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Lupo’s International Industrial Expansion Occurs Without Factory Closures in Brazil and Includes Continuous Investments in the Historic Unit of Araraquara While the Company Seeks Competitiveness in the Face of Tax Changes and High Operational Costs.
Lupo, a century-old Brazilian textile company, has initiated a strategy of international productive expansion with the inauguration of an industrial unit in Paraguay, without shutting down or deactivating its operations in Brazil.
The company keeps its national factories operational, including the unit in Araraquara, in the interior of São Paulo, the historical headquarters of the company, which remains active and in a continuous process of modernization and investment.
The new Paraguayan plant was installed in Ciudad del Este, with an investment reported to be over R$ 30 million, and is part of a complementary strategy aimed at industrial competitiveness in light of recent changes in the Brazilian tax environment.
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According to the company, production in Paraguay allows for a cost reduction of around 28% compared to manufacturing in Brazil, mainly due to the lower tax burden and a simpler regulatory environment.
Founded in 1921, Lupo has weathered economic crises, monetary changes, and periods of instability without halting its production in the national territory, maintaining its industrial base in the country for over a century.
In recent months, however, the company has started to reorganize part of its production chain in direct response to changes in the tax treatment of fiscal incentives in Brazil.
Tax Changes and Impact on Industry
Law 14.789, enacted in December 2023, changed the treatment of subsidies for investment granted by states and municipalities, establishing new rules for the use of these incentives in the calculation of federal taxes.
In practice, the legislation altered how companies can recognize and utilize tax benefits related to ICMS, imposing additional requirements for registration and accounting records.
The federal government presented the measure as part of an effort for fiscal reorganization and increased revenue.
For labor-intensive and cost-sensitive industrial sectors, such as textiles, the change prompted reevaluations of investment and production location.
New Unit in Paraguay and Maquila Regime
Lupo’s factory in Paraguay operates under the maquila regime, a system aimed at industrialization for export, which allows the importation of inputs with reduced taxation and the application of a flat tax of 1% on the national added value or on the value of exports.
The unit has the capacity to produce up to 20 million pairs of socks per year and currently generates around 110 direct jobs in the neighboring country.
The location in Ciudad del Este was also chosen for logistical factors, as the city is close to the border with Brazil and integrated into Mercosur trade corridors.
Brazil remains one of the main destinations for products manufactured under the maquila regime, including items produced by Lupo.
Company Statement on International Strategy
In an interview with Folha de S.Paulo, executive Liliana Aufiero stated that the decision to expand production in Paraguay does not represent an exit from Brazil.
According to her, the move is linked to the search for competitiveness in a scenario of rising costs and regulatory complexity.
“It’s not that Lupo went to Paraguay; Brazil pushed us to Paraguay,” she declared, commenting on the effects of the tax burden and bureaucracy on the industry.
The company emphasizes that the Paraguayan operation does not replace national production but acts as a complement within a global strategy, a common practice in companies with international operations.
Production in Brazil Remains Active
Lupo has not announced the closure of factories or the end of industrial activities in Brazil.
The Araraquara unit remains a historical and productive reference for the company, with continuous investments in modernization and technology.
This move highlights the challenges faced by industrial companies in light of recent tax changes and reinforces the debate on competitiveness, regulatory environment, and attraction of productive investments in the region.
How can Brazil adjust its economic environment to prevent more companies from adopting similar strategies of productive expansion outside the country?
Empresa falida, parou no tempo, não tem mas copetividade ,Ching ling tomou o mercado, tchau não vai fazer falta
Sua formação em administração comércio exterior e economia deve ser explendida!
Materia **** de **** amestrado ,a lupo continua no Brasil no interior de sp. E vai sim abrir uma nova fábrica no Paraguay para exportações , simplesmente uma indústria brasileira criando filiais e se tornando internacional, matéria ****.