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an update from São Paulo, Brasil

Wednesday 16 June, 2010

I spent last week in São Paulo, Brasil meeting with potential partners of a nanotechnology client of mine.  Without divulging anything proprietary about either side, here’s what we learned:

Brasil hasn’t suffered much from the global recession & has maintained growth, if just a bit slowed, over the past few years.  Brasil is still very protective, with 60% import duties on some products.  We’d even heard of an import embargo, but were not able to corroborate it.

Given Brasil’s level of development, cost is still an issue when dealing with products from developed countries, but Brasilian companies that focus on service in addition to sales are able to differentiate themselves considerably.  Servicing Brasilian accounts from Brasil, as opposed to from the U.S., can be important for American companies.  Some Brasilian companies are setting up offices in the U.S. so that they can buy & sell as a local & handle the export/import paperwork internally rather than work through other brokers/forwarders, etc. Smaller Brasilian companies may prefer Cash against Documents instead of more expensive letters of credit.

São Paulo comprises ~45% of all of Brasil’s economy, & together with Rio de Janiero comprises well over 1/2 & perhaps 2/3 of Brasil’s economy.  A big part of the reason for that is the São Paulo state government is a leader in implementing new & progressive policies, which other states then mimic.  Government funding of research can take anywhere from 6 months to 3 years, which can stretch out sales cycles that long.  However, we were told 10% of the GDP of the state of São Paulo goes to education and research, so that’s another indicator of their national leadership.

Lula’s term is coming to an end, which means there’s an election coming up.  Lula’s successor from his party won’t necessarily just continue to follow his policies, so there is some risk even with a candidate from his same party.  Of the businesspeople with whom we spoke, some were planning on little growth in 2011, while others were planning on continuing along the same growth curve.  The election & change in government could lead to appreciation of the Brazilian currency, the Real.  Corruption was mentioned as a problem by most of the firms with which we met, mostly of the federal government bureaucrats with their hands out variety.

On a lighter note, the day we arrived, we happened to come across this: or here’s the short version .

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