The following research report contains market research, analysis, statistics and business intelligence relating to research on Yarns In Guatemala.

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ABSTRACT
Imports of yarns increased from $ 1.1 million in 1999 to $ 1.6 million in 2000. Imports from the United Sates are insignificant. (.009% of the total import market in 1999 and 0.02% in 2000) The market is expected to show 14% reduction, from 1.6 million in 2000 to 1.4 million in 2001. Depending on how the Guatemalan economy develops in the near future, a 5 percent growth per year is expected during the next three years.

During 2000 the most important supplier of yarns was Mexico with a 76 percent market share, followed by China with 14.3% and Spain with 7.9% yarns from Mexico are imported under the brand name "Crisol". It is believed that this brand could be manufactured by the Mexican U.S. subsidiary Celanese or DuPont.
In Guatemala, there are approximately twenty yarns and sewing thread importers and about 30 yarn and sewing thread manufacturers. These firms serve around 27 textile manufacturers and a large number of "maquila" operations. High cost of capital has forced some yarn and sewing thread manufacturers to lower their production.

Lists of importers and manufacturers may be obtained for U.S. $ 25.00 from the U.S. Commercial Service, U.S. Embassy Guatemala, Tel.: 502 331-1541, ext. 4258, Fax: {502 331-7373, e-mail: guatemala.office.box@mail.doc.gov

Guatemala is a priority for investors wishing to have a presence in Central America. Mutual dependence as a region is fast becoming a reality. Central America, with the exception of Panama, has a common external tariff with no internal tariff barriers. Guatemala, Honduras and El Salvador, recently signed a Free Trade Agreement with Mexico. Many U.S. companies are currently reorganizing their Central American operations to take advantage of what is needed quickly becoming a regional market.
A. MARKET OVERVIEW

Yarns covered by this ISA include:

High tenacity yarns of viscose rayon; textured yarn; other yarns, single, of viscose rayon untwisted or with twist not exceeding and exceeding 200 turns / m; other yarn, single, of cellulose acetate; other yarn, multiple (folded) or cabled of viscose rayon; man-made artificial filament; discontinued man-made filament yarn (other than sewing thread) , put up for retail sale mixed mainly or solely with cotton; yarn (other than sewing thread) of man-made staple fibers, containing 85% or less than 85% by weight of such fibers.

Guatemala is an excellent market. Guatemala's GDP reached $ 20 billion and U.S. exports to Guatemala totaled USD 1.9 billion in 1999. Real GDP grew by 3.3 percent in 2000, down from 3.5 percent in 1999. The non-traditional sector has seen strong growth and has provided jobs and increased income for many people over the last ten years. Tourism has also developed significantly.

U.S. products and services enjoy high name recognition in Guatemala and U.S. firms have a good reputation in the Guatemalan market. Almost one half of all Guatemala's imports come from the United States.
Guatemala can also be an attractive place for foreign investment. With a population of approximately 11.5 million, it is the largest country in Central America and accounts for one third of the region's GDP.

Guatemala is experiencing rapid political and social change and is searching for its place in the global economy. The government of President Alfonso Portillo was inaugurated in January 2000 on a populist platform with General Efrain Rios Montt as head of Congress. In its first few months the government has locked horns several times with the private sector. The government has currently issued changes across-the-board to agreements made by the last administration. This willingness to repudiate past deals, no matter how sound, brings into question the sanctity of current deals.

Instituting the 1996 Peace Accords ending Guatemala's 30-year civil war is a major challenge for the government as the Peace Accords call, among other things, for the government to increase taxes in order to provide the resources necessary for development. Security, corruption, workers rights, protection of intellectual property rights and education are other key challenges for the government.
As a result, on August 1, 2001, the government increased the value-added tax (VAT) from 10 percent to 12 percent. Both the opposition and the private sector argue that this 2 percent increase not only will cause a decrease in economic activity, but will negatively affect the population as a whole. To date, inflation has been relatively moderate but the private sector expects that the new VAT, together with the increased tax on cigarettes, soft drinks and liquor and the increase in tax paid for by the Mercantile and Agricultural Entities ( Impuesto a las Empresas Mercantiles y Agropecuarias - IEMA) which will go into effect in October 1, 2001, will skyrocket the inflation rate beyond projected figures. According to various sources, to date there is close to 60% tax evasion and it is not expected to get better in the near future.

The Government of Guatemala welcomes foreign investment and generally accords foreign investors national treatment; there are few legal or regulatory restrictions placed on foreign investment . The Government of Guatemala, however, has a long way to go in order to make Guatemala business and investment friendly.

