It’s nuts to miss out on Brazil

Sep 19 2007 by Andrew Mernin, The Journal

WHEN most growing firms target a rapidly emerging market with huge opportunity for growth and a relatively low cost of doing business, India and China are no doubt top of the list.

But one organisation hoping to challenge this view among the region’s businesses is UK Trade and Investment (UKTI).

Next February the Government-run group will take several North-East companies on a trade mission to Brazil – a country which has the 10th biggest economy on the planet which is often overlooked by British businesses.

While the group is yet to confirm which companies have signed up for the mission, it has received interest from businesses of all shapes and sizes and, come next year, it expects to have around 10 firms on board the Brazil-bound trip.

Among those who have shown an interest include a TV documentary maker, a dance performance firm and a golf course and leisure management company.

So what are the opportunities for North-East firms in Brazil and should the region’s businesses re-adjust their radars towards the land of sun, sand and samba?

We caught up with the Paul Smith, a UKTI representative from the British Consulate in Sao Paulo, who visited the region this week to find out more.

What brings you to the region?

“I’m here to visit companies that are interested in going on our mission to Brazil. I’ve met people from education, TV programme makers and also visited Middlesbrough FC, who are running a scheme in Sao Paulo with a couple of minor clubs in slum areas to find two Brazilian football stars of the future.

“I’m answering their questions about their particular sectors and what the prospects are there and to raise awareness.”

What are the benefits of doing business in Brazil?

“It has a stable economy without high inflation, it has experienced workers in most sectors. It’s been an industrial powerhouse for around 40 years and so has a much more developed workforce and is a much more developed economy than say India or China.”

Why should businesses choose Brazil over other South American countries?

“Brazil is bigger than all the South American countries put together while the economy of Sao Paulo is bigger than Argentina’s entire economy. Brazil is the 10th biggest economy in the world.”

What common difficulties do British companies come across in Brazil?

“The main challenge is the cultural difference in the way people do business because it’s very much based on the Italian and Portuguese culture of doing things. Also there is a lot of bureaucracy. You have to appoint somebody in Brazil to help you get through the bureaucratic and the customs difficulties. On the legal side you have to get advice frmo a Brazilian lawyer to see you have those things straight.”

But despite the challenges is their sufficient support for UK businesses in Brazil?

There are many potential pitfalls but that's what we are there for. We can help the person identify the right people to rake them through the pitfalls.

Is Brazil a particularly competitive market?

Competition is tough in Brazil because it's a market where other nations have identified already and have been there before. The British have tended to ignor Brazil until now so we should be looking more at Brazil as it's a top ten economy and the Americans, the Germans and the Italians have discovered it already.

Does the Brazilian Government welcome an influx of British businesses?

Yes, they are gradually opening up the country much more to trade and international investment and looking to invest overseas as well. The Brazilian companies are trading more, they are going abroad more and there are lots of Brazilian companies with their own technology that are looking to invest overseas. So that's another opportunity for the UK as we are looking for Brazilian companies to come to the UK.

Which particular sectors in North-East do you think could prosper most in Brazil?

I've met quite a few companies from the region in IT and telecoms that are interested in Brazil so from my experience I would say that those sectors are strong. There are many opportunities in software, which is very broad based in Brazil. In aerospace, healthcare, banking, you name it, there are opportunities in software. In telecoms there are big opportunities in 3G technology which is just about to take off in Brazil. They are a bit behind Europe in 3G telecommunications but there are big opportunities in mobile applications such as games, video, security, location software.

Is it difficult for British companies to set up their own office in Brazil?

it depends what the company is looking for. Obviously the company has to be of a certain size to warrant setting up another office.

Are there free zones in Brazil which make it easier for UK firms to do business?

Well there is the Manaus Free Trade Zone which is right in the middle of the Amazon rain forest and a lot of companies have set up manufacturing plants there. So they bring in the raw materials free of charge or at very low import duties. It's probably the most famous free trade zone in Brazil but its a long, long way from Sao Paulo.