Internationalization in Latam Retail

ESCP MS International Project ManagementProfessional ThesisHow A Local Industrial Player Can Develop Its Competitive Advantages Within An International Industrial Stream?The Example Of The Argentinean Fashion Brand Trosmancandidate Patrick Morsellitutor Prof. Dr. Jean-Paul Lemaire

Table of Contents1. The Problematic 5

2. Literature Review & Analysis Model 6

2.1 Relevant Literature 6

2.2 Analysis Model 9

3. PREST Analysis: from Argentina to Trosman 11

3.1. PREST Macro 113.1.1. Political-Regulatory Pressures: Emerging from Kirchner’s shadow 11

Economic Policies 12Regulatory Model: is it outdated? 13

3.1.2 Economic and Social Context 15Economic Indicators and Progress in International Reputation 15Social Context 19

3.1.3 Technologic and Environmental Context 21The Growing Information Technology Market 22Growth of e‒commerce 23

3.1.4 The Macro PREST Dimension 26

3.2 PREST Meso 323.2.1 Analyzing the Industry Vertically, from Textiles to Fashion 32

Textiles and Innovation 32Textiles Import & Export Snapshot 34The Argentinian Creative Industry 36Talent & Cultural Management 37Design and Fashion Industry 38Impact of Fashion & Luxury on Argentinian Economy 40The Local Clothing Industry 42

3.2.2 Fashion Business Environment, Business Culture and Regulations Affecting Textile Business 463.2.3 The Meso PREST Dimension 52

Adaptation Challenge 53Redeployment Challenge 55Competitive Challenge 57

3.2.4 “4xi” Internationalization Model 59

3.3 PREST Micro 613.3.1 Trosman 61

First steps 61Ayres 62

3.3.2 Competition Taxionomy 64Tramando 66Balenciaga 67

Pat r i ck Morse l l i f o r ESCP MS I n te rna t i ona l P ro j ec t Management , A rgen t i na Fash ion I n te rna t i ona l i z a t i on 2

Alexander Wang 68Haider Ackermann 70

3.3.3 Porter Model and Competitive Map 71Threat of New Competitors Entry 71Substitute Product or Services 71Bargaining Power of Buyers 71Bargaining Power of Suppliers 72Intensity of Competitive Rivalry 72Competition Map 73

3.3.4 Trosman’s Key Factors of Success 74

4. Stategic Pattern: from Argentina, to the World 76

4.1 The International Industrial Stream 76

4.2 Argentinian Fashion Promises 79

4.3 Strategic Pattern Envisaged 81

5. Managerial Implications and Research Transferability 94

5.1 The Entrepreneurial Management Advantage 94

5.2 Transferability 97

Annexes 99

1. Argentina, Geographic Map 99

2. Political Instability Ranking 100

3. Political History 102

4. Domestic Politics 104Long-Term Politics: Tackling Key Issues is Unavoidable 104Limited Financing Capacity 104Returning to International Capital Markets 105Rampant Inflation 105

5. Economic Risk 107

6. Legal Landscape 108

7. GDP Grows 8.6% in the third quarter of 2010 109

8. Industrial Incentives 111

9. R&D in Argentina 113

10. Case Study: Internationalized Non-Competitor: Etiqueta Negra 114

7. Bibliography 117

8. Notes 122


It’s 5pm of a busy saturday in Buenos Aires. In the neighborhood of Palermo, a lively crowd,

made up by locals and visitors, is walking along the endless, perfectly squared blocks. The delicate

wind is clean and refreshing, and so is the design of most of the shops. A multitude of fashion

brands, each with its own distinctive heritage, concept and style, offer a complementary and ex-

haustive range of womenswear and menswear prêt-a-porter, able to fulfill the needs of a metro-

politan area of nearly twenty millions, besides the tourists coming from Uruguay, Brazil and the

world.

Warm rays of sun penetrate the characteristic airy, minimal spaces of the immense bou-

tiques, whose products offer a cutting-edge design merged with surprising textile quality: the pro-

fessional polo athlete will find his outfit, as well as the Gaga-teenager and the thirty-something

uptown NewYorker visiting family. Nevertheless, while looking around, it is soon perceived that

something substantially differentiates this environment from the other cities that present the same

kind of urban texture. For sure, the big difference here is that every shop, every brand, every pro-

duction is exclusively made in Argentina. International brands are sporadical, hidden and striv-

ing to survive.

As this is realized, the sensation of breathing a new air becomes even more tangible.

How does this special entrepreneurial ecosystem works? How can it survive by itself while in

the rest of the world globalization is an inescapable axiom? And, finally, how can it be expanded

to let these superior design and quality play in the highly-competitive international fashion

arena?


1. The ProblematicThe problematic that this research aims to address is the potential competitive advantage of

Argentinian prêt-a-porter fashion industry to effectively penetrate the international high-end market

currently dominated by Europe and U. S.

This competitive advantage is a whole strategic vision that finally aims to grow within an in-

ternational industrial stream, and it is made up by different functions of the value chain:

1. Import fabrics or exploit the internal textile industry;

2. Develop an internationally competitive design team;

3. Manufacture with a cutting-edge know-how;

4. Create a convenient international distribution network;

5. Originate an effective marketing strategy.

While some of these elements are an innate comparative advantage of the Argentinian

sourcing landscape and job market, others present issues that might not help to develop a competi-

tive advantage. The internationalization potential of the high-end apparel business in Argentina, ei-

ther of FDI or local actors, will be measured following a step-by-step approach which could be

transferred to other comparable sectors in Argentina or in similar countries. This might be an excel-

lent case study for engineering a complete process of designing an international industrial stream,

centered on a specific country, with a vertical approach, encompassing design, sourcing, production,

marketing and distribution of textile products.

This study will try to understand if the issues of an emerging country as Argentina can be

solved, and eventually how, and how its comparative advantages can be exploited, using a strategy

tailored to a local brand and to its pre-existent competitive advantage.


PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

2. Literature Review & Analysis Model2.1 Relevant Literature

Considering the scope of this project, there are numerous academic and industrial, offline and

online, institutional and private, resources that offer pertinent figures regarding Argentinian eco-

nomics, textile trade and internationalization strategies. To restrict the dimension of the research the

appropriate keywords have been selected, which, in our case, can be listed as the following: ‘argen-

tina’ (and ‘argentinian’), ‘design’, ‘marketing’, ‘fashion’, ‘internationalization’, ‘export’, ‘interna-

tional trade’, ‘textile’, ‘manufacturing’, ‘sourcing’. They coincide with the keywords that define the

content of this paper, as well.

The approach this research follows is a step-by-step approach based on an environmental

analysis process both of the country and of the sector. It aims at facilitating the internationalization

key decisions such as “what?”, “where?”, “how?”, “when?”. The “why?” of the story, the researcher

hopes, it’s profoundly subjective.

This approach is supported by a PREST analysis perspective, considering Argentina as a

growing economy. Research has been made in online publications from private research institutes,

for example Euromonitor1, IHF2, Datamonitor3, Businessmonitor4, the Political Risk Services

Group 5, and printed publications, like The Economist Intelligence Unit6 and Revue Tiers Monde.

Important academic resources, then, are present on Icon Group7, for example in the study by Prof.

Philip M. Parker for INSEAD, and, of course, on the ESCP archives with the case studies Arriba

Mendoza and Argentinian Promises used often by Prof. Jean-Paul Lemaire during his classes.

These studies offer the advantage of considering the Country-analysis as a mere support to a

wider and deeper business strategy, that, in fact, takes into account the specific growth potential tied

to the definite competitive and comparative advantage of a local reality that it aims to international-

ize. A thesis by Federico Marongiu for Universidad de Buenos Aires also provides a series of useful

“Indicators of Currency Crises in Developing Countries”, as we’ll discover. A few articles in maga-

zines such as Environmental Health Perspectives8, Mouvements9, International Journal of Retail

and Distribution Management10 offer a detailed view of specific aspects, sectors and growth drivers,

from the lenses of a French press specialized in politic economy, distribution engineering and social

structure in the BRICs.

Fashion articles are also deeply linked with the perception of Argentinian design and creative

production, and therefore essential for a branding study, especially offered by a distinctive interna-

tional press, and crucial to understand the external market perception. These can be found in par-

ticular in Chinadaily 11, clarín.com, wikia.com, Womens’s Wear Daily12, The European Journal of

Marketing13 , the Wall Street Journal14, Entreprises et Histoire, El Cronista15, GCImagazine.com,

NewStatesman16 and also in a few reports summarized by the government promotion agency Pros-

perar Invest in Argentina17, mirror of the image that the local society wants to communicate to po-

tential external investors and shareholders.

The international trade regulations and their influence on Country development is another

necessary aspect to analyze potential marketing strategies, through Academic studies like the one of

Lincoln Bizzozero Revelez, researcher in the International Politics and Relations Program, faculty

of Social Sciences of Uruguay Republic University18, and the one from Universidade do Santa

Catarina19 regarding The Role of the Fashion Design Manager, the publications Économie Interna-

tional20 (and its english version International Economics), the Revue Économique21, Reflets et Per-

spectives22, the Journal of Public Policy and Marketing23 , the International Journal of Operations &

Production Management24. Private Economic Associations, for example the American Marketing

Association, the American Economic Association, the Royal Economic Society, Taylor & Francis

have also been helpful and rich of data. A report by Hildegunn Kyvik Nordås for the World Trade

Organization will assist us when analyzing the dynamic changes of the local textile industry.

The most actualized data, though, are crucial to analyze a snapshot of the international textile

stream, that can see drastic adjustments as often as every few months. That’s why a wide list of tex-

tile journals and magazines is essential to create a study able to be not only contemporary, but pro-

jected into the mid-term future. Manufacturing is the last aspect we need to investigate to get a clear

view of the processes of the industry: we will refer to the Management Decision Journal, the Inter-

national Journal of Operations & Production Management, the Asia Pacific Journal of Marketing

and Logistics, the Journal of Manufacturing Technology Management, Economia Journal, Eco-

nomic and Political Weekly.

Less information is available on specific manufacturing and production firms, which, consid-

ering the Argentinian rate of informal labour close to 50%, is not a surprising phenomenon. Even if

this information can be still recovered on-site, by conducting researches in person, it is still not


clear whether there is the possibility to discover which aspects of the sourcing process are more

difficult to implement and why; the main reason is that we can’t eventually have precise data re-

garding the choice of every producer to import through legal or illegal couriers.

The information got from these sources will be inspected through the lenses of a few, relevant

and pertinent, theoretical analysis models, described in the following paragraph.


2.2 Analysis Model

The research that we aim to conduct wants to be a hands-on approach. To reach a consistent

level of pragmatism, though, it is necessary to apply pertinent models to understand the past and

potential development of the industry in the Country and its international context, before envisaging

an implementation business plan. The brand Trosman, made in Argentina but devoted to an interna-

tional target, is the case study that will guide this research. The historic development of this firm

underlines the fact that the Argentinian location offers at the same time disadvantages and advan-

tages for a fashion brand. We will understand strengths and weaknesses of this specific top range of

fashion apparel, with an approach that can be transferable to similar local brands, and use several

tools to offer an internationalization strategy.

We will start using Prof. Jean Paul Lemaire’s PREST model, with a textile sector analysis, in

a both domestic and outbound perspective, which will include an identification of the major drivers

of the industry in Argentina. A timeline-historical approach will evaluate the past progress and the

circumstances of the recent expansion. Then, we’ll study the Country at a political, regulatory and

social level, with the objective to discover, in relation to a comparative advantage, how demand has

been evolving at domestic and international level, we’ll view the sourcing issues from the perspec-

tive of understanding whether they can become a competitive advantage or not, and discover why

the manufacturing can be definitely considered an advantage. This first part leads to identifying the

challenges of the Argentinian textile industry potential for internationalization. The approach is

fundamental to understand which elements of the local environment are an obstacle to the interna-

tional development of the brand, and which ones, instead, are an underlying advantage, and will be

graphically synthesized in Prof. Jean-Paul Lemaire’s “4xi” model.

The Trosman brand and its evolution, first locally then globally, will be analyzed and diag-

nosed with the structural business strengths related to the production and distribution functions,

necessarily local and eventually international, and the creative strengths, connected to design and

marketing, that must find a definite voice into a space that is unquestionably lacking geographic

restraints.

Local and global competition will be then considered, if present, among with its dominant

marketing strategy and a taxonomy of players, group players and respective positioning in the ap-

propriate axes, to identify where the sounder local base has advantages or disadvantages to interna-


PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

tionalize. Every fashion brand with a strong identity as Trosman has a precise style, and its competi-

tors are reduced to the ones that play in the same range of conceptual ideas and in the micro-

markets that can appreciate and purchase them. While it would be useless to consider a wide range

of competitors - high-end fashion doesn’t follow needs or demand but creates them - we chose to

compare Trosman with brands that could steal or menace its still tiny market share in the main in-

ternational markets where it’s present and can develop at the moment. The conclusion will be the

result of a strict understanding of the needs of the international, mature markets and the potential of

this Argentinian sector to satisfy them.

A stemming of key factors of success from the aforementioned evaluation will be particularly

helpful because of its international perspective. This summary will provide a functional landscape

to work with during the following steps of the study, which will culminate in a strategic analysis

that will become experiential through the design of a business plan. This business plan and the final

strategic analysis will be transferable to a selected group of Argentinian firms similar to Trosman,

that might or might not be in the same internationalization step.


PM apud XANTHUS

3. PREST Analysis: from Argentina to Trosman3.1. PREST Macro

Prof. Jean-Paul Lemaire’s PREST model is used to understand the complex situation of the

textile sector in relation to its potential for internationalization. Political, regulatory, environmental,

structural and technological parameters are analyzed together to evaluate strategic strengths and

weaknesses among with location-specific competitive advantages or disadvantages.

The PREST Model gives the better understanding of a micro condition if, first, analyzed at a

macro level, which is where the analysis will begin. The Macro-Economic level, supra-national or

national, identifies structural or cyclical “external pressures”, pertinent to foreign investors or local

authorities, which stimulate, hinder, delay or suspend the project in question (Lemaire, 1997).

3.1.1. Political-Regulatory Pressures: Emerging from Kirchner’s shadow

The death of former President Néstor Kirchner is expected to have little impact on policy

ahead of presidential elections set for October 2011, with current President Cristina Fernández

committed to seeing through her husband’s political agenda. Opposition remains well placed to pre-

vail in the vote, but it needs to identify candidates quickly (BMI, 2011). Long-term, the political

outlook is stable, if a number of key challenges facing policymakers over the coming years will be

addressed. In particular: limited financing capacity, return to international capital markets, wooing

the IMF, rampant inflation, pressure for Peso revaluation, Central Bank credibility.

• Argentina history of democracy suggests the threat to political stability going forward

should be relatively minimal.

• Party system underwent a massive makeover following socioeconomic breakdown of 2002.

Unión Cívica Radical (UCR), the traditional democratic alternative to Peronist dominance, has

fallen back.

• The Kirchners’ loss of support in 2009 midterm elections paved the way for a more bal-

anced congress.

• Fernández rides high in the polls: a shift in the current unorthodox economic policy mix is

totally unexpected.

PM apud XANTHUS

PM apud XANTHUS

• The lack of results in dealing with inflation problems will remain an underlying downside

risk to political risk ratings. (ibidem)

Economic Policies

The Argentine government has expedited the implementation of liberal economic policies,

which will further integrate it with the world in terms of trade and investment. Since the ascendancy

of former president Nestor Kirchner, international investors have expressed keenness to invest in

the Argentine market (ibidem). The salient features of the country’s economic policies are:

• Improving trade – Argentina’s trade policies mirror a fragile balance between protectionist

forms of trade and the country’s desire to achieve faster economic growth. The Argentine gov-

ernment has removed non-tariff barriers on exports and slashed import duties significantly. Even

though these measures indicate a progressive opening to the international trade, which is one of

the key factors of success for fashion apparel in an export perspective, as we’ll see further on, the

country is still far from having an efficient and well organized trade policy.

• Increased investments – the government has ambitious plans to step up investments and

generate more employment in the economy. Foreign investors are permitted to venture into most

sectors of the economy. The government also dismantled the protectionist form of trade and initi-

ated the privatization program, enabling it to attract the interest of global investors. The participa-

tion of global investors is particularly interesting for the fashion/textile sector (ibidem). Trosman,

for example, has been recently acquired by Ayres, a fashion apparel group already strong in South

America. The possibility of getting foreign direct investment, especially for the advantages of

cost, is a strength many Argentinian fashion companies aspire to. However, the obscure and un-

stable inflationary policy undermines any initiative the government or private actors may take to

increase foreign investment.

• Liberalization in the small-scale industry sector – the small-scale industry sector has been

considerably bolstered by the government in a bid to create more employment opportunities for

the semi-skilled rural workforce. Prospective investors interested in starting operations in rural

areas of the country are given attractive offers. If a fashion brand has to keep production, at least

partially, in Argentina, this means a good potential to outsource production of different garments

to specialized small-scale enterprises, gaining quality in the final product and, at the same time,

flexibility.


• Infrastructure investments – the government favors private-sector participation in infrastruc-

ture development and maintenance. Since 1991, private entities have sizably invested in public-

infrastructure construction, while the government has encouraged private-public partnerships in

crucial infrastructure developments, such as rail linkages through hilly terrains. Infrastructure is

important to implement the currently unstable shipping system, that ultimately translated in distri-

bution problems. One of the most important reasons why Trosman is the only brand that exports

to Europe because is that it’s the only one able to anticipate the instability of the shipping and or-

ganize distribution efficiently. This explains how important might be an infrastructure upgrade for

this industry. (ibidem)

Regulatory Model: is it outdated?

The government has initiated many reform measures to increase flexibility in the labor mar-

ket. However, the Argentine judicial system still needs restructuring, particularly to enhance busi-

ness prospects and investments. Moreover, judicial delays, lack of sufficient resources, delays in

court cases and slow procedures have reduced the overall effectiveness of the legal system (ibidem).

Compared to other Latin American countries, Argentina has lenient bilateral trade and in-

vestment laws, evident from the fact that a relatively low number of days and procedures are re-

quired to start business operations within the country. Efforts have been made by the government to

fight corruption: membership of the Organization of American States' (OAS) and the Organization

for Economic Co-operation and Development's (OECD) Anti-Corruption Convention in order to

share expertise in tracking corruption within government agencies.

• Comprehensive Legal Structure - Argentina has a comprehensive legal and regulatory

framework. The country has a federal republican representative form of government, with each of

its provinces having its own constitution. This legal stability is indeed an attraction for foreign

companies which promote investments and entrepreneurial activities in Argentina (ibidem).

• Corporate Governance - The corporate governance rules of Argentina match the prevailing

standards in countries with a comparable degree of development. This characteristic of Argen-

tina’s regulatory framework, which is probably going to follow the international standards more

and more, in one more incentive for foreign direct investment, and in general for entrepreneurs

willing to create a stable firm or branch in the country.


• Tax Rates - The tax rates in Argentina are high. For instance, the income tax rate and the

corporate tax rate are 35%. Other taxes include VAT and wealth tax, overall tax revenue as a per-

centage of GDP was 22.4%. Moreover, corporations in Argentina are liable to pay taxes on their

worldwide income, although they are entitled to receive a tax credit for any foreign income tax

paid. In addition, the government of Argentina has imposed high taxes on most exported raw ma-

terials; for instance, the total export tax revenue in 2006 was approximately 10.3% of the value of

exports, including goods not subject to export taxes. Even if high tax rates in Argentina could

lower investments and consumption in the long run (Datamonitor, 2010), they are probably not

going to affect the investment in activities based on export.

• Judicial Delays - Slow procedures and a lack of sufficient resources have reduced the over-

all effectiveness of the national legal system. The root cause of the situation is believed to be the

legacy of a formalistic, bureaucratic culture based on procedures and processes that have not been

adapted to modern times. Therefore, the need today is to change the existing judicial culture and

provide incentives to comply with it, rather than the creation of new laws (ibidem).

• Labor Market Reforms - The government initiated reform measures to increase flexibility in

the labor market. In August 2008, for instance, it announced plans to reduce income tax burden on

workers. In March 2004, Argentina introduced a labor law to reduce corruption prevailing in vari-

ous administrative departments. The law also reduced the employment trial period from 180 days

to 90 days, and made it mandatory for companies to provide contributions and benefits to its em-

ployees during this period. During 2008 and 2009, the country amended the right to organize and

bargain collectively in consultation with the labor unions.

• Increasing Wage Demands - During April–May 2010, a number of labor unions have al-

ready secured pay rises of between 20% and 30%, and some labor leaders have suggested that

they may come back with proposals to seek even higher increases. That has sparked off fears that

the wage demands could contribute to higher inflation. Even with these adjustments, labor cost in

Argentina, especially considered in the relationship between the cost of manufacturing and the

quality of the final product, is still convenient enough to attract foreign investors (ibidem).


3.1.2 Economic and Social Context

Economic Indicators and Progress in International Reputation

GDP growth has been pushed up to 8% in 2010, with forecasts of 4.1% in 2011, thanks to

surging exports and the pre-election fiscal stimulus. The economic policy mix, however, is not

clear, and one of the consequences of these choices might be a harsh downturn following the 2011

election (BMI, 2011).

Despite being in the midst of high inflation rates (9.1% in 2009), the economy is most likely

to benefit from higher commodity prices as well as strong demand from Asia. It is expected that the

strong service sector will result in a favorable labor market in the near future. The majority of the

unemployed labor force either lack specialized technical training or have not completed basic

schooling; this makes it obligatory for the government to initiate short term vocational training. Al-

though the economy contracted by over 2.6% in 2009, with strong demand both domestically and

internationally, the economic output is expected to see a slow recovery, with a growth rate of 1.1%

in 2010 and estimated 2.1% by 2011. In March 2010, Argentine economy grew by around 8% year

on year.

Argentine industrial production rose over 10% in April 2010 from the same month in 2009.

Also, according to government sources, the country’s unemployment dipped to around 8.3% in

April 2010. The government also recorded a fiscal surplus in April 2010. The country posted a fis-

cal surplus of ARS1.88 billion ($480 million) in April 2010, more than double the ARS844 million

($214.6 million) in the same month in 2009 (Datamonitor, 2010). With strengthening economic re-

covery coupled with strong external sector and fiscal surplus, the country is set to recover during

2010 (ibidem).


• Economic Stability - After the 2001–02 economic crisis, the economy recovered considera-

bly due to the pragmatic policies adopted by the former Kirchner government. The economy reg-

istered an average growth of over 6.3% during 2003–09. Until 2008, the economy maintained an

average growth rate of over 8%, however, the global economic slowdown impacted the country’s

economy, which contracted by 2.6% in 2009. However, increasing external and domestic demand,

along with favorable commodity prices and interest rate trends, has played an important role in

economic recovery. Improved tax collection methods and strong tax revenue also contributed to

sound economic growth. Investment and trade policies were relaxed considerably after the eco-

nomic crisis and the country’s infrastructure sector was opened up for private investment. How-

ever, high inflation rates and unemployment, among other macroeconomic factors, are likely to

hinder future economic growth. The Argentine government has revamped its trade policies by re-

ducing trade barriers. Additionally, Argentina has entered into an agreement with other Latin

American countries to form a duty-free trade conglomerate called Mercosur. This slight im-

provement of the trade policies is a determinant factor for the development of the fashion apparel

sector. On one side, to let Argentina have the same export easiness as the countries where the

competitors are located, there is still much to do. On the other side, further liberalization of Mer-

cosur internal trade policies are great, if this is considered as a potential market for expansion

(ibidem).

Economic Growth - The economy is growing fast again, but moderated in 2011. The strong

economic expansion observed in Argentina during 2003-08 came to a short-lived truce in 2009, as

deteriorating economic conditions worldwide took their toll on Argentine exports and, later, on

household consumption. Economic expectations improved during the last quarter of 2009 because

of an apparent change in policy-making, and not even the removal of the central bank president in

early 2010 without the adequate procedure derailed the process. Some deceleration in activity levels

is expected for 2011 and beyond, with the outlook very much linked to the evolution of the global

economy, particularly Argentina’s main trade partners. Returning to the financial market is impor-

tant for the government, but especially for companies located in Argentina and its provincial gov-

ernments, which have suffered a lack of financing sources since 2001. Improving the business cli-

mate under current conditions would be a big plus for the economy. The economy expanded 8.3%

in 2010 and is expected to decelerate to 5.0% in 2011. In the following years, growth should ap-

proach 4.0% (Santiago Mosquera for IHS, 2011).


Inflation - It’s not possible to depict a true economic framework of Argentina without men-

tioning inflation, as it affects not only the monetary policy, but also the level of external investors’

trust in the local business development potential. Only a change in economic policy could guarantee

inflation rates will return to the single digits. The lack of reliable statistics has been one of the major

sources of inflation acceleration, as economic agents include their own inflation measures and not

observed inflation in the price-setting mechanism.

Solving the issue requires a strong political decision,

first to accept the previous manipulation and then to

provide independence to those in charge of a new

price survey. Although the decision to improve the

quality of public statistics was apparently in place, no

major changes have occurred, losing momentum and

credibility.

E x-

c h a n g e

Rates - Central bank intervention is used as needed.

Clearly, the government, as well as the central bank,

would like to have a relatively weak domestic cur-

rency against main trading partners, so it can count

on the external sector to provide the necessary stimu-

lus for economic activity, fiscal accounts, and enough

foreign-exchange earnings. Nevertheless, the mone-

tary authorities do not want to see a major deprecia-

tion of the peso, as it will affect consumer inflation from higher prices of imported goods in local

currency, even despite the current manipulation of inflation statistics. For that reason, the central

bank will continue to intervene at any excessive pressure that might affect the domestic currency

(ibidem). This is particularly interesting for the manufacturing in fashion industry. Cotton produced

in Argentina doesn’t sustain local demand, therefore import in needed. While the main supplier of

cotton and textiles for mid-low fashion apparel industry is China, a continuous depreciation of the

peso, merged with the bureaucracy and taxes connected with import, are at the base of the issues

that any apparel firm is having if it decided to expand. This problem has been reported extensively

by many Argentinian fashion entrepreneurs, related to the necessity to source for materials that al-


low a mid pricing. On the other side, high-end apparel producers, willing to use Italian textiles, as in

the case of M.I.A. Mis Intimos Amigos, who proposed a collection of shirts designed and produced

in Argentina with a renowned Italian cotton, experience the same problem, but exponentially in-

creased, because the final price of such products is too high for the Argentinian local market, and

not competitive if exported, because it would be more expensive then those Italian brands with

strong heritage that have design, manufacturing and textiles truly made in Italy.


Social Context

Argentina is a traditionally urban country, with over 90% of the population residing in urban

and semi-urban settlements. Furthermore, the urban population enjoys a relatively high standard of

living compared to other Latin American countries. However, regional disparities, crime, drug

abuse among the young population and gender inequality in the employment market have tradition-

ally acted as stumbling blocks for the equitable development of the country (Datamonitor, 2011).

Fresh investments generated in public health-

care and the comprehensive restructuring of the ex-

isting education system will usher in better social

development. The government has set out plans for

further curtailing the unemployment rate, which has

shown considerable deceleration over the past two

years.

The government has been restructuring the education system, in particular the education sys-

tem in the rural belt. Fresh investments are being generated by private as well as public authorities

to make quality education accessible to all at a low cost or for free. Alongside this, the government

has initiated plans to reduce the escalating school drop-out rates in rural areas of the country. A new

national education law, passed in late 2006, has increased mandatory schooling to 13 years. The

country spends around 3.6% of GDP (2009) on education, less than peers such as Brazil (4.1%) and

Chile (3.7%) (ibidem). In March 2010, the World Bank approved a $50 million loan for the prov-

ince of San Juan in Argentina, aimed at improving the equity, quality and efficiency of education

and health services, as well as making public sector management more efficient. The project sup-

ports improvements to the quality and efficiency of health services through the implementation of

the provincial Health Ministry's strategy (ibidem). It is therefore expected to generate social and

economic benefits and improve services for all its citizens, including those with limited resources

and those dependent on the public health system.

• Strong Healthcare System

• Rapid Urbanization

• Regional Disparity

• Criminality and Drug Abuse


• Strong Educational System

• Reduced Healthcare Budget


3.1.3 Technologic and Environmental Context

Over the past few years, there has been remarkable growth in the IT sector. As a result of the

technology boom, companies based in the US explored the talent available in countries such as In-

dia, Ireland and Israel. Currently, there are more opportunities than ever in the outsourcing space,

and some of the largest technology companies in the US are turning to Latin American countries

like Argentina for outsourcing support. The Argentine IT market is considered to be the second

largest in Latin America. Furthermore, total value of IT products and IT spending is expected to

surpass $12 billion by the end of 2012. US companies, in particular, have recognized the benefits of

working with Latin American companies (Datamonitor, 2010).

In February 2010, Argentina's Ministry of Science and Technology has announced its plans to

boost the national production of vaccines and recombinant proteins and provide funds of up to

$26.6 million to fund 70% of individual projects. New funding opportunities indicate increasing

governmental efforts to boost the participation of local companies in the biotechnology sector to

enhance the country's self-reliance and increase research activities in related areas (ibidem).

