PORTUGAL a country report
SNAPSH OT CO UN TRY
PORTUGAL 39 30 N 8 00 W
Location: SW Europe on the Iberian Peninsula, bordered by Spain and Atlantic Ocean
COUNTRY AREA: 35,556 sq. mi
GDP PURCHASING POWER: $276 billion
CAPITAL: Lisbon
GDP PER CAPITA: $26,300
TIME DIFFERENCE: +5 hours
GDP GROWTH RATE: 1%
LANGUAGES: Portuguese, Mirandese
LABOR FORCE: 5,271 million
MAJOR RELIGIONS: Roman Catholic, Christian
UNEMPLOYMENT RATE: 13.6%
POPULATION: 10,813,834
INFLATION RATE: 0.3%
GROWTH RATE: 0.12%
CURRENCY: euro € (EUR)
LIFE EXPECTANCY: 79.01 years
EXCHANGE RATE: 0.895 EUR per 1 USD
SCHOOL LIFE EXPECTANCY: 16 years
MINIMUM WAGE: €589/month
LITERACY RATE: 95.4% (15+ years old)
WORKING HOURS: 8/day 40/week
EDUCATION EXPENDITURES: 5.6% of GDP
CHILD LABOR: 3% (6-14 years old)
SOURCE: The World Factbook
POLITICAL
ECONOMICAL
SOCIAL UNEMPLOYMENT RATE DECLINE
17%
15%
2012
2013
13%
2014
GDP GROWTH (billions)
218
227
276
2012
2013
2014
The country has a large population of over 10.8 million people with a high literacy rate of over 95%. While the unemployment rate is around 14%, it is the lowest in years. The government is taking steps to reform the labor market. They want to help create jobs and further improve worker mobility, and to do this they are taking measures such as reducing labor costs, introducing flexible work hours and relaxed wage setting agreements. The government provided incentives to hire the unemployed in return for on-the-job training through public-funded programs under Estimulo 2013. A separate program was set up for unemployed youth called Impulso Jovem. These programs are believed to reduce the division in the labor market.
STAB I LI T Y
Portugal’s rise out of the European debt crisis is becoming more noticeable with the rise of competition and government initiatives as noted above. Currently, the inflation rate is low at 0.3% and every 1 USD is 0.895 EUR. This ties into the ease of starting a business in Portugal. According to the World’s Bank Doing Business 2014 report, the Organisation for Economic Co-operation and Development (OECD) average is 11 days to start a business, where in Portugal it is around 2.5 days. The cost (percentage of income per capita) is lower in Portugal as well - 2.4% compared to OECD’s 3.6% average. Getting credit is easier than before as well. The government is trying to help stimulate the economic growth with low interest for borrowing money. The European Central Bank (ECB) is also taking measures in this area with several programs for loans, making sure the European economies do not crash.
COU NTRY
The Portuguese Republic is a parliamentary democracy system, with President Anibal Cavaco Silva as the Chief of State and Pedro Passos Coelho as the Prime Minister. The Portuguese government has taken steps to become stronger since the political coalition in June 2011. This coalition between the Social Democratic Party (PSD) and the Democratic and Social Centre-People’s Party (CDS-PP) has shown a proactive stance and commitment to bringing Portugal out of the current debt crisis. In May 2014, Portugal successfully exited the EU/IMF bailout, which allowed the country to fund itself through the capital market again. Prime Minister Pedro Passos Coelho has been implementing structural reforms in Portugal to help promote employment and growth in the labor market. Some initiatives include rationalizing healthcare and education, tax deductions and benefits and privatization. This altogether will help the Portuguese government become more credible in the international market. The strength of Portugal in this market can be seen in the rapidly-growing bilateral relations with China. In June 2012, China and Portugal signed a memorandum of understanding to boost scientific and technological ties and in July 2014, 31 Portuguese dairy companies were allowed to be exported to China by the Chinese government. This growing relationship will create market opportunities for Portuguese exports while attracting foreign capital investment.
SOURCE: Portugal
PORTU G AL I N T R AD I NG
4,055 mi
savannah - portugal
ENVIRONMENTAL ELEMENTS
When it comes to natural disasters, Portugal does not have any major factors that would affect working with the country. Heavy rain is known to cause river flooding, but the system of dams reduces the number of floods.
LEAD TIME IN PRODUCTION Export: 16 days | Import: 15 days
MAJOR SEAPORTS 1. Leixoes 2. Lisbon 3. Setubal 4.Sines
HOLIDAYS
Portugal has several national holidays with most of them being religious ones. The month of August is seen as a vacation period, so it is advisable to not schedule meetings then and the week between Christmas and New Years.
