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Wednesday, June 24, 2015

Buenos Aires Market Booms As Argentina Economy Stagnates


June 23, 2015 4:56 pm

Buenos Aires market booms as Argentina’s economy stagnates

DAJM58 La Salada in Buenos Aires is the biggest illegal market in South America. A high range of products is offered at the market for half the usual price. Several million Dollars turnover is made here per week. Photo: Lisa Rauschenberger©Alamy
La Salada market in Buenos Aires
While Buenos Aires sleeps, La Salada roars to life. By 3am, shoppers are chaotically barging their way through the narrow passageways of Latin America’s largest informal market, hauling sacks bulging with anything from fake branded clothing to pirate DVDs.
“Look at this, just 135 pesos!” exclaims a satisfied Rodrigo Vega as he brandishes a pair of jeans, explaining that the price, about $15 at the overvalued official exchange rate, is at least a fifth of what they might cost in a more upmarket Argentine shopping centre.
For Mr Vega, like many other Argentines struggling to get by on wages sapped by double-digit inflation and a flatlining economy, it was worth the seven-hour bus ride from the interior to get to La Salada, which has annual revenues of at least $3bn, according to organisers. Others come from as far afield as Paraguay and Brazil to join the hundreds of thousands that on market days scour as many as 40,000 wire-mesh stalls jammed into warehouses on the banks of a putrid river in the rundown outskirts of Buenos Aires.
Its popularity first exploded during the country’s economic collapse at the start of this century as bargain-hunting Argentines were drawn in by rock-bottom prices of textiles made in local sweatshops. But La Salada is booming once again, its popularity an ironic bookmark to nearly 13 years of presidential rule by Cristina Fernández and her deceased husband, Néstor Kirchner, who came to power in 2003 after Argentina’s 2001 default and subsequent devaluation.
“During the bad times, La Salada took off, but when things got better [during the commodity boom] people had got used to coming here so it kept growing,” said Jorge Castillo, the public face of La Salada and the administrator of its biggest warehouse. He says the market sells at least $20m of merchandise on open days, with annual sales rivalling those of all of Argentine e-commerce of about $4.4bn.
“Now things are bad again, people keep on buying more and more here. Many can’t make it to the end of the month,” added Mr Castillo, complaining ofArgentina’s stagnating economy.
Now things are bad again, people keep on buying more and more here. Many can’t make it to the end of the month
- Jorge Castillo, administrator of La Salada’s biggest warehouse
Although Ms Fernández claimed during a trip last week to Europe that less than 5 per cent of Argentines live in poverty — after the government stopped publishing its much-questioned poverty statistics in 2013 — independent groups estimate that more than 25 per cent of the population had been pushed under the poverty line by last year when prices rose as much as 40 per cent.
As Ms Fernández reaches the end of her presidency, with elections due in October that are expected to produce a more market-friendly administration, she is fiercely defending her political record. It is part of an effort to shore up support among her largely poor power base in order to maintain some influence once she leaves office.
Although La Salada has been blacklisted by the Office of the US Trade Representative because of its counterfeit produce — the logos of brands like Adidas, Nike or Lacoste catch the eye at every turn — its popularity has protected it from the kind of heavy-handed government intervention that is normal elsewhere in the country.
In fact, the government has even invited representatives of La Salada on trade missions to countries like Angola and Vietnam in an effort to export its business model, which reduces costs by cutting out the middle man.
“Now it is a place of progress, not just of survival,” says Sebastián Hacher, the author of a book on La Salada who highlights its “brutal contradictions”, at once epitomising Argentina’s darker side and its flair for creativity in the face of adversity.
It all started in 1991 when a group of Bolivian immigrants first set up stalls at La Salada to sell their manufactured wares directly to consumers. Local merchants were struggling to compete with cheap imports in the early years of the presidency of free marketeer Carlos Menem, who had just slashed trade barriers and pegged the peso to the dollar.
Shortly afterwards, Mr Castillo bought up land at La Salada, so called because it was formerly a saltwater spa that had been spoiled by industrial pollution. It was a canny investment that allowed him to transform from a small-time shoemaker into a powerful business magnate and local political boss.
Mr Castillo dismisses accusations of tax evasion as bad-mouthing by Argentina’s “bloodthirsty” traditional business elites who are simply afraid of losing out on juicy profits. “Argentine businessmen don’t know how to compete. They don’t want to pay taxes, they want easy credit, they want cheap dollars. They want paradise, to live like kings,” he says.
Now, Mr Castillo is hoping to give US businesses a run for their money too, with plans to open a version of the fair in Miami.