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How Brazil Weaned from the US and EU to Win New Markets

Brazilian Minister of Development, Miguel Jorge

The growth of Brazilian foreign trade is directly related to the fact that
Brazil has finally created an export culture, over the last five years. From it,
the businessmen started, in an organized and permanent manner, to program
themselves for export. That is, the country and its companies have started
having an export mentality.

This is the explanation of Development, Industry and Foreign Trade minister Miguel Jorge for the growth of Brazilian exports that, in recent years, without losing touch with traditional importers, like Europe and the United States, have been winning new markets. Brazil is expanding the number of items in the export basket and, consequently, registering frequent surpluses in the trade basket.


In an interview to the Brazilian Arab News Agency, Miguel Jorge, who doesn’t use a last name but is a grandson of Lebanese immigrants, also pointed out the expressive growth of sales of Brazilian products to the 22 Arab countries.


Last year, the region was the fourth main destination for Brazilian products. This growth, according to the minister, is attributed to the Brazilian strategy to win new markets with the objective of reducing dependence on traditional export partners like Europe and the United States.


With foreign trade between both regions consolidated and growing continually, Miguel Jorge stated that Brazil is getting ready for another challenge: attracting Arab investment to the Brazilian productive chain. For this reason, in the first quarter of 2008 there will be a Brazilian trade mission to several countries in the Gulf.


The objective is to prospect business opportunities and also to invite possible investors to travel to Brazil and learn about the sectors of the Brazilian economy that may be of interest to their investment. Following are the main stretches of the interview with Jorge:


Over the last five years there has been a clear change in the Brazilian foreign trade policy. Brazil has not only maintained its traditional markets, but has also won new ones, like China, India and the Arab nations, and is selling regularly to over 180 nations. Is this posture part of a strategy to change the profile of Brazilian foreign trade, with the objective of making the country less dependant on Europe and the United States?


It was and it is a strategy that has been developed over the last five years. This change and reduction of dependence was built little by little. It started being discussed around ten years ago. And it has become more profound in the Lula government, as macroeconomic conditions for it really started taking place.


Over the last five or six years, we have had, for example, a reduction of inflation, price stability and macroeconomic stability, giving companies a chance of programming themselves, starting programming their sales. To export, it is fundamental to have stability in the country. Creating a market is very difficult. On the other hand, losing one is very easy. If you don’t deliver, you lose the market.


And trust…


Yes, trust, credibility that the exporter gains due to complying with contracts. The exporter cannot, for example, sign one contract, start selling and then, due to an increase in costs or inflation, which reduced his profits, want to renegotiate prices or find it impossible to export.


Over the period, Brasil, which used to export to around 100 countries, has started exporting regularly to over 180. Apart from trustworthiness, what explains this growth?


When you establish an export culture in the country – and this is probably the most important thing that has taken place over the last five years -, you start making businessmen find new markets and, also, seek regions where competition is even smaller, where he may compete for better conditions.


This is the case with Arab countries and Latin and South America, except Argentina, due to the Mercosur (the Common Market of the South, a customs union between Brazil, Argentina, Uruguay, and Paraguay). We did not export much to South America. This has changed, Brazil has expanded its exports to all the countries in South America, at the same time as the country has won new markets in several regions of the world.


Could you mention an example of this expansion in Brazilian foreign trade?


In South America, a good example is Venezuela. We have increased exports to Venezuela from US$ 600 million to US$ 4 billion. That is over four years, and that is incredible.


How about the Arab countries?


To the Arab countries too. Over the last five years, for example, our exports to that area of the world have grown at a fast rate. All you have to say is that the Arab nations are currently the fourth main destination for Brazilian foreign sales. From 2003 to 2006, Brazilian exports to the Arab market rose from US$ 2.76 billion to US$ 6.68 billion. And this year we should reach US$ 8 billion.


And what may this growth be attributed to?


Brazilian companies have started having an export mentality. What happened before? Companies only exported when the market shrank. Exports were opportune, were momentary things. If the domestic market recovered, businessmen stopped exporting and returned to selling domestically, also because it is more comfortable, more peaceful. To export, you have to have what I would call sophistication, you must be prepared, have an office abroad, people outside the country and structured distribution channels.


You must have instruments to prospect the market, right?


Exactly. Tools for prospecting are necessary, like, for example, the missions and fairs organized by the government in partnership with the Arab Brazilian Chamber of Commerce. When one wants to export, it is necessary to know what products to sell and to what markets.


