Wiracocha wrote:G'day Dutchy,
And , yes, they will sell at a loss for as almost as long as it takes to destroy almost all local makers....that's their tactic, and then after that, the prices escalate. It happened in my home country,Australia, so I know from experience.
I wonder if this is really the case. My impression is that the clothing industry is full of a ton of small and mid-sized companies, here and in China. Unless there is massive collusion between all the Chinese companies, where they all agreee to drop their prices, the strategy would fall flat, and they seem pretty competitive amongst themselves, which makes that kind of allegiance doubtful.
Now, if only one or two companies dropped their prices - taking a loss in the process - and were successful at pushing the local companies out of business, they would be opening this market for not just their goods, but the goods of other competing Chinese companies ( as well as Indian, or Vietnamese, or Bangladesh companies). Doesn't sound like a very sound strategy.
A more likely scenario is that the Chinese manufacturers benefit from huge markets of scale and that makes them more competitive. Unfortunately, the Peruvian textile industry doesn't seem to have much of a future. After all, what is our competitive advantage here? We don't produce much cotton, wages in the sector, even as low as they are, are no lower than other emerging markets (and are maybe even higher).
That said, there seems to be a niche for small lots of higher end garments that Peru produces for the US, Canadian and European markets. Let's hope that holds.
But getting back to the OP, agro seems to be the bright light... brighter than garment manufacture, brighter than fish meal, and unless this and future governments get their act together, brighter than new mining projects.