Transcript Hardware Leading Industry in Brazil

Brazil
Agenda
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Country Overview
 Brief History
 Geography
 People
 Government/Politics
 Economy
 Business & Culture
Information Technology Landscape
 Telecommunications/Infrastructure
 Electronic Commerce
 Hardware & Software
Overall Recommendation – Strengths &
Weaknesses
Brazil – Brief History
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Portuguese “discovered” in 1500
Independence – September 7, 1822
After WWII – Industrialization advancements
1980s – Oil crisis and foreign debt
1990s – Reforms and economic growth
http://www.odci.gov/cia/publications/factbook/geos/br.html
Brazil – Geography
Brazil – Geography
Five Regions
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http://www.odci.gov/cia/publications/factbook/geos/br.html
Largest country in S. America
Fifth largest in the World
Area: 8,511, 965 sq. km.
Climate: mostly tropical
Major Cities:
 San Paulo
 Rio de Janeiro
Terrain: mostly flat to rolling hills
Capital: Brazil (Brasilia)
Environmental Issues:
 Natural Hazards
 Deforestation
 Illegal Wildlife Trade
 Air and Water Pollution
Brazil – People
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Population: 182, 032, 604
Population Growth Rate: 1.15%
Urban: 81%
Median Age: 27 years
Life Expectancy: 71.13 years
HIV/AIDS
 Adult Prevalence Rate: .7%
http://www.odci.gov/cia/publications/factbook/geos/br.html
Brazil – People
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Nationality: Brazilian
Ethnic Groups
 White 55%
 Mixed White & Black 38%
 Black 6%
 Other 1%
Religions
 Roman Catholic 89%
 Protestant 6%
 Other 5%
Languages
 Portuguese (Official)
 Spanish
 English
 French
Literacy: 86.4%
http://www.odci.gov/cia/publications/factbook/geos/br.html
Brazil - Government/Politics
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60s & 70s – limitations on rights
80s – democracy restored
90s – democratic institutions strengthened
Governed by Constitution (est. 1988)
Similar to U.S.
Major Political Parties
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PFL--Liberal Front Party (center-right)
PMDB--Brazilian Democratic Movement Party (center)
PSDB--Brazilian Social Democracy Party (center-right)
PP--Progressive Party (center-right)
PT--Workers Party (center-left)
PDT--Democratic Labor Party (center-left)
PTB--Brazilian Labor Party (center-right)
PSB--Brazilian Socialist Party (left)
http://www.nationmaster.com/encyclopedia/Economy-of-Brazil
Brazil – Technology Leadership
Deregulation –
Allowing private
and foreign
investment
Industrial
Policy
Environmental
Parameters
IT
Diffusion
Industry
Structure
Significant
Investment
encouraging
R&D
Emerging
Technology
Infrastructure.
Education level
growth through
R&D experience
Economic
Payoffs
Technology development in Brazil
is beginning, with limited ECommerce currently, but the
potential exists for success.
Investors can utilize the
“Lessons Learned” from the
U.S. dot-com era, and
capitalize on Brazil’s emerging
Technology landscape
Brazil - Economy
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Currency Floating System
$1 US = 2.87 Brazilian Real (as of 11/6)
Open Trade
Import tariff reductions
Increase in consumer good imports
Recognize need for quality (ISO 9000 series)
Automatic licensing
Equal opportunity
Exports exempt of indirect taxes
San Paulo
Unemployment Rate: 7.5%
http://www.nationmaster.com/encyclopedia/Economy-of-Brazil
Brazil - Economy
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Foreign Investments
 Government approval not required
 No minimum investment or local participation necessary
(exception: banks and insurance)
 Inflow and outflow of money exchanged through the Central
Bank
 Foreign ownership restricted in:
 Banking and insurance
 Press and broadcasting
 Rural land
 Taxes
 Federal
 IPI (equipment)
 State
 Some Municipal
 Property rights cover trade and service marks, patents,
technology transfer, franchising, and scientific/technology
services
 Technology is considered a ‘know-how’ not protected by
patent. Can be sold but not licensed
 Between 1996-2000 net direct investments presented a
growth of 273.6%
http://www.lexmundi.com/publications/INTL_Guides/guide-brazil.pdf
Brazil - Economy
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Incentives to stimulate technology R & D:
 Reduction of 50% of IPI due on equipment
 Deduction of 4% on income tax due
 Credit of 30% of income tax withheld
 Assistance of 10% of net revenue from sale of produced
goods as a result of this technology
 Reduction of 25% of the IOF applying to values paid.
Brazil Country Commercial Guide FY 2002, International Copyright, U.S. Department of State, 2001
Brazil -Economy
Main Economic Indicators
1993-97
1998-99
2000
GDP
Total
Manufacturing
Per Capita GDP
Inflation
Exports*
Imports*
4.18
4.70
2.70
0.50
-1.53
-0.83
4.46
5.01
3.10
12.17
47,460
49,177
5.23
49,597
53,508
5.97
55,088
55,783
- 1/3 of Brazil’s exports go to the U.S.
