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Medellin-based multinational retail giant Exito is enjoying ever-greater success with its “Didetexco” clothing manufacture/export subsidiary – even in the face of Colombia’s  competitive problems with illegal, below-cost, and unethical clothing vendors (mainly exporting from Asia).

In a presentation to the Colombiatex 2018 annual show here January 23, Didetexco general manager Ramiro Arango and fashion coordinator Juliana Rincon pointed to tremendous growth in the division’s production, sales and exports – with 97% of clothing for Exito’s domestic and foreign markets made right here in Colombia.

“To ‘democratize’ fashion is our goal, with everyday-low-prices and sustainability,” Arango said.

The Didetexco clothing division – launched here in 1949 by Exito founder Gustavo Toro Quintero – initially tapped relatively low-cost supplies (scraps and remains from Medellin’s major textile manufacturers) and also provided dignified labor for seamstresses coming from vulnerable economic sectors.

Today’s business model for Didetexco involves tapping “sinerproveedores” – that is, scores of independent workshops in many Colombian towns and cities (including municipalities in Antioquia). These workshops employ some 9,000 directly or indirectly, mostly female heads-of-households.

While these workers aren’t direct employees of Exito, Didetexco nevertheless ensures that these workers receive all legal Colombian salary and benefits packages – in contrast to certain Asian countries that unethically employ slave-like child labor in clothing manufacture, dump toxic chemical byproducts, or sell to third parties that might be laundering illegal drug money by importing below-cost clothing.

In 2017, Didetexco’s “sinerproveedores” produced 33 million items of clothing -- up 153% since 2015 -- with 2.79 million of those units sold for export, up 390% since 2015, Arango boasted here.

For Exito, having Didetexco enables expansion of its domestic clothing retail sales to its recently acquired retail chains in Argentina and Uruguay -- via clothing exports from Colombia -- as well as to Brazil, which until recently (December 2017) had tariffs that made it cheaper to export designs rather than clothes.

However, thanks to a new free-trade agreement (eliminating tariffs on clothes), it’s possible that Exito in future could export at least some clothes from Colombia to Brazil.

The Didetexco subsidiary also is now exporting clothes from Colombia to France as well as to Africa, Arango showed.

Thanks to special agreements between Didetexco and several well-known clothing designers (including Silvia Tcherassi), Exito clothing brand-names now include Arkitect, Bronzini, People, Bluss, Custer, Myst lingerie, WKD, Coqui, Carrel, Eventi and Ama’s.

Besides having strong brand names, other competitive advantages enjoyed by Didetexco/Exito include: mid- and long-term deals with the “sinerproveedores;” strong capacity and expertise in exporting; creative designers; strong knowledge of fashion trends; seasonal product lines; “complete package” products; strong marketing and communications; ethical labor and environmental practices; aggressive brand promotion; strong controls on product supply in response to demand; and growing consumer awareness, Arango said.

In addition, “we can react fast and produce fast” in response to changing fashion trends, he said. “From runway to retail, we do fast turnaround. You can’t do that with Bangladesh or China,” even though those countries may offer relatively cheap costs for clothing -- but can't offer fast shipping.

The Didetexco business model also employs a firm “gross margin return on investment” (GMROI) policy that ensures relatively fast inventory rotation, as products will go straight from factories to stores, not to warehouses, he said.

“We also fight [alongside Colombia’s fellow law-abiding clothing makers] to ensure just import duties, so that we can formalize more jobs,” he added.


Medellin-based Celsia – the electric-power division of corporate giant Grupo Argos – on January 26 reported full-year 2017 net profits of COP$251 billion (US$89 million), up 47% from COP$171 billion (US$61 million) in 2016.

Earnings before interest, taxes, depreciation and amortization (EBITDA) hit COP$1.12 trillion (US$399 million) for full-year 2017, up 9% year-on-year -- an all-time record.

