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Q. I love watching the World Cup in Brazil. What’s the business climate like now?
A. Reasonably good, and the exciting matches played thus far in beautiful facilities around the huge country should provide a post-Cup fillip. Infrastructure challenges have been a drag on potential growth, but the country is on a roll with close to 400 hotels under construction adding thousands of rooms to inventory. That’s lots of drapes, plumbing fixtures, spa lotions, advisory services, and countless other things to be purchased at home and abroad.
Brazil is a big market both in land mass and its population of 198 million. GDP is expected to grow 2.5 percent in 2014, while GDP per head at purchasing power parity is $12,790 compared to $54,920 in the U.S. Look at the market as a big opportunity with plenty of potential, which will be fueled in the future by sizable reserves of oil and gas. If you sell products to that industry you should be there now. If not, get busy.
The U.S. is the number one source of imports with 15.9 percent of the total. China is in second place but coming up fast with 15.2 percent and is the number one market for Brazil’s exports. Good thing then that Americans comprise the largest contingent of foreign visitors to the World Cup, reliably filling 150,000 stadium seats. While there, they should hit the beaches and find a business partner.
Like the United States, Brazil is mainly a service economy. Services comprise about 68 percent of Brazil’s economy, compared to 78 percent of the U.S. economy in. Some additional factoids:
• Brazil is a net exporter to the world and had a 2013 trade balance of $2.5 billion. In the same year, Brazil’s exports totaled $242 billion.
• As recipient of $44.1 billion of U.S. exports in 2013, Brazil earns a spot in the Top 10 U.S. Export Markets. The top five U.S. exports to Brazil are chemicals, transportation equipment, computer and electronic products, machinery (except electrical), and petroleum and coal products.
• U.S. and Brazil mutual foreign direct investment totals more than $80 billion dollars, supporting thousands of jobs in both countries.
Death, taxes and samba
Doing business in Brazil requires intimate knowledge of the local environment, including both the explicit as well as implicit costs of doing business (referred to as the “Custo Brasil”). Such costs are often related to distribution, government procedures, employee benefits, environmental laws, and a complex tax structure. Logistics pose a particular challenge, given infrastructure limitations posed by nearly a decade of economic expansion. In addition to tariffs, foreign companies will find a complex customs and legal system. A policy of import substitution has been pursued for years by government authorities, but it’s arguably not a good solution for a country as developed as Brazil, which is in need of more technology and goods than it can produce on its own. In time, Custo Brasil will get a makeover
There are few, if any, sectors in Brazil that don’t have excellent short-term opportunities. Certain sectors of the Brazilian market have experienced higher than average growth, such as air transportation, telecoms, oil and gas, and mining. Under the second phase of the Growth Acceleration Program (PAC II), the Government of Brazil will spend around $470 billion developing the country’s energy generation and distribution system, roads, railroads, ports, and airports. Other promising areas for U.S. exports and investment include agriculture, agricultural equipment, building and construction, aerospace and aviation, electrical power, safety and security devices, environmental technologies, retail, and transportation.
The Brazilian national oil company Petrobras' expansion may represent the largest global business opportunity in the oil and gas sector from now until at least 2020. The offshore oil deposits discovered in 2006 and 2007 are estimated to exceed 60 billion barrels in probable or recoverable reserves, and could place Brazil among the world’s top ten oil-producing countries. Petrobras anticipates that it will invest $224 billion in exploration and development.
Brazil’s business culture relies heavily on the development of strong personal relationships. Companies need a local presence and must invest time in developing relationships. One of the best ways for U.S. companies to enter the Brazilian market is by participating in local trade shows or using the U.S. Embassy and consulates to find pre-screened potential clients or partners. When your WPG correspondent was in Los Angeles recently, he met a company from nearby San Diego that has just used this service to score a big contract to sell a system which keeps track of drug prescriptions and finds cheap generic drugs to reduce costs. It was the company’s first export sale and would have been impossible if not for the introduction.
It is very difficult for U.S. and other foreign companies to get involved in public sector procurement without a local Brazilian partner. For those wanting a deeper dive into doing business in Brazil, here is a video briefing from a U.S. Commerce Department market expert. Also of interest is the use of Goldman Sachs analytical power to predict the winner of the 2014 World Cup. What do their numbers show? BRAZIL.
Meanwhile, don't be sad when the World Cup and all those TV beauty shots of Brazil are over. In just two years the Summer Olympics open in…Rio! Who knows? By then you could be there, taking selfies on Ipanema Beach and celebrating with your Brazilian business partner.
| Product Model | Inside Diameter | Outside Diameter | Thickness |
| PCMF353926B bearing | 35 | 39 | 26 |
| PCMW102001.5B bearing | 10 |