April 7, 2011
MIAMI — Brazil is a continent-sized country with a $2.2 trillion economy and is South Florida’s largest trading partner as well as the source of hundreds of thousands of free-spending visitors who are snapping up everything from ocean-view condos to U.S. companies.
And that means it is high time for a well-thought-out, multi-year game plan to take advantage of the opportunities the burgeoning Brazilian economy presents, as well as to meet the challenges of doing business with the world’s seventh-largest economy, said Frank Nero, president and chief executive of the Beacon Council, Miami-Dade County’s economic development agency.
So last week before an overflow audience, the Beacon Council put on a Brazil Business Development Strategy Conference with the goal of compiling a white paper on Brazil that will serve as a road map for a new business relationship.
The Miami conference comes on the heels of a successful visit to Brazil by President Barack Obama, whose goal was to reset political and economic relations with a country that has a huge appetite for American products, is sitting on oil discoveries that could potentially make it one of the world’s largest oil exporters, is a stable and friendly democracy, and is on an infrastructure building binge as it readies for the 2014 World Cup and the 2016 Olympic Games.
The Beacon Council conference explored everything from investment and trade opportunities in Brazil to investment by Brazilian companies in South Florida and how to spur travel and tourism between the two countries. Last year, Brazil became Miami-Dade’s first “billion-dollar” international market, with Brazilians spending $1.1 billion during their visits.
Nero called the session a “crash course in Brazil” — one that he hopes will pay dividends for both South Florida and Brazilian companies.
“Brazil is living a very good moment — really a remarkable period of time,” said Ambassador Luiz de Araujo Castro, consul general of Brazil in Miami. “We see ourselves today as a world player.”
While the United States has traditionally been Brazil’s top trading partner, it no longer is. Now it is China, which has been snapping up Brazilian agricultural products and raw materials, pushing up the price of commodities and pumping up growth.
Brazil is the world’s top exporter of beef, poultry, sugar, coffee, orange juice concentrate, tobacco and ethanol and the second-largest exporter of soybeans.
Some critics say Brazil has become too dependent on China, but de Araujo Castro said, “Brazilians are not scared of China; it has been a very productive relationship.”
Brazil has a trade surplus with China, but a trade deficit with the United States, noted Amaury de Souza, a visiting scholar at the University of Miami’s Center for Hemispheric Policy.
But that trade deficit is largely the product of a very strong real that makes U.S. products relatively cheap for Brazilian buyers.
What also differentiates trade with the two countries is that Brazil buys mostly manufactured products from China and sells commodities, but manufactured products are in its export mix to the United States.
“Trade with the U.S. promotes Brazilian domestic industry, but trade with China promotes agro-industry and the import of manufactured goods,” de Souza said.
And just because there is plenty of potential for business with Brazil doesn’t mean there aren’t challenges. Right now the Brazilian government is trying to strike the right equilibrium to keep its economy growing without stimulating inflation, and while the middle class is growing, Brazil still has serious income distribution problems.
Meanwhile, high interest rates in Brazil are attracting lots of capital from abroad but that also contributes to strengthening the real, which is making Brazilian exports less competitive.
Panelists also pointed to a complicated legal system, red tape in business dealings and bottlenecks at Brazilian ports as challenges.
But as Brazil prepares for its two mega-sporting events, the biggest opportunities will be in improving and building infrastructure — roads, ports and airports, de Souza said.
Gilberto Neves, president and chief executive of Odebrecht USA, said, for example, that $95 billion will be invested in infrastructure for the Olympics and $1.7 billion will be invested in stadiums needed for the World Cup.
Sao Paulo-based Odebrecht, the largest construction and engineering firm in Latin America and also a major builder in South Florida, is heavily involved. It will be building four of the World Cup stadiums, taking a stake in two — including the new Corinthians stadium in Sao Paulo. It is involved in the renovation of Rio’s famed soccer stadium, Maracana, and is also engaged in Rio’s $24 billion revamp of Port Maravilha. “It will almost be like a new downtown for Rio,” Neves said.
“There are big opportunities in Brazil now,” Neves said. And they aren’t just related to the games. An Odebrecht company is the world leader in ethanol production, another division builds oil platforms for Petrobras, and Odebrecht also is a leader in construction of hydro-electric projects. Neves said he also sees big opportunities in affordable housing construction in Brazil.
Odebrecht opened a U.S. office in 1990, and has worked on 61 U.S. projects valued at $4.8 billion — the majority in South Florida — in the past 21 years. Among its current projects are the mile-long North Terminal at Miami International Airport; Airport City, a retail and commercial complex planned at the airport; and the Metrorail AirportLink.
Another Brazilian company that has found success in South Florida is Embraer, a commercial, defense and executive jet manufacturer whose North American headquarters is in Fort Lauderdale. The company recently opened its first U.S. production facility in Melbourne. It was able to hire a number of former NASA employees as the space shuttle program wound down, said Christine Manna, director of corporate communications.
But the strategy many Brazilian companies are using to enter the U.S. market these days is buying an existing U.S. company, said Marcel Coehlo, a lawyer in the New York office of Becker & Poliacoff.
That’s the route that IBOPE, a Brazilian media, market and opinion research firm, took when it acquired Zogby International and planted the new firm, IBOPE Zogby International, in Miami
“Now is a great time for Miami as an entryway to Latin America — and especially Brazil,” said Kjell D’Orr, the chief executive.
Some who attended the conference are already working to expand Brazilian business. William Talbert, president and chief executive of the Greater Miami Convention & Visitors Bureau, for example, chairs a U.S. Travel Association committee that is working to get visa requirements lifted between the two countries, so visitors can travel with just a passport. Currently 36 countries have so-called visa-waiver programs with the United States.
It costs $140 for a U.S. citizen to obtain a Brazilian tourist visa, and U.S. fees are equivalent. Waits for visas, particularly for Brazilians, can be extensive. Talbert presented data showing the average waiting time for a U.S. visa in Brasilia, the Brazilian capital, is 142 days and 111 days in Sao Paulo.
Travel professionals have told him that a visa-waiver program might double the number of Brazilian visitors, Talbert said. With Brazilian travelers already accounting for more than $1 billion in expenditures in Miami-Dade County, Talbert asked, “A $2 billion market? Anyone want a piece of that?”
Support for a visa-waiver program will probably be one of the ideas that will wind up in the white paper.
“Getting a visa travel waiver for Brazil is the U.S. Travel Association’s No. 1 priority,” Talbert said. “What can be done to help? Keep the buzz going on a visa waiver — just keep talking.”
At the end of the meeting Nero asked the audience for their recommendations. “No idea is wrong; no recommendations are too small or too big,” he said.
The next step will be summarizing the ideas of the seminar, incorporating new ideas that are submitted and circulating a draft for input before the final white paper is prepared.
“I think this was very useful for everyone,” said Brazil’s de Araujo Castro. “It was a very interesting brain-storming session.”