Technology - Argentina

has a strong landline and mo-

bile telephony base. The coun-

try’s leading telecommunica-

tions operators, Telecom Ar-

gentina and Telefonica de Ar-

gentina, have posted signifi-

cant growth in the number of

broadband connections. The

Argentine IT market is the

second largest in Latin Amer-

ica. The government has also

expedited implementation of plans to enhance IT service penetration in underserved areas and has

significantly bolstered R&D activities. Since the former Nestor Kirchner government, the govern-

ment has supported biofuel exploration and development activities, in a bid to preserve future en-

ergy security. However, the country faces low levels of innovation due to inadequate investment in

R&D (ibidem).


Infrastructure - Argentina stretches 4,000 km (2,400 mi.) from north to south, an expanse

crossed by only a few major highways. Argentina’s 208,350 km road network carries 85 percent of

domestic freight traffic. Argentina has over 35,000 km (21,000 mi.) of railroads. Almost 70 percent

of Argentina’s foreign trade is carried by ship, and about 80 percent of the import/export transac-

tions are carried out through the ports of Buenos Aires and La Plata. The waterways on the Parana

and Uruguay rivers are well dredged and maintained. These rivers link the port of Buenos Aires to

internal Argentine ports, and well as to Paraguay and Brazil (PRS Group, 2010).

Environment - Argentina is acclaimed for its rich natural resource base, and is bestowed with

a rich biodiversity. The government has signed agreements with neighboring countries like Brazil

and Uruguay to jointly construct dams, reservoirs and river canals to serve common interests. How-

ever, the country has given longstanding importance to the implementation of industrialization

plans, which can compromise some environmental conservation issues. Furthermore, atmospheric

and water contamination continue to be a major challenge (ibidem).

The Growing Information Technology Market

With the total value of spending on IT products and services expected to reach $4 billion by

2012, the Argentine IT market is the second largest in Latin America. Moreover, the government

has expedited the implementation of ambitious plans to enhance computer penetration to the un-

derserved segment of the population. Personal computer (PC) sales had witnessed double-digit

growth in 2007 and this is expected to generate significant increase in investments by retailers and

resellers. Argentina’s IT services market is estimated to have grown at the rate of over 11% in 2008,

to a value of $700 million (Datamonitor, 2010). Argentina's government continued to roll out a

number IT-related projects in 2009. One area of spending was computers in education, with a tender

launched in August 2009 for 250,000 net books to be distributed to students of public schools. The

government allotted $150 million for this program.

Currently, there are more opportunities than ever in the outsourcing space, and some of the

largest technology companies in the US are turning to Latin American countries like Argentina for

support. Argentina possesses a large number of well-trained software engineers. Its infrastructure is

significantly developed compared to the region. Latin America in general and Argentina in particu-

lar have geographical advantages compared to conventional Asian destinations like India. Proximity

to the US and the relatively small time differences between the two eliminate many of the difficul-


ties related to outsourcing, which makes it a preferred destination for outsourcing-related invest-

ments. Moreover, many multinationals have opened software development centers in Argentina.

Notable among them are companies like Motorola, NEC, Intel and IBM. Many others are planning

to announce their presence in the country. Furthermore, the government has formulated a new Law

of software development in late 2008, which reduces the regulatory hurdles and also gives it similar

status to that of an industrial activity. The Argentine Government has launched several initiatives to

support the industry and to make sure to comply with international standards in terms of applicable

laws such as intellectual property protection (ibidem).

Given that no brand, nowadays, especially if relatively new and growing, can allow itself not

to have an online presence, the IT expertise in Argentina and the low costs compared to the interna-

tional market availability for the same services at the same level of quality constitute one of the

biggest strengths of a brand that, born in Argentina, can rely already on a network locally built and

therefore exploit the IT sector of Buenos Aires.

It might be easily stated that a vanguardist brand, whose customers are fashion-sensitive but

also in an age forcefully technology-sensitive, could survive nowadays relying only on the online

presence. The shift that many international groups, like Dolce & Gabbana, Oscar de la Renta and

LVMH, are taking towards this direction, and the success of firms like Createthe Group25, demon-

strate that a strong - read: strategically savvy - digital and social marketing can sustain alone the

growth of medium brands like, in Argentina, Trosman, Churba26 and Ayres, but also much smaller

realities like Humawaca27.

Growth of e‒commerce

The Internet is used mainly for communication purposes (e-mail, chat, etc) and information

searches. Since 2006, however, the number of e-commerce transactions has experienced vigorous

growth. According to a report put out by Argentina’s Chamber of Electronic Commerce, the value


of business-to-consumer (B2C) operations reached US$4.8bn in 2009 and grew by 24% in 2010.

The variety of services provided over the Internet has sharply increased and now includes many re-

tail sectors as well as professional services, including financial services. With 20m users, Argentina

has the third-largest Internet market in Latin America, trailing Brazil (67.5m) and Mexico (23.9m),

according to December 2008 figures from Internet World Stats28. It has the second-largest penetra-

tion level after Chile in the region.

According to the Economist Intelligence Units E-Readiness Rankings, Argentina ranked 45th

out of 70 countries in 2009, down one spot from its 2008 rank (Chile ranked 30th and Brazil ranked

42nd.) E-readiness is measured as the quality of a country’s information and communications tech-

nology (ICT) infrastructure and the ability of its consumers, businesses and governments to use ICT

to their benefit.

The number of homes with Internet access reached 4.1m in March 2010, up from 3.4m at end-

2008, according to the National Statistics and Census Institute. The total number of broadband con-

nections reached 3.7m accounts in March 2010, up from 2.8m at end-2008. About 68% of residen-

tial Internet users are in Buenos Aires city and Buenos Aires province. At the corporate level,

852,134 institutions had Internet access in March 2010, an increase of 50% from the same month in

2009, according to INDEC (Economist Intelligence Unit, 2010).

The growth of the e-commerce sector implies the expertise increase of the services industry

specialized in providing e-commerce solutions. This is indeed one of the most interesting opportu-


nities for the fashion industry: the low entry barriers in Mercosur markets are an incentive to keep

the e-commerce strategy and expertise local even when exporting to Brasil and Chile. Moreover, a

small branch can be maintained in foreign markets in Europe and US while the technical develop-

ment benefits of the low costs of technical development made in Argentina. While there is virtually

no brand that nowadays is not present on the internet, available to international customers, this

strategy becomes not only a possibility, but a must, especially considering that the digital marketing

function can benefit from the low cost, high quality Argentinian environment.

Small Italian and French shops, like Luisa Via Roma29 and Antonioli30, e-commerce wise,

compete internationally with the biggest groups like The Corner31 and Net-a-Porter32, in the same

way as in a metropolis like London the small boutiques like Zilli33 and Dover Street Market34 are

able to compete with the bigger department stores like Selfridges35 and Harrods36. That’s why a

self-owned e-commerce boutique website, for a brand that has an online presence through digital

and social marketing, might be an excellent option to nurture along the classic business model. In

this way, by shipping directly to the customer, even from Argentina, or eventually from Chile where

it’s easy to transfer goods thanks to Mercosur agreements and infrastructure/trade easiness is more

reliable, it might minimize the downsides of the distribution and timing issues connected with dis-

tributing to international shops following a less dynamic and older model.


3.1.4 The Macro PREST Dimension

PREST: Political-Regulatory PressuresPREST: Political-Regulatory Pressures

Structural pressures affecting (+/-) the opening of the location under construction

Cyclical pressures affecting (+/-) the opening of the location under construction

• National will and capacity to fit into large, regional (Mercosur) and global group (WTO) means that regional growth, facilitated by easy trade policies and minor bureaucracy, may be able to sustain, medium- and long-term global growth. This, assuming that the Brazilian demand for a specific type of fashion apparels, especially if able to challenge the - often not creatively competitive - local competitors, is not going to absorb all the growth for the first 3-5 years of expansion of a new brand. But this would mean limiting the conceptual identity of the brand to the South-American market, and this decision must be taken with an eye to the pricing and long-term expansion that has been strategically envisaged.

• Corruption doesn’t help export both inter-nationally and in Mercosur.

• Excellent links and commercial traits with neighboring countries, as mentioned above, merged with a cultural intelligibility, allow the local Argentinian industry to expand into Latin America with relative easiness, exploiting rapidly developing markets.

• Equal regulations allow external actors to enter the market, and invest in local ventures.

• Inflation remains a crucial obstacle to patching-up relations with IMF, and suggests that investor confidence in Argentine markets will remain scarce. This may exclude those investors that decide to rely in enterprises whose objective is to export: that’s why this element will become a key success factor.

• The government has ambitious plans to step up investments and generate more employ-ment in the economy. Foreign investors are per-mitted to venture into most sectors. The impact of these reforms, especially if actually perpetrated as promised by the current Government that is likely to be re-elected, will be extremely consistent on the foreign direct investment that we might fore-see in the textile and fashion apparel industry in Argentina.

• No particular political tension or terrorism is present in the region at the moment, which fur-ther helps foreign direct investment in local, often family run, small enterprises, the so-called tal-lers, that possess know-how to produce textiles, leather and fashion apparels with high quality.

• The current Political Leader demonstrates opportunism and doesn’t gain international trust; on one side, big investments might be frightened by this element, but smaller investors aiming to get a stake of a textile brand and not only of the physical assets of the company, won’t.

• Central bank monetary policy is very likely not to be independent but strictly tied to the inter-ests of the current political majority.

• Unclear inflationary policy may affect budgeting, especially because there is the risk of a sudden increase. This doesn’t help a manufac-turing process where a collection needs of many different fabrics and accessories to be produced, as it’s the case for Trosman.


PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

Structural pressures affecting (+/-) the framework of economic and legal infrastructure

Cyclical pressures affecting (+/-) the frame-work of economic and legal infrastructure

• Judicial delays doesn’t seem to affect this specific sector, in the high-end fashion industry with small players it’s rare to sue for intellectual property issues.

• Low instability risk helps to look for for-eign direct investment and to plan growth with a strategic plan that is likely not to be destroyed by sudden economic or regulatory changes.

• Labor market reforms will affect the labour cost slightly in all the fashion manufacturing sec-tor. However, it’s needed to make a distinction. Argentinian market for apparel production is not like the Chinese market: labour costs are low but not the lowest. Mid- and low-range products might be negatively affected because competitive advantage is based on a pricing strategy, but high-end collections won’t, because their prices for manufacturing are already relatively high. The need to assure quality know-how and trustable artisans for products that are going to compete in the international market already raised the cost for manufacturing labor years before the intro-duction of these new regulations, that are proba-bly not going to change in any way the cost struc-ture of brands like, for example, Trosman.

• Infrastructure Policies are trying to im-prove commerce easiness and speed

• Expropriation risk low but present.

• Regulations and processes to open a branch in Argentina are easy. While this might be con-sidered indifferent, it might be an element to take into consideration when assessing entry barriers for foreign competitors seeking not only a cost advantage, which is not the high-end sector worry, but also a design and concept one, in Ar-gentina.

• The Argentine government has removed non-tariff barriers on exports and slashed import duties significantly. While the export might be helped, the biggest problems still concern corrup-tion, bureaucracy and timing for international distributions, and these are issues that the Gov-ernment can’t solve simply changing the law, but must address holistically changing the processes and the attitude towards firms willing to export to a more promising international market and need-ing to import from a less costly international sup-plier.

• The country is trying to re-establish inter-national debt credibility: on one side, succeeding thanks to the favorable balance of payments, on the other side, not succeeding because of the evi-dently artificial inflationary policy. The conse-quences of this international reputation reflect on the possibility of a firm to look for foreign direct investment, and on the reputation and prestige of the firm’s brand internationally. It must not be forgotten that a fashion brand not only represents itself, but also the country where its concept originates. Therefore the external image of Ar-gentina as a country has an influence on the mar-keting communication strategies of the brands - no matter the sector - that operate internationally.

• Argentina is a member of the World Intel-lectual Property Organization (WIPO). However, Patent and Intellectual Property Regulations are weak.

• Recently introduced Labour Regulations can incentive workers to create wage strikes, which is probably not the concern of small fash-ion realities.


PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

PREST: Economic and Social PressuresPREST: Economic and Social Pressures

Structural pressures affecting (+/-) supply and demand in a quantitative way

Cyclical pressures affecting (+/-) supply and demand in a quantitative way

• Population is growing: this stimulates de-mand, in general. Therefore, local demand can sustain international expansion, to a determined extent, as it’s now happening for Martin Churba’s brand and Ayres.

• Labour cost is still low, even if recent regu-lations could increase it. If this will happen, as it’s been explained, the cost structure of a high-end fashion brand won’t probably change, be-cause the premium price they are already paying for a high know-how is not going to increase as a consequence of these regulations (it might in-crease, for example, if demand for these skilled artisans increases) while for brands competing on price and with a different target it might actually change, influencing negatively either revenues or local demand.

• Natural resources are abundant and easily available. In particular, leather and some kinds of textile products are available in high quantity and low price. This affects especially foreign (and tourist) demand for leather goods.

• Currency fluctuations and high import taxes can create issues if the import of resources is essential for the business activity. Cotton is probably the most important example we could mention.

• Tourism is intense in the capital: this af-fects the quantity of premium products that can be sold in this location, the hospitality sector and its prices. It’s often see how fashion brands can expand into hospitality: Versace in Abu Dhabi, Bvlgari, etc. May it be an opportunity for local brands as well?

• Inflationary pressures are high, especially because of the current manipulation, which is not likely to stop.

• The increasing wealth of countries that buy Argentinian products is going to be beneficial for the medium and long term export. Read: Brazil, with its impressive growth and demand for luxury goods, and with exorbitant taxes for luxury goods imported from Europe and U.S., might become one of Argentina’s best customers of luxury products, especially if the creatives with offices in Buenos Aires will be able to understand the cultural and climatic differences underlying the Brazilian demand, which is not always the case, unfortunately.

• The current situation of depreciation is go-ing to be positive for the export policies in the near future, but it limits competition and innova-tion in the product and process development, be-cause as long as local brands compete interna-tionally on the price, they will never compete on innovation. On the other side, Jessica Trosman complains that innovation and know-how are not enough in the Argentinian manufacturing offer, respect to the standards she would like to obtain from the products of the homonym brand and that she would probably prefer to get in Europe, for example in the top quality manufacturing firms that already produce part of Haider Ackermann collections near Bologna, in the Emilia region of Italy.

• Central Bank policies are completely de-pendent on the current political majority, this makes the country less prone to commit to invest internationally.


PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

Structural pressures affecting (+/-) supply and demand in a qualitative way

Cyclical pressures affecting (+/-) supply and demand in a qualitative way

• Urbanization concentrates the sourcing of high-skilled labour in the capital, diminishing HR costs. In this way, a local brand that wanted to expand first locally and then internationally, given the possibility that its concept is able to compete in both context, shall not have to distrib-ute its marketing efforts in the whole country, but instead limit them to the capital, Buenos Aires, and to its extremely fashion conscious, elegant citizens and tourists of the middle and high class.

• Fresh investments generated in public healthcare and the comprehensive restructuring of the existing education system will usher in better social development. As local demand becomes more educated, also its tastes change. This mar-ket, thanks to the internet penetration as well, is going to become more cosmopolitan and there-fore line its needs up with the foreign demand, which makes the pattern envisaged a few lines above more possible and realistic.

• Education is a strength: technicians and professionals are qualitatively as skilled as in Europe and US. Underestimating this aforemen-tioned strength of the IT sector, both at a techni-cal implementation and at a strategic level, is possibly one of the biggest mistakes an Argentin-ian fashion brand might do.

• The labour cost in Argentina is much lower than in US, Europe or even Brazil, comparing them from the same level of skills and compe-tences, allowing the manufacturing sourcing to produce high-end apparels with costs low com-pared to the international options.

• E-commerce sector is growing, this in-creases the demand for specialized and highly-skilled profiles, able to provide knowledge and strategic advice to local providers, especially in terms of outsourcing providers. Competing in e-commerce is now an investment with low risk and low entry costs: in fact, if the brand is known, there will be customers looking for it on the internet, and they are going to appreciate a proprietary e-commerce solution. At the same time, the search engine effects of creating an e-commerce strategy will benefit the brand aware-ness globally, if the aforementioned strategy re-spects the core concept and style attributes of the brand.

• Middle class is not increasing, yet. There-fore there is not a higher demand for premium products at local level. This does mean that tour-ists might continue to sustain local consumption of premium goods for a while, but doesn’t mean that the high-class is not ready to spend more on luxury goods, especially if they incarnate an in-ternational ideal of vanguardist research. The high class Argentinian customer is famous for the international openness and for the global aspira-tions.


PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

PREST: Technological PressuresPREST: Technological Pressures

Pressures affecting (+/-) the dissemination of technology

Cyclical pressures affecting (+/-) the upgrading of technology

• Both production techniques and manage-ment and organization are highly affected by the excellence of the local educational system, on one side, and by the artisanal culture of the coun-try.

• IT infrastructures are well-developed and growing.

• The ability to learn from outside technol-ogy and develop it locally is widespread in IT but not so much in fashion and textile production. Technologic innovation in particular is one of the major interests of the middle-class population and an aspiration for young students. Still, fashion students aspire to innovation and vanguardism, but don’t find local corporate realities able to sus-tain and encourage the dream, because the in-vestment in R&D can’t be afforded currently with the low consistency of local demand.

• The great integration in the international community, because of the percentage of english-speaking citizens and because of the global con-nections of educational institutes, would allow R&D to develop a great potential in the fashion apparel sector. Brazil is now seeing a growth in the trend of organic grown cotton (which never really happened in Europe and U.S., despite the tentatives), and Argentina could exploit this trend, if the textile, manufacturing and fashion industry could invest in it. The abundance of natural resources is a strength of the country, but it also disincentives businesses to develop a more responsible approach to fashion apparel manufac-turing, which would now happily integrate with the international trend.

• International standards of quality, envi-ronment and safety are easy to implement in Ar-gentina, and often immediately received and ap-plied to products.

• The high standards of labour skills allow to obtain international recognition of quality, espe-cially in technology, telecommunications and education areas.

• The infrastructure level is enough devel-oped to allow much more than the current export or import level. On this aspect, what creates a bottle-neck is not the physical infrastructural bur-den, but the bureaucracy and limitations due to the tight import and export regulations and pro-cedure.

• The aforementioned must take into account that Argentina is located far from Europe and US. This will never allow the country to reach the same speed and efficiency of logistics, even if, in highly organized frameworks, it can be nonethe-less reduced to the minimum. Jessica Trosman, for example, often mentioned her determination to complete production much before the deadline needed by shops. This is not the same procedure that European and U.S. fashion apparel producers adopt, but nonetheless is needed in the Argentin-ian market. Stores appreciate it, but, due to the delicate commercial equilibrium of these, often small, retailers, sudden and unexpected delays, even if affecting just one collection, might ruin the efforts made in years to create a reliable rela-tionship.



3.2 PREST Meso

The Meso-Economic level is multi-sectoral or sectoral, and evaluates the impacts of the

macro pressures on the specific sectors that will be more or less affected, positively or negatively,

according to their respective characteristics (Lemaire, 1997). It has the objective to identify which

challenges the project managers and the investors will have to tackle if they want to exploit the

country’s characteristics for internationalization (ibidem).

3.2.1 Analyzing the Industry Vertically, from Textiles to Fashion

Textiles and Innovation

Argentina has a very important and diversified agriculture system that extends throughout re-

gions within the country. The diversity of environments is the determining factor in Argentina’s

production profile and, at the same time, provides identity as a cotton - and food - producing coun-

try worldwide. Its importance in the global cotton community is a given, as evidenced by Buenos

Aires being chosen to host the 70th Plenary Meeting of the International Cotton Advisory Commit-

tee, which has been held from September 4-9, 2011.

In Argentina, cotton growing is concentrated in the northern provinces, predominantly in the

state of Chaco, and covers an estimated 500,000 hectares. Acreage is expected to jump significantly

in 2012, potentially as much as 40 percent. Planting begins in early October and continues through

the end of the year. The harvest runs from mid-February through mid-July, depending on location.

Cotton lint production in 2009-10 will total about 200,000 tons, the majority of which has been

used mainly to supply Argentina’s domestic textile industry. There likely will be enough cotton to

export, reflecting the crop’s socioeconomic importance at a regional and domestic level. There are

about 19,000 cotton growers in Argentina, many of whom are smaller, family-based operations.

When combined with medium and large producers, they help to increase employment in every link

of the supply chain, which now provides between 450,000 and 500,000 jobs in ginneries, mills, and

weaving and clothing factories. In total, the textile chain accounts for more than 10% of Argentina’s

total industrial employment (UN Comtrade).


Source: United Stated Department of Agriculture

As in many other sectors of the Argentine economy, apparel companies have made commit-

ments to the Argentine government to maintain prices (or even price reductions by 10 percent) in

order to help control inflation. According to the Argentine Apparel Industrial Chamber, annual pro-

duction of clothing items is valued at US$2.27 billion. The sector boasts about 11,600 manufactur-

ing and design companies and 30,100 retail stores. The economical apparel sector reaches annual

sales of about US$ 5 billion per year, and this figure is expected to rise. However, only one third of

these sales are legally recorded due to the prevalence of informal activity. For example, the

Carrefour-Norte supermarket chain’s clothing turnover increased from 2.5 percent of total sales to 6

percent of total sales in 2006 (UN Comtrade).

The clothing industry of Argentina is expected to grow steadily in the coming years in view of

the growing demand for high fashion garments and its exports and the dynamic local retail sector

consisting of local and foreign players. Argentina’s clothing preferences have leaned towards de-

signs and brand names which are important, especially to the younger generation who are influ-

enced by the US lifestyle.

The Apparel industry is fragmented and more than 65% is run by small family units employ-

ing on an average 50 people (ibidem). The Argentinean textile and garment industry - though self

sufficient - still heavily depends upon import of synthetic fibers and fabrics and novelty items like


accessories. In view of the local designer and trendy retail stores, Buenos Aires is emerging as the

fashion capital of the South American region.

The ongoing demand for innovation in processes and products of the agro-industrial chain has

the key support of technologies from both the public and private sectors. At the beginning of the

chain, the emphasis has been on improving cotton at the genetic level, which has led to cultivating

with improved agronomical, sanitary and technological characteristics that are ideally suited to Ar-

gentina’s diverse environmental conditions. Environmental sustainability is a critical component of

innovation in Argentine production fields and has been a driving force behind the adoption of envi-

ronmentally friendly technologies and processes. Integrated pest management is used extensively

for several harmful species and continues to face new challenges, such as the one currently posed

by the boll weevil (ibidem).

Another example of technological innovation in the cotton industry is the use of narrow-

furrow cultivation, which has helped to increase yields by as much as 50% in recent years (ibidem).

That innovation also extends to modern harvesting systems designed specifically for narrow-row

harvesting, such as picker and stripper systems customized for shorter distances. A drag-type har-

vester also has been developed to meet the needs of small and medium-sized producers. The tech-

nologies are designed to enhance both crop yield and quality, thus enhancing the sector’s competi-

tiveness in global markets.

Improving the quality of Argentina’s cotton to improve its competitive position worldwide is

a challenge that requires comprehensive solutions. Therefore, the Argentine cotton industry is seek-

ing to create a cotton lint quality certification system through the implementation of a program

aimed at improving the overall production process (ibidem).

Textiles Import & Export Snapshot

The recovery since 2003 is vigorous, strong and impressive. Argentina's foreign trade reaches

99 billion dollars in 2007. According to provisional figures, exports went up by 18% to 55 billion

dollars and imports increased by 43 percent to 44 billion dollars. Brazil remains the leading trade

partner (accounting for 30% of imports and 19% of exports) followed by China (11% of imports

and 9% of exports) and USA (10% of imports and 8% of exports). Top ten export destinations for

Argentina in 2007: Brazil, China, US, Chile, Spain, Holland, Germany, Italy, Mexico, and Vene-


zuela. Top ten Countries for Argentine Imports in 2007: Brazil, China, US, Germany, Mexico, Italy,

Japan, France, Spain, and Chile (ibidem).

The textile and apparel sector has shown significant growth since 2002. During 2004, the tex-

tile sector grew 75 percent, the highest growth recorded for any industry sector in the Argentine

economy that year. Positive activity continued through 2005 & 2006 due to consumption booms,

driven by increased general purchasing power and rapidly growing inflows of tourists buying Ar-

gentine textile and apparel products. The total Argentinean textile market is estimated to be worth

US$ 12 Billion (ibidem).

In terms of supplying the domestic market, there is a mix of methods applicable to the indus-

try. Lower production costs have led companies from Brazil to install plants in Argentina. Most lo-

cal firms carry out their manufacturing activity (raw materials and labor) in Argentina; other com-

panies import fabrics, and/or send their designs overseas for manufacturing and receive the finished

product (a method employed widely during the last decade) and a few licensees of foreign brands

manufacture locally under an international label. Sub-sectors highly dependent on imports, such as

sports footwear and high-tech apparel.

The overall Argentina market for textiles and clothing import was valued at over US$ 911.55

million during 2005. MMF (Man Made Fibre) Textiles & Cotton covered under chapter 55, 54 & 52

constitutes majority of imports followed by Apparels (60, 62) and Made-ups (63) during 2005.

From merely US$ 85.33 million imports in 2002, overall MMF textiles imports have grown nearly

287% to reach US$ 330.13 million in 2005. Selling to departmental stores, chain stores etc., is an

interesting option. Between high fashion products and mass market products, there is an opportunity

for niche markets which may be exploited by the exporters (ibidem).

Argentina and its MERCOSUR partners established a common external tariff (CET) on goods

originating in non-member countries that currently ranges from zero to 22 percent for most prod-

ucts. The average import duty in Argentina is approximately 13.6 percent. According to World

Trade Organization (WTO) regulations, textile imports from member countries are subject to a

maximum of 35 percent of the value of the imported goods. The importer pays the higher of the two

calculations: CET Ad Valorem (on FOB Value+Insurance+Freight) or weight (DIEM). According to

WTO regulations, all apparel imports from member countries are subject to a maximum limit of 35


percent of the value of the imported goods. The importer pays the higher of the two calculations:

FOB value (Extra Zone -applicable to imports of products of non-Mercosur countries- 20 percent)

or weight (DIEM). DIEMs vary according to the product (ranging between $2 and $20 per kilo),

however, one should expect to pay around 35 percent in import tariffs. Argentina has restricted im-

ports of used clothing and textiles, closeouts, irregulars, new and used rags, and scrap cordage of

textile material wastes (ibidem).

The majority of agency and distribution agreements are flexible and can be negotiated indi-

vidually. Most key Argentine importers are based in Buenos Aires, although a few of the larger or-

ganizations have branches in the provincial cities of Córdoba, Rosario and Mendoza. They gener-

ally opt for a network of distributors supported by traveling sales staff and rely on periodic visits

from the provincial buyers to their headquarters showroom in Buenos Aires. For certain product

categories it is currently common practice to concentrate sales.

The Argentinian Creative Industry

The diverse creative industries sector includes advertising, music, cinema, television, audio-

visual production, printing, design and fashion. These segments are closely interrelated and exhibit

important complementarities with other economic sectors, such as tourism, software and profes-

sional services. In fact, creative industries not only show an important potential for growth but also

an extraordinary ability to foster innovation and design capabilities across other sectors within the

economy.

Most segments within creative industries are characterized by a combination of leading com-

panies -national and international- and a number of smaller creative firms taking advantage of

unique opportunities in the market. By and large, creative industries are largely concentrated in the

city of Buenos Aires, where they represent 7.5% of the district’s GDP and 8% of total employment

(SINCA, 2010). Other big cities, such as Córdoba, Mendoza and Rosario, are also developing an

increasingly large creative industries sector.


Creative industries are growing

at a faster rate than the econ-

omy as a whole–at a 14.5% ac-

cumulated annual growth rate

between 2002 and 2007—and

contributes with over 2% of

total employment (ibidem). The

sector has flourished in recent

years, increasing its global

presence and reputation for

quality and sophistication. Ar-

gentina is unleashing its unique potential resulting from the combination of abundant and well-

trained human resources and a vibrant culture oriented towards creativity and innovation. Since the

mid 1990s Argentina has experienced a boom in creative exports. In 2007, a historical peak of over

US$500 million was reached, more than doubling the figure for 2002. Audiovisual and related serv-

ices stand out as the most relevant creative exports (US$214 million), followed by advertising and

market research services (US$194 million). In fact, almost 50% of total advertising productions and

commercials are for export. Publishing and printing exports (including books, newspapers, periodic

publications, printing and related services) reached US$80 million in 2007, while copyrights ex-

ports bordered US$20 million37

(ibidem).

Talent & Cultural Management

Argentina is a country en-

dowed with an enormously rich

and varied culture. Tango music

and dance are world renowned

and today stands as Buenos Ai-

res’ main cultural icon, as shown

by the growing sale of records,

tickets for concerts, dance shows, dancing classes, shoes, trinkets and specialized magazines. But

not everything boils down to Tango in Argentina. Folk dances are popular and a new generation of


ballet dancers offers marvelous performances at the splendid Buenos Aires Opera House (Teatro

Colón) and diverse open-air scenarios. Argentina is also known for its theater industry that can be

compared to that of very few countries in the world; with over 200 plays shown regularly on Satur-

days: 10 shows per hour. The Argentine people’s growing interest in reading can be measured by

attendance records at the Buenos Aires International Book Fair, which was visited by 1.2 million

people this year. Meanwhile, Argentine works of art are experiencing an unprecedented growth in

sales. The vibrant artistic life in Argentina’s main urban centers is also known across the globe,

where dynamic and diverse cultural activities include 740 museums, 2,807 theaters and 498 cine-

mas (ibidem).