Must hurdles to exporting and investing in Guatemala are bureaucratic in nature. The government is generally aware of these problems and is working to overcome them. There are no exchange controls and the currency, currently trades in a fairly stable range of 7.8 - 7.9 quetzals to one U.S. dollar. Currency is bought and sold freely in the local banking system. There are no restrictions on repatriation of profits by foreign business people.
If the government continues to work toward economic reform maintaining free trade and liberal markets, including more of its citizens in the economy, providing personal and investment security, as well as positioning itself as a leader in Central American economic integration, U.S. exporters can expect a continued bright and growing market in Guatemala.
MARKET TRENDS

The following problems have been selected i the yarns market:

a) Financial situation - shortage of capital
b) High cost of raw material, except cotton and polyester.
c) Low use of installed capacity - only 75 percent of installed capacity is being used.
d) Price - sophisticated new equipment is imported and expensive.

Imports of yarns increased from $ 1.1 million in 1999 to $ 1.6 million in 2000. Imports from the United States are insignificant (.009% of the total import market in 1999 and 0.02% in 2000 ) but it is expected that with the new CBI legislation, imports from the United States will increase during 2001. During 2001, the market is expected to show a 14% reduction to 1.4 million. Nevertheless and depending on how the economy develops in the near future, a 5 percent growth per year is expected during the next three years.

U.S. firms interested in selling in the Guatemalan market should make a commitment to offer excellent service and support to their buyers, agents and distributors. This commitment to excellent service and support should also be made clear by the U.S. firm to its local representative since poor after-sale service will lead to lower sales and poor image.
Although after-sales service currently is not contemplated in the local Commercial Code, most representatives, wholesalers and retailers provide it. There are no provisions in the law regarding product guarantees, however, most retailers provide some sort of guarantee that covers problems that may occur under normal conditions of use during a specified period of time. IMPORT MARKET
Statistical Data
(U.S. Dolls Millions)
Percent Gain/Loss

Est. Avg. Annual

Real Growth-Next

Three Years

1999 2000 (e) 2001 (e) %

Import Market 1.1 1.6
1.4 5

Local Production* 58.4
43.0 41.0 1

Exports 0.004 0.028 0.07 5

Total Market 59.5
44.3 41.6 2

Imports from U.S. 0.01 0.02 0.03 25

Exchange Rates 7.40 7.78 N/A x U.S. $1 (average)

(e) estimate
* Includes both yarns and sewing threads. There is no information available regarding percentage of yarns and percentage of sewing thread.
Future Inflation Rate Assumed: 8 to 10 %
2000 Import Market Share
(Percent for USA and Major Third Country Suppliers):

USA: $ 0.009 million (1.7%)
Mexico: $ 1.2 million (76.0%)
China: $ 0.2 million (14.3%)
Spain: $ 0.1 million ( 7.9%)
LOCAL PRODUCTION

Local production of yarns and sewing thread amounted to $ 43 million during 2000. There are approximately 20 yarn and sewing thread manufacturers in Guatemala specializing mainly in the production of cotton and cotton blends. There is no information available as to how much of the $ 43 million is for yarns.

Exports of yarns are insignificant. During 2000, Guatemala exported $ 0.03 million of textured yarn; artificial filament yarn; discontinued man-made filament yarn (other than sewing thread), put up for retail sale, mixed mainly or solely with wool or fine animal hair; yarn (other than sewing thread) of man-made staple fibers, put up for retail sale, of synthetic staple fibers, containing 85% or less than 85% by weight of such fibers, mainly to El Salvador and Honduras. B. COMPETITION
The Guatemalan market is competitive. Guatemalan business people are price sensitive and expect good after-sales service and support. They are accustomed to doing business with U.S. firms and a lot travel regularly to the United States and speak English. The three most important factors affecting Guatemala purchasing decisions are 1) price, 2) service and 3) quality. Occasionally payment terms also influence the decision.

