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From Rockville to Rio: Doing Business in Brazil
Diplomatic Pouch / February 27, 2013

By Larry Luxner

Twenty years ago, Brazil was an economic basket case, with inflation running nearly 2,000 percent in 1993 — the year the country’s Real Plan was launched.

“It was impossible to plan business investments, and it was a very difficult situation for the poor in Brazil. You would lose 70 or 80 percent of your monthly wage to inflation,” recalled Mauro Vieira, Brazil’s ambassador to the United States. “The day companies paid their workers, everybody would rush to the supermarket to stock up on food so they could make it to the end of the month.”

These days, however, Brazil’s economy is booming as it prepares to host next year’s FIFA World Cup as well as the 2016 Summer Olympics.

“We are doubling our business every three or four years,” said Vinzen Plorer, vice-president of strategy and operations for EMS, the leading pharmaceutical company in Brazil, where it enjoys a 14 percent market share. “There are very few countries where one company has a market share of above 10 percent. And 100 percent of our growth is internal, with no acquisitions involved. I think that for a committed long-term oriented company, Brazil is a very good place in which to invest and do business.”

Vieira and Plorer were among half a dozen speakers who earlier this month addressed a Global Trade Forum at the Rockville campus of Johns Hopkins University. The Feb. 5 event was co-sponsored by the university and four other entities that form the Global Trade Initiative (GTI): the U.S. Department of Commerce, the Maryland Department of Business & Economic Development, the Montgomery County Chamber of Commerce and the Montgomery County Department of Economic Development.

“GTI reduces the risk of U.S. business expansion into established and emerging global markets,” said Gigi Godwin, president of the Montgomery County Chamber of Commerce. “GTI recognizes that the capabilities and expertise of companies based in Maryland and the Greater Washington area are uniquely attractive to international outlets and contends that global success strengthens the U.S. and local economy.”

To that end, Vieira noted that in 2011, Brazil ranked 11th worldwide in exports from Maryland, buying $270 million worth of the state’s goods. Meanwhile, Brazil was the eighth-largest supplier of imports to the state that year.

Brazilian companies with operations in Maryland include Suzano, a pulp and paper manufacturer headquartered in Salvador, and São Paulo-based industrial group Votoranim. Top Maryland companies operating in Brazil include Cambridge Information Group (Bethesda); Choice Hotels International (Rockville); Discovery Communications (Silver Spring); FTI Consulting (Baltimore); MICROS Systems (Columbia); Sourcefire (Columbia), W.R. Grace & Co. (Baltimore) and Marriott International (Bethesda).

“The growth of the C-class in Brazil has been huge, especially for businesspeople traveling within Brazil,” said Michael Dearing, Marriott’s executive vice-president of project finance. “We saw there was a huge imbalance — far more demand for those kinds of hotels than supply. We realized there was a demand for at least 75 three-star Fairfield Inn-type hotels, so we designed it from the ground up.”

Not all of Marriott’s properties are located in megacities like São Paulo or Rio de Janeiro. For example, Macaé — a smaller city about 100 miles northeast of Rio — is likely to see a proliferation of business hotels to serve the growing horde of technicians and professionals attracted by the burgeoning oil exploration sector.

Likewise, Plorer of EMS said his pharmaceutical company produces 42 million packets of pills per month, or 800 million pills in all.

“On average, this is four pills per month for every Brazilian,” he said, noting that Brazil alone accounts for about 45 percent of Latin America’s pharmaceutical market. Mexico comprises another 20 percent, and Venezuela is in third place. But 50 percent of all regional growth last year came from Brazil, where the drug market is expanding at 12 to 13 percent annually.

EMS, headquartered in Campinas — just outside São Paulo — already has 5,000 employees and is building a new factory in Manaus just to keep up with growth.

Also appearing on GTI’s panel in Rockville was Parag Sheth, director at High Street Partners, and Braeden Young, Brazil desk officer at the U.S. Commerce Department’s International Trade Administration.

The program was moderated by Dr. J. Roberto Trujillo, president and CEO of TruBios LLC, and included special guest Dr. Vanderlei S. Bagnato, a professor at the University of São Paulo and coordinator of the Agency for Innovation.

“Brazil is not a place that we go for business because it’s less expensive to produce,” said Bagnato, a scientist who specializes in innovative startup operations. “Brazil is a market that has its own complexities, but if you have partners there, you will have people who know how to deal with the difficulties. Brazilians love Americans and we always have.”

Vieira said that on Feb. 26, his government will launch a road show on infrastructure opportunities in Brazil, timed for next year’s World Cup and the 2016 Summer Olympics. Seminars on that topic will be held in New York, London and Tokyo.

He said much of the credit for Brazil’s economic turnaround belongs to former presidents Inazio Lula da Silva and Fernando Henriques Cardoso before him.

“When Lula was elected in 203, he started a big social policy program that included the largest program of cash distribution in the world, known as Bolsa Familia,” he explained. “It reached 13 million families, or 70 million people. Money was transferred directly to families through credit cards, and the amount varied from family to family depending on the number of children. This allowed great social mobility, and 50 million people moved up the social ladder; 20 million were taken out of poverty and 30 million entered the middle class.”

As a result, said Vieira, today 54 percent of Brazil’s inhabitants are middle-class.

“This means consumption is very high,” he said. “Inflation is 5.84 percent, unemployment is 5.5 percent, interest rates today are much lower than in the past, and the domestic market in Brazil is very vibrant and robust.”

For more information on GTI’s upcoming events, please call Barbara Ashe of the Montgomery County Chamber of Commerce at (301) 738-0015, extension 215, or email her at bashe@mcccmd.com.

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