Argentina’s educational level is similar to that of developed countries and is well above the

educational standards of other Latin American countries. More specifically, Argentina has an abun-

dant pool of human resources in design, fashion, and audiovisual production and post production.

Many universities, as well as a wide range of tertiary education institutions, offer degrees in design,

fashion design and cinema (ProsperAR, 2010). The Metropolitan Institute for Design and Innova-

tion (IMDI) in the city of Buenos Aires stands out as a special initiative established by a local gov-

ernment. In recent years, audiovisual arts experienced an outburst of specialized educational institu-

tions which went beyond traditional schools. Many of the new generation of filmmakers and techni-

cians were trained in the Cinema University; the National School of Experimentation and Filmmak-

ing (ENERC), belonging to the INCAA; the Cinema Research Center (CIC), a spin-off of a cinema

review magazine; and ORT technical schools.

Design and Fashion Industry

Ranging from architecture, decoration, urbanism, and industrial design to packaging, stage

design, publicity, graphic design and corporate marketing, the local design industry is thriving. De-

sign is increasingly entering higher value market segments in Argentina through the introduction of

design-led processes and innovative technologies. A new generation of young and creative design-

ers has given free reign to their imagination and talent and is increasingly selling their creations to

both the national market and the world. Different designers and design studies stand out globally,

such as BKF (Bonet, Kurchan, Ferrari Hardoy) and Manifesto (office furniture), among others.

More than 60 design studios were present in the local Design Festival in 2006. Indeed, the United

Nations Educational, Scientific and Cultural Organization (UNESCO) distinguished Buenos Aires

as the first City of Design in August 2005 (ibidem).


This boom is not entirely new: Argentine designers have held important positions in the de-

sign departments of large companies around the world (such as Ferrari, Honda, Lancôme, Nokia

and Renault, to name but a few) for quite some time. Going back several decades, we find one of

the icons of Argentine design, the BKE chair or butterfly chair. The BKE chair conquered the world

in the 1950s and became part of the collection of the Museum of Modern Art in New York (ibidem).

Many Argentine professionals shine in the global design scene. Among them, Tomás Maldonado is

known as one of the top design theorists in the world, founder of the Ülm School—the most impor-

tant design school in Europe after the Bauhaus.

Different public initiatives are supporting this fast growing design industry. Specifically, the

Secretariat of Industry is implementing a National Design Plan, whose main objectives are to high-

light design as a key factor for competitiveness and help firms in the execution of their design ini-

tiatives, providing them with assistance and linking them with available funding. The Plan com-

prises several programs, including: Promoting Design in the Productive Sector; Development of a

National Design Network; and Training and International cooperation. At the same time, the pro-

gram developed an industry-specific directory, national workshops and fairs and different design

awards (Marca, Design and Productive integration in Furniture, Innovar). The Metropolitan Center

for Design (CMD) is a public initiative created by the city of Buenos Aires which assists firms, de-

signers and entrepreneurs to improve their competitiveness via the use of design and innovation.

The CMD implements different programs aimed at creating and transferring know-how that enables

product differentiation. Additionally, the CMD is responsible for the city’s design fair (El Dorrego)

and for INCUBA (an incubator for creative industries ́ firms). The vitality and drive of the design

industry is evident by the many contests organized or sponsored by firms or chambers of com-

merce: Ternium (oriented to design in steel); Alpargatas (for textiles); Grimoldi (for shoes); FACIF-

Para Ti (for leathers and alternative textures); FEDEMA and PVC Association (oriented to the de-

sign of specific materials); and, Unilever, CODEAR and Hipercasa (aimed at specific functionali-

ties) (ibidem).

The national apparel industry is positioning itself as a leader in South American prêt-a-porter

with Buenos Aires as the fashion capital of Mercosur. Within the last couple of years, an extraordi-

nary number of fashion shows have taken place in Buenos Aires, establishing the Buenos Aires

Fashion week (BAF) as an important event in the worldwide fashion calendar and as a special mo-

ment where everybody in the city is even more concerned about looks and fashion.


An ever-rising number of youngsters are being attracted to the world of fashion design every

year. In fact, the fashion design program at the University of Buenos Aires attracts over 2,000 new

enrollments every year, having become the career with the highest increase in university enrollment

in the recent years (ibidem). Successful fashion designers and trend-setters such as Cora Groppo38,

Estebecorena Brothers39, Jessica Trosman (Trosman), Lucía Sanchez, Mariano Toledo, Martín

Churba40 (Tramando), Pablo Ramírez and Vero Ivaldi, among many others, are paving the way for

newcomers. Many parallels are being drawn between the successful textile industry in New York

and Buenos Aires’ potential. The capital city has the highest concentration of textile production in

Argentina. In this context, new designs and textures are combined in the most innovative ways, go-

ing beyond conventional standards.

Key industry stakeholders - firms, trade associations and governments - are encouraging local

manufacturers to take full advantage of the extensive domestic resources available. Only about 16%

of leather, 30% of cotton and 13% of national wool production is currently consumed by the Argen-

tine apparel sector, with a hefty remainder leaving the country as raw material (ibidem). From a

business perspective, the garment industry has changed with the aim of conquering different domes-

tic and regional segments. The great achievements have, in turn, attracted foreign capitals to support

the industry. Moreover, the industry’s growth has given rise to service activities such as modeling

schools, tertiary and university fabric and fashion-related studies.

Impact of Fashion & Luxury on Argentinian Economy

Argentina's growing economy and increase in personal wealth has raised the demand for fash-

ion and luxury goods. With an emerging taste for a more lavish lifestyle, the market for fashion has

increased in demand. Numerous luxury brands have decided to expand into Argentina. Although

many high end clothing retailers have decided to develop into Argentina's clothing market, barriers

to trade such as tariffs are possibly holding these companies back from reaching their highest poten-

tial. Many merchandisers have begun to offer new niche products into the fashion market, such as

apparel brands going "green." The steady investment of lush brands in Argentina has brought much

opportunity to this South American country.

Argentina's Economic Growth and Demand for Luxury Goods is growing thanks to a popula-

tion of 40.3 million people, with approximately only 5 percent being able to afford luxury goods,

although much of the middle class is willing to go into debt to purchase luxury items41 (ibidem).


The luxury market in Argentina grew by 38% from 2002 thru 2005, 9% in 2006, and 6% between

2007 and 201042. Argentina's raising GDP makes international luxury brands rank Argentina as the

number three country in South America to expand their business43.

An example of this trend outside the fashion world is the car market where, out of 440,000

units sold in 2006, 5,000 belonged to the highest end. In 2008, total car sales reached 500,000, of

which 7,000 were in the premium market, and the growth is expected to continue this year. One of

the brands that increased sales is Porsche, which went from 100 units in 2006 to 140 in 2008 (ibi-

dem).

Of course, the wealthy still dominate the market for fashion and luxury, accounting for about

70 percent of the business. "We are talking about 1,000 to 1,500 families whose fortunes are stable

and they do not move along with the economic ups and downs that Argentina might suffer," said

Gabriela Guerschanik, Argentine luxury analyst based in Chile44. The aspirational market is grow-

ing fast - and many of these consumers live outside the major cities. They're finding themselves in-

creasingly wealthy as a result of the country's booming commodity and agricultural exports, par-

ticularly soy. "New millionaires connected with the countryside powered the sector," said Guer-

schanik, who described these top consumers as being "the same buyers who also boosted the square

meter value of apartments to almost $4,000 in Puerto Madero, Buenos Aires, and the sales boom of

luxury cars”45.

The rising incomes of Argentines can be seen in their favored luxury goods. A recent survey

found that consumers prefer to spend money on, in order: luxury cars, jewelry, technology, hotels

and clothing. Among brands, those perceived to rank the highest in luxury are Ralph Lauren, Ar-

mani, Swarovski, Hermés, Ermenegildo Zegna, Salvatore Ferragamo, Christian Lacroix, Audi,

Volvo and Bang & Olufsen. Many luxury designers such as Valentino, Louis Vuitton, Ralph Lauren,

Fendi, Herms, Swarovski, Salvatore Ferragamo, Diesel, and Christian Lacroix have entered the

fashion market to tap into the demand46. The Italian luxury retailer Ermenegildo Zegna has emerged

into Argentina's capital, Buenos Aires, investing heavily in this Latin American country and cur-

rently generating 3 percent of the company's revenue, or $29.5 billion47. A/X Armani Exchange has

opened three new retail stores in Argentina in 2008, with the Armani flagship store already located

on Alvear Avenue, a well known luxury shopping area. Kenzo, which had a store in here until 1999,

re-entered the country through the Bendow group and coincided with a brand relaunch overseen by


its new creative director, the Italian designer Antonio Marras. After the store here, the brand, which

is owned by LVMH, hopes to expand to Punta del Este, Uruguay, and Brazil. Diesel, the Italian

denim brand, recently decided to re-enter Argentina. It closed down before the last financial crisis

seven years ago due to differences with its Argentine licensees. Less than a year ago, the company

opened its first flagship in the Palermo neighborhood, which is considered the SoHo of Buenos Ai-

res. Now the brand is opening another store in Patio Bullrich to tap into the tourists staying at first-

class hotels in the area.

The Southern Cone Common Market Group (Mercosur) established new rules in 2007 regu-

lating Argentina, Brazil, Uruguay, and Paraguay to issue labeling requirements for textile and ap-

parel products48 These regulations are for products that are produced in, imported for, and in con-

sumption into a member country, protecting these countries from outside investments49. Such re-

quirements enable the market group to regulate influences from outside nonmember nations, while

uniting member countries50. Another international trade deal adopted by the government increased

tariffs on textile fabrics and carpets, and clothing products in effort to restrain further imports from

China51.

Environmental buzz has made its way to the fashion market in Argentina, offering new niche

products made of organic and recycled fabrics from clothing brands such as Imagine Adventures,

designed by Mike Farrell52. The shoe line Toms, by designer Blake Mycoskie, founded the Alpar-

gata canvas sandal, which is sold for $17 wholesale a pair, and for each pair sold, a pair of shoes is

donated to an impoverished child in Argentina53.

The Local Clothing Industry

The expansion of selected businesses towards the foreign market through an internationaliza-

tion strategy may stimulate other local businesses to accept the same challenge. Our internationali-

zation study would not be complete if we didn’t analyze the local competitive market, among with

the international competitors, especially knowing that Trosman, our case study, first developed in

Argentina and only expanded to Europe and U.S. once stable and strong in the home market.

For the Argentinian Fashion Association (Camera Argentina de Indumentaria), Argentinean

fashion is a US$6.000mil business and a leading case globally. There are 12,200 manufacturers of

clothing with a 150,000 employees labour force while 34,000 retailer employing other 130,000


people54. The governmental agency also points out to an extremely scattered market based on fam-

ily owned companies, confirming the sources of this research. Casual wear accounts for 50% of the

business while 70% of the consumption is of local brands - Argentina fashion. Among the players

are Kosiuk55o, with a production of 2mil clotting pieces per year and a Pesos 200mil turnover and

own stores in major shopping centers. Rapsodia56 is another fashion and retailer company ending

2009 with Pesos 100mil turnover, up 50% from 2008. Cardon57 plans a Pesos 210mil turnover in

2009 and move internationally.

The clothing market expanded by 4.1% in volume terms and 11.1% in value terms during

2008, when 472.7 million garments were sold for 20.6 billion pesos. The consumers’ loss of confi-

dence on account of internal political and economic problems and the credit crunch led to a signifi-

cant decline in the growth rates of sales during 2003–2008. Sales of underwear and nightwear grew

by 5.9% in 2008 and exhibited the highest growth of any subsector in volume terms. In value terms,

on the other hand, children’s wear was the subsector with the highest growth during that year, at

13.1%. The clothing market is further expected to grow by 13.0% in volume terms (2.5% CAGR)

and 16.9% in value terms (3.2% CAGR) during 2008–2013. By the end of the forecast period,

527.4 million garments will be sold for 24.4 billion pesos.

For the first time since the end of the previous economic crisis in 2002, growth in sales regis-

tered a sharp slow-down in 2008, on account of internal political and economic problems that af-

fected consumers’ confidence. Sales in several areas of the country’s interior were paralyzed in

early 2008 because of a conflict between farmers and the government. The global financial crisis

affected the consumers’ trust further in the fourth quarter of 2008 and early 2009. Even though

growth rates were below those seen during 2003–2007, the market continued to expand in both vol-

ume and value terms, because of the positive outlook and the strong economic growth experienced

since the end of the previous crisis. The clothing sector was stimulated by increases in consumers’

earnings, the revival of local companies, the entry of multinationals and the opportunity to manu-

facture for export, all of which encouraged the production of good-quality clothing and greater

added value, but the positive influence of all these factors came to an end in 2008.

The clothing design sector within Argentina is growing every year with the graduation of new

design professionals, the establishment of more trade fairs, parades and clothing exhibitions, and

the increasing activity in the retail sector. Argentina has emphasized the design aspect of the cloth-


ing industry at the regional level, by launching new products and brands in both exclusive and non-

exclusive outlets. Local consumers are themselves attracted by the new fashion trends and are able

to acquire good-quality articles of clothing that are generally made for export. Wanama58, which

opened its first store in Buenos Aires in December 2001 in the midst of the financial setback, is a

prime example of the fashion industry's growth in Argentina: following the nation's economic re-

covery, the firm now has over 200 stores, with shops in Venezuela, Mexico, Guatemala and Peru.

Inflation once again had an uneven impact on the market. On the one hand, the lion’s share of

the growth in value sales reflected rises in price rather than any more widespread adoption of more

expensive brands. In recent years, however, the general rise in prices has led to increases in produc-

tion costs, and many companies have had to reassign part of their profits to meet these costs (ibi-

dem).

The clothing industry has been strongly affected by the development of new, large shopping

centers, and by the arrival in the Argentine market of non-traditional distribution channels, such as

department stores. The inauguration of this new style of shopping increased the sales of clothing

and footwear retailers still further, since the majority are located in the new shopping areas. Super-

markets have made efforts not to withdraw from the sale of clothing, while department stores, such

as the Chilean chain Falabella, are growing at a slower rate. Other sales channels are participating

only on a small scale. The interest of young people and adults up to the age of 30 in clothing and

footwear in recent years boosted consumer spending in this sector, and a slight change in the types

of clothes in which they were interested. Formal clothes remains a very small percentage. An in-

crease in sales of casual and evening clothes can be noticed, while sales of sports clothing declined.

The clothing market began to show signs of stagnation and maturity in some subsectors in

2008, and the industry does not expect the market to exceed the growth rates experienced during

2002–7. The impact of the credit crunch and the country’s internal economic problems also affected

the competitive environment and reduced consumer confidence. Other trends that have been notice-

able over the review period will also have only a very slight impact on the development of the mar-

ket, although they will still be present. As a general trend in the short and medium term, companies

estimate that the unit costs of their products will grow more rapidly than the numbers of units sold,

for three main reasons.


First, the increase in import duties on clothing from countries such as China and Brazil from

2008 has led to an increase in the prices of articles from these countries. Second, both men and

women are expected to buy more clothes from recognized brands and designers over the forecast

period, which have above-average prices. The trend included the end of the market among consum-

ers of mid-high, who will not be affected by the financial crisis or the slow-down of the Argentine

economy. Finally, because of the current international economic crisis, the black market (often con-

sisting of smuggled goods) will increase in the short term, thus provoking a rise in the average price

of the products in the legitimate market. The negative impact of black market trading, the increased

supply of contraband and the production of counterfeit goods will have a negative impact on the

clothing industry, affecting both national manufacturers and global companies. Department stores

and supermarkets will also be hit, since the products they sell are at the low end of the market.


3.2.2 Fashion Business Environment, Business Culture and Regulations Affecting Textile Business

• The strong education system has produced a skilled and flexible labour market

• The government encourages foreign investment

• In the big picture, politic and economic stability have generally improved

• Weak financial system and regulatory framework

• Restricted access to international capital retrains local growth medium-term

• Rising inflation expectations threaten the economic recovery

The Argentine judiciary is severely plagued by corruption, and the public perceives the judi-

cial system to be highly corrupted, resulting in low public confidence in the judiciary. Many foreign

companies prefer to include provisions for private or international arbitration in contracts rather

than deal with Argentina's courts, even though an Argentine court for dispute settlement was estab-

lished in 2004. Argentina accepts the principle of international arbitration and is party to the Inter-

national Center for the Settlement of Investment Disputes (ICSID).

There are no limits on the amount of foreign investment or on the percentage of capital to be

acquired through foreign capital. Most approval requirements were lifted in April 2001 (Decree

396) (The Economist, 2010). Nevertheless, in June 2003 Argentina enacted legislation that limits

foreign ownership of media and internet industries to 30%. The World Bank & International Fi-

nance Corporation Enterprise Survey revealed that senior managers in Argentina spent more than

14% of their time dealing with the requirements of government regulations, compared to a regional

average of less than 11% (Datamonitor, 2010). These barriers increase the cost of private invest-

ments. Combined with frequent changes in policies in some sectors, companies find themselves

subject to considerable uncertainty.

Argentina passed a labour law in March 2004 (Law 25,877) that repealed Law 25,250 of May

2000. Recent administrations have supported labour reforms that favor workers over employers.

Law 25,877 reduced the employment trial period to 90 days (from 180 days). During this period,

employers are permitted to lay off employees without compensation if they provide at least 15 days

notice. Companies must pay all employee contributions and benefits during the trial period. Penal-

ties apply to employers who abuse the trial period. Terminated employees who have worked with a

company for more than five years must receive two months notice. Payroll taxes are set at 13% for


employees and 21% for employers (The Economist, 2010). A new law regulating contract work

(Law 26,474) promulgated on December 1st 2008 obliges employers to pay a wage proportional to

that dictated by law or collective agreement or pay the full daily wage if the worker works more

than 2/3 of a standard day. The employer is also responsible for paying social-security costs for

these employees, proportional to time worked. Resolution 490 of May 2010 modified the Labour

Contract Law (Law 20,744) by requiring employers to pay an additional 11% of their workers’ sala-

ries into the National Employment Fund. A new law promulgated in May 2010 (Law 26,590) also

modified the Labour Contract Law by obliging employers to pay workers in cash, by check in the

worker’s name or by direct deposit into an account in the worker’s name (The Economist, 2010).

The corporate-tax regime in Argentina is based on the income tax, value-added tax (VAT),

payroll tax, export and import taxes, and the financial-transactions tax. The corporate income tax

applies at a flat rate of 35% and the VAT at a standard rate of 21%. Social-security taxes and levies

on exports and imports are also important generators of government revenues.

Government revenues amounted to 29.3% of GDP in 2009, according to the National Tax

Directorate (Administración Federal de Ingresos Publicos AFIP). Direct tax collections, which ac-

counted for 57.3% of government revenues in 2009, represented 16.5% of GDP. Social-security

contributions accounted for 29.9% of government revenues, and customs revenues generated by

duties on exports and imports accounted for 12.5%. A tax on financial transactions was created in

2001. The government collects a 0.6% tax for every transaction. Of this amount, 0.2 percentage

point may be taken as advance payment on VAT, resulting in an effective rate of 0.4%. (The

Economist, 2010).


Argentina’s economy is subject to a variety of foreign-exchange controls, and numerous re-

porting requirements are in place. Foreign direct investments, the primary auctions of shares and

bonds, and loan inflows from development banks are not subject to capital controls. Inflows of for-

eign portfolio funds, however, have been subject to minimum-stay and reserve requirements since

2005. Portfolio inflows must remain in the country for a minimum of 365 days, and 30% of the in-

vestment amount must be deposited in an interest-free US-dollar account with the central bank for

one year. Capital controls on inflows of portfolio investment have increasingly come under the spot-

light since 2009. The Buenos Aires Stock Exchange has called for the government to lift the exist-

ing capital controls in order to encourage foreign investment in the bourse and to foster a more at-

tractive investment climate (The Economist, 2010).

Argentina is a member of the World Intellectual Property Organization (WIPO), and is party

to the major international agreements on protection of intellectual-property rights. The National In-

stitute of Industrial Property is the decentralized agency with exclusive jurisdiction on industrial

property within the country.

Trade liberalization and strong economic growth triggered a wave of licensing and franchis-

ing agreements in Argentina during the 1990s. With consumer markets eager for new products and

brands, local companies found licensing agreements a profitable way to satisfy demand without in-

curring the cost of technological development. In 2010, the majority of the franchising business was

in food services (35%), apparel (25%), retail (10%) and professional services (10%), with the rest

spread across pharmacies, book stores and appliances (ibidem).

Domestic investment dispute adjudication is available through local courts or administrative

procedures. Many foreign investors prefer to rely on private or international arbitration when those

options are available. Argentina has a strict bankruptcy law similar to that of the United States.

However, initiating bankruptcy proceedings is more difficult in Argentina. Creditors can participate

in a procedure to determine the best means of recovering debts from a bankrupt firm. Company di-

rectors are personally and criminally responsible in cases of fraud although severe punishment for

white-collar crime is not common. (PRS Group, 2010)


The present administration of Cristina Fernandez de Kirchner has frequently resorted to pro-

tectionist measures, including export bans, export quotas, export taxes and non-automatic licensing

requirements in an attempt to achieve its domestic policy goals of maximizing fiscal revenue from

exports and containing food-price inflation. Import restrictions also are common. Weaker external

demand and lower prices for the country’s agricultural commodities cut into the value of Argen-

tina’s exports in 2009. The value of exports contracted by 6.4% in real terms, to US$55.75 billion,

from their peak in 2008. However, export activity has picked up in 2010. The value of exports in

January-May 2010 was up by 17% over the same period in 2009.

The Global Enabling Trade Report 2010, prepared under the auspices of the World Economic

Forum, based in Geneva, ranked Argentina as one of the most protectionist nations in the world.

The report ranks 125 countries, of which Argentina falls within the bottom 25% (position 95); in

Latin America, only Bolivia (98), Paraguay (103) and Venezuela (121) ranked lower on the list.

Two types of import licenses, automatic and non automatic, are administered by various

agencies. Automatic licenses include the Pre-Import Automatic License, which covers imports of

footwear parts, paper in reams and rolls, textiles (cotton and synthetic yarn), parts and spare parts of

agricultural and self-propelled machinery, cardboard boxes, telephone accessories, wooden furni-

ture (bedroom furniture and cupboards), dried egg yolks and canned peaches. Automatic licenses

also include the Statement of Product Composition, which covers the textile and clothing industry 59.

Non-automatic licenses include the Footwear Import Certificate, Paper Import Certificate, Bicycle

Import Certificate, Washing-Machine Import Certificate, Toy Import Certificate, and Tyre and Inner Pat r i ck Morse l l i f o r ESCP MS I n te rna t i ona l P ro j ec t Management , A rgen t i na Fash ion I n te rna t i ona l i z a t i on 49

Tube Import Certificate. In 2005 the government imposed new non-automatic licenses on shoes and

toys (Resolution 485/05 and Resolution 486/05) (ibidem).

The Anti-dumping Law provides for countervailing duties on imports that are sold in Argen-

tina at less than the normal value in the exporter’s domestic market, and hence damage local pro-

duction. If the product is not ordinarily available in the country of origin, dumping may be claimed

in any of the following circumstances: if the export price to Argentina is lower than the highest

comparable export price; if the export price is lower than the production cost in the country of ori-

gin (or a cost estimated by the under-secretary of foreign trade, when no other price is available);

and if the imports originate in a country with a monopoly on trade of the product or with a state

price-fixing policy. Local producers must first prove that there has been a significant increase in

imports of the product and serious injury to the local producer. Local producers must also establish

that the imported goods are in direct competition with their products. Most anti-dumping measures

consist of an increase in import tariffs, by charging specific duties or an ad valorem duty that lifts

the price of goods to international prices. Products that benefit from a foreign subsidy may also be

charged a compensatory duty, which is not higher than the amount of the subsidy.

As it becomes increasingly clear from the Macro Analysis and the Meso Analysis, the inter-

nationalization challenge for a textile firm in Argentina is restricted to a few key factors. On one

side, these elements come from business culture related issues such as corruption, low intellectual


protection and political risks. On the other side, they delineate a foreign trade policy that may be the

only true challenge but is, nonetheless, a hardly manageable issue.

While Argentinian Economic and Legal structure invites almost any foreign investment op-

portunity, the same laws create a trade environment which, for the import restrictions and taxes,

discourages from internationalization any type of sector that is not completely auto-sufficient inside

the borders of the Country. In this optic, businesses that require international imports, even for

smaller or secondary parts of their products’ manufacturing chain, may find a very hard time in sur-

viving. Depending on the level of research and innovation a potential fashion brand decides to ad-

here to, this might be alone a factor that imposes non-solvable issues. On top of that, we might want

to take into consideration the potential export costs due to the bureaucracy of complicated and

quickly changing taxes and the export delays caused by the non-automatic licensing process and the

“prioritizing” of shippings that have been guaranteed by local corruption. The global frame seems

to pose far from easy challenges.


3.2.3 The Meso PREST Dimension

Taking into account the external pressures identified in the Macro Outlook, the Meso Chal-

lenges are based on a logic that impacts both local authorities and foreign firms.

• The Adaptation Challenge concerns the adjustment and evolution of local sectoral offer. In

this case it might be considered both as the textiles offer and the fashion products offer. Emerging

countries and companies shall follow the local evolution, determined by political regulations, so-

cial conditions and technology, as the international environment changes (Lemaire, 2003)

• The Redeployment Challenge is a stimulus for firms and local government to create a proc-

ess of constant re-evaluation of the geographical display and activities disposition. They will take

advantage simultaneously of the production factors’ improvement as well as of the new opportu-

nities offered domestically and abroad (ibidem).

• The Competitive Challenge, influenced by the regulatory pressures and the technology ad-

vancement, invites to find convenient development processes in order to better face the local and

international competition (ibidem).


PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

Adaptation Challenge

Stakeholders of both parties, government and private sector, have interests in investing in Ar-

gentina’s infrastructures. The Government enabled and currently sustains many initiatives to en-

courage the growth of the creative and design industry, through Universities, fashion and design

contests and governmental agencies like the Buenos Aires Fashion Week, Alpargatas (for textiles),

Grimoldi (for shoes), FACIF- Para Ti (for leathers and alternative textures). These institutions not


PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

only sustain the rich cultural and creative life of the capital, but also guarantee growth in the fashion

industry, leading to a growth in textile production and, hopefully, export. For the local and foreign

fashion industry, this means an easiness in human resources sourcing, and a guaranteed source of

new ideas and inspiration close to the production and manufacturing site. It’s a rare characteristic,

which, for example, doesn’t happen in the case of outsourcing to China, where the manufacturing

and the creative direction are thousands of kilometers away. It can be pointed out that technology

nowadays makes distances much closer, but in the fashion industry creative directors need to see

and actually touch fabrics, examine garments, cuts and sewings. It is proved by internationalized

brands as Dolce & Gabbana or Armani that logistics to ship the samples from China to Italy - and,

once evaluated and corrected, back again - take much time and are costly in organization and poten-

tial mistakes.

Also other infrastructures are especially important for the local authorities, that seem to have

noticed, especially in the last five years, the trend towards IT growth and digital marketing sectors.

If this is interesting, on one side, because marketing for new fashion brands is done mainly - if not

exclusively - online, it is also worth noticing, on the other side, that a few online clothing sellers,

born in the past couple of years, grew exponentially and don’t stop expanding. This is a main trend

in the current Argentinian fashion and apparel retail sector, and it seems that will expand even more

because of the expansion of the same strategies and market in Brazil. How can this benefit the local

firm internationalizing outside? First, the firm can learn how to thrive in highly competitive e-

commerce markets, to use this knowledge outside the local market. Second, it can exploit the local

know-how to create online strategies abroad, like in Europe or U.S. In case of a brand with a strong

identity, competition won’t be easy but not even impossible to face. The adaptation challenge in this

case would be the capacity of a local firm, not used to digital marketing or e-commerce strategies -

many in fact just rely on external online retailers - and, at the same time, with low budget for mar-

keting, to adopt these strategies in a coherent and effective way.

But the IT industry is not the only one with a double-digit growth. Cotton cultivation, as men-

tioned in 3.2.1, showed interesting numbers not only for quantity, but also for quality of the fiber

and innovation, and leather is a structural strength of the country. These results have been sustained

and nurtured by consistent governmental investments in infrastructures, that benefit both the local

authorities power and the foreign players searching for a competitive location. In terms of adapta-

tion, from the point of view of the foreign companies, not big efforts need to be made, because level


PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

of education60 and technologic development are comparable to the “first-world” countries. This

constitutes a major menace for the local brand internationalizing. In case the local firm decides to

expand into a Mercosur or international market using locally originated cash flow and the local

strengths (know-how, low labour cost, low leather cost, etc...) it must be sure not to lose the current

local market share because of external competitors entering the market exploiting the same com-

parative advantages, or it might lose both the international and the local market.

