Having faced a host of political, social, and economic challenges – including its worst recession in decades – Brazil has not had the easiest of years. Yet the change of government and potential for reform means things are starting to look up: good news, of course, for UK exporters who have their sights set on Brazilian shores.
The Santander-sponsored UK Trade and Investment (UKTI) roadshow – which toured Cambridge, London, Reading, Bristol and Hinckley – provided a platform for potential exporters to assess both the opportunities and challenges of exporting to Latin America’s largest market. Here, Mauricio Munguia, Latin America Desk Head at Santander, interviews Joanna Crellin, HM Consul General in Sao Paulo and Director of Trade & Investment for UKTI Brazil and Latin America.
Mauricio Munguia: The political and economic situation in Brazil looks challenging – could you please talk us through it?
Joanna Crellin: While Brazil has been in the midst of an economic and political crisis, the arrival of the interim government led by Michel Temer is seen as bringing the possibility of change –Temer’s government’s economic plan focuses on tackling the deficit primarily through addressing some of the major areas of spending. It emphasises the need to accelerate the Public-Private Partnership (PPP) programme, and aims to create a more “open” business environment – with a vision of reducing many of the structural barriers that business has complained has held them back in the past.
Munguia: Good news for trade, I hope. Yet how has Brazil’s trade and foreign investment fared against such a turbulent backdrop, and what developments can we expect following the change in government?
Crellin: Interestingly, the volatile political and economic landscape had both winners and losers. In fact, some of the existing UK investors and exporters in the country have even benefited. And there are reports of lots of interest in Brazil by international buyers attracted by both cheap assets, and a favourable exchange rate. What’s more, the new government now sees clearly the opportunity to boost its own export plans. The move to include APEX – Brazil’s UKTI equivalent – under the country’s foreign ministry is a clear indication that trade will increasingly be at the heart of Brazil’s overseas activities.
Munguia: It certainly sounds like a recovery is in sight. But where are the specific opportunities for UK exporters in Brazil?
Crellin: The oil and gas industry – one of Brazil’s core sectors – has a continued significant demand for the specific industry expertise and services offered by UK companies. Brazilian and other companies looking to explore the country’s pre-salt layer – a large off-shore oil resource– for instance, would benefit greatly from the off-shore expertise available in Aberdeen and elsewhere. And associated with this, British marine companies have the products and services required for the construction of ships required for oil and gas production.
Meanwhile, Britain excels in its provision of financial services – an area of particular interest to São Paulo’s burgeoning financial sector. Indeed, appetite is strong for the UK’s expertise with respect to insurance, re-insurance, green finance and capital markets.
Finally, as Brazil’s middle class grows, so does the demand for services around healthcare and education. Tens of millions of people in Brazil have joined the middle classes in the past 10 years alone, and many of them are now keen to give their children opportunities for a better quality of life. Given this, there is an increased interest in education, with even those on modest salaries investing in English language lessons. On the healthcare side, there is demand for everything from products such as pharmaceuticals, and medical devices, to the expertise for medical training and around PPPs to run hospitals.
Munguia: Over 200m people in Brazil… that’s quite a market. Are there any specific opportunities for UK companies to take advantage?
Crellin: British goods are widely thought of as high-quality and premium. And many Brazilian consumers aspire to own anything with the “British brand”. Jaguar Land Rover, for instance, just chose Brazil as the location for its first wholly-owned manufacturing plant outside of the UK, with the capacity to build 24,000 vehicles annually for the Brazilian market – a clear demonstration of the demand.
Interestingly, the opportunities among Brazilian consumers can also sometimes be unexpected – the Pernambuco region in the North East of Brazil, for instance, has the highest per-capita consumption of Johnnie Walker Red Label in the world!
Munguia: Unexpected opportunities – such as the one experienced by Johnnie Walker Red Label – are excellent, but impossible to predict. How can organisations such as UKTI and Santander help companies find demand, and realise their Brazilian export ambitions?
Crellin: UK exporters expanding their global footprints to Latin America are not doing so alone. UKTI can help companies with the local-knowledge and information they require to expand to Brazil, as well as the connections when they arrive. Santander, as a bank with a strong reputation and regional coverage in Brazil, also has the knowledge as well as the resource to support exporters. There is so much the two organisations can do and have done, together, to boost UK exports – such as the trade mission we collaborated on last year, or this UKTI roadshow. We share the same goals: to encourage British companies to sell their products, sell their services, and invest in Latin America.
Finally, for anyone in Rio de Janeiro during the 2016 Olympic and Paralympic Games in August and September – we are setting up a British House that will include a variety of activities for business. We want businesses involved throughout – for more details please register your interest at www.britishhouserio.com.
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