With the tumult engulfing Brazil’s recent political landscape, it might seem that investing there these days is only for the intrepid businessperson.
Indeed, fortune could favor the bold in this situation, especially as the Brazilian real’s depreciation versus the dollar makes cross-border acquisitions more affordable.
But international business shouldn’t be undertaken as an “adventure” for its own sake, experts said at a Brazilian-American Chamber of Commerce and World Trade Center Atlanta on trade with the country.
“There is no recipe for international trade. You need to analyze these things very, very carefully,” said Paulo Wenceslau, a consultant for the Latin American Company, an Atlanta-based firm specializing in cross-border deals with Brazil.
Mr. Wenceslau said savvy investors are seeing Brazil’s woes as an opportunity, understanding that even the fallout from the country’s unprecedented corruption scandal doesn’t trump the fact that the world’s eighth largest economy moves in cycles.
“When you invest in Brazil, expect a roller coaster,” said Michel de Amorim, partner at Drummond PCA LLC, a tax advisory firm that provided an overview of transfer-pricing practices that should be followed by companies selling assets or moving intellectual property between their affiliated entities across borders. (Drummond, founded in Boston to help small companies focused on Brazil, now has an office in the country.)
Still, any international endeavor requires deep research, and especially in a country with as rigorous of a bureaucracy and as broad of a cultural and business landscape as Brazil, Mr. Wenceslau said. Companies must give a lot of thought as to whether to purely export from afar, work with a distributor or set up a local entity on the ground.
“It’s an ocean of opportunity, but you need to know how to capture that opportunity,” he said.
It works both ways, too. Mr Wenceslau is working to bring small to medium-sized Brazilian firms to Georgia, and he’s finding it useful to cooperate with cities like Brunswick, Ga., where he’s in the early stages of landing an industrial investment. Smaller towns have incentives and land available on top of what the state offers, and they’re hungry for foreign businesses, Mr. Wenceslau said.
Travis Stegall, the city’s director of economic development, said as much in introducing Brunswick’s charms for the foreign investor, from nearly 1,000 acres of industrial park land to a thriving sea port specializing in break-bulk (mostly agricultural goods) and roll-on, roll-off cargo (mostly cars). Coastal Georgia also boasts six golf courses and quality beaches and, importantly for his Brazilian visitors, lacks any semblance of rush-hour traffic.
Mr. Stegall added that the Brunswick port has industrial warehouse space available to the tune of some 300,000 square feet in the Mayor’s Point Terminal.
“We are looking for partners right now, especially partners in the global market that need this type of space,” he said, adding that Brunswick is also situated in a foreign-trade zone, a designation that allows companies to import components without paying duties until an assembled product is sold.
WEG Electric Corp. is an example of a Brazilian firm that has grown rapidly in the U.S. after acquiring its initial distributor.
At 10.8 million square feet, the massive manufacturer operates the largest motor factory complex in the world in Jaraguá do Sul, Brazil, filling 14,000 shipping containers last year with exports to 135 countries.
But being near the customers has taken on a new significance over the past decade, to the point where production in other countries for export to third markets around the world has increased from 4 percent to 28 percent of the company’s business.
In the U.S., that has come about through acquisitions that target new technology or better market access. After four deals in the U.S. starting about a decade ago, WEG staff in the U.S. has grown exponentially to about 1,400. Nearly 400 of them are based in the company’s Duluth, Ga., headquarters.
“The big difference here is the WEG strategy to have manufacturing facilities located outside Brazil, closer to end users, closer to the customers,” said Valdemir Concalves, WEG’s vice president of sales.
Mr. Stegall urged such Brazilian investors to get connected with the Georgia economic-development community as soon as possible to makes sure they’re not leaving incentives on the table.
Mary Waters, also a panelist and the state’s deputy commissioner for international trade, said the same on the outbound side: Georgia has a “deep bench” of resources to help companies export to the Brazilian market, including a trade office in Sao Paulo that will perform market research on behalf of qualified Georgia companies.
Lucia Jennings, president of the Brazilian-American chamber, said it stands ready to provide assistance to companies looking to iron out some of the complexities of the Brazilian market. The chamber partnered with the World Trade Center Atlanta to put on the Brazil spotlight event.
Sunday, just days after the Atlanta discussion, right-leaning Brazilian presidential candidate Jair Bolsonaro won 46 percent of the vote in the first round of elections but didn’t capture the outright majority needed to avoid a runoff. The second round is scheduled for Oct. 28.
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