Betting On Brazil

Serra or Dilma? Who Would Be Best For Brazil?

This is the most frequent question I receive from investors these days. 

Both candidates are expert government administrators, tough, hardly charismatic, but know their ropes around bureaucratic government.

Government bureaucracy is definitely one of our bottlenecks, and both candidates will do an excellent job in putting government to work. In fact that is what both are doing know, Dilma as Chief of Staff, and Serra as Governor of São Paulo.

Lula was more easy going, and would rather make friends than enemies. Serra and Dilma are more like hatchet men, not afraid of making enemies to get things done.

Consumer Sales 10% Growth in 2009

These figure do not include 2009 Xmas, so final numbers should be better still.

The Summary of 2009 in a Single Graph

Consumer spending maintained its historical growth rate, except for a brief (blue) dip in October 2008.

Brazil : The Future Testing Ground of The World

You are a multinational company with a new product. Where will you test market: San Francisco, London, Jakarta, Switzerland, Japan or Brazil ?

Take a guess.

7.000 new products were introduced in Brazil in the first semester of 2009. Nearly 6% of all new products introduced in the world. Why?

For various reasons.

1. Brazil has the youngest population, excluding Africa, of the world. 26 year average, just in the beginning of a life cycle. That is a wonderful market to try new products. If you choose Switzerland, were everyone is loyal to a 30 year old brand, you may not be that successful.

2. Brazilians for many other reasons, are curious, technologically bent, and will try out everything new. We have more cell phones, more people on the internet, 80% of ORKUT affiliates of the world are Brazilian.

3. We speak a single language, USA has two, Switzerland has 4, and so on. Great for reducing advertising costs.

4. We are a melting pot of many cultures, we have Poles, Italians, Lebanese, Japanese, Afro-American  descendants,  a true cross section of what you will find when you go international with your product.

I have been recommending for more than 10 years, that multinational companies transfer at least one of their research centers to Brazil, because that is were a research center should be, next to its test market.

For the reasons above, Brazil will be the center of most multinational companies marketing strategies, in the future because of its unique stratified, young and same speaking people.

If you do not have a research center in Brazil, talk to us, we will be pleased to help you.

Key Developments of The Month of November

Now investment expenditures are rising dramatically, given the demise of the last bastions of doomsday economists predicting a W. No L, no U nor even a W.

Business Confidence has reached its highest level since 2005, much higher than a year ago. Mother's Day Sales grew 35% compared to a year before, giving fuel motions to reduce Sales Tax permanently. The Lafer Curve theory seems to have been proved once and for all in Brazil. 

Purchases of equipment, middle sized, financed by BNDES rose 40% in October 2009, and capacity is running 100% in many sectors. Imports have risen 15%, which will stabilize our exchange rate without continuous government intervention.

Though car production rose 92% in January 2009, a clear sign that the financial crisis would not hit the rest of our economy, sales of trucks lagged due to Doomsday Economics. Nouriel Roubini toured Brazil spreading fear and made headlines.

Now there is a waiting list for trucks as well.

Unemployment down to 7,7%, which for Brazil is rather low. Due to Labor Laws, and FGTS deposits, workers in Brazil change jobs every 4 years, rather than usual 8 years in other countries. This increases the unemployment rate, but actually workers are getting hold of their FGTS reserves, which usually pay zero interest rates. 

Fortunately most businessmen do not take economists in Brazil very seriously, so the doomsday predictions did not affect Brazilians as much as American and Europeans.

There may be some inflationary pressures in 2010, and interest rate hikes, but nothing to be very worried about.