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 suicidal

to just take your crates and storefront down into Rio and hope to

begin selling," laughs May. "The laws are so complex, and

they just pop up at you when you least expect it." Tariffs on

electronic items can shift from 50 percent to 10 percent, depending

on the season and the port. At the very least, you will need an

experienced,

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-American

Chamber of Commerce in Manhattan can line you up with banks, all the

Fortune 500 Brazilian investors, buyers, and more.

Consider a joint venture. One possibility is to unite

with an American company already in Brazil to expand its product line.

If you sell office furniture, you might link up a carpet firm or

computer

service 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 turns

a standard television into a sophisticated webTV, linked with an

existent

retail chain to push the items through, from the harbor to their

stores.

The company also joined with an American computer provider to

establish

service.

Don’t worry about what product to sell. "In Brazil,

it matters less what you sell," says Viera da Cunha, "than

how you sell it." The small, high-income, sophisticated market,

blended with the much wider low-income majority can afford the whole

array of goods and services. The automotive and related products boom,

for example, is unprecedented, and there is tremendous demand for

any type of clothing. Meanwhile, fine art and jewelry finds a great

many buyers. Domestic consumption on all levels is rising, but

reaching

consumers remains a problem, making it advisable to tailor your goods

to the available retail outlets.

Be aware that environment reform is taking place, but

security

remains a problem. For many, Brazil is synonymous with the ruin

of 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 and

pulp. But unlike the 1970s, when the trend was to encourage the trade

of forest for cattle grazing pasture, virtually all the pulp comes

from tree farms in the southern part of the nation.

Meanwhile, the Amazon basin in the north suffers from drug-porous

borders and ruthless guerrillas. Brazil considers the area a valued

preserve, but Viera de Cunha says, it remains unclear how the region

can be made secure, and who will pay to make it so.

Find money for investing in Brazil. Due to the numerous

links between U.S. and Brazilian banks, investing and arranging credit

is surprisingly easily. "You’re better off choosing a large

Brazilian

bank that has been bought out by an American institution," says

May. Even so, look for breadth.

Act like a native. Generally, most U.S. business social

protocols mesh with Brazil’s culture. There are few taboos and no

elaborate gift giving or extended periods of "character

testing"

exist as in China. The biggest problem is likely to be making sense

of tariffs.

Says May: "All in all, the Brazilians are friendly folks

who like doing business American style."

Bart Jackson


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