Brazilian business climate by Breno Nunes [2014]
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Transcript of Brazilian business climate by Breno Nunes [2014]
Dr Breno Nunes
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
Dr Breno Nunes / October 2014 Copyright © 2014 - All rights Reserved
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
Dr Breno Nunes / October 2014 Copyright © 2014 - All rights Reserved
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
Dr Breno Nunes / October 2014 Copyright © 2014 - All rights Reserved
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
Aston Business School, Aston University
Birmingham, UK
Dr Breno Nunes / October 2014 Copyright © 2014 - All rights Reserved