Photogaphy By Michael Vonal
Philip Gough is a Counselor for Trade Promotion and Investment Affairs with the Brazilian Embassy. As head of the Trade Promotion Offi ce, Mr. Gough oversees a team working in the areas of trade and investment. Mr. Gough is a career diplomat, and has a background in Trade Policy. He has worked in the Trade Policy Division of the Ministry of External Aff airs in Brasilia, where he specialized in Intellectual Property rights. During his assignment with the Permanent Mission of Brazil to the International Organizations in Geneva he was responsible for antidumping, subsidies and safeguards negotiations. He has also served as Chairman of the Working Group on Trading Rights as well as the Working Group on China’s Accession into the World Trade Organization. We were happy to catch up with Mr. Gough and talk about trade with Brazil.
What should we know about doing business in Brazil?
Brazil is a consolidated democracy based on solid institutions, with a stable political environment that guarantees individual rights. It is a country with a high degree of institutional, political and economic maturity, with immense potential for growth and investment. Today, the country is a major player in global affairs. With a population of 192,3 million inhabitants and a US$ 2,1 trillion GDP, Brazil is the seventh largest economy in the world. The Brazilian economy rests on strong macroeconomic fundamentals: inflation under control coupled with a high level of foreign reserves and a sustainable average economic growth.
The consumer market has expanded, attracting new entrepreneurs and expanding business. Roughly 40 million Brazilians have joined the ranks of the middle class in recent years. The size of such middle class is estimated at more than 100 million people, or about 50% of the country’s population.
Due to the size of its population and its high consumer potential, Brazil is a naturally attractive market for any international company and it is comparable to some major world markets. At the same time, the Brazilian market is complex and diversified. Brazil is a country of continental dimensions, which still presents great contrasts between different regions. However, far from being a problem for foreign companies looking to do business in Brazil, the country’s economic, social and cultural diversity mean an almost unlimited number of business opportunities. Before going to Brazil, the American executive needs to get a business visa at a Brazilian Consulate. Washington, DC area executives should apply for a visa at the Brazilian Consulate General, which is located at 1030 15th Street, NW, Washington, DC 20005. Details about the documentation required and how to apply are available online at www.consbrasdc.org.
Companies interested in importing from or investing in Brazil will find useful information at the Brazilian Government’s trade promotion portal BrasilGlobalNet (www.brasilglobalnet.gov.br). In addition, they can contact the Trade and Investment Offce team of the Embassy of Brazil in Washington by telephone at (202) 238-2788 or by e-mail at email@example.com.
Most of the direct investment that we see has been in the banking industries in the U.S. What other American industries are well positioned to attract Brazilian capital?
Brazilian investment in the U.S. has increased substantially in the past years, in a wide variety of segments. One American sector that has attracted significant Brazilian capital is the meat processing industry. In fact, the Brazilian company JBS purchased Swift to become the largest single Brazilian investor in the United States. Another major investor, with factories throughout the country, is Gerdau Ameristeel, who acquired a string of previously American-owned rebar facilities. A third major investor has been Embraer, Brazil’s largest aircraft manufacturing company; a substantial portion of the parts in Embraer’s aircrafts is actually made in the United States, in an interesting example of integration of supply chains. Thus, a variety of American industries have attracted significant capital from Brazil, and we expect the variety and magnitude of such investments to increase in the coming years.
BRAZIL IS A NATURALLY
ATTRACTIVE MARKET FOR ANY
How are Brazilian-American business ties under the Obama administration? We know that the two countries have had some disagreements in the recent past, have some of the trade issues been resolved? Brazil and the United States are going through a very positive phase in their bilateral relations.