As for fourth-quarter (4Q) 2017, net profits dipped slightly, to COP$71 billion (US$25 million), down from COP$75 billion (US$27 million) in 4Q 2016. However, 4Q 2017 EBITDA rose 21% year-on-year.

Consolidated earnings for full-year 2017 dipped 18% year-on-year, to COP$3.1 trillion (US$1.1 billion) because of a decline in thermal-power generation and lower power prices in Colombia, the company explained. However, 4Q 2017 consolidated earnings rose 4% year-on-year.

Total power generation in Colombia for full-year 2017 totalled 5,226 gigawatt-hours (GWh), down from 5,596 GWh in 2016. However, 4Q 2017 generation rose 31% year-on-year thanks to heavier rainfall that enabled greater output at Celsia’s hydroelectric plants.

Celsia’s power operations in Central America generated 9% more income in 2017 versus 2016, hitting US$245 million.

Celsia president Ricardo Sierra added that the company is “very content” with its 2017 financial results, adding that Celsia is now a leader in development of solar-photovoltaic power arrays as well as photovoltaic roofs for commercial operators -- including the Compañia Nacional de Chocolates chocolate factory in Rionegro, just outside Medellin.

Meanwhile, Celsia hailed a recent decision by Colombia’s national power regulator (CREG) that has boosted the financial outlook for thermal power generation -- via a “marginal scarcity price” scheme that allows thermal power generators to tap special revenues mainly generated by hydropower operators. These special revenues enable thermal power generators to survive for months or years until called-upon to boost output during occasional droughts that sap Colombia’s overwhelmingly hydropower-dependent electrical grid.

The company also hailed the recent start-up of a natural gas regasification plant in Cartagena, enabling thermal power generators to tap liquefied natural gas (LNG) imports during periods of peak demand for gas in Colombia.


Medellin business-development agency Agencia de Cooperación e Inversión de Medellín y el Área Metropolitana (ACI) announced January 19 that Switzerland-based multinational consultant Amaris plans to expand its Colombian and South American operations following start-up of new offices at Medellin’s “Ruta N” high-tech hosting center.

“Teamwork between ACI Medellín, Ruta N and ProColombia, managed to consolidate the presence of this company in the country,” according to ACI.

Amaris – now operating through 65 offices in 50 countries, with some 700 corporate clients – chose Medellin for expansion because of the “innovative environment offered by the city and its strategic geographical location to support its other offices in the provision of recruitment services, human resources, administration, finance and technical support,” according to ACI.

“Ruta N offered us a pleasant work environment,” added Sara Mondragón, platform manager at Amaris Medellin. “Thanks to the other [high-tech] companies installed [here], we are surrounded by an innovative and challenging environment. We constantly interact with the members of other foreign companies that are part of the Ruta N ecosystem” and “we see an excellent opportunity to benefit from their knowledge of the Colombian market.

“To make this decision we made an analysis of the environment and the quality of life in Latin America. Medellín was the best decision [considering] cost, safety, quality of life, institutional support and human talent,” Mondragón concluded.

Amaris -- founded in Switzerland in 2007 -- specializes in business-administration consulting, information technology, telecommunications, engineering, biotech and pharmaceutical sectors.

“With a turnover of €187 million [US$228 million], its goal in 2018 is to reach a team of 5,000 employees -- currently amounting to 3,650 -- and thus ratify itself as a world leader in independent consulting,” according to the company.


The latest monthly survey of leading banks and financial firms by Colombia’s Banco de la Republica (the national bank) finds that the Colombian peso is likely to trade in a range of COP$2,800 to COP$3,200 per US$1 during 2018, with a foreseen average of COP$2,995/US$1 by year-end.

The monthly survey (see: http://www.banrep.gov.co/es/informe-estadisticas-monetarias-y-cambiarias) of 40 leading private banks, stock analysts, pension funds and international organizations also sees the COP/US dollar trading in roughly the same ranges through 2019 and 2020.