*$US Millions
Brazil Country Commercial Guide FY 2002, International Copyright, U.S. Department of State, 2001
Brazil - Economy
Average Monthly Income (US$)
350
300
335
280
250
301
297
S
C
234
200
172
150
100
50
0
Brazil
N
NE
SE
Region
Brazil Country Commercial Guide FY 2002, International Copyright, U.S. Department of State, 2001
Brazil – Business Culture
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Personal Connections
Long-term business relationships
Appointments are important
Business hours: 8:30 – 5:30
Poor punctuality (except with meals)
Conversation – fast, interruptions, animated
Brazilians consider themselves Americans
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Don’t use the phrase 'in America' when referring to the U.S.
Topics to avoid – ethnic, political, Argentina, criticism
The O.K. sign is considered vulgar
Guidelines to negotiating deals
U.S. – Market; Brazil - Machine
http://www.executiveplanet.com/business-culture-in/136482266500.html
Brazil – Telecom/Infrastructure
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Telecom – Largest telecom sector in Latin America (market
size $8.3 billion US,
2000)
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Large scale privatization – Until 1995, Telebras
monopolized the country’s telecom services, in 1995 the
Brazilian government approved Constitutional Amendment No.
8, authorizing the entry of private, domestic, and foreign
investment
Teledensity: reached 16.8 in 1999 from 8.6 in 1994
Mobile Teledensity: reached 9.1 in 1999 from 0.5 in 1994
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Quality connectivity to ROW: (64 Satellite stations, 3
coaxial submarine cables)
- Pent up demand for basic telecom services, make Brazil
a very attractive market
- Some lingering Internet connectivity issues in remote
areas
http://www.odci.gov/cia/publications/factbook/geos/br.html
http://www.american.edu/carmel/cp8809a/landscape/index.htm - Brazil IT landscape
Brazil – E-Commerce
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Brazil Internet Connectivity – high number of individuals
connected to the internet
 Globally - 10th
 Latin America –1st
 400 ISPs – mostly dial-up, heavily dependent on access
fees
Business to Customer: Far ahead of the rest of Latin
America, far behind the US. Majority of simple products
(Books, CDs, etc) with the exception of groceries
Business to Business: Operating on a limited scale in niche
areas (replacement parts, office supplies, computer parts),
large opportunity for growth once logistics problems are
solved
http://www.odci.gov/cia/publications/factbook/geos/br.html
http://www.american.edu/carmel/cp8809a/landscape/index.htm - Brazil IT landscape
Brazil – E-Commerce (con’t)
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Factors driving E-Commerce as a key area for
Investment:
(1) large user base
(2) state-of-the-art banking equipment
(3) large local retailers with strong brand recognition
(4) A wide array of Portuguese language content providers
(5) The Brazilian Government's new project to extend Internet
access to all citizens
Problem Areas:
 Considerable problems with Logistics/Transportation
Infrastructure
 Power Shortage Issues - Electrical power shortage
announced by the Brazilian Government in 2001, including
a strict power rationing program
http://www.odci.gov/cia/publications/factbook/geos/br.html
http://www.american.edu/carmel/cp8809a/landscape/index.htm - Brazil IT landscape
Brazil – Hardware
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Hardware
 Leading Industry in Brazil ( US - 7.3 Billion in 1999), rated
as the leading industry for investment by US government
groups
 Q1 2000 – 80% growth in computer hardware and
peripherals
 Manufacturer products domestically, import parts.
U.S. Department of Commerce's Trade Information Center – http://www.usatrade.gov/Website/ccg.nsf/CCGurl/CCG-BRAZIL2002-CH--00619FAE
http://www.american.edu/carmel/cp8809a/landscape/index.htm - Brazil IT landscape
Brazil – Software
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Software
 Large Scale Investment – Well integrated into key vertical
markets (Argibusiness, transportation, health, financial
services, etc.), also as a key business management enabler
(CRM and ERP software)
 Large % of Imported Software: Small growth, however
will change as E-Commerce develops.
U.S. Department of Commerce's Trade Information Center – http://www.usatrade.gov/Website/ccg.nsf/CCGurl/CCG-BRAZIL2002-CH--00619FAE
http://www.american.edu/carmel/cp8809a/landscape/index.htm - Brazil IT landscape
Brazil – Overall Recommendations
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Electronic Commerce in Brazil is in its infancy, coupled with
investment in telecommunication and technology infrastructure, and
the government de-regulation to open markets, there is a significant
gap in Internet services for Industry and general consumers. A
unique opportunity exists to capitalize on Brazil’s emerging
technology landscape. Over the next 5 years, significant growth is
expected several key areas:
Brazil’s large internal market: 165 million residents and a single,
unified language.
Opening to foreign capital investment
Advancing Technology Infrastructure – Supporting Telecom growth
Population demographics lend to E-Commerce
Geography – Gateway to South America
Problems/Weaknesses to Overcome:
 Transportation and Power Infrastructure
 Distribution of Wealth Issues - Increase PCs per household ratio –
approx current (8 per 100 households). Top 10% of income ->
60% of computers