What’s left of Venezuela’s manufacturing sector has survived government expropriations, frequent blackouts, a currency collapse and equipment shortages. But now there’s another threat: competition from imported versions of the companies’ own products.
By Yahoo Finance – Nicolle Yapur
Aug 17, 2021
Shops across Venezuela stock Mexican-made Oreo cookies right next to the locally produced version. Kraft Heinz Co.’s mayonnaise is being imported from Brazil and the U.S., even though the company also makes the sandwich spread in the city of Valencia. Fifty-pound bags of American-made Purina dog food compete with the same product from Nestle SA’s plant in Aragua.
The imports, which are exempt from customs duties and value-added taxes, can be as much as 40% cheaper than the locally produced version even after shipping costs are included. Local factories just can’t compete given the extreme inefficiencies of doing business in Venezuela.
Allowing the duty-free imports for some 2,500 items was intended to help ease shortages. And while there are signs the Maduro administration is beginning to recognize the problems for domestic factories, there’s also a booming cottage industry for mom-and-pop companies that buy from overseas middlemen and then resell the goods to retailers.
“The government has said the priority is the local industry, but what they are doing right now is subsidizing foreign economies,” said Luigi Pisella, the president of Conindustria, a group that represents manufacturers. He says the imports are among the biggest challenges for his members.
As with much of the nascent private enterprise that’s bubbling up in Maduro’s socialist Venezuela, some of the imports of retail goods are technically illegal, as door-to-door international shipments are supposed to be limited to private consumption, not items for resale. But the government turns a blind eye to the trade. According to industry estimates, door-to-door shipments now represent 40% of total imports, doubling since 2017.
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