January 01: New Years Day April 25: Liberty Day May 01: Labor Day June 10: Portugal Day August 15: Assumption of Mary December 01: Restoration of Independence December 08: Immaculate Conception December 25: Christmas Day
SOURCE: River Floods Portugal; Work-life balance; The World Factbook
TOP 5 PRODUCTS
exported by portugal
Refined Petroleum (7.4%) Cars (4.7%) Vehicle Parts (3.7%) Leather Footwear (3.3%) Uncoated Paper (2.5%)
INFRASTRUCTURE Portugal has a strong communication system with broadband, high speed telephone capabilities, with over 95% of the country having broadband coverage. There are over 4.6 million main telephone lines. Along with telephone systems, the Internet is also well established here, with over 3.7 million Internet hosts. The land, air and ocean transportation systems are also well developed. There are over 71.3 km of paved road, which makes up 86% of the 82.9 km of roadways the country has. It is easy to travel throughout the country on the road or by rail. There are several major international airports, including Lisbon International, Porto International and Faro. The major seaports are Leixoes, Lisbon, Setubal and Sines. Since the country is developed, they have strong operation systems for importing and exporting goods to help move them in and out of the country easily.
COUNTRY CODE TELEPHONE: +351 INTERNET: .pt
TRANSPORTATION ZIM INTEGRATED SHIPPING SERVICES LTD.
LINE: Mediterranean Pacific Service PORTS: Lisbon to Los Angeles (37 days); Oakland (39 days); Tacoma (43 days) COST: $4,694.74 - $5,578.44*
MEDITERRANEAN SHIPPING CO.
LINE: WEC PORTS: Leixoes to New York (8 days); Savannah (16 days); Oakland (27 days) COST: $3,757.33 - $5,184.05* *cost is a range for all three US ports
SOURCE: Learn More About Trade in Portugal; Routefinder; The World Factbook; ZIM
TRADE AGREEMENTS & ORGANIZATIONS European Union (EU)
This is a political-economic union among 28 states of the European nation. It was formed after World War II to help stimulate the economies after the war. Today, the EU has 28 members that promote and regulate trade between these nations. Countries include Portugal, France, Italy, Spain and Romania.
TTIP (TRANSATLANTIC TRADE INVESTMENT PARTNERSHIP)
On June 14, 2013, members of the European Union and the European Commission started talking about trade agreements with the US. The EUUS trade agreement would be the biggest deal ever negotiated and could add around 0.5% annually to the EU’s economic output. US investment in the European Union is three times higher than the investment in all of Asia.
WTO (WORLD TRADE ORGANIZATION)
The WTO is the only global international organization that deals with trade between nations. The goal of the organization is to help producers of goods & services, exporters and importers do business. This replaced GATT (General Agreement of Tariffs and Trade) in 1995. Currently there are 161 nations, including the 28 from the EU, Brazil, China and Mexico. MEMBER SINCE: 1 January 1995
COTANCE
The Confederation of National Associations of Tanners and Dressers of the European Community (COTANCE) is the European Leather Industry’s representative body. This organization was created to help promote the European tanning industry internationally, along with promoting European leather within European and international markets. Members include the UK, Portugal and Italy.
CEC (The European Confederation of the Footwear Industry)
CEC’s main goal is to facilitate competition and sustainable growth in the European market. The group wants to promote interest in European footwear within the EU and internationally while serving as a place for stakeholders to communicate. CEC also wants to help promote employment in this industry by allowing workers to further develop their skills. Members are other footwear associations, such as the British Footwear Association and the Portuguese Footwear, Components, Leather Goods Manufacturers’ Association.
SOURCE: About CEC; COTANCE; Countries and Regions; European Union; US Relations; WTO
GIFT GIVING
When invited over to a Portuguese home for dinner, it is custom to bring flowers, chocolates or candy. Wine is not advised unless you know which wine the host enjoys.
First meetings are polite but reserved with a firm handshake and appropriate greeting according to the time of day (i.e. ‘good morning’). After a relationship is built, greetings become more personal, with women kissing each other two times on the cheek starting with the right and men hugging each other. Properly address the person with ‘senhor’ (Mr.) or ‘senhora (Ms. or Mrs.); this is the ‘honorific title.’ If they have a university degree, add on ‘doutour’ or ‘doutoura’ (doctor) to the honorific title. It is advised to wait until invited to use a first name, as this can be seen as inconsiderate.
