilian exports in the six year period because of Chinese competition were most intense in the European Union (6.2 billion) and in the US (5 billion) followed by Argentina with losses totalling 1.4 billion US dollars.

Fiesp says that the share of Chinese manufactured goods in the EU doubled in the period analyzed from 11% to 22%, while Brazil’s share went from 1% to 1.2%. In the US market Chinese share of the market was up from 11% to 25% between 2004 and 2009, while the Brazilian share dropped to 1% from 1.2%.

Fiesp, a mother federation for over 150.000 companies in all segments of manufacturing in Sao Paulo, the financial and trade capital of Brazil, attributes the loss of market to the strength of the Brazilian currency Real vis-à-vis the US Dollar, which meant an overall fall in industrial exports.

The Sao Paulo organization also argues that the low cost of labour, the tax reimbursement system for exports and the low exchange rate of the Chinese currency, Yuan, helped boost the competitiveness of Chinese exports.

The report finally indicates that competition from low cost Chinese produce has also replaced a significant percentage of Brazilian products in the domestic market.