President Obama’s visit to Brazil last March, and President Dilma Rousseff’s upcoming visit to the United States exemplify the intensification of our relations. We have now more than 20 mechanisms of bilateral dialogue, covering a vast array of topics. One of them is the “CEO Forum”, which brings together representatives of both governments and CEOs of both private sectors in a frank exchange of views. Many of the ideas advanced in the Forum translated into concrete measures to facilitate business. Naturally, as the relationship becomes more mature and diversified, some points of disagreement can arise. In any case, the positive aspects of the relationship between the two countries surpass, by far, localized points of friction. The message to retain is that this is a good moment for the business communities of both countries to take advantage
When you look at the headlines about Brazil, four major themes are readily apparent: staggering economic growth, The Olympics, The World Cup and the amount of crime in the cities. Out of these four, the level and severity of the crimes seem to be the biggest deterrent to attracting American businesses. How would you advise businesspeople traveling there?
Public safety policies are considered one of the priorities of the Dilma Rousseff Administration and they aim to reduce crime in the country. Many programs are part of the activities of the Brazilian Ministry of Justice and are executed in an integrated manner between the Union, the States and cities.
Studies published by the Ministry of Justice demonstrate the index of the reduction of violence due to many public actions. The Ministry of Justice of Brazil developed the National Public Security with Citizenship (Pronasci), which marks a new initiative in tackling crime in the country. Launched in August of 2007, the project articulates public safety policies with social actions, prioritizes prevention and seeks to eliminate the causes that lead to violence.
There are also important measures being adopted on a local basis. Take, for instance, the actions of the State of Rio de Janeiro, which have been under the spotlight recently. According to numbers informed by the state’s Instituto de Segurança Pública (Institute of Public Safety), levels of violent crimes have fallen signifi cantly. As a result, the established targets for crime reduction in the state for this year have been met.
The state government is developing an important program of pacifi cation of some poor communities that were dominated by drug traffickers. Th e state is regaining control of these communities, one by one.
What are some of the things Americans should never say or do in a business environment?
Perhaps, one of the most important things regarding doing business in Brazil is the fact that Brazilian businesspeople are more relationshipdriven than in some other countries. By cultivating close personal relationships and building trust, entrepreneurs will have a greater chance of successfully doing business in Brazil. Knowing Portuguese gives foreign businesspeople an important edge. Brazilian executives normally have a reasonable command of English, but in some cases it might not be the case. Meetings usually take place in offi ces and are seldom scheduled to take place in a hotel or at the business person’s residence, as sometimes happens in other countries. Keep in mind that most of the decisions are made by top level managers. It is expected that before the meeting starts, some light conversation will take place, usually involving news in the media or even some teasing about the soccer team of those present. To Brazilians, these are ways of “breaking the ice”.
What are the top three exports to Brazil from the U.S.? Exports from the United States to Brazil are very diversifi ed. Th e United States exported US$35.4 billion in goods to Brazil last year.
Of this large sum, 23%, or US$8.1 billion was chemicals. In second place, computers and electronic products accounted for almost 19% of total exports, amounting to US$6.6 billion. Th e third largest export category was transportation equipment, which accounted for nearly 16%, or US$5.6 billion. Close behind is machinery, except electrical, whose exports from the U.S. to Brazil were about 14% of the total, or US$4.9 billion. Th e other sectors, which include petroleum and oil products, minerals and ores, fabricated metal products and others, made up the rest of the exports, at US$10.2 billion or nearly 30%.
What are some interesting opportunities in emerging industries in Brazil?
Some of the most talked-about investment opportunities in Brazil arose from the country’s role as host of the 2014 Soccer World Cup in 12 major cities throughout Brazil and the 2016 Olympic Games in Rio de Janeiro. Brazil is planning to expand the capacity of its major international and domestic airports, extend various terrestrial transportation routes, and modernize several sea ports. The sporting events have also created opportunities for companies specializing in the hospitality and tourism sectors, as Brazil plans to build more hotels around the country and retrain staff to interact with the tourists expected to visit the country. Th e announcement of Brazil’s enormous presalt reserves off the coasts of Rio de Janeiro and São Paulo also presents a promising opportunity for international investors.