Brazil
– The Next Opportunity
By Stephen Zarick,
President, VO Group
 |
With
everyone talking about Asia, it seems that we have forgotten
about one of the largest economies in the Americas – Brazil.
Brazil
will provide the next big sourcing opportunity for businesses
in North America, as Asia does today. Brazil has an economy
that most Americans are unfamiliar with. The country is
very industrialized
and rich in resources such as iron ore, wood, cotton, leather,
coffee, fruits, and meats. Using these resources, Brazil has
become a major producer of automotive parts, steel, pig
iron, wood products,
furniture, clothing, leather products of all kinds, and has
a healthy agri-business and pharmaceutical industry. All
of these products
are available for export to the U.S. |
If Brazil is such a large economy, why hasn’t there been more
of a representation in the U.S. until now? My answer to this is
that there seems to be a language barrier, and maybe even in the
past an infrastructure barrier, that Asia and Europe don’t have.
Not many Brazilians over the age of 30 speak English, and in the
past, the roads and infrastructure in Brazil were not developed
enough to improve product movement.
What has changed? There are several things that are now causing
interest in Brazil.
-
Brazil
has a national directive to increase exports.
-
The
younger generation speaks English and is exposed to the Internet,
hence
are more aware of a global economy and global markets.
-
CAFTA,
the Central American Free Trade Agreement, has given us
a new introduction to our economic partners in the Americas.
-
The
effort to construct a Free Trade Area of the Americas,
or FTAA, in which barriers to trade and investment will be
progressively
eliminated.
-
When
the Chinese currency ceases to be subsidized by the Chinese
government, the cost of Asian-made
products will rise.
-
The
growth in U.S. business in Asia has created heavily congested
ports and shipping delays for
products coming to the U.S. This
is getting worse, not better, and will
be the case for at least 5 more years.
-
Those
that are having to hold large inventories because of this Asian
congestion,
are spending money that conflicts with their
Just-In-Time manufacturing models.
-
Products
that come by ship from Brazil can move up the East Coast,
avoiding the congestion caused by the heavy product
movement from
Asia.
-
Deepening
U.S.-Brazil engagement and cooperation is reflected in the
numerous high-level contacts
between the two governments.
Some of the
key reasons to look to Brazil for sourcing products include:
-
Same
time zone as the U.S. (EST) most of the year.
-
Lead
times can be 30% less compared to Asia.
-
Products
come directly to the East Coast.
-
Quality
and price are comparable to Asian imports.
How does Kentucky win with this renewed interest in Brazil? With
Louisville being called the logistics city of the Midwest, Brazilian
products will no doubt find their way into Louisville warehouses
and distribution centers. Kentucky will win as California is
winning with the Asian push.
Brazil is positioned to be the next big exporter to the U.S.,
creating sourcing opportunities for U.S. companies. Get to know
your neighbor – BRAZIL!
If
your company needs assistance with sourcing products from
Brazil, the VO Group would
be happy to assist. VO Group is a Louisville-based
company specializing in Sales Development, Logistics
and International Business, with a unique expertise in
Brazil. You may contact
Stephen Zarick at (502) 899-3227 or visit
www.vogroup.com.
FACTS About Brazil
People
Nationality: Brazilian.
Population (2004 est.): 182 million.
Annual growth rate: 1.4%.
Ethnic groups: Portuguese, Italian, German, Spanish, Japanese,
Arab (Lebanese), African, and indigenous people.
Religion: Roman Catholic (80%).
Language: Portuguese.
Education: Literacy--81% of adult population.
Work force: 79 million.
Economy (2004)
GDP: $604.9 billion.
Annual real growth: 4.9%.
Natural resources: Iron ore, manganese, bauxite, nickel, uranium,
gemstones, oil, wood, and aluminum. Brazil has 14% of the
world's renewable fresh water.
Agriculture (10%
of GDP): Products--coffee, soybeans, sugarcane,
cocoa, rice, livestock, corn, oranges, cotton, wheat, and
tobacco.
Industry (36%
of GDP): Types--steel, commercial aircraft,
chemicals, petrochemicals, footwear, machinery, motors,
vehicles, auto parts,
consumer durables, cement, and lumber.
Services (54%
of GDP): Types--mail, telecommunications,
banking, energy, commerce, and computing.
Trade:
Trade balance 2004--$33.7 billion surplus.
Exports--$73.1 billion.
Major markets--European Union 25.0%, United States 21.1%, Argentina
7.6%, China 5.6%, and Mexico 4.1%. Imports--$62.8 billion. Major
suppliers--European Union 25.4%, United States 18.1%, Argentina
8.9%, China 5.9% and Nigeria 5.6%.
©
2005
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