On São Paulo’s hectic 25 de Março street where you can find a good deal on just about anything, one shop features knock-off designer kid’s clothes and shoes. A young Brazilian woman stands at the door to greet the thousands of bustling passers-by. She shouts orders to a slender Chinese man in the back of the store, who responds in a lightly accented Portuguese.
Dozens of mini versions of Kanye West’s latest Yeezy sneakers line the display at the front of the store. Priced at 40 BRL, around $12, they’re half the actual retail price.
When asked if he brought the shoes over from China, the store owner laughs, “From China? Everything you see in this store comes from factories here in Brazil. It’d be more than three times the price if I were to ship them in from China.”
Like São Paulo, every major city has its Chinese street vendors hawking discounted electronics and clothes. Brazilians know and love these cheap knock-offs so much they’ve come up with a popular saying, negócio da China, or “a Chinese deal”. But what Brazilians don’t know is that these “Chinese deals” aren’t coming from the other side of the world. Rather, they’re made much closer to home.
Cheap And Cheaper
Turns out while labor costs in China have been increasing, the same costs have been going down in Brazil. According to a Euromonitor International study, the average factory worker in China makes about $3.60/hour, up to 70 percent the average European factory wage. Furthermore, Chinese wages as a whole have actually increased by 10.5 percent annually over the last decade.
Meanwhile, in Brazil, the average manufacturing worker makes only $2.70/hour. In fact, the Chinese hourly wage averages out higher than in any Latin American country, with the exception of Chile.
Specialists see this change as an opportunity for Brazil to increase its role in international commerce. In addition to decreasing labor costs, the depreciation of the dollar should give Brazilian goods an advantage in the market.
However, other Southeastern and South Asian countries continue to have the lowest manufacturing wages. Sri Lankan workers earn as little as $0.50/hour. But Brazil continues to have the advantage of relative political and social stability in comparison to other low-labor countries, as well as stronger anti-slavery laws, representing a lower risk for importers.