Corrections or additions?
This article by Bart Jackson was prepared for the June 20, 2001
edition of U.S. 1 Newspaper. All rights reserved.
`Jeito,’ the Brazilian Way of Doing Business
It is perhaps forgivable, even understandable, that
we know little nothing of South America’s largest nation. Of late,
it has produced few international rock stars, dueling chefs, or the
sort of similar luminaries that might tempt our major U.S. media to
acknowledge this country’s existence. Yet businesses of many types
could profit from getting to know Brazil’s 170 million increasingly
prosperous consumers. The country poses challenges, but some 90
percent
of Fortune 500 companies have already staked major claims in Brazil’s
expanding economy. The conquistadors have come and proved the country
safe for commerce. Now it’s time for small and mid-sized companies
to size up the opportunities.
The Center for Global Business’s “International Breakfast on
Brazil,”
on Thursday, June 21, at 8 a.m. at Mercer County Community College
is designed to provide both an overview and practical steps in getting
started in this growing market. The panel includes Paulo Viera
da Cunha, senior vice president of Lehman Brothers; Richard
May, founder of NCR Advisory Partnership; and Brock Lewis,
president of SGI International. Cost: $25. Call 609-586-4800.
The Center for Global Business, explains Keld Hansen, the
director,
“is no academic forum, but rather a real nuts and bolts
organization
for small and mid-size firms seeking to explore and expand.” Born
in Denmark, Hansen came to America originally to pick up a Harvard
MBA in international trade, and stayed to guide several corporations
out into foreign waters. “Most foreign traders fail at the
counselor
level,” says Hansen. “They don’t get enough help
initially.”
To fill that gap, the Global Business Center hosts monthly business
breakfasts, each focusing on one particular country. Speakers
typically
include an economist who explains basic trends; a consultant who tells
how to get involved; and a veteran who presents his own harrowing
experience.
“Jeito” is the Portuguese/Brazilian term that May uses as
he explains the Brazilian approach to business. It roughly translates
into “the way of doing things.” Says May: “If you don’t
know it, you will be totally lost.” It is not that Brazilian
business
methods stand distinguishably more Byzantine, corrupt, risky, or even
unfriendly. They are just distinct.
If anyone should have a firm fix on the Brazilian way, it is May.
Following a youth spent in neighboring Argentina as part of a foreign
service family, May returned to the U.S. to gather an economics degree
from Purdue and an MBA from George Washington University in
international
commerce. Since then, he has managed Chase Manhattan’s Brazilian
business
and founded NCR Partnership — a financial advisory group to aid
companies globally expanding.
Probably the most agreed upon aspect of the Brazilian economic cycle
is that it soars and plunges in sharply defined cycles. Right now
it stands poised on a cusp — quivering. Whether things will climb
or skid, depends on whose opinion you ask. Viera da Cunha says
that we must hold our breath until the fall elections, but that the
current government coalition has proved itself strongly pro-business
for the past four years. The devaluation and shift to a floating
currency
in l999, along with increased foreign investment in telecommunications
and other fields have engendered positive sentiment among domestic
businesses and their investors. Four percent growth continues
steadily.
These are not the ringing praises of a statistics-besotted economist.
Granted, Viera da Cunha, a Brazilian native, did take an economics
degree at the Federal University of Rio de Janeiro and later an
economics
Ph.D. at UCLA Berkeley. Yet his theoretical views have been tempered
by long service with the World Bank in Washington D.C., and the past
three years as senior vice president of Lehman Brothers.
“In essence,” says Viera da Cunha, “Brazil, as an export
platform, has not taken off like, say, Mexico after NAFTA. But it
stands ready to expand dynamically.”
May is a little less sure. He reads the 1999 currency devaluation
less rosily, claiming it put prices under real pressure. Also, as
Argentina downsizes, Brazil, a great exporter to its southern
neighbor,
may be dragged down with it. But May’s real fear lies with the
Brazilian
energy crunch. Despite recent cutbacks of 23 percent, most of the
country faces severe brownouts and blackouts far beyond the most
haunting
fears of Californians and Europeans.
“Don’t talk to me about growing consumer prosperity,” says
May. “If these folks can’t plug in a television, computer,
refrigerator,
or even a desk lamp, they just aren’t going to buy them.”
On the other hand, May and Viera de Cunha agree that Brazil will
eventually
straighten out its problems, and keep the lights on. The country is
politically secure, and unemployment, now at 7 percent, has dropped
substantially. And while the historic unequal income distribution
still exists, folks on the lower end are speedily moving up. For the
sharp and adventurous, ground floor opportunities are waiting in
Brazil
— for those who can learn their Jeito. Here is May’s advice for
staking out a claim.
Don’t go it alone. “In short, you have to be suicidalto just take your crates and storefront down into Rio and hope tobegin selling,” laughs May. “The laws are so complex, andthey just pop up at you when you least expect it.” Tariffs onelectronic items can shift from 50 percent to 10 percent, dependingon the season and the port. At the very least, you will need anexperienced,native agent who can see your goods through the labyrinth of customs,and get them shipped across the maze of roadways.Substantial aid also lies not far from home. The Brazilian-AmericanChamber of Commerce in Manhattan can line you up with banks, all theFortune 500 Brazilian investors, buyers, and more.Consider a joint venture. One possibility is to unitewith an American company already in Brazil to expand its product line.If you sell office furniture, you might link up a carpet firm orcomputerservice provider. The goal is to pool people and get some specialists.Better yet, link up with a going Brazilian concern.One of May’s clients, selling an electronic attachment that turnsa standard television into a sophisticated webTV, linked with anexistentretail chain to push the items through, from the harbor to theirstores.The company also joined with an American computer provider toestablishservice.Don’t worry about what product to sell. “In Brazil,it matters less what you sell,” says Viera da Cunha, “thanhow you sell it.” The small, high-income, sophisticated market,blended with the much wider low-income majority can afford the wholearray of goods and services. The automotive and related products boom,for example, is unprecedented, and there is tremendous demand forany type of clothing. Meanwhile, fine art and jewelry finds a greatmany buyers. Domestic consumption on all levels is rising, butreachingconsumers remains a problem, making it advisable to tailor your goodsto the available retail outlets.Be aware that environment reform is taking place, butsecurityremains a problem. For many, Brazil is synonymous with the ruinof its Rain Forest by a capitalist elite. Viera da Cunha insists,however, that one need not despoil the forests to prosper in Brazil.The country remains the second largest global producer of paper andpulp. But unlike the 1970s, when the trend was to encourage the tradeof forest for cattle grazing pasture, virtually all the pulp comesfrom tree farms in the southern part of the nation.Meanwhile, the Amazon basin in the north suffers from drug-porousborders and ruthless guerrillas. Brazil considers the area a valuedpreserve, but Viera de Cunha says, it remains unclear how the regioncan be made secure, and who will pay to make it so.Find money for investing in Brazil. Due to the numerouslinks between U.S. and Brazilian banks, investing and arranging creditis surprisingly easily. “You’re better off choosing a largeBrazilianbank that has been bought out by an American institution,” saysMay. Even so, look for breadth.Act like a native. Generally, most U.S. business socialprotocols mesh with Brazil’s culture. There are few taboos and noelaborate gift giving or extended periods of “charactertesting”exist as in China. The biggest problem is likely to be making senseof tariffs.Says May: “All in all, the Brazilians are friendly folkswho like doing business American style.”Bart JacksonNext StoryCorrections or additions?This page is published by PrincetonInfo.com— the web site for U.S. 1 Newspaper in Princeton, New Jersey.