However, despite the recovery after the crisis, a few structural weaknesses have not disap-

peared, and play the role of negatively balancing the strong undeniable assets of the country. Politi-

cal risk, maintenance from abroad of a large proportion of private assets, social unrest, weakness of

national solidarity and the under-valuation of the local currency are examples of the challenges that

it’s necessary to contrast with a sound strategy before entering the market (Lemaire, 2010). That’s

probably the reason, among with the weak currency that makes extremely difficult direct invest-

ment in international markets, why local players - except for a handful of exceptions - chose not to

internationalize.

However, this persistent instability, which has to be scrutinized along with the unpredictabil-

ity of the government, and which goes with the quickly-steering economy, it’s not a sufficient rea-

son to abandon growth exploiting Argentina’s strengths. The adaptation the firm must face is not

predictable from the point of view of these factors. In fact, considering verticalisation processes the

easiest way to penetrate the market and international horisontalization the most profitable solution

to exploit a foreign market for a local firm, if the brands are not totally dependent from external

suppliers or clients, but rather keep in mind that a certain degree of flexibility will be needed al-

ways, the excellent qualification level and advantageous cost of local workforce, among with the

easy sourcing for cotton, leather and synthetics, allows a quick grow with low investments.

Redeployment Challenge

Reviewing the portfolio of activities, supply chain, production and holdings is especially im-

portant for textile realities to identify the extremely diversified characteristics of know-how needed

for each function and role. Local authorities in Argentina reconsider the major sectoral guidelines of

the country and its regions, by creating an identity and concept coherent with the available assets

and appealing for foreigner investors. The public sector is well aware of its weaknesses, such as

bureaucracy, difficulties in timing for import and export, etc. On the other side, the government is


PM apud XANTHUS

PM apud XANTHUS

also aware of the strengths that might be appealing such as the education system that produces

competent and skilled workers, the low cost of labour, etc.

Foreign companies, in this case specifically textiles and fashion brands, justify and upgrade

their presence depending on the local potential, which strengths they can exploit, and try to maxi-

mize effectiveness by overcoming constraints such as risk and deadlines compliance. The strengths

are comparatively inexpensive labour and an intense know-how for design, creativity and produc-

tion, which seem just perfectly suited to the industry, because to reach the same equilibrium Euro-

pean firms went as far as to China, while in Argentina they would find them in the same location.

The major risk is not to be able to respect deadlines compliance when exporting the semi-final or

final products outside the country, and therefore lose contracts with international retailers. This is

possibly the biggest fear of any fashion apparel producer. Retailers may vary worldwide for style,

policies, size, but they do share one characteristic: they show no mercy to the brand that is late in

delivering collections, and they are ready to cancel the contracts in a matter of hours, leaving the

firm with no cash flow to cover production costs. This behavior reflects the characteristics of the

contemporary consumer, who is able to see the fashion shows six months in advance respect to the

moment when she will be able to buy the product61 and therefore can’t wait: she wants to buy the

winter collection in June, as soon as it hits the shelves, and the summer collection in January. The

first brand who arrives to the shop is often the first one to sell, and the late ones are usually left for

the end of season sales. In conclusion, a redeployment in Argentina can indeed exploit many oppor-

tunities, but it must be extremely careful to manage appropriately a few major threats.

In Argentina, after the crisis of December 2001, more horizontal than vertical businesses de-

cided to thrive. It was the case of the automotive business, vineyards and supermarkets, for exam-

ple. But the ones that generates a higher quality price ratio for internationalization investment are

those which, pursuing a vertical advantage, decided to invest not much capital to keep barriers to

exit low, and, at the same time, targeting customers from abroad. The redeployment challenge

emerges, as a consequence, to decide how international firms are to act and re-act as a consequence

of the local authorities decisions. A strategically developed verticalisation should not invest exces-

sively in consumer capital in Argentina, nor should be affected by fluctuations of the local market.

Therefore only the vertical configuration targeting international customers can be considered a valid

alternative, which can be eventually further strengthened by the participation of local investors.


PM apud XANTHUS

PM apud XANTHUS

As the foreign players try to deal with these handicaps, it is a shared hope that the authorities,

considered the current growth of both textile, fashion and retailing markets, will try to soften the

legislation relative to the import and export of these goods, which would consistently ease the pres-

ence of an international chain for production of fashion. If this will happen, there will still be two

elements to take into consideration. First, regulations are not the only obstacle to the export. Bu-

reaucracy and timing are often much more problematic, among with corruption and an informal

business culture that force local brands who want to export to bribe officers and controllers, so that

their products are not kept in the customs for weeks due to controls. Second, making export easy

makes also the country more appealing to foreign investors in the same fashion and textile field.

What could be the consequences of this? If the foreign investor is looking to verticalise production,

which is the only strategy worth playing for a foreign brand, either consolidated or start-up, it could

exploit not only know-how in manufacturing, but also creative assets typical of Buenos Aires, creat-

ing a brand that competes on the same international markets that the local internationalizing brand

would like to target. Having the foreign brand more knowledge of its local markets, this would ul-

timately mean a strenuous difficulty to defend the superior quality of the local brand fabrics and the

originality of the design. In this case, investing in brand identity and awareness is extremely impor-

tant, and we can understand why maybe keeping these handicaps alive is a way for the government

to protect local industry, especially in a moment where the currency is still so weak.

Competitive Challenge

Seeking a definite competitive differentiation through internationalization is not possible for a

fashion brand or for a textile company. While brand differentiation and marketing are the main fac-

tors that can determine a real differentiation from competition, it is also evident that the internation-

alization of one or more processes of the value chain has the unique final objective of reducing

costs, increasing flexibility or pursuing an “extended horinzontalisation”, in this case, from Merco-

sur.

However, both local authorities and foreign companies need to be extremely dynamic in their

decision-making. The former need to attract the right kind of businesses that can both thrive and

contribute to the country’s growth, the latter have to be accepted by all the economic players and

expand as quickly as possible abroad. The local brand that wish to expand internationally shall be

wise enough not to feel intimidated by the increasingly growing foreign direct investment in favor

of its competitors. In this awkward situation, its main objective might be to secure the local market


PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

through branding, to keep a solid cash flow, and to feed with this the international expansion. A dif-

ferent alternative, easier but also riskier for the local entrepreneur, is to let foreign direct investment

in his or her brand. Why riskier? First, because the international investor might end up with pos-

sessing the brand itself. Second, and more important, because in case of sudden economic changes62

the foreign investor will abandon the country - and the investment - leaving the brand in a dramati-

cally helpless condition.

As the economic situation of Argentina is subject to sudden changes, in the same way a firm

establishing an internationalization project has to be ready to take into account risks and rapidly

change its strategy, in a continuous adaptation to the local forces. “Nothing is not earned in the con-

text of emerging countries with high growth, neither for local authorities, nor for foreign compa-

nies; perhaps because the increasing openness of these economic areas occurs in a context of accel-

erated internationalization, making it constantly changing from environmental pressures, internal

and external: opportunities and threats will evolve continuously, making it difficult to control the

situation, the respective interests of the parties and, therefore, the continuity of the commitments

made.” (Lemaire, 2010) On the other side, a local company that internationalizes is more used to

this unstable environment, and might just find opportunities in it.

For the textile sector, competitiveness is essential, especially in the Mercosur area, and a

strong shield can be found only in innovation. From the fashion brand realities point of view, it be-

comes difficult to identify a real “differentiation” from competition issue. In fact, considering the

challenges imposed by Mercosur, and even only the challenges imposed by the Argentinian design

sector, it’s impossible to identify a priori one area that is not already in a crowded competitive

situation. Moreover, being clear that the only advantages pursued by internationalization keep their

importance only in an international verticalisation strategy, the competitive field becomes limitless.

The issue of competitiveness, in this optic, becomes vast to be analyzed in general, but, still, not

impossible to overcome for the specific firms. A strong branding strategy would do for the fashion

product what ten years ago would have done a traditional marketing strategy based mainly on dif-

ferentiation. Moreover, as branding can be leveraged through social media, the growing Argentinian

IT environment, specialized but not costly, could support this process in the most efficient way.


PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

3.2.4 “4xi” Internationalization Model

The degree of upgrading infrastructure and the sensitivity to instability and economic crises

are the variables through which we can put together the elements of the Meso Analysis into a matrix

of “Positioning of emerging countries with high growth as a function of the structural context and

national cycles and the attitude of local authorities vis-a-vis Foreign Direct Investment”. Instead of

being regarded as a static table, this tool shall be treated as a dynamic model that changes as the lo-

cal government, foreign investment and international competition patterns change.


It is clear that Argentina, specifically for the textile and fashion apparel mid- high-segment

market, is a market where verticalisation provides more satisfying results than verticalisation. This

happens because the local demand is static, and the middle class is surely not likely to grow in the

following years. This is caused also by the sensitivity to instability and conjunctural shocks, that

prevents local firms to grow in size and innovation and, at the same time, imposes a depressing at-

mosphere on the local consumer, who is not able to afford products that, for the tourist, are not even

luxury but often mid- or low-fashion. For the foreign brand that wishes to invest, the high degree of

upgrade to infrastructure invites to exploit know-how, IT and creativity, but the instability risk sug-

gests to keep investment low and flexible, often in partnership with local players.


3.3 PREST Micro

The Micro Dimension of PREST analysis has the objective to analyze the case study brand of

choice, in this case Trosman, the competitive environment that is challenging the firm on interna-

tional grounds and the key factors of success that defined, so far, the development of the brand it-

self.

3.3.1 Trosman

First steps

Admirer of National Geographic magazine and nostalgic for legendary designers like Charles

Eames, Frank Lloyd Wright, Le Corbusier and Van de Roche, Jessica Trosman takes distance from

the classic methodology of a fashion designer. She walks through the silhouette taking scientific

decisions and developing each piece like an architectural process where parts are apparently not

sewn but become ensemble. While doing so she reveals shapes that flow along the body as if they

were predestined63. Jessica Trosman is increasingly becoming a well-known new face in the fashion

world, while she still remains based in Buenos Aires, the city which supplies her with endless inspi-

ration. The 39-year-old designer confesses she has neither an icon nor a muse in the fashion indus-

try but instead draws her inspiration from the daily process of her work. A Trosman design begins

with abstract shapes and volumes, which are later combined with simple silhouettes. Working with

materials of natural origin—the rough hewn cottons and raw leather favored by many Argentine

designers—Trosman also loves to print on and texturize her clothes, a legacy of her early years

working with Argentina’s master fabric and fashion designer Martín Churba. Trosman may be

South American to the core, but today her designs sell equally well at Neiman Marcus and Barneys

in New York.

Since her first collection in 2002, Trosman enjoys a consistent growth that placed the label in

Europe, Asia, U.S. and Middle East. Jessica Trosman has been recognized by two of the most re-

nown book publishers, when being included in their latest compendiums of fashion design (“Fash-

ion Now 2”, 2005, Taschen; “Sample”, 2005, Phaidon). Meanwhile the brand has struck a deal with

the group Onward Kashiyama for manufacture and distribution in Japanese territory.

The target of Trosman has possibly no age boundaries, as it is one the rare fashion brands with

such a strong identity that can be appreciated by a wide, upper segment. This is helped by the fact


PM apud XANTHUS

that the brand concept is not strictly connected with luxury, political or social ideas, but with re-

search, nature, mechanics and culture. This helps in terms of being chosen by the “first adopters”,

which in fashion are the customers that look for innovative designers and spend consistent time in

researching upcoming brands for job or pleasure. At the same time, its presence in stores like Bar-

neys and Net A Porter confirms its status as, in fact, a luxury brand, and makes it appealing also for

less vanguardist and concept-driven customers, which are attracted by the exoticism and the singu-

lar esthetics of the design. The characteristics of the cut and the palette used, that are not really

linked to the stylistic heritage of a specific country - Trosman is Argentinian in the spirit and in the

energy but definitely not in the esthetics, make it possible to distribute the brand also in very di-

verse markets, where other brands, due to strong cultural differences, prefer to adapt locally often

creating a targeted line.

The headquarters of Trosman are in Buenos Aires, and finance, strategy, marketing, design as

well. Products are shipped directly to Europe and U.S. from Argentina, while in other areas like Ja-

pan and Middle East am external distributor is used. Only sales and representation are based in the

showroom located in Paris, where the collections are presented twice a year to press and buyers.

Ayres

In 2011, Ayres, one of the five most important women fashion brands in Argentina, formalized

the acquisition of Trosman. The agreement includes complete acquisition of the brand in Argentina

and in South America, keeping a partnership for the development in foreign markets. The fusion

confirmed Jessica Trosman as creative director for the future collections. The continuity of this

partnership has been confirmed by Gabriel Isersky, CEO of Ayres. The first step together has been

the presentation of the collection Fall Winter 2012 in the showroom located in Paris and, locally, in

Buenos Aires Fashion Week. The interview with Jessica Trosman, which provided us most of the

information about the development of the brand for this professional thesis, in June 2011, took

place in Ayres headquarters in Buenos Aires, suggesting that they became already also the strategic

and creative main offices of Trosman.

Isersky started working in fashion at 18. He initially worked in a rented taller producing

tailor-made apparels for brands like Drugstore, Soho and Clorofila. Some years later, he visualized

the opportunity to create his own brand. Ayres was born in March 1998, targeting women of the

middle segment between 25 and 40 years old. It now has 23 exclusive stores in the main shopping


PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

streets of Buenos Aires, Cordoba, Rosario and Mendoza, 3 point of sales in Uruguay and the sight

definitely directed towards an imminent penetration of the Brazilian market. The verticalisation of

the brand possibly played against the potential for internationalization, but the local market made

possible for the venture to grow solid.

Jessica Trosman, on the other side, is the most internationally recognized and vanguardist ar-

gentinian designer, between the 100 most influential designers of our days, as declared by the eng-

lish designer Alexander McQueen, Madonna’s stylist, Adrianne Phillips, and the fashion editors of

Vogue and Harper’s Bazaar. In 2008, Jessica won the “export excellence” prize. That was the mo-

ment when and the reason why Ayres became so interested in the brand. In fact, Trosman, which

50% of total sales is in international markets, presents twice a year in Paris and is distributed in UK,

France, Japan, Switzerland, Germany, Saudi Arabia, Belgium, Hong Kong, Italy, Georgia, Taiwan

and US. The international growth, and its speed, has been one of the key success factors of the

brand. The shops in locations much sought-after and extremely inaccessible for Argentinian brands,

like Dubai or Prove, provided the brand with a unique prestige, that now Ayres aims to exploit.

Trosman counts than 10 points of sale in the US and 4 in France (Bordeaux, Paris, Lille and LaRo-

chelle). In 2009, after trying five previous collection in the local market, the group Ausway Trading

decided to sign a royalty-based distribution and production contract for the entire Chinese market.

In total, Trosman penetrated 25 Countries with more than 50 points of sale. Not bad for a 8 years

old brand from third-world country Argentina. This unique global disposition is now going to

launch Ayres into a bright new future - or, at least, that’s the hope of Ayres’ CEO, Isersky64. How

Ayres, with a different target respect to the one of Trosman, and indeed a completely separated con-

cept, style and quality definition, is going to use the assets of the vanguardist brand for its own de-

velopment, is not yet clear. This matter, for the proportions of this research, can’t be discussed and,

therefore, will not be further analyzed.

On the other side, it seems much more clear what Trosman will gain. Through this operation,

Ayres will allow Trosman to amplify its investments in foreign markets and in innovation. More

specifically, it will:

1) Support a production increase;

2) Expand the brand in menswear;

3) Expand the accessories and denim line;

4) Open more points of sale in Europe and U.S.


PM apud XANTHUS

3.3.2 Competition Taxionomy

Trosman has been extremely facilitated in its international expansion by two factors. First, the

sister of Jessica Trosman was a fashion PR in New York back in 2003, and her contacts helped a lot

to launch the brand in the main department stores in Manhattan as well as in Paris65. Second, the

solid growth experienced in the local market, Argentina, gave to the brand the possibility to invest -

and take risks - in the foreign markets as well. These elements are important to consider when de-

ciding which local or international brands to consider as competitors.

On one side, Trosman started an aggressive internationalization, but 50% of the total sales are

sill in Argentina, and the corporate functions are not internationalized at all. Just as an example,

let’s consider the contracts with Japan and China. The quality of the output can’t be guaranteed with

royalty based contracts, especially for growing brands, and this is a menace that could dramatically

damage the international image of the brand, as it’s been proved in case studies in the same indus-

try66. Nonetheless, this strategy has been chosen, instead of an internationalization process that

could keep more control on the brand image and manufacturing quality. This suggests that, even

though the export is intensive towards foreign markets, the core of the company is not that strongly

internationalized, yet, and it must rely consistently on the local market.

On the other side, the recently stipulated contract with Ayres gives total control to Ayres on

the local market, therefore, even though the brand is present in Argentina, the strategic decisions in

this market are not taken anymore by Trosman, just as it’s happening in China and Japan. Nonethe-

less, it must be considered that the design and creative direction is still in the hands of Jessica

Trosman.

Which to consider, then, as competitors? The local competitors? The international ones only?

And how to behave regarding China and Japan? It’s already difficult to envisage a strategy for a

company, that, even though generally cohesive, takes paths determined mainly by a compromise

between different shareholders. For the purpose of this research, whose final objective is interna-

tionalization capabilities, it seemed lacking of sense the presumption of understanding what the ob-

jective, strategies and methods of different actors such as Ayres and Ausway Trading could be, and

therefore analyzing the local markets as a separate reality from the international setting of Trosman.

This decision is further consolidated by two facts. First, Trosman as an independent brand is no

more relying on 50% sales in Argentina, because this share is now managed by Ayres, therefore the


PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

true Trosman brand is now the one who creatively determines the future of the whole name “Tros-

man” in the world, but, strategically, can act only in Europe, U.S. and Middle East. Second, the

brand would be too small to create different lines for different countries, yet. This means that, even

if an Argentinian or Chinese competitor was menacing the local market, the current company struc-

ture would have no way to envisage a separate strategy for the local market, except for pricing or a

specific selection on the pieces of the collection distributed - but, of these two, none can be made by

Trosman in the local markets, because pricing decisions are determined by the groups that have the

brand distribution rights and collection is already selected by buyers. In conclusion, the current

analysis will consider international competitors, which are players that indeed can be a threat also in

local markets, but can nonetheless be challenged with a global strategy.

One last note about this competition analysis. Competitors in the fashion industry are innu-

merable and anywhere. For example, the competitor of a brand new Balenciaga pochette can be the

vintage Schiaparelli, even though the latter doesn’t exist anymore as a brand and the two identities

are totally different; it happens because the customer interested in the first product for its vanguard-

ist concept and excellent quality, is a vanguardist person per se, and therefore considers equally in-

teresting a real vintage. In the same way, Topshop, a low-segment retailer, thanks to its trendy de-

sign, can compete in quantity with the quality of Dsquared, a glamorous high-end brand: the cus-

tomer will think if she prefers to buy ten t-shirts for USD 20 each from the first, or one USD 200 t-

shirt from the second. Why? Because a t-shirt is a product very different from a cocktail dress and it

indeed gets into this kind of dynamic, which resembles what happens in other industries with com-

modities. Yet, Dsquared is still selling more t-shirts than cocktail dresses, confirming the power of

the brand over the characteristics of the product. Of course, this doesn’t apply to every single cus-

tomer, but to a great share of them: when the product is aspirational, not even the boundaries of in-

come can help us to segmentate. Many low-income, fashion-addicted customers will save on food

to buy a Luis Vuitton, as the Japanese fashion boom taught us in the late 90s. What does this con-

sideration bring us? To the concept that analyzing a fashion brand’s competitors would mean not

only considering all the brands that produce products in the same price range, targeted to the same

segment and available in the same markets. It would also mean considering all the price ranges, as it

was explained above, all the segments, because of the aspirational characteristic of luxury brands,

and all the markets, because Net A Porter, among with at least 25 more online retailers, ships inter-

nationally. Does this mean that the competitors of a fashion brand are all the other fashion brands?

Possibly, yes. Does this mean that we can’t select a few competitors and analyze their business


PM apud XANTHUS

PM apud XANTHUS

model? Indeed, no. The following competitors are an international selection of the ones that can ap-

peal to a sensitive, vanguardist, cosmopolitan, innovative and anti-conventional woman with a

strong sense of determination, economic independence and psychical freedom from the stereotyped

feminine image of, just to mention one example, Valentino, between 25 and 45 years old; we be-

lieve this is the target towards which Trosman is directed, and, at the same time, is the segment of

population which might be interested to experiment the selected competitors instead of Trosman

itself.

Tramando

Tramando represents the basic action in the making of textiles: “trama” where “tramando”

comes from, means “woof” in Spanish. Design is the key word. The attitude to textiles is the pass-

word. Tramando is therefore more than a brand or a sales channel for designs. It is a design business

with an integrated factory for exclusive products, an office for ongoing consultations (all-inclusive,

for the individual or for firms), it forges production partnerships with individuals and with institu-

tions, links with industry and the academic world and outsource ecologically and socially. “Tra-

mando was born in 2003. I started a business project which, rather than become a workshop for

repetitions, was to be the generation, the birth of a workshop for experimentation and creation” says

Martin Churba, ex professional partner of Jessica Trosman67.

Tramando is made up of four business projects: garments, textiles, objects for home use and

the consultancy division. A company that combines several business units related to design, located

in a sophisticated maison in classy Recoleta in Buenos Aires, with its innovative concept-store at

the ground floor. Tramando is a business which joins various strands of design. In the same build-

ing, an established group designs and develops products (clothing, textiles and equipment) later to

be produced by means of agreements with industry and eventually to be sold on the high street. It

also runs its own lab, where materials are researched and the required technology is developed to

perform the transference of textiles to different fields of design. Finally, Tramando markets concept-

development in design through its consulting service offered business to business.

In addition to local mentorship on growth strategies, franchise opportunities, HR, marketing,

and partnership issues, Martin Churba has benefited from the Global eMBA program and Global

introductions/mentorship from the non-profit, entrepreneurship oriented organization Endeavor. He

hired his BCG consultant as CEO in 200868. The Tramando brand went international by selling


roughly half its total annual production of 15,000 garments outside Argentina, at its store in New

York and shops in Paris, Kuwait, Dubai, Istanbul, United Arab Emirates and Brazil.

Even if the concept of Tramando is different from Trosman, as well as the style of its designs,

it is clear that the international expansion of the former and the fact that both the brands come from

Argentina can menace the position of the latter as international leader in representing and exporting

the exotic and dynamic creativity of Buenos Aires. In addition, it seems that Tramando, even though

second after Jessica Trosman in international recognition of an Argentinian designer, has a business

structure much more ready to expand and to capture opportunities offered by the market. In a deli-

cate phase of internationalization through export, this strategy can save Tramando many of the is-

sues that Trosman as a brand, with a yet unclear strategy, the acquisition by Ayres and the royalty

contracts in China and Japan, will encounter in defending the high status of the image of the brand

in international markets.

Balenciaga

Balenciaga is the rising star owned by the Gucci Group - part of PPR -, and its womenswear

and menswear is headed by Nicolas Ghesquière. Ghesquière, like Balenciaga, is a self-taught de-

signer, and apprenticed to Jean-Paul Gaultier and Agnes B. The hip, fresh interpretation of Balenci-

aga classics, such as the semifitted jacket and the sack dress, caught the attention of the media as

well as such celebrities as Madonna and Sinéad O'Connor. Gucci group said that if Balenciaga

didn't become profitable within the year 2007, they would replace him. Ghesquière's F/W 2005 line

showed that the house was not only profitable, but also attracted a number of celebrity customers

including editor-in-chief at Vogue, Anna Wintour69.

Today, Balenciaga has stores in Athens, Cannes, London, Milan, Moscow, Nicosia, Paris, St.

Petersburg, Costa Mesa, Las Vegas, Los Angeles, New York, Bangkok, Hangzhou, Ho Chi Minh,

Hong Kong, Manila, Seoul, Shanghai, Shenzhen, Singapore, Taipei, Kaohsiung, Fukuoka, Kobe,

Nagoya, Osaka, Sapporo, Tokyo, Yokohama, Doha, Dubai, Jeddah, Riyadh, Kuwait City, Beirut,

and Manama. Four exclusive boutiques are located in the United States70. One Balenciaga store is

located on 22nd St in New York, NY. A second store is located in Los Angeles, CA on Melrose

Avenue. Recently, a third store opened at the famous shopping center South Coast Plaza, in Costa

Mesa, CA. The brand is most famous for its line of motorcycle-inspired handbags, especially the

famous "Lariat". Balenciaga is also very well known for creating avant-garde structural pieces,


straddling the edge of fashion and forecasting the future of women's ready-to-wear fashion. Vintage

Balenciaga garments are very popular among influential fashion editors, Hollywood stars and top

models, and have been seen on Sienna Miller, Lara Bingle, Raquel Zimmerman, Caroline Trentini,

Emmanuelle Alt, Tatiana Sorokko, Hilary Rhoda, Jennifer Garner and Stephanie Seymour, among

others.

Balenciaga is a huge reality compared to Trosman, nonetheless, it has some elements in com-

mon. First, stylistically, the woman that wears Balenciaga might be tempted by Trosman and vice-

versa. They are both vanguardist, anti-conventional brands with a strong identity that aim to a rela-

tively young target market. Second, they are both young realities. Balenciaga brand is almost one

century old, but before 2003 was not properly commercialized internationally and it didn’t have a

strong concept. Balenciaga is, according to Gucci Group, a brand that offers long-term potential. On

one side, Balenciaga is much stronger than Trosman, because it is supported by one of the largest

luxury groups of the world. On the other side, Trosman is exotic and fresh, with a brand that has a

new taste and is projected towards the future. Balenciaga is projected towards the future as well, but

it has to carry the burden of being already an international brand, therefore already seen as commer-

cial from the creatives that look for the last vanguard. In this sense, Trosman and Balenciaga might

be considered competitors, because the former could steal enthusiastic trendsetters from the latter.

Alexander Wang

Alexander Wang, born 1984, is Taiwanese-American. At age 18, he moved to New York to

attend Parsons The New School for Design to study fashion design. After dropping out in his

sophomore year, he launched his first women's ready-to-wear collection in 2007. The label embod-

ies casually cool downtown style, drawing inspiration from the nineties, French chic, and rock

grunge—always finished off with a slouchy, rolled-out-of-bed edge. He was nominated for a 2008

Council of Fashion Designers of America in Women's Wear and won a USD$ 200,000 prize as the

CDFA/Vogue Fashion Fund Award winner. Wang launched a diffusion line of pre-weathered cotton

tees, tanks, and T-shirt dresses in spring 2009, T by Alexander Wang, as well as a footwear collec-

tion of towering platform sandals. He won the CFDA/Vogue Fashion Fund in 2008, an honor ac-

companied by a $200,000 award to expand one's business. His lines are now stocked globally by

more than 30 of the world’s premiere retailers including Barneys NYC, Neiman Marcus, Bergdorf

Goodman, Dover Street Market, Browns, Otte and Selfridges71. Alexander Wang chose eBay’s

Fashion Vault to launch a small leather goods cruise collection72.


“Anyone can get all dressed and glamorous, but I show people dress in their off days, that are

most intriguing.” It’s during these in between, wayward days when a person true style emerges from

their everyday life, forming the basis of Alexander Wang’s collection where clean, classic, luxurious

and refined silhouettes are introduced to urban street provocative ideal73. Like the collection itself,

the girls he dresses stand out, but not in the obvious ways. More like the black sheep in a crowd in-

spiring, surprising and slightly mysterious. The directive in Alex’s vision is upholding the own in-

dividuality, breaking the conventional idea of a predictable uniform.

Alexander Wang brand is growing fast, and its growth is as tied to technology as it is its

young target. This is typical of a Manhattan-based company created and directed by a 27 years old

designer that is influenced by the shift we’re witnessing in the world. The connections with Parsons

School of Design and the established location in the creative hub are also elements of strength.

Strangely enough for a fashion company in the U.S., even though in its first steps, Alexander Wang

is a family company. “-My mom and I, my sister-in-law and my brother, we're the four partners-

Wang clarifies, -no external investors. We’ve had people approach us but we don't need the money.

If we can keep one hundred percent of our ideas about how to grow the business, then why not?74.”

Is this be a strength or a weakness? Judging from the technologic and operative choices of the com-

pany75, nonetheless very young, it could be stated that, with the help of the right consultants and

advisors, it might not be a bad business model, to begin to get known in the world. And indeed Al-

exander Wang brand grew in international awareness so quickly that it might be regarded as one of

the great fairy tales of our times - so far.

The style of Alexander Wang is slightly different from Trosman’s, but the concept is so close

that it is clear that in the long run the two brands will be seen very close to each other. Right now

this won’t happen, because Jessica Trosman is still seen as an Argentine designer, and this differen-

tiator helps consistently in avoiding a challenge with contemporary designers that have the same

approach to the freedom of the body and the easiness of the design worn in daily life. When Tros-

man will approach the next internationalization steps, this differentiator might become weaker, on

one side strengthening the global awareness of the brand, on the other side creating the need for an

even stronger and well defined brand identity. It is clear that, even though Alexander Wang is still a

family company, and Trosman is instead owned by a South American fashion group like Ayres, the

business structure and organizational assets available for the former are outclassing the current ca-

pabilities of the latter.