During 2000, Mexico was the largest third country supplier with a 76.0 percent market share and sales of $ 1.2 million exporting chiefly other yarn, single, of cellulose acetate; other yarn (folded) or cabled, of viscose rayon; artificial filament yarn; and discontinued man-made filament yarn (other than sewing thread), put up for retail sale, mixed mainly or solely with cotton. China sold $ 0.2 million, obtaining a 14.3 percent market share exporting mostly artificial filament yarn and Spain sold $ 0.1 million obtaining a 7.9 percent market share exporting principally discontinued man-made filament yarn (other than sewing thread), put up for retail sale, mixed mainly or solely with cotton. Mexico has always been Guatemala's largest third country synthetic yarn supplier. This is due not only to the very good quality of Mexican yarns but also excellent price and to the proximity of suppliers.
Additional information may be obtained from the Country Commercial Guide (CCG) for Guatemala, at the National Trade Data Bank (NTDB). C. END USERS

The most important end users of yarns are the textile manufacturers. There are around 27 textile manufacturers in Guatemala with approximate total monthly production of 20 to 25 million yards (flat, towel, knitted, etc.). Of these, about 20 are large textile manufacturers and the rest are medium-size. Many of these manufacturers make their own yarns by purchasing cotton, polyester and rayon fiber mainly from the United States.
Lists of importers and manufacturers may be obtained for U.S.$ 25.00 from the U.S. Commercial Service, U.S. Embassy Guatemala, Tel.: 502 331-1541 ext. 4258, Fax: 502 331-7373, e-mail: guatemala.office.box@mail.doc.gov
SALES PROSPECTS

Below is a list of best sales prospects for the next three years and import values during 2000. The Guatemalan tariff schedule does not contain the same breakdown of categories found in the U.S. tariff schedule.

HS CODE PRODUCT DESCRIPTION $ VALUE

54033300 Other yarn, single, of cellulose acetate 687,669
54034100 Other yarn, multiple (folded) or cabled of viscose rayon
329,961
54061200 Artificial filament yarn
319,348
55096200 Discontinued man-made filament yarn (other
than sewing thread), put up for retail sale,
mixed mainly or solely with cotton
129,405

Imports from the United States are insignificant. With the new CBI legislation, imports from the United Sates are expected to increase in the next three years. Mexico has always been the largest supplier to the Guatemalan market, although China is fast gaining ground. D. MARKET ACCESS

There are no impediments to imports of yarns in Guatemala. U.S. exporters looking at Guatemala will find a relatively open market. Imports are generally not subject to non-tariff trade barriers, though there are occasional cases or arbitrary customs valuation and bureaucratic obstacles that can cause delays. All imports are subject to customs duties. Yarns pay between 0 and 18 percent, depending on the type of yarn/thread. There is a value-added tax of twelve percent to be paid on the sum of ad valorem duty and the CIF value of the import. This tax can be credited against a firm's value added liabilities. Guatemala uses both the metric and the English systems of weights and measures.

Additional information may be obtained from the Country Commercial Guide (CCG) for Guatemala, on the National Trade Data Bank (NTDB).

KEY CONTACTS
DISTRIBUTORS / REPRESENTATIVES

A list is available upon request and a fee of U.S.$ 25.00
form the U.S. Commercial Service, U.S. Embassy Guatemala, Tel.:
502 331-1541, ext. 4259, Fax: 502 331-7373, e-mail: guatemala.office.box@mail.doc.gov

TRADE PROMOTION OPPORTUNITIES

There is one local trade fair for yarns and fabrics:

VESTEX
Dates: May (annual)
Place: Grand Hotel Tikal Futura
Guatemala City, Guatemala

Information on this show may obtained directly from:

VESTEX
(Apparel and Textile Exporters Committee)
15 Avenida 14-72, Zona 13
01013 Guatemala, C.A.
Tel: 502 362-1990
Fax: 502 362-1994
e-mail: ccaballeros@apparel.com.gt
Internet: www.apparel.com.gt
Contact: Luis O. Estrada, Manager
Carla Caballeros, Marketing / Promotion
A second event that may be of interest to U.S. exporters is
INTERFER 2001 - "USA Pavillion", October 23-28, 2001.

This event is an international trade fair held in Guatemala City every odd year. A similar international trade fair is held every even year in San Salvador, El Salvador.

The USA Pavillion at INTERFER, is being organized by the
American Guatemalan Chamber of Commerce - AMCHAM
Avenida de las Americas 18-81, Zona 14
Edificio Columbus Center, Nivel 8
01014 Guatemala, C.A.
Tel: 502 363-1774
Fax: 502 367-3414
e-mail: guamcham@guate.net
Contact: Edwin Solares, President
Carolina Castellanos, Executive Director

DISCLAIMER
Information in this report relies on sources including Government Publications, Opinions of industry experts and other public sources. Infomat can accept no responsibility for the accuracy or completeness of such information or for loss or damage caused by any use thereof. All prices subject to change without notice.

$3500 USD
For the 2008 Edition

Published: 2006 August
Market: Mens Womens Childrens
Region: Guatemala
Industry: Textiles
Pages: 45
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