Continuing our recent theme of featuring commercial capitals over political centres, we take a closer look at Brazil’s business heartland
As global powerhouses go, they don’t come much bigger than Brazil. It boasts a population of 200 million and is larger than Europe in terms of combined land mass.
Its economy, now the eighth largest in the world, grew by 9% in the first quarter of 2010 and is predicted to increase by around another 8% by the end of the year. What’s more, the country’s ‘open for business’ in every sense and there’s a feeling of goodwill towards the UK, according to John Doddrell (right), director of UK Trade & Investment (UKTI) for Brazil and Her Majesty’s Consul for São Paulo. “For so long it has been seen as a country of great potential – that potential is now being realised,” he says.
Keeping it naturalBeyond its footballing and partying prowess, Brazil is rich in natural resources through its rainforest, arable land and water. The oil and gas industry has become increasingly prominent, not least through China’s demand for fossil fuels to power its burgeoning economy. More Brazilians are travelling and the growing middle class is spending on what would once have been considered luxuries. Indeed, sales of Scotch whisky to Brazil shot up by 56% last year.
Gone is the runaway inflation that marked Brazil in the 1990s. Under former workers’ party leader President Lula, business has been good. As he reaches the end of his two terms, there’s hope for more of the same from Dilma Rousseff (Lula’s nominee) or José Serra (the city’s former governor), come October’s elections.
Commercial centreSão Paulo, with its 20 million residents, is central to the country’s growth. While Rio de Janeiro will host the Olympic Games in 2016, the World Cup in 2018 will absorb the interest of the planet again two years later, and São Paulo remains the hub for many direct flights into the country. The commercial centre’s economy is also bigger than those of Argentina and Chile combined – a staggering fact.
With its sprawling high-rise buildings, it hosts the financial sector and the headquarters of most international corporations based in the country. Its strength was built on coffee beans, but industry is also a big contributor, through the motor trade and metals, particularly steel.
Because of the upcoming international sporting events, huge sums are being spent on the country’s infrastructure, such as airports, railways and roads. Construction is responsible for 13% of Brazil’s gross domestic product. No wonder Doddrell says it is the most profitable country worldwide for the British construction equipment firm JCB, which has a factory in São Paulo.
Relationship building It’s unlikely any new business will be signed on your first visit to the city, says Doddrell. “It’s all about co-operation with partners,” he explains. “Personal relationships need to be built over time. It’s not an easy country to do business with. The first barrier is language, as people don’t generally know enough English. So a Portuguese speaker is essential.” The message: hire an interlocutor. That said, there are a lot of second or third-generation Italians, Spanish, Germans and Portuguese giving the city a European flavour. The British Chamber in São Paulo is also strong and ready to help.
Employment law, the regulatory environment and the tax system, which has three layers (federal, state and municipal) are “complex”. Transport is also a problem. Drivers are restricted to using vehicles on a rotation basis and the Metro needs improvement.
Beyond São Paulo, Rio is the hub for the country’s oil and gas industry, and is heading towards being the largest producer outside the Middle East. Porto Alegre in the south is a centre for agriculture, footwear, packed food and offshore oil and gas. Meanwhile, in the north east, Suape is growing quickly through ship building, chemical processing and other industries, and Recife is strong in IT. An hour’s drive from São Paulo, Campinas has an economy as big as Chile.
There’s a wealth of opportunity in the fields of transport, teaching English (for the influx of visitors in 2016), and selling consumer goods. But, warns Doddrell, do your research and establish partnerships before boarding those flights.