Haider Ackermann

Born in Santa Fe de Bogota, Colombia, by French parents, Haider Ackermann grew up living

in various cities throughout Europe and Africa. After graduating from high school in the Nether-

lands, he then moved to Belgium to join the Academy of Fine Arts in Antwerp. He left the academy

after three years to start working for different designers. In March 2001, he presents his first collec-

tion in Paris, acclaimed by the international press. Soon after, in 2002 the Italian luxury leather

house Ruffo asked him to collaborate on a research collection. In 2004, Haider Ackermann is the

winner of the prestigious Swiss Textile Award and in 2005, after signing up with the belgian Groupe

32, he moves to Paris. That same year, he contributes to a magazine as guest curator. Haider’s work

is about contrast. The mix between high and low culture, elegance and street life. He is intrigued by

cultural differences and cultural force. The purity and simple aesthetics of forms mixed with the ac-

tivity and vitality of life itself.

Haider Ackermann went under the spotlight after the events that made luxury group LVMH

dismiss John Galliano as the creative director of Dior76. When it started to be rumored77 that Haider

Ackermann might be his successor as the star of one of the biggest and most prestigious interna-

tional brands, he suddenly jumped on the cover of Vogue78 as well as in many fashion blogs7980.

This moment of glory further amplified the influence of the brand and its recognition among the

most vanguardist global designers. If the rumors are true, Haider will be appointed as creative direc-

tor of Dior, his own brand will grow quickly and probably get funding and licensing by LVMH, as

happened to Galliano in the same situation around a decade ago.

Haider Ackermann style is, again, quite different from Trosman. Nonetheless, because the

brand is fresh and growing, and because it’s made for an independent, vanguardist woman that

doesn’t care of stereotypes. The business structure of Haider Ackermann, however, seems to be very

basic compared both to Trosman and to the other competitors, but its popularity is growing in 2011

and it might get investors and a strong business team quickly. Haider Ackermann is only partially

internationalized, for the moment the brand is distributed in Europe and U.S. mainly, but it’s getting

more and more global.


3.3.3 Porter Model and Competitive Map

The Porter Model of Competitive Rivalry within an industry for Trosman, as for all the fash-

ion sector, is atypical. Customers don’t have bargaining power, as in fact often in luxury a higher

price attracts more than a lower price. Also, the threat of new entrants depends on the international

recognition of the brand. We analyzed here the brand Trosman as an internationalizing brand with a

global concept, using the same approach as when we considered the single competitors.

Threat of New Competitors Entry

With the Argentinian fashion industry growing consistently, Brazil leading South America

purchase power, the western world slowly recovering from recession and the new eastern markets

more powerful than ever, it’s clear that many Argentinian brands might consider pursuing the same

strategy of Trosman. On international grounds, creating a brand like Trosman is not easy though, it

requires years of brand awareness strategy, even though a few competitors, like the ones we men-

tioned, especially thanks to their connections in the fashion industry, could get to get known

quickly. However, Trosman has also a consolidated distribution among retailers in U.S. and Europe,

and this is difficult to gain just in a couple of years.

Substitute Product or Services

This force, in fashion, measures the strength of the identity and concept of the brand, if it’s

able to be clearly recognizable by customers and followers. Trosman identity is pretty strong at the

moment, even though it might not benefit from the licensing contracts in China and Japan because

they might ruin the reputation of the brand and diffuse a product quality lower than expected.

Bargaining Power of Buyers

For a fashion brand like Trosman, the only buyers that matter are the retailers. In this perspec-

tive, shops and virtual boutiques have a quite strong bargaining power because the brand is small.

They are able to impose strict deadlines, unfair conditions to any new brand that is not yet totally

recognized and can’t produce in high volume. It’s not a case that often the same boutiques that offer

Trosman offer also its competitors’ brands, because they are all new, emergent brands, sough-after

by the most trend-sensitive customers, but also all small enough to leave to the shop the power to

dictate its own rules.


PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

Bargaining Power of Suppliers

The manufacturing in Argentina is a fragmented industry, fragmented enough to leave to the

brand the power to switch supplier quickly in case quality is not satisfactory. However, Trosman

needs know-how, and this somehow limits its strong position. If the brand had to start producing in

Italy, as Jessica Trosman is considering, because of the extremely higher level of know-how respect

to Argentina, then the power of suppliers would be even stronger, because these manufacturing

company in Italy are rare and sough-after by the most prestigious international brands.

Intensity of Competitive Rivalry

The competition in the industry is harsh. Not only innovation is in the genes of these contem-

porary brands, but they are also, more or less, in the same internationalization stage of brand aware-

ness, and therefore fighting to get known. The fact that all of them can be considered vanguardists

intensifies the expense, in terms of both money and time, that is needed to get recognized by the

international press, and to be sure that the diffusion of the brand is equilibrated in the global market.

Each of these brands has a competitive strategy based often on the assets that the creative director

was able to build at the beginning of the career in terms of networking, financing and partnerships

for manufacturing and distribution. As long as Haider Ackermann is stronger in Paris, Alexander

Wang in New York and Balenciaga established everywhere, rivalry damages can be limited. But

once Tramando and Trosman try to enter the international markets targeting, of course, the most in-

teresting cities where the creative customer is, then we’ll probably assist to a decisive re-definition

of each brand’s concept or to the abandon of a market in exchange for a niche.


PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

Competition Map

This competition map is conceived to measure three elements: strength of the brand identity/

concept (horizontal axis), internationalization stage (vertical axis) and organizational/business as-

sets and potential (bubble dimension). It is also designed in a dynamic way, to show the historical

progress of each brand, which, for all of them except Balenciaga, took place in the past four years.


PM apud XANTHUS

3.3.4 Trosman’s Key Factors of Success

Which current characteristics of the brand and corporate structure of Trosman are critical to

defend its competitive advantage on a global ground and, in particular, against the internationaliza-

tion of its rivals?

• Made in Argentina. It might seem secondary, but even though Argentina has a wide fashion

scene, it’s not often known in Europe and U.S. This gives to Trosman an exotic and unique ele-

ment to be easily remembered by customers among its competitors.

• Brand Concept. The concept of Trosman, as it’s presented through the passion of Jessica

Trosman for the images in National Geographic, Le Corbusier, and the process of the garment be-

coming “ensemble” as an architectural process is unique and appealing. It also reflects the heri-

tage of South America, and Argentina, as an area where nature is abundant and appreciated, be-

coming part of the daily life. It resembles somehow the way though which Gianfranco Ferré81 be-

came known at the very beginning of his career. This precious asset is simple but specific enough

to let customers remember it as distinctive, and it’s very important to keep its connection with the

quality of the output.

• Ayres. The acquisition by Ayres should not only be considered as an opportunity to get in-

vestments and a more skilled management team to learn from. It is also, maybe more importantly,

a solid anchor for times of crisis that might present during the international expansion.

• Quality and Know-How. Even though not at the same level of Italian or French manufactur-

ers, the know-how acquired by Trosman in the production through local partners is an important

element to keep and develop further, because reaching a good level of quality through production

in Argentina is keeping the cost level optimal, and switching production to Europe would force

the brand to either sell more or increase prices.

• Internationalization. Trosman is already present in almost every region of the world. This

interesting aspect offers to the brand the possibility to learn what the customers want in every dif-

ferent market, and should be considered an asset to explore even though the licensing contracts do

not require the brand’s direct control over the sales and marketing process.


PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

• Creative Director Role. The fact of having an actual creative director - still alive -, with a

personal history, a character, aspirations and the potential to network in the main fashion metropo-

lis like Paris, Milano, New York and Tokyo is a factor of key importance, and helps dramatically

the global growth and awareness of an emerging brand.


PM apud XANTHUS

4. Stategic Pattern: from Argentina, to the World4.1 The International Industrial Stream

Before assessing the potential of Trosman to penetrate the international industrial environ-

ment through a specific strategy, it might be useful to quickly describe, generally and schematically,

how the international industrial stream works in first place, and how the main corporations decided

to strategically manage every function.

The international textile sourcing landscape concentrates in some Countries where are located

a few defined, globally reliable producers. For example, a brand from Europe or United States, ex-

cept for the start-up phase where quality control must be overseen from closely, is likely to decide

to internationalize production, not only by researching and importing fabrics from China, India,

Turkey, Indonesia and Philippines, but also by creating a network of reliable manufacturing suppli-

ers, which must be able to take responsibility of all the production phases that result in a final prod-

uct of desired quality. However, the strategic decisions, and often the creative ones, are taken where

the comparative advantages allow them to be flawless and coherent with the tradition and vision of

the brand: in the home country. This internationalization strategy, that has become a diffused pattern

in the last twenty years of exponential development of the luxury industry, indeed results in an in-

creased profitability, but has to go through a series of problematic processes that involve human re-

sources know-how availability, different textile history of Countries where production is external-

ized, strict quality control enforcement in presence of huge outputs, brand heritage preservation and

well-known counterfeiting issues. Often, start-ups with high creative potential simply can’t compete

with established brands or groups that already possess both a strong manufacturing competitive ad-

vantage and a location advantage, and soon exit the industry for the incapacity to efficiently organ-

ize and sustain their value chain, because it’s impossible for them to reach the break-even point

where demand is big enough to get the advantages of a sourcing and manufacturing externalization.

On the marketing function, a few differences, mostly introduced five years ago by social net-

works and their consequent increased diffusion, allow big and small companies to fight almost on

the same field. Even if mayor luxury groups still possess a strong negotiating power in terms of

globally purchased advertising in traditional media, the increasing penetration of social networks

provides a relatively cheap instrument to create a substantial brand awareness keeping the invest-

ment effort low. Moreover, the target segment can be almost hand-picked: very specific and selected

segments of the population can be reached easily with externalized and pay-per-click solutions such

as Facebook or Google Ads. In the case of the “bubble-up effect82”, where a brand or product grows

thanks to a circumstance where an exponential number of customers adopts it by emulation follow-

ing a trend-setting initial event, with no advertising effort, the originality and creative component of

a new product often outsets a long-term established brand expensive advertising campaign. How-

ever, the balance of forces will never be equal: in fact, what an established brand lacks in terms of

creativity, innovation and proximity to the desires of the target segment, can compensate by intensi-

fying advertising with the abundant resources available.

Manufacturing and marketing can both be externalized or internationalized to markets where

expertise has become high thanks to a learning process that is a characteristic consequence of

globalization. The Western professional influence and know-how voluntary or involuntary created a

wide range of human resources as specialized as the ones in the brand’s original countries. Depend-

ing on the production needs, on the available resources and on the desired profit margin of the or-

ganization, it can be chosen to internationalize functions in a easier way than ten years ago, because

the countries that provide the textile or manufacturing sourcing quickly adapt to absorb skills and

competences and offer a service that get closer and closer to the needs of the high-end luxury brand

output.

It is clear that sourcing, manufacturing, advertising and distribution are key functions to be

internationalized, because the high costs encountered in Europe inevitably erode the profit obtained

by the core activities. Nonetheless the strategic and creative functions, such as design, marketing

and finance, have to be kept close to where the vision and heritage of the brand come from, to avoid

dangerous pitfalls such as a loss of personality or a communication which is too vague respect to

the specific target it is made for.

On the other hand, start-ups, or small companies eager to expand, don’t possess enough re-

sources to have internationalization of the some functions between their options. When we mention

the word “resources”, it must be noticed that this term is not only referring to economic resources.

In fact, the most important resources that these small companies or start-ups are missing are knowl-

edge and human resources, because these elements alone, yet without a huge investment, could al-

low them at least to understand what could be internationalized and how. Start-ups often don’t grow

because they lack the international managerial, entrepreneurial and business development expertise


that an established brand uses to choose what to externalize, where, and through which phases. As a

direct consequence, start-ups and small fashion companies, in Europe and US as in emerging

economies, can only exploit their own competitive advantage, and to survive in a market where the

bigger players sum their competitive advantage with a comparative advantage researched outside

the original local environment.

These considerations have the objective to briefly synthesize where the opportunities and

threats rely for enterprises located in the first world, which is developed and quickly aging. They

will become interesting once we’ll compare them with the situation of Argentina, which is a devel-

oping Country, but young and with a very different combination of competitive and comparative

advantages respect to the first world.


4.2 Argentinian Fashion Promises

The more “European” Country of South America, Argentina, has been going through quite a

lot of ups and downs from the 70s until now. Used to be regarded as one of the top world economies

prior to the First World War, Argentina soon knew a slow and relentless regression of which the

relatively recent economic collapse in December 2001 is just the somewhat expected apex. Its low

current economic ranking can be attributed to both an economic and political series of events which

have profoundly affected the region over the past three decades. As it’s been showed in the PREST

analysis in the previous chapter, the country, now home to many European immigrants who moved

in the first half of the century, still possesses an impressive abundance of resources, not only agri-

cultural but also mineral and, lately, a wide human asset made by well-educated professionals not

inferior to European or U.S. for skills and competences in their own fields.

Argentina is now a Country of paradoxes. Infrastructures outside the very center of Buenos

Aires are poor, society is not cohesive in pursuing a common objective, trade barriers make imports

difficult and social gaps are increasing. On the other side, since 2002 there has been a comparable

progression in the three main sectors - agriculture, industry and services -, unemployment has been

steadily decreasing and the commercial balance keeps positive. In the meanwhile, the stable growth

of Brazil brings positively influences growth in the whole South American region. The wealth of

Argentina can be generally linked to favorable or unfavorable variations of naturally unstable fac-

tors. Without a rigid internal policy it would become impossible to control the poison of rising infla-

tion. But, while the international public opinion and the local government despise and try to address

these problematics, a few sectors may benefit from this peculiar conjunctions.

Effective, entrepreneurial-based brainstorming could find strategies or businesses that may

consider advantages what was originally viewed as a threat. While for big foreign corporations, or

companies that require big initial investments, an internationalization strategy is still dominated by

a highly unpredictable risk, there are some smaller realities, able to exploit local resources, and for

their nature flexible and less dependent on big start-up investments, which could foresee and capi-

talize on opportunities that bloom in this highly changing environment.

Human resources, for example, are extremely qualified in Buenos Aires, especially in the

services sector, such as marketing, IT, administration, etc. A wide part of the population of the capi-

tal is very educated and Academic institutions are becoming excellent talent incubators. Fashion


PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

and design production is also stimulated by a few good schools, which offer exchange periods with

prestigious foreign Universities of which every design student dreams of. When these young brains

of management and creativity come back to their hometown, they not only speak perfect english, a

skill that in Latin America is rare, but they are trained at the same level of excellence of their Euro-

pean and American peers.

At the same time, know-how for textile manufacturing is close to the European Countries too,

because it’s where the history of these artisans comes from. The love for nature and Argentina of

these artisans is translated in the love for the products of the Country, like top-quality leather and

soft, precious textiles. These products are part of the heritage of the population as well as the com-

plex and original manufacturing process that transforms them into shoes, bags and clothes. If this

process hasn’t reached yet the level of the European counterparts, it is confirmed that, since ten

years, there is the good will to learn and experiment more with textile production and fashion ap-

parel manufacturing.

The majority of the designers, entrepreneurs and head of manufacturing in the textile industry

- in both big and small sized companies - spent a period of their life in Europe, especially in Italy

and France. They are well-aware of the manufacturing techniques and know-how used in European

fashion production and updated about the latest innovations. The lively social life of Buenos Aires

connects artists, designers, architects and professionals from the marketing and advertising industry

to share and create an innovating platform able to further stimulate the potential of original creativ-

ity. How can this appealing environment be exploited at its maximum extent to implement the exist-

ing fashion brands towards internationalization?

What Argentina already possesses in terms of design, finance, management and manufactur-

ing competences, though, seems to be counterbalanced by the presence of some issues, that inevita-

bly seem to be the main obstacle for a healthy internationalization process. Sourcing, as already

mentioned, gets difficult because of extremely high importation taxes. Corruption has a role in this,

and creates problems to the industry in the sense that it’s extremely difficult to forecast when items

will be shipped for exportation. Tired and demotivated by issues created both by the government

policies and by the local business environment, many entrepreneurs decide not to import fabrics,

which limits their choice, and, consequently, production, to a few expensive fabrics present locally


PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

or in Peru and Chile, and, of course, leather. Is it possible to find a way to overcome these obsta-

cles?

The distribution network as a whole is affected not only by the difficulty to import, but also

by the geographic position of Argentina at the end of the world. Sending internationally and fore-

casting is not impossible, especially with the help of expert distributors, but for sure gets quite ex-

pensive. Can these costs be balanced by the convenient local manufacturing and design structure?

The last disadvantage to consider is the possibility for the local brands to be aware and com-

pete effectively with the ever-changing, aggressive marketing strategies elaborated in New York

City, London, Paris and Milan by the best heads of the international fashion industry. A clear brand

image to communicate to costumers, and a clear campaign made by presence in social media, inter-

national press and television is a fundamental element at the heart of the success of a firm in this

industry. How the brand is positioned, in which magazines and to which exact segment is the vital

decision that will ultimately create a collapse or a boom of the brand. Are the skilled marketing pro-

fessionals in Buenos Aires able to keep up to date with the competition? Will they be able to pene-

trate an endless stream of creativity which permeates the streets of the main international metropo-

lis, that is where ultimately creativity and consumer behavior come from, and influence it effec-

tively?

4.3 Strategic Pattern Envisaged

The main information has been searched, selected and organized. We now have a deeper un-

derstanding of the background and specific characteristics of the Argentinian market from a broad,

general perspective and from the closer and more detailed situation of the textile and fashion mar-

ket. The PREST Model guided us from the general to the specific, from the broad to the limited and

from the frame to the core of the picture. As a dynamic model, it allows us to consider all the ele-

ments and choose a potential ideal pattern of development for a corporate reality as Trosman, which

we analyzed from a competitive and KFS point of view in the last chapter. We need now to translate

this analysis into a clear action plan with the final objective of internationalization. The Strategic

Pattern Model that we are about to use will, therefore, consider through a scheme what the present

conditions are and where, ideally, should the firm be headed at a strategic level in the future.


PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

Strategic Pattern: Aspirational/Luxury Fashion Brands

Case: TrosmanStrategic Pattern: Aspirational/Luxury Fashion Brands

Case: TrosmanStrategic Pattern: Aspirational/Luxury Fashion Brands

Case: Trosman

Current Possible

Which Product(s)?

Specificity High-End Pret-a-porter

Average Denim

• The High-End Line is currently commercialized in Argentina and Internationally. It is made by the collection of women-swear and accessories cre-ated and designed by Jessica Trosman and her creative team, following the brand con-cept and developing a consis-tent degree of research collec-tion after collection.

• The Denim line (Trosman Jeans) is present only in Ar-gentina and available for li-censing in China and Japan. It offers mainly basic denim and apparels, like basic t-shirts, sweaters, etc.

Top-End Pret-a-Porter

High-End Pret-a-Porter

High-End Denim

• The Top-End Pret-a-Porter allows experimentation and is perfect to show in Paris. It can be a boost for the branding strategy.

• To exploit completely the markets in Europe and US, then, the High-End line is perfect for aspira-tional high and medium segment,

• while the High-End denim, the efficacy of which has been demonstrated by Balmain recently, is a second line that can work well in emerging markets, such as Argentina, Brazil and China.

• In emerging markets only the Top-End and second line would be sold. The first has the function of branding and is targeted to a high segment that is able to afford expensive fashion apparels, the sec-ond line can be sold to the medium segment, that is not able to afford the first line. Therefore the first line is not appropriate in emerging countries, but only where the purchase power is consistently higher, like in Europe and U.S.

Brand Concept Vanguardist, visionary, inspired b y t e x t i l e r e s e a r c h , d e -structuralism, architecture, na-ture and travel. The Brand iden-tity is currently linked strongly with Jessica Trosman creative identity.

• The brand concept needs to be further strength-ened.

• It should be considered that if in Argentina Trosman is a well-known brand, already part of a national creative heritage, in Europe the brand is not yet known by most of the public.

• Therefore it must be clearly identified within 3 adjec-tives which define the brand concept, and, from there, communicated widely with a focused market-ing strategy. Except for early adopters, the rest of the market might at some point confuse the brand with its closest competitors. The more precisely and clearly the brand identity can be communicated, the better.

• With time, the brand Trosman should own a specific brand identity, separated from the one of the crea-tive director Jessica Trosman.


PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

Market Position-ing in Argentina

High

At the moment, the market posi-tioning in Argentina targets mid-dle and high income segment with an undifferentiated offer.

Top and Medium-High

The most interesting segments in Argentina are the Top segment and the Middle segment. Therefore it would be more effective to target these two segments with a differentiated offer. For example, the Top Line, the most vanguardist and expensive, can have a dedi-cated shop in the neighborhood of Recoleta, and the denim line, more affordable for Argentinian middle class, in Palermo.

Market Position-ing internationally

High Top, High & Middle-High

• By targeting all these three segments at interna-tional level, the brand can pursue a long-term branding strategy.

• The current client of the denim line is the future cli-ent of the high line.

• The Top segment reinforces the aspirational con-nection of the two other segments.

Price for first line High

avg. tshirt: € 450avg. dress: € 1.400

The prices at the moment reflect the competitors’ prices, with slight increases in the most unique and original pieces.

from Top to High to Denim

tshirt: € 950 to € 200dress: € 4.000 to € 550

• By extending the prices on both the top and the bottom line, we can reach more potential customers, especially in the perspective of targeting both con-solidated and emerging markets.

• This shift doesn’t change the power of the brand and the strength of the aspirational.

• The margin is higher for the Top segment, especially in the first period, but with economies of scale (de-pending on the textiles sourcing and manufacturing) this will soon extend to the High and Denim lines.

Textile quality for first line

Extremely high and re-searched, all materials used

By keeping the same textile quality for all the lines, Trosman can gain a consistent competitive advantage over the counterparts that often in the denim line lack both textile research and manufacturing quality.

Textile quality for second line

The denim second line, at the moment commercialized only in Argentina as Trosman Jeans presents a medium quality for denim as well as for the basic collection.

It is crucial for the brand internationalizing to offer an extremely high quality level, both textile, manufactur-ing, fit and design, even in the denim line. Else way, the brand will confuse the target and lose precious brand identity, not to mention that it would be difficult to really differentiate from the many competitors al-ready present in US and Europe offering denim lines.

Design character-istics

Vanguardist, minimal but innova-tive, internationally acclaimed

Not only the design should be kept coherent collec-tion after collection, but should also refer to the same main visual concepts among the three lines, and, at the same time, keep a singular identity for each line.

From Where?(sourcing)


PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

Textiles Europe, China, Peru

• At the moment, the most re-searched textiles are sourced from Europe, at exorbitant prices due to importation taxes. This limits the use of these materials to a few se-lected pieces.

• Good quality textiles but still expensive can be sources from Argentina or Peru, even if Jessica Trosman is oriented towards a research on textiles textures that Argentina’s indus-try can’t provide.

• China is a good source of tex-tiles. The cost is still increased consistently by taxes, but more choice in terms of fabric, color and fiber is available.

Europe, China, Peru

• The sourcing in Europe should be limited, except for those pieces that are produced in Europe by spe-cialized manufacturers (see section about manufac-turing).

• Thanks to Mercosur agreements, it will become increasingly less expensive to source from Latin America. Therefore, at the cost of complicating op-erations, Trosman could try to look for more textile providers around South America.

• The acquisition by Ayres should be of big help in this matter.

• At the same time, the recent licensing contract in China allows to optimize the sourcing from this country, and, eventually, dislocate production of the most basic pieces.

• The internationalization of textile sourcing is funda-mental to keep quality high and costs low.

• For a brand which main operations site is in Argen-tina, moreover, this allows to gain benefits also from a less costly labour market for specialized opera-tions management.

Leather Argentina Argentina

The home country is an excellent provider of leather, therefore for this type of material there won’t be need to look to international markets.

Know-how Argentina 70%, Europe 30%

At the moment, the know-how is sourced mainly in Argentina.

Argentina 20%, Europe 80%

Jessica Trosman would like to take advantage of the contacts made in Italy and France to further innovate the collections by using sewing and fitting techniques that are well known in Europe but still not implementa-ble in Argentina due to the absence of a local demand for such a high level of skills.

Manufacturing Argentina

• The manufacturing function has always been based in Ar-gentina;

• but Jessica underlines that the competitors often offer types of sewings and fits that with local Argentinian manufacturers are not possible to achieve.

China 30%, Argentina 60%, Europe 10%

• It is advisable to seek a more diverse manufacturing function.

• China can produce the more basic items, like t-shirts, cotton sweaters, etc.;

• while Argentina would manage prints and the high-end production.

• Trosman could, then, establish a small research office in Italy, in the region close to Mantova and Modena, to research new sewings, fibers and fit potential.

• This research could be then developed for the Top-End line, which has a margin high enough to be produced in Europe.

• The lower lines would benefit as well of this re-search practice, that would have the objective to bring constant innovation to maintain a competitive advantage for the brand.


PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

Marketing Argentina 90%, Europe 10%

• Marketing is sourced mainly in Argentina at the moment.

Argentina 30%, Emerging Markets 30%, Europe 40%

• It is crucial to have access to specialized marketing strategists in the targeted markets.

• This internationalization of the marketing function is essential for a fashion brand, as it’s been demon-strated widely in the past by the strategy of many brands now completely internationalized.

• The importance of this is due to the fact that only agencies that work in a specific local market are knowledgeable enough of the local culture to be totally competitive.

Communication Argentina, Paris, Tokyo Argentina, Paris, London, Milano, New York City, Sao Paolo, Shanghai, Tokyo through specialized

agencies

PR Argentina, Paris, Tokyo Argentina, Paris, London, Milano, New York City, Sao Paolo, Shanghai, Tokyo through specialized

agencies

Advertising Argentina Milano, Paris, Tokyo, Shanghai

Online Argentina Argentina

• While it’s convenient to internationalize those mar-keting functions that are market-specific, like PR and advertising;

• it’s also interesting to exploit the cost advantages available in IT, digital marketing and social market-ing in Argentina.

• Buenos Aires offers a wide and professional pool of talents in this field;

• for a cost which represents a fraction of what is paid by European competitors of Trosman, for example, hiring Createthe Group.

Strategy


PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

Marketing Strat-egy

Argentina

• The marketing strategy in fashion is commonly very close to the brand strategy and to the design of the brand. Often who conceives the iden-tity and the ideas for one sea-son, is also the person who decides on the marketing strategy, especially in emerg-ing brands and start-ups.

• Right now, the marketing func-tion is located in Buenos Aires;

• even though Jessica is sur-rounded by European, Japa-nese and American contacts that have the role of consult-ants with a interests in the company.

Europe 50%, Argentina 50%

In the internationalization shift, the ideal plan would be to:

1) progressively separate the marketing function from the branding and design. They are and will always be interconnected and strictly dependent, but Trosman needs now professionals specialized in luxury and fashion marketing to expand and get a more consistent share of this market.

2) progressively re-locate a marketing office in Europe and in the most important markets, so that the whole marketing function is still controlled by Bue-nos Aires but the research and strategic functions of the marketing take place closer to the target markets. This is also important to avoid losses in campaigns that don’t produce results and to asso-ciate with the best local partners.

Financing Strat-egy

Argentina

So far, the financing strategy has been taken care of from Argen-tina, with a consistent direct in-tervention by Jessica Trosman.

Argentina

• The financing is now in the hands of Ayres, and this is an advantage for Trosman, because the commer-cially bigger and locally more consolidated group can probably help consistently the evaluation of new investment and sourcing of capital.

• Most probably, Jessica Trosman will have a strong voice in the financing strategies still for a while.

Brand Strategy Argentina

As the home country of the crea-tive director and as the location where the brand was founded initially, Argentina is where, so far, the branding strategies have been chosen.

Argentina + Consultants help from Europe

• Ayres is going to help in the brand strategy as well.

• Considering the interest that the group has in the company, and aware of the danger of lacking deci-sion and differentiation in the development of the brand on international grounds, Isersky should pro-vide consistent support on this side of the strategy.

• At the same time, it would be appropriate to seek consultancy from Europe, because the brand is be-coming more and more international.

Operations Argentina

Manufacturing has always taken place in Argentina, and from there Trosman has always been exporting to the world.

Argentina

• Ayres, already well-expanded in Latin America, and with a consistent quantity of production, will provide know-how and support in the operations function.

• It is crucial that the eventual cost advantages de-rived by exploiting the production facilities of Ayres doesn’t influence the quality of Trosman.


PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

Design Argentina with international inspiration

Jessica Trosman incarnates the design of Trosman, inspired by the forms of nature, architecture, and able to compete strongly with the best international de-signers. Even if the design func-tion strictly takes place in Argen-tina, the inspiration doesn’t have geographic borders.

Argentina with international inspiration

• As long as the design function of Trosman remains aligned with its original purposes and research, the design will keep its competitive advantage and eventually develop it further.

• Jessica Trosman is able to create a design research team, thanks to the international appeal of Buenos Aires and thanks to the presence of fashion univer-sities of indiscussed quality.

To Where?

First Line Undifferentiated - all markets Differentiated to all the markets, with a Top line exclusively for Brazil, Europe, Japan and Middle

East

• The first line is perfect to be differentiated depend-ing on the design characteristics preferred by each market.

• In Argentina, it is advisable not to have a First Line, just the Top Line and the Denim, because the lower power of purchase respect to the other markets.

• How to differentiate the First Line? The differentia-tion usually takes place by itself, when buyers see the collection in Paris or Tokyo and choose accord-ing to their target market.

