brazilian business climate by breno nunes [2014]

Dr Breno Nunes

b.nunes@aston.ac.uk

Aston Business School, Aston University

Birmingham, UK

Birmingham, West Midlands, UK

16 OCT 2014

Brazilian Business Climate

PRESENTATION OUTLINE

• Introduction to Brazil

• A brief view of the country macro-economics

• Opportunities for investors & exporters

• Final Considerations

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BRAZIL: Country Profile

CAPITAL: BRASÍLIA CURRENCY: Brazilian Real (R$) Population: 200.4 million (2013) Official language: Portuguese GDP: 2.24 Trillion (2014) Size: 8,515,767 km² Or Approx. 65 Uks or 1.5 Europes

Dr Breno Nunes / October 2014 Copyright © 2014 - All rights Reserved

Country Profile -

Comparing

Brazilian states

with countries http://www.economist.com/blogs/grap

hicdetail/2014/06/comparing-

brazilian-states-countries

Dr Breno Nunes / October 2014 Copyright © 2014 - All rights Reserved

MACRO-ECONOMICS

• Political stability

• Economic prospects

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POLITICAL STABILITY

Despite the protests in 2013, Brazil remains as a country with little room for political instability or threats to democracy.

Dr Breno Nunes / October 2014 Copyright © 2014 - All rights Reserved

MACRO-ECONOMICS

• Political stability

Dilma Rousseff Workers’ Party

Centre-left

Photos: R7 and UOL.

Aécio Neves Social Democracy Party

Centre-right

Dr Breno Nunes / October 2014 Copyright © 2014 - All rights Reserved

ECONOMIC SNAPSHOT

– Very low unemployment rate (4.9%)

– Quick reduction of poverty

– Fast-growing middle class

– Income gap still large but being reduced

– Inflationary pressures (6.75%)

– Increasing income per capita

Dr Breno Nunes / October 2014 Copyright © 2014 - All rights Reserved

A POLITE GUESS ON THE COMING YEARS?

2014 Slow, cloudy and

uncertain (World Cup, Elections, slow-down at global

economy)

2015 Adaptation and Planing,

Come back of investment Average or slightly higher

growth

2016 Golden Year for Brazilian

Economy? A deja-vu of 2010?

2017 Clear path ahead with sustained high growth above global average?

Dr Breno Nunes / October 2014 Copyright © 2014 - All rights Reserved

KEY BUSINESS SECTORS

• Agricultural products (e.g. From beef to biofuels)

• Mining

• Aerospace

• Automotive

• Software and other creative industries

• Education

• Energy: Hydro, Wind, and Solar

• Healthcare & cosmetics

• Sports – Olympics 2016 in Rio!

• Oil industry (deep-water drilling)

• Rail, ports, and roads

Dr Breno Nunes / October 2014 Copyright © 2014 - All rights Reserved

BRAZIL’S BUSINESS ENVIRONMENT

• STRENGTHS

– Cheap skilled labour > Human capital -> young population

– Good overall respect to IPR

– Increasing number of innovation grants and funds

– Leading technological development in key areas: Energy, Agriculture & livestock (food security), aerospace (market niche), automotive, Finance, etc

– Good penetration of ICT infrastructure

• WEAKNESSES

– Very high import duty

– Bureaucracy of funding bodies

– Weak institutional environment (infrastructure, legal systems, etc)

– Deficient infrastructure & cost of doing business in Brazil

– Some urban areas in many large cities are still vulnerable to violent crime

– Shortage of skills in some areas

– Low productivity across key sectors

– Low “sense of urgency” promotes a number of missing opportunities

Dr Breno Nunes / October 2014 Copyright © 2014 - All rights Reserved

• OPPORTUNITIES FOR INVESTMENT AND EXPORTING

– Demand higher than supply; customers usually pay higher prices than in Europe and USA.

– Business maturity for greenfields investment, joint ventures, licensing, and franchising – low risk for expropriation!

– All market segments (Luxury, affordable luxury, and low-cost products) are likely to experience high growth in the coming years

– Integrate your business to global challenges for food security and energy – Brazilian commodities can help to solve them – be part of their supply chain!

– Brazil may experience exponential gains by doing the basics as it is in its early stages of being a global player

– Explore your network of expats and British presence (British Council, Embassy)

– Western Latin culture & Portugal: front door to Western & European Market? Or a Threat?

– Brazil as a bridge for new markets in the Mercosur – and also to the Portuguese colonies: are they the new “blue ocean” ? (e.g Angola, Mozambique, Cape Verde)

BRAZIL’S BUSINESS ENVIRONMENT

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Final Considerations

• National content policies have been put in place which may reduce the chances of exporting

• Exporting needs to be carefully analysed because the import duty too – businesses will need to find a clear market niche

• Government keen to attract FDI in future years

• Many Brazilian companies are now seeking partners overseas to have a greater global presence

• Large infrastructure projects

• 400 of the 500 Fortune MNC are in Brazil

Dr Breno Nunes / October 2014 Copyright © 2014 - All rights Reserved

Thanks!

Dr Breno Nunes

b.nunes@aston.ac.uk

Aston Business School, Aston University

Birmingham, UK

Dr Breno Nunes / October 2014 Copyright © 2014 - All rights Reserved