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The list of firms leaving the South American country does not stop growing. Airlines, factories and department stores join a trend that is caused by the economic crisis and the coronavirus.
The news fell like a bucket of cold water: the Chilean company Falabella announced the closure of four of its stores in Argentina “in the coming months” and the search for a buyer or a strategic partner that would make the operation of its stores that operate under said brand viable, where it sells clothing and appliances, and Sodimac, of items for home improvement. In the package, the company will include its portfolio of CMR card users.
The firm recognized the efforts, already laid off 250 people, and attributed the sustained drop in sales to the growing digitization of retail (more and more people are buying online), the economic crisis that is hitting the country and the covid-19 pandemic.
However, the Diario Financiero, specialized in economic issues, assures that Falabella has been trying for several years to leave its business in Argentina, a market it entered in 1993.
What bad signs is our country giving for those who want to invest in Argentina. Regulation. Justice? Rate freezes. Not to mention taxes that scare even more. In addition to Nike, Latam, Qatar and Emirates, Falabella and Sodimac are added. Where are we going? pic.twitter.com/zLGEiPeiq5
– Gustavo Neffa (@gneffa) September 14, 2020
This is just one example of the precarious economic situation in South America’s second power, which has been experiencing negative growth for two years.
The most notorious exodus has been on the airlines. In December 2019, the European low cost Norwegian left its operations in the hands of JetSmart. In April 2020, the firm Air New Zealand suspended its five flights between Auckland and Buenos Aires.
In the middle of June, Latam announced its departure from Argentina and began negotiating with its 1,700 employees. This airline had been in the market for 15 years, where it had 16% of the pie.
Then came Qatar airlines in August. All of them anticipated that they will not return even when flight restrictions are lifted.
Emirates, meanwhile, it withdrew, but said it would analyze an eventual return if it becomes operationally feasible.
The stampede isn’t just about the airlines, and it’s not just about the pandemic.
Economic instability is a factor that is repeated as an argument. Nike announced in February that it was leaving, leaving its operations in the hands of the Mexican group Axo. At that time, the firm explained that it was making a transition to make the business more efficient. The German BASF announced that it will move to Brazil a paint factory that just opened in 2017.
CARREFOUR WOULD JOIN FALABELLA, SODIMAC AND WALMART
Tax increase of almost 50% and very little growth, the reason why companies reorganize https://t.co/MaS8KMjRTr pic.twitter.com/4Y4QRw93yB– Urgente24.com (@ U24noticias) September 15, 2020
Other firms, such as Axalta (American chemistry), Saint Gobain Sekurit (manufacturer of windshields of French capitals), Pierre Fabre (Gallic laboratory), VF Corporation (owner of Lee and Wrangler) and Gerresheimer (packaging machine of German origin) sold their operations in recent months.
Meanwhile, the Chilean Cencosud and Masisa they hope to reduce their presence in the Argentine market. A similar policy had already been adopted in February Walmart, While Starbucks and Burger King they closed 13 stores in total trying to balance their finances. In March, meanwhile, the Japanese Panasonic announced its exit from the Argentine market due to low sales.
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