Brazilian fashion could pick up in Hong Kong.

Brazilian designers believe Hong Kong is a mainstream retail market in its own right - the so-called "New York of Asia" - which can set the styles and retail trends for Chinese mainland middle income shoppers, according to the trade intelligence department of the Brazilian Textile and Apparel Industry Association, ABIT.

ABIT advises Brazilian garment exporters who want to sell to Mainland mid-to-upper range consumers to show off their products in Hong Kong, so they have the advantage of understanding design preferences and pricing.

Leading Brazilian fashion designer Tereza Santos is pleased that due to buyers from Hong Kong's manufacturing and distribution group, Mateway Corporation Ltd who visited her showroom in Paris, her products are now on sale in Hong Kong, picking up traction for greater exposure to shoppers on the Mainland.

Mid-range bargain.

Designer Luiz Claudio said he led a "hidden life working for several brands," before winning an award at the Smirnoff International Fashion Awards in Hong Kong in 2000 and has since seen his designs take off, even in his own country. In Minas Gerais, his home state, he's now often compared with the celebrated fashion designer, Ronaldo Fraga.

On the other hand, João Fialho, Commercial Director for the women's wear producer Graça Ottoni, recently visited Hong Kong and concluded that Brazilian designers can't actually compete with Hong Kong firms in terms of price and retail response. He was especially awed by the speed of Hong Kong stores which sell and produce made-to-measure suits.

For other observers, the prospect of forming joint ventures with Hong Kong firms offers advantages of understanding both the territory's position as a shop window and as a conduit for exposure on the Chinese mainland.

Brazilian middle income class growing sophisticated

Since 2000, a revitalisation of the Brazilian economy has seen meritocracy and social mobility get a mighty boost, with some 53% of Brazil's 190 million people among the middle class, up from 42% in the 1990s.

Santos: selling in the territory.

Discounting at the end of the summer.

Brazil also has around 1.5 million families with annual incomes exceeding US$72,000. More than 70% of the richest have incomes more than 30 times the minimum wage, while 77% of the most wealthy are based in the South East and South of the country. The state of São Paulo alone has 38% of the country's richest people.

A visit to Brazil can certainly open a visitor's eyes to the changes this has wrought in the design-conscious fashion market. On the José Paulinho shopping street in São Paulo there are hundreds of shoppers chasing mid-range clothing priced at between US$17 and US$24, mostly blouses, dresses, shirts and trousers.

In Oscar Freire street, dozens of Brazilian brands (Havaianas, Triton, Vide Bula and Ellus among them) compete with international brands such as Adidas, Timberland, Diesel, Lacoste, Guess and American Apparel.

In Belo Horizonte, the capital of Minas Gerais, a state larger than France, middle class families like to shop in the lively clothing district of Barro Preto. The prices of most knitwear articles vary from US$30 to US$50. Long cotton dresses cost around US$100.

Vida Nua features a Barro Preto dress.

Shopping in Belo Horizonte.

The Vida Nua store, which has a customer base of 20,000, is known for its party dresses, designed by Araujo Kleuber. The store has also a large range of imported Chinese mainland-made dresses in 100% silk; these range in price from US$130 to US$300.

Shoppers go to the men's wear store Art Man which sells suits and combinations in polyester-viscose fabrics for between US$130 to US$260. Nearby, men's shirts at Homem de Clase go at US$80. In the Diamond Mall, the most expensive shopping centre in Belo Horizonte, imported Armani and Diesel jeans are on sale for prices from US$2,000.

Fashion event shows uneven distribution and unclear objectives

Aiming to launch Brazilian brands.

This writer attended the fashion event Minas Trend Preview in Belo Horizonte, held from 28 April 28 to 2 May 2009 under TEXBRASIL, the export promotion programme created by ABIT and the Export Promotion Agency, APEX.

The fair's aim was to take Brazilian fashion to the world, with most exporters at the fair focusing on the Middle East markets, where elegant Brazilian dresses, mostly in silk, are in high demand by party goers.

Few of the 170 fashion companies at the event showed their global export ambitions. There were exceptions. Companies like Coven (which makes 20% of its turnover from exports) and Alessa had clear strategies to put in place.

Coven's blouses and dresses carried average ex-factory prices per piece of US$113 and an average landed price of US$136. Alessa offered blouses in 100% silk with an exclusive design at US$125.

Coven export wear.

Dress sense from Coven.

Several Brazilian manufacturers conduct a policy of market segmentation, using separate brands.

Classic line from Patricia Bonaldi.

The women's wear producer Alphorria, in Belo Horizonte, has three brands: Bahal (a segment seller with dresses costing on average US$45, wholesale), along with Cult and Alphorria which sell at US$80 per unit and US$130 respectively. Director Karla Thibau has visions of creating a new luxury line for personalised dresses, with prices varying from US$2,000 to US$6,000.

Graça Ottoni uses two brands: GO (with average wholesale prices per piece at US$65) and Graça Ottoni itself (with prices at US$100). Brazilian retailers multiply wholesale prices by ratios of 2.3 to 2.5.

Yet Brazil remains a major importer of clothing, even though the first quarter of 2009 saw total Brazilian imports of textiles and clothing sector decrease by 37% in volume and 15% in value.

In fact, clothing imports alone have seen a startling increase. These imports jumped by 75% during the first quarter of the year. According to ABIT, 72% of the 18,000 tonnes imported clothing originated from the Chinese mainland, particularly in the silk, knitted shirts, jackets and velvet textile segments.

Roscoe: playing the environmental card.

Some are questioning whether the Brazilian government, under pressure from the industry, is prepared to start antidumping investigations on clothing items imported from the Mainland (with antidumping taxes already imposed on Mainland viscose fibres and yarns). Some experts claim that this is unlikely to happen given the lack of organisation among Brazilian small- and medium-sized manufacturers.

Flávio Roscoe, Vice President of the industry federation FIEMG said only the imposition of tough environmental requirements can hold back Mainland-made goods.

from special correspondent Jozef De Coster, Belo Horizonte