It is no use saying that you are going to sell pork to the Arab countries. You have to know what the market wants, what it needs, and where you may be competitive. It is also no use slamming into a wall, if the market is already completely occupied by very productive people.


In the case of meat, for example, Brazil has taken the place of some countries in the beef export markets and, on the other hand, China has taken over part of the Brazilian shoe market.


Still with regard to the Arab market, figures supplied by the ministry itself show that, in recent years, there has been growth of 270% in sales to the 22 countries that are members of the League of Arab States, whereas bilateral trade has grown 520%. What is this due to?


It was the partnership between the government and the private initiative and the perception that, to sell, it is necessary to move. You cannot just sit, waiting for someone to pick up the phone directory looking for you, although, today, I think that the phone directory is no longer used much.


However, even in the domestic market, if you want to sell to somebody, you have to go there, sit, talk, know the buyer and establish relations. It has to be eye to eye. We did not have this system of going there, sitting, talking, bringing them to see where you are and what you do.


We started coming closer to the Arab countries. There were already, say, poetic, cultural, anthropological ties, etc., of which I am even a small example, due to origins and things like that. Everybody is very pleasant. Brazil has ten million Lebanese, twice the number of Lebanese living in Lebanon. But this has never been translated into trade, into business.


When did this scenery start to change?


When the country started looking to the Arabs as trade partners. President Lula visited six Arab countries, the first South-South summit took place, in Brasília, and the second has already been scheduled for next year. It will take place in Morocco and will certainly contribute to even greater expansion of trade between Brazil and the Arabs.


What is your evaluation of the meeting in Brasília?


The results were positive in all aspects. After the summit, Brazilian businessmen intensified their trips to the Arab countries after buyers interested in Brazilian products. On the other hand, we have brought Arab buyers to Brazil, but I am not only talking about the government.


It is essential for the government to come closer, but businessmen are fundamental. It is they who are going to sell, the government does not sell, the government does not export and the government does not import. It is businessmen who export and import.


Is that what justifies the missions that took place to the Arab countries?


Exactly. It is interesting to recall that between Arabs and Brazilians there has always been affinity. But I would add that closer commercial ties themselves only began in the 1990s and they were intensified after the visit president Lula made to the region in December 2003. The visit made clear the Brazilian interest in intensifying trade relations with the League of Arab States.


To give an idea of the importance of Lula’s visit, it is worth recalling that, before him, only one Brazilian head of state had visited the Arab countries: emperor Pedro II (who travelled to the region twice in the 1870s). That is, today there is business between Brazil and the Arabs.


What kind of business?


The trade basket between Brazil and the Arabs is very large, varied and with greater value-added products. To mention just one example: a great slaughterhouse in São Paulo, Minerva, sells live cattle to Lebanon, they even have an office there. They have taken over a market that belonged to the Irish, who used to export live cattle to Lebanon.


In fact, the Irish are very angry, they are campaigning against Brazilian beef, saying that it is not cattle, that the Brazilian zebu is not cattle. They have reached this point, they are stating that it is a kind of camel due to the hump it has. So, you see, we are selling around 3,000 heads of live cattle to Lebanon.


Trade relations with the Arab countries are a reality, and exports should continue growing. Isn’t this, therefore, the right time for Brazil to start working on attracting Arab investment to the Brazilian productive chain?


Yes, but we have to work focussing on the medium term. That is because today Arab investment is turned to their own economies. I think that, in a first phase, Brazilian businessmen need to make use of the several business opportunities participating in several megainvestments that are being made in the region, in sectors in which Brazil has quality, price, competence and competitiveness.


What do you mean with Arab investments are turned to their own economies?


The Arab countries are scheduling investment in infrastructure and other sectors that are essential to expand their economies. Let’s say that the investments these countries are making are like their own PAC (the name given to the Brazilian government’s Growth Acceleration Program).


I am going to give one example, among the many there are. Saudi Arabia is going to invest around US$ 400 billion in coming years in the infrastructure sector in the country. This represents a great opportunity for Brazilian companies. That is why in the first quarter of next year, we are planning a trade delegation to the countries in the Gulf.


Apart from that, there are also good opportunities in other countries. This is already taking place in several Arab nations. Companies like Camargo Corrêa and Odebrecht (both in the construction sector) are already participating in infrastructure works in several nations in that area of the world.


Anba – www.anba.com.br

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