• What could help this process is the specific design of a collection keeping in mind all the target mar-kets. If some pieces are not chosen by anybody, they serve as indicators and are don’t go into pro-duction.

• Considering that the brand is still weak in specific countries, it is advisable to target by specific coun-tries and by city as well: Brazil (to intensify), Chile, New York City, Los Angeles, Aspen, Miami, Chi-cago, Las Vegas, Dubai, Abu Dhabi, Doha.

Second Line,Denim

Argentina All the markets, except China and Middle East

The Denim Line, directed usually to a younger seg-ment and with a relatively lower power of purchase, should be reserved for those markets where this seg-ment is actually consistent.


PM apud XANTHUS

PM apud XANTHUS

Licensing China and Japan None

• With time, the long-term objective of the brand should be to eliminate the licensing at all, because it is a consistent threat against the brand identity and quality on international grounds.

• In fact, the customer of Trosman is often fashion-sensitive, original and international. Therefore, it could consistently damage the brand to observe different levels of quality depending on the country where the customer is traveling to.

• Moreover, as the brand begins to get known in Europe, there is the threat of products made in China to enter these markets and be perceived as fakes by the customers.


PM apud XANTHUS

How in Argentina? Verticalization

• Used Argentinian market to sustain international expan-sion, keeping practically all of the production, strategic and marketing assets in Argentina.

Horizontalization & Verticalization

• Trends and latest innovation in terms of design, operations strategy, branding, marketing, digital marketing, textiles and manufacturing has to come from Europe or US, but development of these func-tions has to be kept in Argentina - through a trustful and competent workforce - to exploit the cost ad-vantages.

• Export process has some issues, because the tim-ing is slow, but so far the pro-active attitude of Jes-sica provided a strong influence on all the organiza-tion, and those issues have been managed well, balancing the risk of delay with anticipation of all the phases of production.

• Argentina should become a base to develop all the non-strategic assets and products that might benefit from cost advantages.

• Argentina is also the home country of the brand, that means that the brand must be strong in this country for international brand awareness. As has been mentioned earlier, there is no international brand that is not strong in the local market.

• Fresh investments in public education will usher in better social development. As local demand be-comes more educated, also its tastes change. This market, thanks to the internet penetration as well, is going to become more cosmopolitan and therefore line its needs up with the foreign demand.

• Argentina provides also the exotic differentiator for the brand, therefore it helps in international branding strategies.

• Because entry barriers to entry in the local fashion apparel industry is low (see PREST Macro Analy-sis), it is possible that competition in Buenos Aires increases consistently, in this case it will be more difficult to defend the market share gained so far.

• Tourism is intense in Buenos Aires: this affects the quantity of premium products that can be sold in this location, the hospitality sector and its prices. It’s often seen how fashion brands can expand into hospitality: Versace in Abu Dhabi, Bvlgari, etc. May it be an opportunity for Trosman as well?


PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

• The immense availability of good quality leather may suggest to make more use of this precious and sought-after material. Being the sourcing and the cost so easy, slightly increasing the percentage of leather use in the collections would help revenues.

• The connections that Trosman can develop with local fashion and design Universities and education institutes are very important and mutually beneficial. Also partnerships with business Universities might be interesting. They provide a great tool to source talents both in the creative and in the management functions.

• The same links can be established with local pro-ducers like artisans, which would create a long-term asset to manufacture with a high-quality level, and eventually introduce innovations from Europe to Argentina, to produce at the same level of the com-petitors but with lower costs.


PM apud XANTHUS

How internation-ally?

Horisontalization

• Exporting goods from Argen-tina;

• intensive networking with local partners like showrooms, PRs and shops;

• that also played the role of advisors for the entrepreneu-rial intensive role of Jessica.

• This entrepreneurial manage-ment approach has consis-tently helped in keeping the firm flexible while expanding, and sourcing the best pool of talents that could face not only internal but also external growth.

Horizontalization and Verticalization

• The Entrepreneurial Management, a tool that pro-vides flexibility, dynamism, networking, vision and quickness in grasping opportunities, has revealed as an important tool of Trosman ability to develop internationalization. Without losing this approach, which transformed a start-up in an internationally recognized brand in less than ten years, Trosman should now source for management positions and management consulting able to manage innovation and international growth. By keeping the structure flexible and letting every function cooperate in an entrepreneurial and creative symbiosis, Trosman can manage its KFS successfully and project them towards consolidating the current growth and further expanding.

• International expansion can sustain itself alone now, it’s important to shift strategy and marketing by get-ting inspiration from the international and local con-text, using stronger branding and social marketing tools.

• Creating long-term partnerships with reliable col-laborators in marketing is essential to guarantee an excellent development in the targeted countries outside Latin America.

• Most important now is international brand recogni-tion and awareness, which is achieved with a sound international communication and PR, plus an exten-sive social marketing to communicate with those segments of the population (like bloggers) that might not be clients in the short term, but, through word of mouth and their influence in the most impor-tant fashion circles of Milano, Paris and New York, can feed the aspirational of the actual clients.

• Export issues can benefit from departure from other Mercosur Countries such as Chile, where export and import are easier, through partnerships with local firms. Ayres should help in this matter.

• It is important to rely on more solid partners and interlace relationships with international and strong showrooms in every target market. The showrooms can take care of PR and communication at the same time, as well as providing interesting advice regarding the pieces of the collection that might be better accepted by the market.


PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

• A few owned shops in strategic locations (Porto Cervo, London, Paris, Tokio) can be a possibility. These shops, even if small, would be targeted to a segment of the population that likes to experiment and would be more eager to buy from the Top Line than from the First Line. Possessing small flagship stores in these locations would not only bring reve-nue but also awareness. The location should be decided scrupulously, to target a segment not too commercial but high-end.

• The brand would benefit from shifting to produce as well a Top Line, which would attract brand aware-ness and a new Top market very important to gen-erate awareness and aspirational;

• a Second (or Denim) Line, would help to enter into a younger and trendier segment, not necessarily with a lower power of purchase, especially in the Euro-pean market.

• To develop the Top line and the Denim line, it’s es-sential to be vanguardists and competitive on the fit of the denim. Therefore it might be advisable an exchange of know-how with Italian and French manufacturing firms.

• Brazil and Latin American region are areas worth exploiting for their growth potential. The brand is known in Brazil, but its quality, innovation and van-guardism can compete strongly with the local brands. It is suggested to target this country more strategically and with more intensity. The easiness to export there is another factor worth considering.

• Brazil, as other targeted countries, is embracing a green approach toward textiles and fashion. It might be an option to align the brand philosophy a little more to be compliant with this strong trend.

• The unclear inflationary policy may create issues when sourcing many different materials from foreign countries, which happens quite often because Trosman’s characteristic design is based on ex-perimentation. This issue can be avoided with proper budgeting.

• Intellectual property is a key issue, especially when the brand is weak. It should be especially taken care of in China. The licensing contract may further com-plicate this matter.


PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

• The consequences of the bad international reputa-tion of Argentina influences the reputation and pres-tige of the firm’s brand internationally. It must not be forgotten that a fashion brand not only represents itself, but also the country where its concept origi-nates. Therefore the external image of Argentina as a country has an influence on the marketing com-munication strategies of the brand.

• Let’s just underline once more the importance of an international digital marketing strategy, which, for the low cost of this professional service in argentina and its global importance right now, is one of the most cost effective branding strategies Trosman can embrace at the moment.

• It is key for the international strategy that Trosman establishes strong relationships with big retailers. As long as the targeted retailers are small, conditions will be bad for Trosman and results not worth it. With bigger distributors there are stricter rules, but also much higher revenues.


PM apud XANTHUS

5. Managerial Implications and Research Transferability5.1 The Entrepreneurial Management Advantage

With the international fashion and luxury industry expanding mainly thanks to the increasing

power of purchase of emerging countries, the case of Trosman indeed stands out. In fact, the strat-

egy of the brand has been to target established markets from an emerging country. Nonetheless,

from a branding strategy point of view, it seems that the pattern of development of the brand doesn’t

differ much from the ones of the European and U.S. counterparts. The same is not true for sourcing.

Indeed, because a local cost advantage is present, it is exploited to sustain international growth.

While the results of Trosman in terms of international prestige and commercialization are indeed

remarkable, they look like a solitary case in the Argentinian fashion landscape, and the reasons be-

hind this success seem hidden or, at least, not immediately clear. It is a strong belief of the writer of

this research that this success is far from “random” or due to “luck”.

From the first steps of the brand, Jessica Trosman has always surrounded herself with part-

ners, consultants, family members and clients with high knowledge of the fashion industry in their

relative field or location. One example might be her sister working as a PR in New York, who

helped the brand to expand first into the U.S. then into Middle East. Another example might be

Claudio Antonioli, owner of the homonym boutique in Milano and extremely well introduced in the

Italian fashion scene not only in terms of retailing but also textiles and manufacturing. The last ex-

ample can be Ayres’ owner Isersky, a profile with deeper operations and financial competences.

This sort of constant consulting received by the brand allowed it to position itself where it was

more convenient, and to exploit the communication opportunities in those markets where they

would have been better accepted. In terms of management, the results of this strategy confirm the

need of a flexible, entrepreneurial management approach to successfully manage internationaliza-

tion in a highly risky environment such as Argentina. When the final prize is as high as international

recognition, for a brand that is a small player and coming from a country that is a small player itself,

only an extremely dynamic organization can thrive. The dynamism of Trosman has been demon-

strated by the international opportunities it took advantage of, from the expansion in Japan to the

licensing in China, from the presentation in Paris to Middle East market awareness, starting from


PM apud XANTHUS

PM apud XANTHUS

almost no financing, in a span of only nine years and from a country recovering from one of its

worse debt crisis in history.

On the flexibility side, the brand has been able to envisage the opportunities in China well

before the licensing contract, by taking the risk of producing a small collection for a few retailers

during 3 years waiting for a final long-term agreement. The team of Trosman has been indeed

helped by the international orientation and quality of the education in Buenos Aires, so that the

brand offices have been in constant contact with the world, creating fashion able to compete with

the major Italian and French brands, and without losing a clear brand identity in the process. Jessica

Trosman role is definitely major in this strategy, but the help of a team dynamic enough to shift

with the market and the cost advantages has been essential. All this happened without losing in

quality or experiencing delays in the shipping of the collections to Europe.

Analyzing this case entrepreneurially, it seems clear that there wasn’t a long-term strategy

from the beginning, just maybe the “dream” to sell in the major European boutiques. Strategy has

been created step-by-step depending on the success of the local market, on the international design

recognitions and on the network created among retailers and editors in Europe. Needless to say, a

standard function-based managerial organization could never have succeeded in this international

expansion. Only the actual Trosman team, complementary but also interconnected, where roles are

not defined but everybody is responsible of everything, and each person has a defined specializa-

tion, has the right entrepreneurial approach to work in this type of internationalizing emergent

brand.

On the other side, a few local advantages, such as the potential online marketing cost advan-

tage, haven’t been exploited, and in the target markets the branding is still weak. Why?

The main reason behind this consequence is that, an organization sourced mainly in Buenos

Aires has been a valid asset so far, but it might need to be integrated with international specialists to

maintain its competitive advantage. If expansion continues, location-based cost advantages are go-

ing to shrink, and the brand is going to resemble more an international brand than an Argentinian

exporter. Profiles from Europe and U.S., especially specialized in international operations, branding

strategy and marketing, are unavoidable contributors in this stage. They might be permanent team

members or consultants.


PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

In conclusion, and generalizing the observation for internationalizing brands from emerging

countries, as the entrepreneurial management approach of the organization has been such an impor-

tant asset so far, it must continue to be developed along with the internationalization process, but

progressively shifting to an international sourcing span. If the entrepreneurial approach is nothing

new in the fashion industry, as it’s been demonstrated by almost every European brand in its first

steps of development, what is really new of the emergent brands is when the internationalization

begins. Originally, internationalization comes when the brand is already established in the home

market, and it’s a consequence of the decision of hiring executives after the entrepreneur or family

has exhausted the potential for expansion. In the last 10 years, and especially in smaller markets, the

internationalization begins with the start-up organization itself, and the entrepreneurial approach of

the founder or designer is already oriented towards the exploitation of international advantages,

both for sourcing and for finding a market.

Products of a time where technology amplifies networking and sons of a world where the

borders between nations - at least in a fashion sense - become inexistent, the entrepreneurs of today

choose flexibility over control and tend to strategically exploit foreign markets before the local one.

Many brands like Trosman, in their first ten years of life and already quite expanded internationally,

chose a totally dynamic approach based on three elements: the trust among the team members, the

international source inspiration both for design and strategy, and the ability to surround themselves

with partners that played also the role of specialized consultants, sharing an interest in the develop-

ment of the brand. So far, they didn’t need a classic pyramid structure, not even a relatively more

flexible matrix organization, which is, instead, the structure that the currently established brands

chose - before internationalization - with the objective to exploit managerial skills and competences

to expand. Trosman - as other similar brands - is already internationalized, and never needed a rigid

structure to do so. Is this pure and extreme entrepreneurial management a definitive approach, or

will these brands, at some point, shift towards more conservative structures?


PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

PM apud XANTHUS

5.2 Transferability

In this research we used the case study of Trosman to try and analyze an industry. With one

important precision: for “industry”, we don’t want to consider the whole textile and fashion industry

of Argentina, but the specific realities that are useful to consider as potential internationalizing ac-

tors. For example, this analysis can’t be applied to Ralph Lauren in the Argentinian market, because

this brand, U.S. based, in Argentina sells products made in the country, and therefore not imported

nor exported. The only internationalization relies in the brand’s name use. In the same way, we are

not considering the local tallers with an artisanal production that targets mainly tourists with classic

Argentinian leather goods: they have no structure and/or interest in exporting and they don’t need

importation. Finally, also a brand like London, an Argentinian based independent shop which pro-

duces its own merchandise getting inspiration from the classic collections of the swinging City, will

not benefit from our Strategic Pattern model, because, even if a few of the textiles used, especially

cotton, are imported, the brand strategy is clearly avoiding any sort of internationalization, being

headed towards selling exclusively in the Argentinian market, benefiting from the communication

and design strategy of mimicking the cosmopolitan metropolis style for customers that can’t afford

to travel but eventually aspire to grasp a sense of it.

Ultimately, for a matter of clarity, which brands can this scheme be used for? First example

that comes to mind, Trosman. We used this brand as our main example of rare internationalization

originated in Argentina in the last chapter. This corporate reality, now acquired by an even bigger

Mercosur player, Ayres, needs importation, exchanges know-how with Italian and French artisanal

knowledge, and survives mainly thanks to exports in Brazil, Europe and Japan. In a few words, it is

a brand designed from a cosmopolitan mind, and a company born to be international. Any tentative

to size it down to the Argentinian market, both in a sourcing view and in a marketing view, would

probably kill it. The process of internationalization is still at the beginning, but nonetheless it has

begun on solid grounds, and would indeed benefit from further strategic development.

Much more corporate realities might benefit from a Strategic Pattern of Internationalization,

even the ones that didn’t yet start a proper internationalization, and especially those which are striv-

ing to find a reliable production site in Argentina and/or a market evolved enough to appreciate

their creations. It’s the case of Martin Churba and its brand Tramando, who, by chance, started to

work with Jessica Trosman at the beginning of their career. As a highly creative brand, and with

consequent production know-how needs difficult to be satisfied in Argentina, it’s facing huge obsta-Pat r i ck Morse l l i f o r ESCP MS I n te rna t i ona l P ro j ec t Management , A rgen t i na Fash ion I n te rna t i ona l i z a t i on 97

cles in getting a consistent market share in the local area, but, even if international creative recogni-

tions came copiously in the past decade, wasn’t yet able to find an internationalization strategy to

export into more interesting markets. Yet, it would desperately need an export strategy to survive.

In the same way, we can list more emergin brands: M.I.A. Mis Intimos Amigos83, a US-

owned, made in Argentina brand that is trying unsuccessfully to add to their point of sale in Pal-

ermo a showroom in New York City, El Burgués84, an elaborated and Liberty-London85-prints-

inspired strong local actor who might have the quality and strategic assets to export to Europe - or,

at least, to Brazil - and Felix86, a Buenos Aires shop and taller with textile quality to improve but a

Gotham style that would easily compete with the well-known Greenwhich Village boutique Odin87;

these small brands and retailers, and many more, would all benefit from a deeper understanding of

the international dynamics of this industrial stream, as they are analyzed in this research that offers

many elements in common between Trosman and these early-stage players.

With the right improvements in their current value chain, many start-ups in Argentina could

easily find a market in those same international locations where they now fear to compete88. Their

destiny is probably to be small, locally or internationally, because this is the characteristic of the

brand, and each brand can’t be forced into an industrial reality if its concept and identity are not

born for that. Nonetheless, as we hope it’s clear from this indeed short research, to be radically

faithful to the local market is not always the best choice in terms of containing risk and boosting

growth. In fact, it’s all the opposite: if there is one trend this season, it’s to make a step oversea.


PM apud XANTHUS

6.Annexes1. Argentina, Geographic Map

(The PRS Group, New York, 2010).


2. Political Instability Ranking

The World Bank's 2008 Worldwide Governance Indicators report uses voice and accountabil-

ity, political stability and absence of violence, government effectiveness, regulatory quality, rule of

law and control of corruption as indicators for 212 countries and territories over the period 1996–

2008. The study was carried out by Massimo Mastruzzi and Daniel Kaufmann, of the World Bank

Institute, and Aart Kraay of the World Bank Development Economics Research Group. For any

country, a percentile rank of 0 corresponds to the lowest rank and 100 to the highest rank. Argentina

ranked in the 57.2 percentile on voice and accountability. Voice and accountability measures the

extent to which a country's citizens are able to participate in selecting their government, as well as


freedom of expression, freedom of association and the availability of free media. Argentina ranks

highly due to its strong democratic setup and respect for freedom of expression.

Argentina ranked in the 42.1 percentile on political stability and absence of violence. Political

stability and absence of violence measures perceptions of the likelihood that the government will be

destabilized or overthrown by unconstitutional or violent means, including domestic violence and

terrorism. Argentina has a mediocre ranking in this indicator on account of a turbulent political his-

tory with frequent coups by the military. Although democracy has been restored since 1983, institu-

tional corruption continues to plague Argentina’s bureaucratic and administrative transparency. The

country ranked in the 48.8 percentile on government effectiveness. Government effectiveness

measures the quality of public services, the quality of the civil services and the degree of its inde-

pendence from political pressure, the quality of policy formulation and implementation, and the

credibility of the government's commitment to such policies. Argentina’s rank on this indicator is

mediocre since long-lasting political stability is still to be achieved. Successive governments from

different political parties have broadly pursued similar economic policies, leading to stability in pol-

icy formulation and implementation. Argentina ranked in the 28.0 percentile on regulatory quality.

Regulatory quality measures the ability of the government to formulate and implement sound poli-

cies and regulations that permit and promote private-sector development. A low ranking indicates

tardy implementation of policies and regulations for the private sector. Argentina ranked in the 32.1

percentile on rule of law. Rule of law measures the extent to which agents have confidence in and

abide by the rules of society, and in particular the quality of contract enforcement, the police, and

the courts, as well as the likelihood of crime and violence. Argentina ranked in the 40.1 percentile

on control of corruption. Control of corruption measures the extent to which public power is exer-

cised for private gain, including both petty and grand forms of corruption. It also measures to extent

of the appropriation of the state by elites and private interests. Corruption remains one of Argen-

tina’s primary drawbacks, and successive governments have pledged to mitigate it. The country has

done reasonably well to control corruption in comparison to other countries in developing regions

such as South America, Asia and Africa. (Datamonitor, 2010; World Bank, 2008)


3. Political History

For much of the 20th century, the populist General Juan Perón, with his revered first wife

Evita, had cast a shadow over Argentine political life. Subsequently, Peronist politicians have led

the country through recurrent bouts of fiscal profligacy, economic crisis, political repression and

corruption on a grand scale. The second half of the 1980s and the 1990s seemed to witness a break

from this tradition, as a particularly bloody period of military dictatorship came to an end and

democratic rule became firmly established. In the early 1990s, the center-right Peronist president

Carlos Menem embarked on a radical program of liberal economic reform by deregulating and pri-

vatizing the economy and consolidating the public finances. The centerpiece of the reform package

was the introduction of a currency board pegging the new Argentine currency, the peso, to the US

dollar at parity.

However, renewed fiscal slippage, rising unemployment and a series of external shocks

knocked the economy off course. In December 2001, growing public discontent boiled over into

violent protests. Unable to contain the mounting economic and political crisis, the ineffectual

center-left president Fernando de la Rua resigned, leading to a week of drama which saw the presi-


dency change hands four times before settling on Eduardo Duhalde, a Peronist from the populist

branch of the party.

In April 2003, presidential elections saw the poplar center-left politician Nestor Kirchner

elected after his first-round challenger Carlos Menem dropped out in the second round. Kirchner, in

concert with former economy minister Roberto Lavagna - a Harvard-educated economist retained

from the previous administration - charted a careful program of economic reform, blending fiscal

discipline with support for social programs. Kirchner’s popularity continued to grow as the econ-

omy showed signs of renewed life, particularly after the negotiation of a fresh International Mone-

tary Fund (IMF) loan on uncharacteristically generous terms in September 2003 and successful pub-

lic debt rescheduling early in 2005. In the October 2007 presidential elections, Cristina Fernandez

de Kirchner, the wife of the former president, won the presidential race with a majority vote (Data-

monitor, 2010).


4. Domestic Politics

The death of former President Néstor

Kirchner is the most significative political

event in Argentina since he swept to power

in the midst of 2001’s sovereign default. He

had been the dominant face in politics since

even before his official election in 2007. He

drove economic policy and cajoled Argen-

tina’s often divided political parties into

supporting his agenda in congress.

Long-Term Politics: Tackling Key Issues is Unavoidable

Stability is both the strength and the

weaknesses of the current system in Argen-

tina. However, there are a few key challenges

policymakers are going to face in the follow-

ing years. Mounting financial constraints and

rampant inflation could affect long term sta-

bility, if the aforementioned issues are left un-

addressed.

Limited Financing Capacity

Fernández administration’s political

capital since 2007 has been allocated to secur-

ing new sources to find public spending pro-

grammes, depleting government coffers, requiring the nationalization of public pension funds and

more recently tapping the central bank’s foreign currency reserves. Such measures have seen the

president go head-to-head with Argentine farmers over higher export taxes, resulting in nationwide

protests, and amost costing Fernández her presidency in 2008. Such tensions will remain high even

after 2011 elections (BMI, 2011).


Returning to International Capital Markets

The successful swap in June 2010 of the

bulk of debt outstanding from 2001 removes

one major impediment to Argentina’s return

to international capital markets. However,

new debt issuance remains some way off.

Higher tax revenues and congressional ap-

proval to tap the country’s US$50bn-plus in

foreign reserves suggest that the government

will be able to meet its financing needs for

the time being without issuing new debt. On

the other side, the expensive 2011 agenda

suggests that Buenos Aires might not be ready to undertake the risk of a return to international capi-

tal markets.

Rampant Inflation

Since Cristina Fernández came to power in 2007, the reliability of consumer price inflation

numbers in Argentina has been called into question by observers, as a confluence of provincial indi-

cators and GDP deflator numbers suggests that inflation has remained in double-digit territory,

while the official INDEC reading showed a smooth single-digit trajectory of headline inflation.

Of course, inflation is not a serious problem in Argentina, at least not according to the official

government figures produced by the national statistics agency. However, it is widely accepted that

INDEC’s data, particularly with regard to prices, is completely unreliable. The most recent official

figures put inflation at slightly more than 11%; private economists estimate that the actual number

is closer to 30% (PRS Group, 2010). INDEC’s loss of credibility began in 2007, when then-

President Kírchner, displeased by evidence of runaway inflation, replaced key personnel at INDEC

with hand-picked supporters, resulting in the subsequent release of far more favorable inflation

data. At the time, the FPV enjoyed a strong position in Congress.

The opposition’s opening bid to face this situation was a proposal to increase the minimum

pension payment by 37%, a figure that Economy Minister Amado Boudou stated would bankrupt

the pension system. However, the government dispelled any illusions that it had suddenly recog-


nized the virtues of fiscal orthodoxy by concluding an agreement with the unions to hike the mini-

mum wage by 23%. The administration also increased the minimum pension benefit by 17% (effec-

tive September 1), bringing the total hike since the beginning of the year to 26.5% (PRS Group).

Analysts took note of the fact that the increases in both the minimum wage and pension payments

were more than double the official inflation rate, and, curiously enough, near the mid-range of pri-

vate estimates of actual inflation. As such, the increases perhaps provide a gauge of the govern-

ment’s true understanding of what is happening to price levels.

Even the highly suspect inflation data indicates that consumer prices are rising at a double-

digit pace, largely owing to demand pressures generated by loose fiscal and monetary policies. Bar-

ring a change of course in macroeconomic policy, which is highly unlikely before 2012, the gov-

ernment will have little choice but to continue using trade restrictions, price caps, and similar meas-

ures to contain inflation, with limited success. Based on the official data, inflation is forecast to av-

erage 11.1% in 2010, and will rise above 13% next year, although actual price increases will be sub-

stantially higher (PRS Group). Inflation remains a crucial obstacle to patching-up relations with

IMF, and suggests that investor confidence in Argentine markets will remain scarce. “Addressing

the true state of inflation, however, is likely to have serious social and political ramifications, and

could result in a deeper inflationary wage spiral” (BMI, 2011).


5. Economic Risk


6. Legal Landscape

Argentina is a federal democracy; its constitution was enacted on May 1, 1853, and later

amended in 1866, 1898, 1957, and 1994. During Juan Domingo Peron's government in 1949, the

constitution was revised by adopting the concepts of democracy. A list of social rights, including

better working conditions for the working class and the right to a good education, were imple-

mented during this time. The military regime deposed Peron's government in 1955 and adopted a

summary of Peron's social articles known as article 14 bis (existing currently) and established the

need for a labor and social security code in 1958.

The current version of the Argentine constitution was brought about by Carlos Saul Menem in

1994. Reforms included an increase in the size of the Senate, one-term presidential re-election and

reduction of the term to four years. Amendments also included the making of Buenos Aires into an

autonomous entity with its own authorities. Most importantly, the bill of rights relating to politics,

health and environment, as well as a much faster legislative procedure for creating laws, were in-

cluded in the reforms of 1994.


7. GDP Grows 8.6% in the third quarter of 2010

According to the latest national-accounts data

released by the Argentine statistical office, the econ-

omy advanced 8.6% in the third quarter of 2010.

Global demand was propelled by a 26.6% advance in

capital formation, with investment in plant and

equipment advancing 55.4% year-on-year and con-

struction growing 6.1%. Good results were observed

across other categories. Government consumption

continues to be a growth engine, expanding 8.5%,

while household consumption grew 8.9% y/y. Per-

formance in the external sector raises some concerns, with total imports jumping 37.4% y/y, while

exports did so by 26.6% y/y, substantially better than the 4.2% expansion observed in the previous

quarter (Santiago Mosquera for IHS, 2011). While the effect is not that dramatic from the terms-of-

trade perspective, the jump in imports confirms the economic rebound, with important advances

across all import categories at the expense of a shrinking trade surplus in the coming quarters.


Manufacture and commercial activities fueled the expansion. The goods-producing sector

advanced 8.1% y/y in the third quarter, partially thanks to a 10.6% expansion in manufacturing ac-

tivities. After a major rebound in agriculture during the previous quarter (up 65.0% y/y), the sector

posted a moderate

5.5% growth in the

third quarter, more in

line with long-term

p r o s p e c t s . T h e

services-producing

sector advanced 7.9%

y/y in the third quarter,

supported by a dy-

namic commercial sec-

tor (up 15.3%). This is

partially explained by

the high inflation lev-

els and Argentines’

past experience with

the issue (Santiago Mosquera, 2011). For instance, Argentines are acquiring properties and automo-

biles (660,000 in 2010 alone) as a mechanism to maintain the value of money, with commercial sec-

tors profiting from current conditions.

Industrial activity continues to advance in

2010. The Monthly Estimator of Industrial

Activity for November advanced a seasonally

adjusted 3.9% with respect to October, a ma-

jor rebound considering the moderation ob-

served in the previous month. Measured in

annual terms, industrial production advanced

12.5% in November for a 9.7% cumulative

expansion during the first 11 months of the

year (Santiago Mosquera, 2011). Basic met-

als, rubber, and automotive industries continue to lead the advance, posting 10.1%, 14.7%, and


32.2% annual expansions, respectively. According to the Argentine Statistical Office, the level of

capacity utilization in the industry stood at 83.4% in November, up from 78.4% a year earlier (San-

tiago Mosquera, 2011).

8. Industrial Incentives

The government has established a number of investment-promotion programmes. Although

incentives are available to both foreign and local investors, locals often receive more-generous

treatment. Incentive programmes are available on a general level and on industry-specific and re-

gional levels. Of late, tax incentives have encouraged investment in small and medium-sized enter-

prises (SMEs) and in the energy, mining and software sectors. Argentina also has numerous free-

trade zones in various regions of the country and a special customs area in Tierra del Fuego.

Incentive programmes geared to supporting SMEs are under the auspices of the Ministry of

Economy and Public Finance; the Ministry of Science and Technology; the Ministry of Foreign Af-

fairs; and the Ministry of Planning. Sectoral incentives are often co-ordinated by the respective

overseeing ministry.