Severe cold weather in the northern hemisphere in recent weeks has boosted global energy demand, with the result that rising oil prices -- traded in US dollars -- habitually weaken relative values of the US dollar against other currencies, including the Colombian peso.

As a result, the Colombian peso has been trading below COP$2,900/US$1 in the last couple of weeks, down from more than COP$3,000/US$1 during several days in Decemeber 2017.

The same survey also found that full-year 2018 inflation is likely to come-in at around 3.47%, with full-year 2019 inflation seen at around 3.33%.

Gross domestic product (“PIB” in Spanish initials) is seen growing by 2.45% this year, according to the average forecast of the surveyed analysts.


In a new study released January 15, the United Nations Economic Commission for Latin America and the Caribbean (ECLAC) finds that Colombia’s gross domestic product (GDP) is likely to rebound to 2.6% growth in 2018, up from 1.8% in 2017.

“GDP is projected to expand by 2.6% in 2018 against a backdrop of lower interest rates, higher oil prices and an expected improvement in the performance of the economies of the United States and the Euro area,” the latter two areas being key Colombian export markets, according to the study.

 During 2017, Colombia’s domestic demand slipped, pinching GDP growth. However, “there are some indications that the slowdown may have now bottomed out and that the growth rate will have begun to pick up [since] the third quarter of 2017,” according to ECLAC.

Meanwhile, “the upturn in international mineral and oil prices [during 2017] helped to bring down the deficit on the goods account as the value of fuel exports strengthened,” the study noted.

“Foreign direct investment (FDI), although weaker than the year before, and portfolio investment were the two categories of inflows that made the biggest contributions to the financial account in the first half of 2017,” according to ECLAC.

On a related front, “gross fixed capital formation rose slightly thanks to an acceleration of investment in civil works, agricultural facilities and transport equipment. Investment in construction slumped, however. Government consumption climbed at a rate of 3.5%.

“Growth was driven by the agricultural sector –with coffee production and other crops leading the way– and by sectors associated with social, personal and financial services,” the study noted.

On the other hand, “the construction sector was hurt by weaker building demand and by contractual problems that delayed the closing of the financial packages for the 4G [fourth-generation] road infrastructure program.

“The mining sector continued to decline, although there were some faint signs of a recovery thanks to an upturn in prices,” ECLAC added.

Fedesarollo Predicts 2.4% Rise in GDP

Meanwhile, Fedesarollo -- Colombia’s leading economic think-tank – on January 12 released its latest Tendencia Económica (economic trends) report, finding that national GDP is likely to grow by 2.4% this year.

Fedesarollo also noted that Wall Street bond rater Standard & Poor’s last month cut its rating on Colombia’s sovereign debt to "BBB-", down from a prior "BBB" rating, although maintaining a “stable” outlook. “The decision by S&P highlights the fiscal challenges over the mid-term,” Fedesarollo’s report noted.

Although federal tax collections in 2017 were “weak,” Colombia’s fiscal goals were met thanks to a COP$4 trillion (US$1.4 billion) cut in government spending along with a one-time fiscal gain from massive fines imposed upon cell-phone companies accused of price-rigging, the study found.

However, such one-time gains aren’t in the cards in future years, so the government must take further steps to maintain its fiscal targets, Fedesarollo added.

Meanwhile, the most recent economic indicators show that Colombia’s full-year 2017 GDP growth likely finished at around 1.7%, while latest GDP forecasts for 2018 indicate a likely rebound to around 2.4% growth, the study noted.


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About Medellin Herald

Medellin Herald is a locally produced, English-language news and advisory service uniquely focused upon a more-mature audience of visitors, investors, conference and trade-show attendees, property buyers, expats, retirees, volunteers and nature lovers.

U.S. native Roberto Peckham, who founded Medellin Herald in 2015, has been residing in metro Medellin since 2005 and has traveled regularly and extensively throughout Colombia since 1981.

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