Two of Brazil's major footwear manufacturers and exporters, Calçados Azaléia and West Coast, are considering moving some or all of their production to Asia.

Marketing director of Calçados Azaléia, Paulo Santana, explained, “Between 2004 and 2006, Brazilian shoe exports fell 50% as a result of an overvalued real and other problems that have restricted Brazilian footwear sales in the international market.” The company’s exports fell from 8.9 million pairs, worth $56.4 million, in 2004 to 4.4 million pairs, worth $36 million, in 2006. In 2005, the company—which exports goods to 60 countries and regions—saw revenues fall 33% in volume and 24.5% in dollars.

Last year, Calçados Azaléia started looking at Chinese factories and produced a test order of 60,000 pairs of branded shoes with satisfactory results. It expects to have the capacity to produce 5.5 million pairs in the country within the next three years. “We would like things to be different and to export goods that have been made in Brazil but, given the present situation, we must take action,” added Mr Santana.

Owner of West Coast and Cravo & Canela, Parobé-based Calçados West Coast, is also completing a study in order to ascertain how viable it would be to move production to China or India, either fully or partially. Argentina, which has already proposed that the company sets up a factory there, is another possibility.

According to Sérgio Baccaro Jr, a decision should have been reached by July. 350 direct and 1,500 indirect jobs are at risk, but the company feels it must produce its goods where costs and labour are more affordable. He explained that high tax levels, currency issues and problems recovering VAT compensation on export goods were all factors in the decision making process. Mr Baccaro believes that the government measures recently introduced for shoe exporters—increasing shoe import duties to 35% and supporting the 'dedollarisation' of payments receivable so that exporters can be paid in real—will not be enough to recover losses. ”Our target is to grow continuously and nothing will stop us. If growing depends on our manufacturing off-shore we shall face the challenge. We are doing everything possible to stay in Brazil but we would feel safer if we were producing out there,” he said. 

West Coast’s exports have dropped from 40% of total production to just 30%, falling well short of the 50% target for 2007.