The international financial crisis in 2008-09 prompted the government to push through addi-

tional incentive programmes to cushion industries from decreased demand and a fall in market con-

fidence. The government’s fiscal-stimulus plan of December 2008 made available credit totalling

Ps3bn (US$880m) to small and medium-sized businesses and extended Ps1.25bn (US$370m) to

industries. It allocated Ps1.75bn (US$500m) in credit to the agricultural sector to assist in the pur-

chase of working capital and the pre-financing of exports. Farmers also benefited from an up to 5-

percentage-point cut in export taxes on wheat and maize for an indefinite period starting from De-

cember 31st 2008. This remained in place as of July 2010.

Another recent incentive includes implementation of tax breaks for purchases of working

capital for infrastructure projects. Law 26,360, promulgated in April 2008, established accelerated

amortisation on income tax and/or the devolution of value-added tax (VAT) payments. Law 26,360,

implemented in April 2008, regulates Argentina’s largest incentive scheme for investments in capi-

tal equipment and infrastructure; it replaced Law 25,924 of September 2004. This programme lets

the government grant tax breaks worth Ps1.2bn a year to qualifying investment projects. Of this

amount, some Ps200m is allocated for PYMEs. Companies can apply for VAT refunds on purchases


of capital goods or to use accelerated depreciation (investments in export-related sectors may qual-

ify for both).

Specific sectors that have benefited are generation, transport and distribution of electricity;

production, transport and distribution of oil and derivates; mining exploration and exploitation; flu-

vial, road and rail transport; and ports. The presidentís office reserves the right to include any other

sector that complies with the requirement of the law. Projects looking to qualify must prove the ex-

istence of an investment project to be started (no less than 15% of planned funds must be invested)

between October 2007 and September 2010.

Investments started before October 2007 can apply for the benefits if the amount invested be-

fore the application is less than 15% of planned investments. The National Directory of Financial

Assistance (DirecciÛn Nacional de Asistencia Financiera), in the Ministry of Planning, runs several

programmes that grant financial support for PYMEs. Among them are the following:

• a regime of subsidised interest rates (Law 24,467/1995, amended by Law 25,300/2000 and

Decrees 748/2000, 871/2003 and 159/2005), which subsidises up to 50% of the interest rate in loans

given by local banks participating in the programme, for financing working capital or capital-goods

purchases;

• National Fund for the Development of PYMEs, which is a financial trust that provides capi-

tal contributions and medium- and long-term loans to small and medium-sized businesses that pro-

mote regional entrepreneurship and generate new employment;

• Argentinian Technological Fund promotes technological modernisation projects by provid-

ing credits to PYMEs in order to upgrade technology.

Other programmes can be consulted on the web page of the Ministry for Small and Medium-

sized Enterprises and National Development, at www.sepyme.gov.ar. A number of incentives are

available for specific industries, such as energy, mining, and software.


http://www.sepyme.gov.ar

http://www.sepyme.gov.ar

9. R&D in Argentina

Parallel to other Latin American countries, the Argentine government has been steadily in-

creasing budgetary allocations for R&D projects in several spheres. Moreover, the government has

sought substantial foreign funding to develop R&D facilities in highly sophisticated areas. For ex-

ample, the Inter American Development Bank has declared its intentions to fund biofuel exploration

and development projects in Argentina. Since the ascendancy of the previous government, Argen-

tina has placed considerable importance on biofuel technology projects to preserve future energy

security. Nevertheless, most R&D initiatives receive 100% of their funding from the government. In

February 2010, Argentina's Ministry of Science and Technology has announced its plans to boost

the national production of vaccines and recombinant proteins and provide funds of up to $26.6 mil-

lion to fund 70% of individual projects. These funds are mainly allocated for R&D activities and

also for implementation processes of pilot programs for the final approval of biotechnology prod-

ucts. New funding allocations in Argentina indicate growing governmental efforts to boost the par-

ticipation of local companies to enhance the country's R&D.


10. Case Study: Internationalized Non-Competitor: Etiqueta Negra

Fast cars and polo are pillars of the Etiqueta Negra concept, conceived by Federico Alvarez

Castillo, who is married to Paula Cahen d'Anvers, designer of the women's collection. The two-

level, 6,000-square-foot unit at 273 Lafayette Street, Etiqueta Negra's first store in the U.S., is pro-

jected to do $3 million in sales in its first year, according to a spokesman89. An owner of Ellerstina,

Argentina's top-ranked polo club, Alvarez Castillo devotes a section of each store to authentic ap-

parel for playing polo or watching a match. Aside from polo-specific attire, Etiqueta Negra, which

means black label or black tie, offers casual clothing with little in the way of decoration and mini-

mal logos.

The company touts the quality of its products: boots made by Casa Fagliano, which serves

Prince Charles and the British Royal Family, Argentine leather for jackets and Peruvian pima cotton

for polo shirts. Much of the apparel is manufactured in Italy. The company plans to open another

Manhattan store before year's end and is eyeing Fifth Avenue and Madison Avenue. A unit at the

Aventura Mall in Miami is scheduled to bow in 2010.

Etiqueta Negra believes in selling timeless pieces that will be in customers’ closet forever. A

classically tailored white cotton coat is $720; black pants, $220, and a women's dress shirt with ep-

aulets, $220. The large selection of leather items includes a black leather jacket with stitching detail

on the shoulders, $1,200; a leather blazer, $1,200; a black leather zipper jacket, $700, and a buttery

leather jacket with pockets in black, beige or dark brown, $1,400. There are basics such as cotton T-

shirts and tanks, two jeans styles and black or white mock-turtleneck sweaters. The tightly edited

selection of handbags and shoes includes lizard boots, $800; clutches, $600, and lizard belts with

horn buckles, $340 to $38090.


11. Strategic Pattern: Accessible/Trendy Fashion Brands

Case: Felix, Bourgois, M.I.A., ...

European/US counterparts: Topman, A.P.C., Giorgio Brato, Koon, ...







Current Possible?

Which Product(s)?

Specificity Pret-a-porter with young and trendy twist

Pret-a-porter, exhotic and high quality coming from Argentina

Market Positioning Medium Medium

Price Medium

avg tshirt: € 40avg shirt: € 100

Medium-High

avg tshirt: € 90avg shirt: € 150

Textile quality Average Medium

Design characteristics Trendy design, inspired from out-side Argentina

Trendy, research, more original, inspired from a merge between Argentina and international

From Where?

Textiles sourcing China, Peru Argentina, China, Peru, Europe

Leather sourcing Argentina Argentina

Know-how sourcing Argentina Argentina 80%, France/Italy 20%

Marketing sourcing Argentina Argentina 60%, Brazil 20%, Europe 20%

Strategy sourcing Argentina Argentina 70%, Europe 30%

Manufacturing sourcing Argentina Argentina

To Where?

Mercosur - Brazil (Sao Paulo)

Europe - London, Barcelona, Berlin (to begin)

US - New York City, Los Angeles

Asia - Shanghai, Beijing, Jakarta


Middle-East - -

How in Argentina? Argentinian designer produces his inspired and original creations following the international trends for the season. Production is easy through the local tallers and quality is average because Ar-gentinians competitors do not compete on quality but on design and local awareness of the brand.

The designer could keep produc-tion and design in Argentina, also exploiting the IT strengths of the Country to develop awareness internationally. Leather products are also a strength. Shift the competition attention from Argen-tina to international local realities.

How locally? At the moment, there is no inter-national presence.

Getting know-how, marketing and strategy from the local areas to de-velop a positioning within the local market through the original and strong Argentinian design. Collabora-tions with showrooms are possible and interesting. A seasonal division is not necessarily needed, which makes much easier the timing prob-lems with shipping. These smaller realities could feel the gaps becom-ing exotic and sought-after products in multi brand stores located in the major cities of Europe and US. They could specialize in specific products (shirts, leather jackets, t-shirts, leather bags...) that would be de-signed keeping an eye to local com-petition. This expansion is possible because of the cost advantages pre-sent in Argentina. Most important is targeting a location where the cus-tomer is sensitive to fashion and likes to research new products. London = good. South Coast Plaza Mall in Newport Bay, CA = bad. For these companies there is no potential to become an international brand, be-cause concept and design strengths are not evolved enough, but expan-sion can be consistent and steady in a precise niche.


7. BibliographyAlexander, Nicholas, and Marcelo de Lira e Silva (2002), “Emerging markets and the internationalisation of retailing: the Brazilian experience,” International Journal of Retail & Distribution Management, 30(6), 300–314.

Arnold, Stephen J (2002), “Lessons learned from the world’s best retailers,” International Journal of Retail & Distribution Management, 30(11), 562–570.

Bidegaray, Martín (2011), “Trosman, con nuevo dueño | iEco | Clarin.com,” www.clarin.com (Apr. 24, 2011).

Bismans, Francis, and Olivier Damette (2008), “Currency transactions tax elasticity: an econometric estimation,” International Economics, 115, 1–20.

BMI (2011), “Argentina Q1 2011,” Emerging from Kirchner's Shadow, Business Monitor International Ltd, 1–41.

Cagliano, Raffaella, Nuran Acur, and Harry Boer (2005), “Patterns of change in manufacturing strategy configurations,” International Journal of Operations & Production Management, 25(7), 701–718.

D'Andrea, Guillermo, Belen Lopez-Aleman, and Alejandro Stengel (2006), “Why small retailers endure in Latin America,” International Journal of Retail & Distribution Management, 34(9), 661–673.

Datamonitor (2010a), “Argentina, In-depth PESTLE Insights,” Country Analysis Report, (Datamonitor, ed.), 1–80.

Datamonitor (2010b), “Apparel Retail in Brazil,” 1–33.

Datamonitor (2010c), “Menswear in Brazil,” 1–27.

Dominique Barjot (2003), “Americanisation: cultural transfers in the economic sphere in the twentieth century,” Entreprises et Histoire, 32(1), 41–48.

Economist, The (2010), “Country Commerce - Argentina,” The Economist Intelligence Unit, The Economist, 1–75.

Eduardo E Castilla, Hebe Campaña, and Jorge S López Camelo (2000), “Economic Activity And Congenital Anomalies: An Ecologic Study In Argentina,” Environmental Health Perspectives, 108(3), 193–197.

Eley, Geoff (2004), “Forging Democracy The History of the Left in Europe 1850 -200.eBook-EEn,” 1–721.

Ettore Bolisani, and Enrico Scarso (1996), “International manufacturing strategies: experiences from the clothing industry,” International Journal of Operations & Production Management, 16(11), 71–84.

Euromonitor (2010a), “Clothing - Argentina,” 1–11.

Euromonitor (2010b), “Footwear - Argentina,” 1–7.

Federico Marongiu (2005), “Towards a New Set of Leading Indicators of Currency Crisis for Developing Countries: an Application to Argentina”, Universidad de Buenos Aires, 1–37.

THE PRS GROUP (2011), “ARGENTINA,” 1–72.

http://www.clarin.com

http://www.clarin.com

Hildegunn Kyvik Nordås (2004), “The Global Textile and Clothing Industry post the Globalization”

“Agreement on Textiles and Clothing” WTO Discussion Papers.

Hilgerdt, Folke (1943), “The Case for Multilateral Trade,” in Papers and Proceedings of the Fifty-fifth Annual Meeting of the American Economic Association, 393–407.

Husseini, S M Moattar, and C O'Brien (2004), “Strategic implications of manufacturing performance comparisons for newly industrialising countries,” International Journal of Operations & Production Management, 24(11), 1126–1148.

Jeong, Se-Eun, Jacques Mazier, and Jamel Saadaoui (2010), “Exchange rate misalignments at world and European levels: a FEER approach,” International Economics, 121, 1–33.

Jordana, Jacint, and David Levi-Faur (2007), “Professional networks, institutional design and global governance: the FTAA and the forign trade professionals in the Americas,” Économie Internationale, 109, 81–106.

José María Pasquini Durán (2002), “Argentine: la question sociale, tango et rock,” Mouvements, 20, 112–116.

Kakati, Writuparna (2008), “Argentine textile industry: An export snapshot,” smetimes.tradeindia.com, <http://smetimes.tradeindia.com/smetimes/in-depth/2008/Aug/01/argentine-textile-industry.html> (Mar. 15, 2011).

Kroll, Cristina (2008), “Latin American Market is Showing Strength” Latin Beat, Expansions and financial results continue to demonstrate

the viability and growth potential for international brands in Latin America., 1–3.

Laudonia, Mara (2009), “La moda argentina llega al Fashion Week de Nueva York” (Mar. 15, 2011).

Letizia Gallacci, and Giovanni Luca Atena (2003), “E-marketplaces in the Textile and Leather Sector,” eMarket Services, 1–8.

Maggie Kenny, and Ricardo A Palonsky (2008), “EBSCOhost: On The Edge In South America,” www.wwd.com (Mar. 15, 2011).

Maloney, William F, Osmel Manzano, and Andrew Warner (2002), “Missed Opportunities: Innovation and Resource-Based Growth in Latin America,” Economía, 3(1), 111–167.

Matt Moffett (2005), “In Argentina, Fashion Police Say Small Isn't All,” global.factiva.com.revproxy.escpeurope.eu, <http://global.factiva.com.revproxy.escpeurope.eu/aa/?ref=OSTDJ00020051126e1bp000jk&pp=1&fcpil=en&napc=S&sa_from=> (Mar. 15, 2011).

Moore, Christopher M, John Fernie, and Steve Burt (2000), “Brands without boundaries,” European Journal of Marketing, 34, 919–937.

Palma, José Gabriel (2006), “Stratégies Actives et Stratégies Passives d'Exportation en Amérique Latine et en Asie Orientale,” Revue Tiers Monde, 186, 249–280.

Parnell, John A (2011a), “Strategic capabilities, competitive strategy, and performance among retailers in Argentina, Peru and the United States,” Management Decision, 49(1), 139–155.

Parnell, John A (2011b), “Strategic capabilities, competitive strategy, and performance among


http://smetimes.tradeindia.com/smetimes/in-depth/2008/Aug/01/argentine-textile-industry.html






http://www.wwd.com

http://www.wwd.com

http://global.factiva.com.revproxy.escpeurope.eu/aa/?ref=OSTDJ00020051126e1bp000jk&pp=1&fcpil=en&napc=S&sa_from=






retailers in Argentina, Peru and the United States,” Management Decision, 49(1), 139–155.

Ph. D. Philip M Parker, and Eli Lilly (2006), “The Economic Competitiveness of Argentina: Financials Returns, Labor Productivity and International Gaps”, INSEAD, 1–148.

Pierre Laurent, Nicolas Meunier, Luis Miotti, Carlos Quenan, and Véronique Seltz (2003), “Emerging Countries’ External Debt How Should One Neutralize Hard-Currency Volatility?,” Revue économique, 54(5), 1033–1056.

Revelez, Lincoln Bizzozero (2011), “Kirchner-Chávez : un nouveau dessin des relations sur la carte sud-américaine,” Université de la République d’Uruguay, 375–380.

Ruiz, Fernando M M (2010), “L‘Amérique latine constitue-t-elle une zone monétaire optimale ? En route vers la construction d’une union monétaire ?,” Reflets et perspectives de la vie économique, XLIX(4), 71.

Sabrina Mauas (2008), “ARGENTINA'S LUXE BOOM,” www.wwd.com (Mar. 15, 2011).

Salama, Pierre (2009), “Argentine, Brésil, Mexique, face à la crise internationale,” Revue Tiers Monde, 197, 1183–1202.

Santiago Mosquera (2011), “Argentina,” IHS Global Insight, 1–9.

Sánchez, María P Salmador, and M Ángeles Palacios (2008), “Knowledge-based manufacturing enterprises: evidence from a case study,” Journal of Manufacturing Technology Management, 19(4), 447–468.

Scavarda, Luiz Felipe, Andreas Reichhart, Silvio Hamacher, and Matthias Holweg (2010),

“Managing product variety in emerging markets,” International Journal of Operations & Production Management, 30(2), 205–224.

Seamus Mirodan (2004), “The Alist celebs move in,” newstatesman, 1–2.

Sharon Edelson (2009), “Etiqueta Negra Brings Fast Lane To NYC,” www.wwd.com, The Argentine jet-set lifestyle is on display at Etiqueta Negra's new flagship in SoHo. (Mar. 15, 2011).

Silveira, Giovani J C da, and Rui S Sousa (2010), “Paradigms of choice in manufacturing strategy: Exploring performance relationships of fit, best practices, and capability-based approaches,” International Journal of Operations & Production Management, 30(12), 1219–1245.

Stearns, Peter N (2003), “Western Civilization in World History,” 1–145.

Syndicate, The New York Times (2009), “Fashionistas flock to ‘City of Design’,” chinadaily.com.cn, <http://www.chinadaily.com.cn/life/2009-02/05/content_7447810.htm> (Mar. 15, 2011).

Terra, María Inés (2003), “Trade Liberalization in Latin American countries and the Agreement on Textiles and Clothing in the WTO,” International Economics, 94-95, 1–18.

Veale, Roberta, and Pascale Quester (2009), “Tasting quality: the roles of intrinsic and extrinsic cues,” Asia Pacific Journal of Marketing and Logistics, 21(1), 195–207.

Venessa Lau (2005), “Argentine Unmentionables,” www.wwd.com (Mar. 15, 2011).


http://www.wwd.com

http://www.wwd.com

http://www.wwd.com

http://www.wwd.com

http://www.chinadaily.com.cn/life/2009-02/05/content_7447810.htm




http://www.wwd.com

http://www.wwd.com

Wade, Robert Hunter (2003), “What strategies are viable for developing countries today? The World Trade Organization and the shrinking of ‘development space’,” Review of International Political Economy, 10(4), 621–644.

“Argentina Cotton Exports by Year” (2011), “Argentina Cotton Exports by Year,” indexmundi.com, <http://www.indexmundi.com/agriculture/?country=ar&commodity=cotton&graph=exports> (Mar. 15, 2011).

“Argentina textile imports up” (2006), “Argentina textile imports up,” www.argentinacorporate.com (Mar. 15, 2011).

“Argentina Textiles and Clothing Report Q4 2009” (2011), “Argentina Textiles and Clothing Report Q4 2009,” 1–2.

“Argentina: growing market in Latin America” (2011), “Argentina: growing market in Latin America,” srtepc.org, Mumbai, <http://www.srtepc.org/html/exporter/market-report-detail.php?rid=13> (Mar. 15, 2011).

“Argentina: Textile industry investing in growth” (2006), “Argentina: Textile industry investing in growth,” global.factiva.com.revproxy.escpeurope.eu, <http://global.factiva.com.revproxy.escpeurope.eu/aa/?ref=SABICT0020060108e21600006&pp=1&fcpil=en&napc=S&sa_from=> (Mar. 15, 2011).

“ARGENTINA” (2011a), “ARGENTINA” (Mar. 28, 2011a).

“ARGENTINA” (2011b), “ARGENTINA” (Mar. 28, 2011b).

“Argentinean fashion is a US$6.000mil business” (2010), “Argentinean fashion is a US$6.000mil business,”

global.factiva.com.revproxy.escpeurope.eu, <http://global.factiva.com.revproxy.escpeurope.eu/aa/?ref=SABICT0020100118e61e00002&pp=1&fcpil=en&napc=S&sa_from=> (Mar. 15, 2011).

Bob Schmetterer, “Leap a revolution in creative business strategy” (2003), Bob Schmetterer “Leap a revolution in creative business strategy,” 1–257.

Douglas Dowd, “Capitalism And Its Economics A Critical History” (2005), 1–332.

“Chapter 1” (n.d.), “Chapter 1,” in “The Economic Competitiveness of Argentina: Financials Returns, Labor Productivity and International Gaps”, INSEAD.

“Clothing Market Size Argentina” (2011), “Clothing Market Size Argentina,” Euromonitor, 1–1.

“Consumer Lifestyle - Argentina” (2011), “Consumer Lifestyle - Argentina,” Euromonitor, 1–2.

“Consumer Lifestyles – Argentina” (2011), “Consumer Lifestyles – Argentina,” Euromonitor, 1–6.

“Creative industries in argentina” (2009), “Creative industries in argentina,” Investment Opportunities, ProsperAr - invest in Argentina.

“Impact of Fashion on Argentina's Economy” (2011), “Impact of Fashion on Argentina's Economy,” internationalbusiness.wikia.com, <http://internationalbusiness.wikia.com/wiki/Impact_of_Fashion_on_Argentina's_Economy> (Mar. 15, 2011).

“International Economics” (2004), “International Economics,” 1–545.


http://www.indexmundi.com/agriculture/?country=ar&commodity=cotton&graph=exports




http://www.argentinacorporate.com

http://www.argentinacorporate.com

http://www.srtepc.org/html/exporter/market-report-detail.php?rid=13




http://global.factiva.com.revproxy.escpeurope.eu/aa/?ref=SABICT0020060108e21600006&pp=1&fcpil=en&napc=S&sa_from=






http://global.factiva.com.revproxy.escpeurope.eu/aa/?ref=SABICT0020100118e61e00002&pp=1&fcpil=en&napc=S&sa_from=






http://internationalbusiness.wikia.com/wiki/Impact_of_Fashion_on_Argentina's_Economy




“Latin American leather industry hit by collapse in demand” (2009), “Latin American leather industry hit by collapse in demand,” chinaapparel.net, <http://www.chinaapparel.net/news/2009/2009-04-22/19095.shtml> (Mar. 15, 2011).

“Sources, Procedures and Microeconomic Effects of Innovation” (1988), “Sources, Procedures and Microeconomic Effects of Innovation,” Jorunal of Economic Literature, 26, 1120–1171.

“Spotlight: Argentina” (2010), “Spotlight: Argentina,” cotton247.com, Moving Up in the World: Technology Is the Driving Force Behind Innovation, <http://www.cotton247.com/globalperspectives/southamerica/?storyid=1690> (Mar. 15, 2011).

“The 100 Brazilians who made it in New York” (2010), “The 100 Brazilians who made it in New York,” 1–10.


http://www.chinaapparel.net/news/2009/2009-04-22/19095.shtml




http://www.cotton247.com/globalperspectives/southamerica/?storyid=1690




8. Notes


1 http://www.euromonitor.com/

2 http://www.ihs.com/

3 http://www.datamonitor.com/

4 www.businessmonitor.com

5 http://www.prsgroup.com/

6 www.eiu.com

7 www.icongrouponline.com

8 http://ehp03.niehs.nih.gov/home.action

9 http://www.mouvements.info/

10 http://www.emeraldinsight.com/products/journals/journals.htm?id=ijrdm

11 www.chianadaily.com

12 http://www.wwd.com/

13 http://www.emeraldinsight.com/products/journals/journals.htm?id=ejm

14 www.wsj.com

15 http://www.cronista.com/

16 http://www.newstatesman.com/

17 http://www.prosperar.gov.ar/es/

18 http://www.universidad.edu.uy/

19 http://ufsc.br/

20 http://www.mazerolle.fr/Economie-internationale.htm

21 http://www.revue-economique.fr/

22 http://www.cairn.info/revue-reflets-et-perspectives-de-la-vie-economique.htm

23http://www.market ingpower.com/AboutAMA/Pages/AMA%20Publications/AMA%20Journals/Journal%20of%20Public%20Policy%20Marketing/JournalofPublicPolicyMarketing.aspx

24 http://www.emeraldinsight.com/products/journals/journals.htm?id=ijopm

25 CREATETHE GROUP partners with forward-thinking brands to deliver innovative and emotional campaigns, communications platforms and commerce solutions that maintain the highest levels of brand integrity in digital, mobile, social media and emerging technologies. As the agency that pioneered digital luxury for successful fashion and retail brands, it offers breakthrough strategic thinking, emotional design that drives must-have desire, and robust technology solutions. Founded in 2004, CREATETHE GROUP has over 150 employees in New York and London suppor t i ng over 30 l ead ing brands wor ldw ide . www.createthegroup.com

26 Martín Churba, now 39 years old, has gained intense experience in the world of fashion and design. He has exemplified artistic quality throughout his career. “My family history has linked me to the world of design. I could say that, in some instances, I was surrounded by design, by architecture, by aesthetics; I was put through the sieve of the world of design.” Martín Churba has developed more than one career, all of which helped to feed his passion for things creative and artistic. When he was undergoing his third year at Secondary School, he took up a course on Advertising and Graphic Design offered by the Panamerican School of Art. He never finished this course but this helped him develop his talents for illustration. At the same time he began studying Drama at Agustín Aleso's School of Dramatic Arts and, later on, he broadened his experience with Augusto Fernandez. Seven years of Drama studies taught him much about expressive movement and was sound preparation for a career in acting. Churba himself stated, “Of my studies in Art, Design and Drama, I believe it is this last subject that turned out to be the most important.” Martín Churba made his first collection of clothes when he was 23, whilst he was working on printing, with fabrics he had designed himself. These clothes, however, were never put on sale. At the same time he became associated with two other textile designers and opened a design studio. “We worked very successfully for a year and a half, but we were somewhat before our time, as common practice consisted in buying samples and copying textiles.” Churba then travelled, for two years, around the USA and Italy with his collections and textile designs. During this time he discovered that a culture of textile development was in existence. “The fact was that I was being driven by my work, by what I like to do. I was beyond market tendencies. My style of design at that time was photographic. On the basis of my own photographs I fashioned new compositions which I later made into textile patterns. This technique was highly innovative, even outside Argentina. There are things I am doing today which are based on the work I was doing at that time. I sold my collections of prints to important brands in Italy and the USA so that they could produce at their own pleasure, no signatures, nothing.” Martín Churba, now 27 years old, finally found his vocation for design with a project which revolutionised the local garment design market with Trosman Churba, a partnership between Jessica Trosman and Martín Churba, two forward-looking and adventurous supporters of fashion who had both been inspired by local themes. The partnership, however, came to an end towards the end of 2002, when it became clear that the partners' expectations concerning the future of the business had now diverged. “I am the sort of guy who especially loves creating and inventing, textiles and other things. But the textile research I had been working on so long was applicable only to fashion. Fashion forces one to relinquish certain things, and I, as a designer, wanted to concentrate more fully on my development.” This vision and these concerns led Martín Churba to risk his capital and vocation on a n e w p r o j e c t : T r a m a n d o . w w w . t r a m a n d o . c o m [http://www.modemonline.com/fashion/mini-web-sites/fashion-brands/references/tramando]

27 HUMAWACA is an Argentine brand that designs and manufactures leather accessories. The products combine the best argentinian leather with international trends resulting in functional and vanguardist products. in march 2009 Humawaca received the Puro Diseño 2009 Gold Award thanks to the hi-tech line that includes a Solar Panel Briefcase and a handbag with a textile tuchpad that can control iPdo music. Well established in the local market, the brand seekd to position itself in the international design market. The first step was the presence of their products at MoMA Museum in New York City, in Harrods in London and Le Bon Marche in Paris. www.humawaca.com

28 www.internetworldstats.com

http://www.euromonitor.com

http://www.euromonitor.com

http://www.ihs.com

http://www.ihs.com

http://www.datamonitor.com

http://www.datamonitor.com

http://www.businessmonitor.com

http://www.businessmonitor.com

http://www.prsgroup.com

http://www.prsgroup.com

http://www.eiu.com

http://www.eiu.com

http://www.icongrouponline.com

http://www.icongrouponline.com

http://ehp03.niehs.nih.gov/home.action

http://ehp03.niehs.nih.gov/home.action

http://www.mouvements.info

http://www.mouvements.info

http://www.emeraldinsight.com/products/journals/journals.htm?id=ijrdm




http://www.chianadaily.com

http://www.chianadaily.com

http://www.wwd.com

http://www.wwd.com

http://www.emeraldinsight.com/products/journals/journals.htm?id=ejm

http://www.emeraldinsight.com/products/journals/journals.htm?id=ejm

http://www.wsj.com

http://www.wsj.com

http://www.cronista.com

http://www.cronista.com

http://www.newstatesman.com

http://www.newstatesman.com

http://www.universidad.edu.uy

http://www.universidad.edu.uy

http://ufsc.br

http://ufsc.br

http://www.mazerolle.fr/Economie-internationale.htm

http://www.mazerolle.fr/Economie-internationale.htm

http://www.revue-economique.fr

http://www.revue-economique.fr

http://www.cairn.info/revue-reflets-et-perspectives-de-la-vie-economique.htm




http://www.marketingpower.com/AboutAMA/Pages/AMA%20Publications/AMA%20Journals/Journal%20of%20Public%20Policy%20Marketing/JournalofPublicPolicyMarketing.aspx






http://www.emeraldinsight.com/products/journals/journals.htm?id=ijopm




http://www.tramando.com

http://www.tramando.com

http://www.modemonline.com/fashion/mini-web-sites/fashion-brands/references/tramando%5D




http://www.humawaca.com

http://www.humawaca.com

http://www.internetworldstats.com

http://www.internetworldstats.com


29 Since 1930, LUISAVIAROMA has been recognized as a premier retailer focused on serving the unique needs of the luxury market. The store, and its official web site LUISAVIAROMA.COM, feature authentic men's and women's clothing, shoes and accessories from the most important designers in the fashion industry. Clients can shop from over 100 designer collections such as Chloè, Dior Homme, Dolce & Gabbana, Dsquared, Lanvin, Christian Louboutin, Moncler, etc. Other famous brands, such as Levi’s Strauss and Lacoste, often create exclusive limited edition items. LUISAVIAROMA's three-level store combines luxury shopping with the latest in technology and services. Oversized touch-screen computers feature LUISAVIAROMA.COM and gigantic plasma screens display graphic art installations. This creative shopping environment allows clients to virtually touch and select items which are then placed in their dressing room. Exclusive private suites cater to every need of the client as they try on the latest styles with a personal assistant. LUISAVIAROMA also organizes events during Pitti Immagine Fashion Week utilizing new experiential marketing and communication techniques. Respected companies such as Nokia, Coca Cola, FIAT, Puma, Missoni specifically request LUISAVIAROMA to host exclusive events and parties. Thousands of people, including important fashion icons, come and admire the store’s world-renowned storefronts and participate in brand premiers. LUISAVIAROMA.COM offers high quality products, exclusive customer care and the ultimate modern shopping experience breaking the barrier between in-store and on-line. www.luisaviaroma.com