BUSINESS MEETINGS DO
DON’T
write in red use aggressive tactics directly criticize
CLOCK
24 hours
DATE
day/month/year
When it comes to doing business in Portugal, relationships are the first step to being successful. Face-to-face meetings are preferred, as they see written or telephone communication impersonal. The first correspondence should be made in Portuguese. The relationships created are made between people, not businesses; if there is a change in staffing, a new relationship must be made. When in the meeting, shake hands first and exchange business cards at the end. Always try to stay calm, since losing your temper or shouting will diminish your credibility.
ETI QU ET T E
translate all material keep eye contact watch body language
In Portuguese culture, a high emphasis is placed on status, so car brands and academic titles are seen as ways to show their status. Business culture is hierarchical, so those in the highest positions make the decisions. Something foreign businesses should note is that Portuguese workers are not used to asserting management since status is so important and they dislike confrontation. Cheating is an instant way to lose their trust and is a deal breaker. Business planning in the Portuguese culture is often poor; deadlines are not considered important, so it is necessary for foreign businesses to constantly check in.
BU S I NESS
There are specific rules when it comes to flowers. Never bring 13 flowers, since the number is seen as unlucky, and they should not be red, as this is the symbol of the revolution. Lilies and chrysanthemums are only used for funerals.
MEETING & GREETING
Make sure when setting up a meeting to schedule it 1-2 weeks prior and confirm several days before hand. It is best to avoid the vacation period in August and the week between Christmas and New Years, since these are busy times.
SOURCE: Meeting Etiquette; Work-life balance
I ND U STRY TEXTI L E & A PPA R E L
TOP INDUSTRIES
LABOR COSTS
Textiles, Apparel & Footwear, Wood & Cork
INDUSTRY ASSOCIATIONS
Textile and Clothing Association of Portugal (ATP) Portuguese Wool Textile Association (ANIL) National Clothing Association (ANIVEC) Portugal Fashion Cluster
minimum wage: monthly (€) Production Manager 864,50 Warehouse Coordinator 747,50 Quality Control Operator 651,50 Tailors, Dressmakers, Sewers 490,00
APPAREL & TEXTILE INDUSTRY
This industry is one of the most important to the Portuguese economy. It makes up about 9% of total exports, 20% of the manufacturing industry’s employment and 8% of the manufacturing industry’s production. Most textile and apparel companies are in the northern part of Portugal, mainly around Porto and Braga. Portugal is one of the largest textile exporters in Europe. Riopele is one of the oldest textile manufacturers in the country, with a high-ranking client list including Zara, MaxMara, Calvin Klein, Versace, Giorgio Armani and Hugo Boss. According to the Portuguese Textile Association, there are about 6,353 textile companies that provide 123,463 jobs in the country. Being 9% of total exports, the industry exports equals around 4.283 million euros. The industry has grown with help from events such as Portugal Fashion and the Modtissimo Trade Show.
FOOTWEAR INDUSTRY
Between 2006 and 2013, the leather shoe industry in Portugal has increased it’s exports dramatically. It has grown around 213% from 36,510,000 pairs to 114,387,000 pairs over the seven years, according to Portuguese leather and footwear association Associação Portuguesa dos Industriais de Calçado, Componentes, Artigos de Pele e seus Sucedâneos. Portugal’s leather shoe and accessories industry represents 3.8 percent of the global leather goods trade according to the International Trade Centre. Also, the cost of Portuguese skilled labor is the lowest in Europe. Portugal has been working in the leather industry since the 16th and 17th centuries. These skills have been passed down, so the workers are still using traditional techniques, along with modern ones, to create high-quality leather goods. This has helped reel in some big name brands, such as Zara and COS to manufacture in Portugal.
LEATHER FOOTWEAR EXPORT RANKING 1 2 3 4 5 6
China Italy Vietnam Indonesia India Portugal
31% 14% 8.7% 5.4% 3.8% 3.7%
SOURCE: Aicep Portugal; Binlot; Mellery-Pratt; Trade of Leather Footwear; The World Factbook
SUPPLIERS AS - INDUSTRIA DE CALÇADO, LDA.
Rua da Cercosa No 220 - Pav. D Lugar de Samil, Apartado 57 3720-700 São Roque WEBSITE: www.alesanti.pt CONTACT: CATEGORIES: Men’s & Women’s Footwear MAJOR CLIENT: Levi Strauss & Co. TIME TO PORT: 44 minutes to Port of Leixoes
CARITÉ-CALÇADOS LDA.
Rua Nicolau Coelho No 2729 Sendim 4610-909 Felgueiras WEBSITE: www.carite.pt CONTACT: +351 255 310 660; info@carite.pt CATEGORIES: Men’s & Women’s Footwear MAJOR CLIENTS: Adidas, Timberland, Kickers, Gabor TIME TO PORT: 18 minutes to Port of Leixoes
MÁRIO CUNHA & FILHOS, LDA.