30 “My proposals, clothing, accessories and footwear, aim at the men and women who, uninfluenced by conventional thinking, like to live following their own taste. I am dedicated to clinets who deosn’t want to be a photocopy but rather want to create their own look and to this end place their trust in the store owner who becomes a personal shopper. Fashion is without definition, as it chnges as fast as the world changes you should rather plan a new way being yourself every day. Thanks to the play of slanted surfaces dividing the internal space, and to a correct interplay of kight and dark zones: the clothing, the accessories and the footwear are the undisputed protagonists of the space. A space which is as exclusive and sohpisticated as the designers working in it. No comproise, therefore, no conditioning. My philosophy is to successfully unite contemporary taste and alternative choices.. To do everything to please oneself and not to please others.” Claudio Antonioli www.antonioli.eu

31 thecorner.com is an online boutique showcasing a selection of cutting-edge fashion and accessories for men and women through dedicated mini-stores. The basis of this trailblazing retail concept is the “corner” - a mini-store and creative platform for designers to feature their latest collections alongside multimedia content - where visitors fully experience the designers’ world and inspirations. Directional and selective, thecorner.com keeps its assortment deliberately limited. All featured designers are known for their fashion-forward, artisanal approach; many make their online debut here. Designers including Ann Demeulemeester, Haider Ackermann, Dries Van Noten, Z Zegna and Santoni chose thecorner.com as their official internet retailing partner. Fashion shoots, videos, and short films have been curated exclusively for thecorner.com by some of the world's most avant-garde creative minds such as Hedi Slimane, Nick Knight and Nicola Formichetti. thecorner.com is “Powered by YOOX Group”, which has offices and operations in the United States, Europe, Japan, China and Hong Kong, ensuring an exceptional level of customer service. thecorner.com delivers to more than 50 countries worldwide. From black-on-black packaging to worldwide express shipping, easy returns and white-glove customer care via phone and email, service at thecorner.com is as impeccable and sophisticated as its product offer. “An Italian menswear website, thecorner.com, is opening a women’s section selling all my favorite little-known labels” Sarah Mower, The Daily Telegraph (UK); “I LOVE USA, a new video that was shot exclusively for the fashion e-commerce site thecorner.com" The New York Times (USA); “thecorner.com is the virtual boutique for the inspired and discerning multimedia shopper” Corriere della Sera (Italy). www.thecorner.com

32 NET-A-PORTER.COM is the world's premier online luxury fashion retailer. The award-winning website, presented in the style of a fashion magazine, offers the style-savvy customer exactly what she wants - unprecedented access to the hottest looks of the season from international cutting-edge labels via worldwide express delivery. Since launching in June 2000, leader in the industry, conceived and strongly pursued by Natalie Massenet, NET-A-PORTER has successfully established itself as a luxury brand, with impeccable packaging and unrivalled customer care. The pages of NET-A-PORTER feature high fashion editorial, updated weekly with new content and product, which is viewed by over 2.5 million women each month. www.netaporter.com

33 For more than 35 years, ZILLI have been establishing a high-performance business in a family atmosphere and with an independence that ZILLI defends on a daily basis protecting the soul of his company. Independence is a strength that forces them to contend ‒ alone ‒ with ZILLI’s extraordinary development. Thier presence in almost 30 countries confirms the international dimension of their creations, and they pursue this boundless creativity in order to affirm their presence on new markets. The respect for the very high quality of their products, expected by the men they dress, requires them to monitor ever stage of the manufacturing of their designs. The company brought a new concept and a new vision of elegance by creating ‒ thirty years ahead of its time ‒ a relaxed style in the luxury world: luxury sportswear, which has now been adopted by all of the menswear brands. [http://www.onenationmagazine.com/the-zilli-influence/]

34 DSM is a vanguardist shop located in London and conceived by Rei Kawakubo, the creator of Comme des Garçons brand. "I want to create a kind of market where various creators from various fields gather together and encounter each other in an ongoing atmosphere of beautiful chaos: the mixing up and coming together of different kindred s o u l s w h o a l l s h a r e a s t r o n g p e r s o n a l v i s i o n . " www.doverstreetmarket.com

http://www.luisaviaroma.com

http://www.luisaviaroma.com

http://www.thecorner.com/

http://www.thecorner.com/

http://www.thecorner.com

http://www.thecorner.com

http://www.netaporter.com

http://www.netaporter.com

http://www.onenationmagazine.com/the-zilli-influence/%5D

http://www.onenationmagazine.com/the-zilli-influence/%5D


35 Selfridges, AKA Selfridges & Co, is a chain of high end department stores in the United Kingdom. It was founded by Harry Gordon Selfridge. The flagship store in London's Oxford Street is the second largest shop in the UK (after Harrods) and was opened on 15 March 1909.[1] More recently, three other stores have been opened; in Trafford, Greater Manchester (1998), in Manchester City Centre's Exchange Square (2002) and in the Bullring, Birmingham (2003). Until 1990, the store belonged to Liverpool's now-defunct Lewis's retail group. www.selfridges.com [http://en.wikipedia.org/wiki/Selfridges]

36 Harrods is a high-end department store located in Brompton Road in Brompton, in the Royal Borough of Kensington and Chelsea, London. The Harrods brand also applies to other enterprises undertaken by the Harrods group of companies including Harrods Bank, Harrods Estates, Harrods Aviation and Air Harrods, and to Harrods Buenos Aires, sold by Harrods in 1922 and closed as of 2011, with plans announced to reopen in 2013. The store occupies a 5-acre (20,000 m2) site and has over one million square feet (90,000 m2) of selling space in over 330 departments. The UK's second-biggest shop, Oxford Street's Selfridges, is a little over half the size with 540,000 square feet (50,000 m2) of selling space. The Harrods motto is Omnia Omnibus Ubique̶All Things for All People, Everywhere. Several of its departments, including the seasonal Christmas department and the Food Hall, are world famous. Throughout its history, the store has had a total of five owners. On 8 May 2010, Mohamed Al-Fayed sold the store to Qatar Holdings for £1.5 billion.

37 ProsperAr, Invest in Argentina, 2010

38 Fashion Designer graduated at the University of Buenos Aires. At the beginning, she works for important fashion brands and, in 1996, she starts designing tailor-made dresses. She also starts body and morphology studies looking for “perfect fitting”. She always presents her collections at Buenos Aires Fashion Week. Season after season, the identity gets clearer, with particular attention for morphology: traditional cuts are transformed with the aim of reinventing the body and silhouette. IN 2003, with Ramiro Lopez Serrot, Cora creates her own label called CORAGROPPO, starting commercial development of the project. During the same year she opens the first shop in Palermo Viejo, the famous corner between El Salvador and Armeni in Buenos Aires; after two years another point in Recoleta. The brand is also growing in other countries: it was presented three times at the London Fashion Week; the collection was also displayed at Cibeles in Madrid and then commercialized in Lafayette Gallery. In 2009 a franchising project starts with the first shop in the famous Piazza di Spagna, Roma. FW2009-10 is then presented at White Milano. Right now, a European development plan is bringing Coragruppo in the most famous boutiques, starting from the Italian “DAAD Dantone” (Milano) and “A piedi nudi nel parco” (Firenze). www.coragroppo.com

39 Hermanos Estebecorena (HE) are brothers and designers (Industrial / Fashion) who have worked together since 1998 in their design studio. HE clothing is modern and sophisticated with a focus on detail and f u n c t i o n . [http://es-es.facebook.com/pages/HE-hermanos-estebecorena/126198045091]

40 www.tramando.com

41 Mauas, S. (2008, March 26). Argentina's Luxe Boom. WWD: Women's Wear Dai ly . Retr ieved October 28, 2008 from http://web.ebscohost.com

42 Mauas, S. (2008, March 26), Ibidem

43 Colavita, C. (2007, April 23). Zegna opens in Buenos Aires, Italian luxury brand bullish on South America as it debuts flagship store in A r g e n t i n a . DNR . R e t r i e v e d O c t o b e r 2 8 , 2 0 0 8 f r om http://proquest.umi.com

44 WWD, 3/26/2008

45 Ibidem

46 Mauas, S. (2008, March 26), Ibidem

47 Colavita, C. (2007, April 23). Zegna opens in Buenos Aires, Italian luxury brand bullish on South America as it debuts flagship store in A r g e n t i n a . DNR . R e t r i e v e d O c t o b e r 2 8 , 2 0 0 8 f r om http://proquest.umi.com

48 Anonymous. (2008, April). Impact of regional trade deals on clothing and textile sector. Just-Style. Retrieved October 27, 2008 from http://proquest.umi.com

49 Anonymous. (2008, April). Impact of regional trade deals on clothing and textile sector. Just-Style. Retrieved October 27, 2008 from http://proquest.umi.com

50 Ibidem

51 Ibidem

52 Craver, C. (2007, December 4). Exhibitors at fabric show battling challenges in the industry. Tribune Business News. Retrieved October 28, 2008 from http://proquest.umi.com

53 Karimzadeh, M. (2006, August 10). Environmentally friendly fashion sprouts at D&A. WWD. Retrieved October 27, 2008 from http://proquest.umi.com

54 El Cronista, January 14th, 2010

55 Branches of Kosiuko, the ultimate local teen brand, are always packed with trendy adolescents served by hip-wiggling staff not much older than they are. The girls come for the improbably small, low-cut pants, the guys for budding metrosexual-wear. Kosiuko's fragrances and deodorant are a favorite. www.kosiuko.com

56 Founded in August 1999 in Buenos Aires, Rapsodia was created, since the beginning, with a personal and distinctive style, away from the fashion codes that ruled at that time. Oriented to a lively, young spirited, bohemian, romantic, feminine woman, who is inspired by rock and roll and who has a strong vanguard attitude. After 7 years of growth, Rapsodia decided to go beyond its frontiers and take its proposition to new markets, disembarking in Mexico and Chile. Today, it has 19 stores in Argentina, 9 in Mexico and 4 in Chile. www.rapsodia.com

http://www.selfridges.com

http://www.selfridges.com

http://en.wikipedia.org/wiki/Selfridges%5D

http://en.wikipedia.org/wiki/Selfridges%5D

http://www.coragroppo.com

http://www.coragroppo.com

http://es-es.facebook.com/pages/HE-hermanos-estebecorena/126198045091%5D




http://web.ebscohost.com

http://web.ebscohost.com

http://www.kosiuko.com

http://www.kosiuko.com

http://www.rapsodia.com

http://www.rapsodia.com


57 From its origins in 1988, Cardon set out to rescue the tradition of country clothing and accessories in the conviction that the identity of a people comes before fashion. Its strong penetration in the market and the increasing growth of its stores placed Cardon as a clear leader among other companies of the field and as the First Argentine Traditional Label. Cardon's founding concept, related to the most authentic part of our cultural identity, is present in the classic style and the quality which characterize its leather clothing line and its textile clothing line. It is also present in its leather goods, shoes, and in the pieces of national silverwork which, as well as the leather, are very linked to the origins of the Rioplatense culture. The clothing of this label use noble and autochthonous materials to develop exclusive fabrics and designs. Different types of leather are used: cow, sheep, buffalo, goat, chamois and red deer, among others. The proposal, designed with a strong aesthetic criterion, is thought to satisfy the strongest demands of today's men and women. Besides, it includes a product line specially thought for the little ones: the Gurises line, for babies and kids between 0 and 10 years old. Nowadays, Cardon has more than 110 stores across the entire territory of Argentina. www.cardon.com

58 Wanama is a young Argentinian brand with a folk style, a medium level qual l i ty of materia l research and a green att itude. www.wanama.com

59 Port Restrictions--Customs Resolution No. 3/2010 provides an updated list of authorized ports-of-entry for textiles and apparel (NCM chapters 50-63), footwear (NCM chapter 64) and travel goods (NCM 42.02). The new resolution lists two additional authorized ports-of-entry for the above mentioned products. Ports as listed in Resolutions No. 3/2010 are as follows: Textile and Apparel (HS chapters 50-63 --excluding HS 5201.00.20 and HS 5201.00.90) Buenos Aires, Ezeiza, Paso de los Libres, Córdoba, Rosario, Campana, Mar del Plata, Puerto Iguazú, Bahía Blanca, Santa Fe, Puerto Madryn, Puerto Deseado, Comodoro Rivadavia, Santo Tomé, Mendoza, San Juan, Salta, La Plata. Footwear (HS chapter 64) Buenos Aires, Ezeiza, Paso de los Libres, Córdoba, Rosario, Campana, Mar del Plata, Santo Tomé, Salta, La Plata. Travel Goods (HS 4202) Buenos Aires, Ezeiza, Paso de los Libres, Córdoba, Rosario, Campana, Mar del Plata, Mendoza, San Juan, Santo Tomé, Salta, La Plata. Administrative Mechanisms--Customs External Note 87/2008 of October 2008 establishes administrative mechanisms that could restrict the entry of products deemed sensitive, such as textiles, apparel, footwear, toys, electronic products, and leather goods, among others. The stated purpose of the measure is to prevent under-invoicing. While restrictions are not country-specific, they are to be applied more stringently to goods from countries considered "high risk" for under invoicing, and to products considered at risk for under invoicing, as well as trademark fraud. Certificate of Origin--In August 2009, Argentina’s Federal Administration for Public Revenue revised certificate of origin requirements for a long list of products with non-preferential origin treatment through External Note 4, which replaced External Note 2 from 2008. Among other products, this regulation refers most fabrics, carpets, apparel and footwear. To receive the MFN tariff rate, the certificate of origin must be certified by an Argentine consulate. The certificate is valid for 180 days which has proven problematic for some companies. Companies report that the major delays in obtaining an import license often put them over the 180 day validity period for the certificate of origin. Import Licenses--Imports of textiles, apparel and footwear are subject to prior approval (i.e., an import license). Argentina has licensing requirements that are automatic (Licencia Automatica de Importacion - LAPI) and non-automatic (Licencia No Automatica de Importacion -- LNAPI), depending on the product and the country of origin. The LNAPI requires additional documentation to obtain import approval. For textiles, apparel and footwear, a sworn Statement of Product Composition (Declaracion Jurada de Composicion -- DJCP), which may also be considered a non-automatic license, from the Undersecretariat for Trade Policy and Management is required for customs clearance. Application for an import license by the importer requires documentation that accurately matches information provided in the actual commercial invoice (any deviation may result in the rejection of the shipment by Argentine Customs). Furthermore, the documents cannot be subsequently modified to fit the new commercial invoice and care must be taken that the shipment date comes after the license approval date. Reportedly, Argentine authorities will not accept any amendments to non-automatic import licenses. No modifications will be allowed once a licence is issued and it will be the responsibility of the importer to request a new license, prior to the cancellation of the original licence, if the information covered by the original licence changes. The following is a compilation of textile/apparel/footwear/travel goods products that have been listed in the various Argentine government regulations imposing non-automatic licensing

r e q u i r e m e n t s . S o u r c e : http://web.ita.doc.gov/tacgi/overseasnew.nsf/alldata/Argentina

http://www.cardon.com

http://www.cardon.com

http://www.wanama.com

http://www.wanama.com


60 “The traditional comparative advantage based on natural resources and low labour costs is diminishing in importance. Knowledge and skill become determinants of competitiveness. The big challenge to latecomers countries is how to continuously improve their comparative advantage and dynamic competitiveness, created by human being in an integrated environment, under the impact of economic globalisation...” Do Hoai Nam, 2005, cited by Lemaire and Bui, 2008.

61 As a demonstration of this trend, Burberry recently introduced the possibility to buy the presented garments immediately after the fashion show, online. The initiative of a genius who understood the importance of both getting an immediate cash flow and satisfying the hurry of the customer, even if the product will be delivered months later. “Burberry’s approach has required an overhaul of the company’s supply chain, from when yarns are dyed to when leather is procured. The company is promising customers who order the runway items ̶ outerwear, makeup and accessories ̶ that they will receive them within seven weeks, versus the normal four- to six-month lag between the runway and the rack. ‘It’s one thing when you’re talking to the industry that’s used to a six-month turnabout,’ said Mr. Bailey of Burberry. ‘It’s very different when you’re talking to a direct customer.’ In catering to customers, though, Burberry and other design houses need to be careful not to lose their appeal by seeming common, said Jean-Noël Kapferer, a luxury-marketing consultant and professor at the business school HEC Paris.” [http://www.nytimes.com/2010/09/12/business/12shows.html]

62 Which are likely to happen, because The Economist, July 2nd, 2011 ranked Argentina ad the first most overheated economy in South America, therefore the most likely to collapse again soon.

63 in www.trosman.com

64 http://apac.feeds.finance.yahoo.com/news/Ayres-formalizó-compra-iprof-646986559.html?x=0

65 She is now living in Beverly Hills and is launching her own label of accessories.

66 For example, see Balenciaga, that after the “renaissance” with Nicholas Ghesquiere had still to accept poor quality and identity desruptive accessories to be produced in Spain as a consequence of contracts made ten years earlier in a situation of decadence of the brand. Same applies to Balmain, which has to see its brand on 10.000 US Dollars jeans and, at the same time, 10 Dollars hair colour.

67 www.tramando.com

68 endeavour.org

69 http://en.wikipedia.org/wiki/Balenciaga

70 http://investing.businessweek.com/research/stocks/private/snapshot.asp?privcapId=970952

71 http://en.wikipedia.org/wiki/Alexander_Wang_(designer)

72 http://luxurysociety.com/articles/2011/06/the-latest-digital-hublot-dolce-gabbana-faberge

73 www.antonioli.eu

74 http://ontheinside.info/author/alexander-wang/

75 “Lyndhurst, NJ - RLM Apparel Software Systems Inc. announces that New York-based fashion brand Alexander Wang Inc. has successfully implemented the RLM FashionManager On-Demand enterprise software solution. The premier American designer has gone-live with the cloud-based FM On-Demand software in its product development, manufacturing, distribution, and financial management operations. Founded by celebrated designer Alexander Wang, the company has quickly become one of the most prominent names in women's apparel, footwear, handbags and accessories. By replacing its in-house systems with RLM's integrated, web-based software, Alexander Wang is among the many creative companies that are also innovating in the management of their business infrastructure. ‘We wanted a system that covered all of our business needs,’ stated CEO Aimie Wang. ‘It did not make sense for us to license and build costly interfaces for separate PLM, ERP, and financial packages. We considered best-of-breed systems, but none offered distinct advantages over the RLM's fully integrated cloud computing solution.’”[http://www.textileweb.com/article.mvc/Alexander-Wang-Goes-Live-On-Cloud-Based-0001]

76 On 25 February 2011, Dior announced that it had suspended Galliano following his arrest over an alleged anti-Semitic tirade in a Paris bar. The same day, Paris-based citizen journalism site Citizenside received video of Galliano on a similar rant in the same bar the previous December. In the video drunk Galliano hurls anti-semitic rants at a group of Italian women and declares "I love Hitler... People like you would be dead. Your mothers, your forefathers would all be fucking gassed." This incident happened just before Paris Fashion Week for Autumn/Winter 2011/2012. The video was licensed to British tabloid newspaper The Sun, who published the video on their website. After his comments he was impersonated on Saturday Night Live by Taran Killam. Natalie Portman, an American actress who is Jewish and whose great-grandparents died at Auschwitz, had an endorsement contract with Dior for its Miss Dior Cherie fragrance. In a statement, she expressed "disgust" at Galliano's anti-semitic comments. Portman said: “I am deeply shocked and disgusted by the video of John Galliano’s comments that surfaced today...I hope at the very least, these terrible comments remind us to reflect and act upon combating these still-existing prejudices that are the opposite of all that is beautiful.” Not everyone in the fashion industry, however, shared Portman's "disgust." Stylist and costume designer Patricia Field went all out defending Galliano by sending an email blast to 500 friends, blogs and media. She dismissed Galliano's anti-semitic rants as "theatre" and later, in a phone interview with WWD described Galliano’s videotaped behaviour as “farce” and said she was bewildered that people in the fashion community have not recognised it as such. "It’s theatre," she said. "It’s farce. But people in fashion don’t recognise the farce in it. All of a sudden they don’t know him. But it’s OK when it’s Mel Brooks’ The Producers singing 'Springtime for Hitler'.” On 1 March 2011, Dior announced that it had begun procedures of dismissal for Galliano, with Dior's chief executive Sidney Toledano stating "I very firmly condemn what was said by John Galliano". After the incident Galliano's popular personal website was jammed and made unavailable for visitors. Galliano has denied the allegations through his attorney, and has launched a defamation lawsuit against the couple accusing him of antisemitism. Various rumours have also surfaced stating that Galliano was proud of his own Jewish roots and that he was set up. "From the very first day of Fashion Week, many editors have been saying that Dior wanted to get rid of him and that a plot like this would save it from having to pay him a reported £17 million," said Marcellous L. Jones, editor-in-chief of fashion web magazine TheFashionInsider.com. [http://en.wikipedia.org/wiki/John_Galliano]

77 http://latimesblogs.latimes.com/alltherage/2011/06/haider-ackermann-hints-at-a-move.html

http://www.nytimes.com/2010/09/12/business/12shows.html%5D

http://www.nytimes.com/2010/09/12/business/12shows.html%5D

http://www.trosman.com

http://www.trosman.com

http://investing.businessweek.com/research/stocks/private/snapshot.asp?privcapId=970952




http://luxurysociety.com/articles/2011/06/the-latest-digital-hublot-dolce-gabbana-faberge




http://www.textileweb.com/article.mvc/Alexander-Wang-Goes-Live-On-Cloud-Based-0001%5D




http://en.wikipedia.org/wiki/John_Galliano%5D

http://en.wikipedia.org/wiki/John_Galliano%5D


78 http://nymag.com/daily/fashion/2011/06/haider_ackermann_confirms_it_i.html

79 http://www.huffingtonpost.com/2011/06/07/haider-ackermann_n_872388.html

80 http://www.stylecaster.com/fashion/13333/8-things-you-need-know-about-haider-ackermann

81 Gianfranco Ferré (15 August 1944 ‒ 17 June 2007) was a fashion designer also known as "the architect of fashion" for his background and his original attitude toward creating fashion design. Born in Legnano, Italy, he received a degree in architecture in 1969 at the Politecnico di Milano university. In 1983, he joined Domus Academy as founding Professor of the Department of Fashion Design. Ferré began his fashion career in 1970 by designing accessories, then worked as a raincoat designer in 1972-74. He started his own company Baila in 1974 [1] and launched his signature collection for women in 1978. His first men's collection appeared in 1982, followed in 1986 by his first couture collection in Rome. Ferré became Stylistic Director of Christian Dior in Paris in 1989, when he was chosen by owner Bernard Arnault to replace Marc Bohan. In 1996, it was announced that Ferré would end his engagement with Dior with the Spring 1997 collection for the label. [http://en.wikipedia.org/wiki/Gianfranco_Ferré]

82 “A remarkable social and cultural inversion has occurred in the last fifty years: where once culture was the monopoly of the upper classes, it now, more often than not, bubbles up from those on the ‘wrong side of the tracks’. This transformation has been especially evident in the world of style - with the authenticity of streetstyle challenging and then toppling the dictatorship of High Fashion.” (Ted Polhemus Blog) [http://www.tedpolhemus.com/main_concept6%20467.html]

83 “Only three collections in, M.I.A is fast making a name for itself with the creation of clothing that is both distinctive yet understated, and without a single logo in sight.

When M.I.A opened this time last year with the advertising slogan “Argentina has something to show the World”, their interests clearly lay in the creation of a true Argentine brand, where every last item is made here.

Even the name, M.I.A, was originally intended to stand for ‘Made In Argentina’ ‒ a name deliberately chosen to be expandable into English language markets with the vision of transporting the brand overseas. The more patentable name, Mis Intimos Amigos, was chosen afterwards to reflect the concept of the brand. Every detail of the clothing collections, the store, the web presence and the marketing campaigns are the product of a collaborative effort between the father and son design team.

When it comes to design, Sebastian rallies for the new, the fun and the eccentric, whilst Luis campaigns for the more classic, toned down simplicity of the every day. Each sets to work independently before bringing their ideas together to throw around suggestions and sketch up changes. Whilst you might imagine this would result in an occasional disagreement on the cutting room table, what results from these creative sessions is a refined balance between the understated and elegant, and the playful and experimental. “The key is fluid communication”, Luis reveals ‒ something which comes from knowing each other so well I suppose.

The autumn/winter marketing campaign included a series of short black and white films projected onto the wall in-store. Inspired by Andy Warhol’s screen tests of Gino Piserchio crying and Lou Reed’s lips, the film captures a dashing male model apparently following instructions for a still photography shoot ‒ adjusting his bow tie, straightening the lapels of his jacket, and turning his head to the right or to the left.

M.I.A are so confident in the effects of standing a clean-shaven man in really well-cut clothes, that they chose silent film to allow the personality of the clothes to speak for themselves. There’s no room for ripped jeans here; M.I.A is all about the unabashedly impeccable.

Manufactured here but made with the finest quality Italian wools, their suits are left unfinished for fitting and hand finishing. Luis, whose father was a tailor, was keen to combine the techniques of traditional tailoring with contemporary taste. He admits they work very hard on the cut, working through a process of trial and error with paper patterns and hand-made prototypes to achieve the perfect fit in each of their three styles.

Luis’ aspiration continues to be to take M.I.A overseas, and he’s been approached several times already to set up franchises in Switzerland and Brazil. While the rest of the world is looking to Argentina as a very exotic and emerging market, it looks like the timing might be right for Mis Intimos Amigo’s expansion.

(http://www.argentinaindependent.com/life-style/fashion/designer-spotlight-mis-intimos-amigos-/)

84 “Aptly-titled menswear shop ready to outfit you for high tea or an afternoon of swindling the proletariat. Immaculately designed collection makes looking like you've just returned from the fox hunt easy. Bring plastic or wads of cash, as prices are steep, though fair, considering the quality of construction. Grand piano, mounted deer head, zebra-skin rug deliver that intended trophy room feel. Choosing between dandified wingtips and elegant boots one of many first world problems that b r o w s i n g h e r e e n t a i l s . ” (http://www.blackbookmag.com/guides/details/el-burgues)

http://en.wikipedia.org/wiki/Gianfranco_Ferr

http://en.wikipedia.org/wiki/Gianfranco_Ferr

http://www.tedpolhemus.com/main_concept6%20467.html%5D

http://www.tedpolhemus.com/main_concept6%20467.html%5D


85 Liberty is a long-established department store in Regent Street in Central London, England, in the West End shopping district.Liberty has a long history of artistic and inspiring collaborative projects ‒ from William Morris and Gabriel Dante Rossetti in the nineteenth century to Yves Saint Laurent and Dame Vivienne Westwood in the twentieth.

Recent collaborations include renowned brands such as Nike, Kate Moss for Topshop, Hermes and Manolo Blahnik to name but a few. (http://en.wikipedia.org/wiki/Liberty_(department_store))

86 www.felixba.com.ar

87 Odin curates its labels to maintain a careful mix of the known (Rag & Bone, Engineered Garments) and the get-them-before-they’re-big (currently, Our Legacy and Burkman Bros.). New merchandise rolls in constantly, not just seasonally, and the shop leans toward casual separates (Duckie Brown jackets, Richard Chai skinny jeans). There are also accessories like Comme des Garçons wallets, Common Projects sneakers, belts, ties, jewelry, even grooming products and objects like clocks and cameras.

In the few years it has been open, Odin has carved out a reputation as a m u s t - s t o p s t o r e f o r t h e m o s t s t y l e - s a v v y m e n . (http://nymag.com/listings/stores/odin/)

88 It is interesting to notice how strong the psychological component is in the Argentinian entrepreneurs’ action plans. These brave, original and dedicated people do have the strenghts to survive in the international environment, but are often scared by how powerful and influencial is the popularity of US and European brands nowadays. The crisis of 2001 might have played a role in this, by sending back to a third-world reality a Country, well-known for its high pride, which was almost achieveing global recognition as being the closest to Europe in South America in terms of history, culture and design. What an European researcher can’t avoid to think, when trying to understand the whole set of reasons behind the decision of Argentinian firms to stay local, especially in the design field, is that fear plays an irrational role in this behaviour. They might well be on the podium side-by-side with the best European entrepreneurs and designers, but they decide to stay on the second step, probably because, in case of a sudden disillusion once more, falling from there would result in a less painful damage.

89 WWD, 4/7/2009

90 Ibidem.