Zona Industrial, Longra 4650-328 RANDE Longra Felgueiras WEBSITE: www.adventure-boots.com CONTACT: +351 255 340 380; contactos@adventure-boots.com CATEGORIES: Men’s & Women’s Footwear MAJOR CLIENTS: Levi Strauss & Co. TIME TO PORT: 37 minutes to Port of Leixoes
PETRATEX SA - PAÇOS DE FERREIRA
Rua de Bande, no429 4590-049 Carvalhosa Paços de Ferreira WEBSITE: www.petratex.com CONTACT: +351 255 868 000; petratex@petratex.com CATEGORIES: Lingerie, Swimwear, Childrenswear, Activewear, Womenswear, Fashion Accessories MAJOR CLIENTS: Adidas Group, H&M TIME TO PORT: 32 minutes to Port of Leixoes
GO BIONIC - TECHNOLOGIAS DE FUTURO R. Estação de São Mamede 136 4465-128 São Mamede de Infesta WEBSITE: www.padrao-ortopedico.com CONTACT: +351 931 168 261 CATEGORIES: Prostheses, Orthotics MAJOR CLIENTS: BeBionic TIME TO PORT: 16 minutes to Port of Leixoes
SOURCE: Adidas Group; Levi Strauss & Co.
IN V E STMENT
SNA PS H OT
-
RISKS Still stabilizing from the European crisis Unemployment still fairly high Limited size of manufacturing industry Subject to some international organized crime Public and private debt still fairly high Banks exposed to sovereign risk
+
BENEFITS Ease of starting a business Portugal open to foreign cultures - ranked #2 on MIPEX 2011 report Cost of skilled labor is one of the lowest in Europe One of the largest textile exporters in Europe Leather industry is rapidly growing One of top leather exporters Thousands of textile and apparel manufacturers Closest European country to the United States High literacy rate Low inflation Efficient lead times Quality logistic and communication infrastructure Skilled labor force in textiles and apparel EU member - promotes trade and investment
“About CEC.” CEC - Footwear Industry. European Confederation of the Footwear Industry, n.d. Web. 06 May 2015. Adidas Group. “Global Factory List: Subcontractors.” (2015): n. pag. Adidas-Group. Adidas Group, 06 Jan. 2015. Web. Aicep Portugal Global. Investing in Portugal Textile and Clothing Industry (2013): n. pag. Portugal Global. Portugal Global, 2013. Web. 08 May 2015. Binlot, Ann. “The Portugal Fashion Industry Gains Momentum, Thanks to Its Design Talent and Textile Manufacturing.” Forbes. Forbes, 17 April 2015. Web. 09 May 2015. “COTANCE.” COTANCE. COTANCE. N.d. Web. 07 May 2015. “Countries and Regions.” United States. European Commission, n.d. Web. 10 May 2015.
“Learn More About Trade of Leather Footwear.” Observatory of Economic Complexity. Macro Connections, n.d. Web. 08 May 2015. “Learn More About Trade in Portugal.” Observatory of Economic Complexity. Macro Connections, n.d. Web. 08 May 2015. Levi Strauss & Co. “Levi Strauss & Co. Factory List.” (2015): n. pag. Levi Strauss. Levi Strauss & Co, Mar. 2015. Web.
W ORKS
European Union. Europa. EU. N.d. Web. 30 April 2015.
“Meeting Etiquette.” Business Culture. Passport to Trade 2.0, 2014. Web. 25 Apr. 2015.
“Portugal.” Portugal Country Profile (2014): 1-75. Business Source Premier. Web. 22 April 2015. “River Floods Portugal.” Climate Adaptation. Centre for Climate Adaptation, n.d. Web. 02 May 2015. “Routefinder.” MSC. Mediterranean Shipping Company. 2015. Web. 06 May 2015. “US Relations With Portugal.” US Department of State. Bureau of Public Affairs, 27 Aug. 2014. Web. 06 May 2015. “What is the WTO?” WTO. World Trade Organizatioin. N.d. Web. 04 May 2015. “Work-life balance.” Business Culture. Passport to Trade 2.0. 2014. Web. 07 May 2015. The World Factbook 2013-14. Washington, DC: Central Intelligence Agency, 2013 . World Freight Rates. World Freight Rates. 2013. Web. 06 May 2015. “ZIM Shipping Line Network.” ZIM. ZIM Integrated Shipping Services Ltd. N.d. Web. 06 May 2015.
CI TED
Mellery-Pratt, Robin. “’Made in Portugal’ is on the Rise.” Business of Fashion. Business of Fashion, 12 Jan. 2015. Web. 27 April 2015.
Victoria Strong | FASM 420 | Spring 2015