Can You Afford to Miss Out?

Mauricio de Sousa Soccer star Ronaldinho is leading an international attack by Brazilian cartoon characters THE SECRETS OF Sabó Buying factories Internationalization: in Europe was the key to keep on growing in Brazil CAN YOU REAL ESTATE The promise of big profits AFFORD TO is attracting European MISS OUT? investors The attempt by mining giant Vale to buy Anglo-Swiss competitor Xstrata sparks a debate about the benefits and risks of Brazilian companies investing abroad

globais

Year 2 Number 3 Apr/May 2008

totum GREENinternational STRATEGIES success How sustainability can bring 007289_404x266_325.pdf March 14, 2008 19:39:05 1 de 1

Is it possible for talent to be Vale is aglobal mining company If you are like us, passionate about passionate about its work and what you do, visit www.vale.com, an essential ingredient in the needing talented people to continue learn more about our work daily life of asuccessful its quest for the best way to do things. opportunities in Brazil and the world This is why Vale believes in constantly and upload your Resume. Talent: mining company? Yes, it is possible. investing in human development. essential to Vale’s daily life www.vale.com 007289_404x266_325.pdf March 14, 2008 19:39:05 1 de 1

Antenna 10 Vancox jewels shine in the Arab world On the road 16 A task for a new boss: Usiminas goes global Interview Cover Story 20 Silvio Crestana wants to turn Why Embrapa into a scientific powerhouse 26 stay out? By Nely Caixeta Design Vale´s announced bid for 24 Brazilians awarded in Germany the management of Anglo- Reports Swiss mining group Xstrata was received by the market 38 Mauricio de Sousa’s plans 42 Sabó packed up – and is better off as another bold stroke 52 Suppliers surf along their clients by the Brazilian giant. However, reservations to Special Report the operation have cropped 46 The power out of sustainability up in some government By Lia Vasconcelos sectors. Here, answers to Marketing the most relevant issues. 56 Originality is the real brand Eliana Simonetti, with an article Career by Lídia Goldenstein Filho/AE Al a or 58 Talents for export Real estate 62 Brazil feted by European investors By Vicente Vilardaga Small Business 66 Artecola´s dead-on planning Emerging markets 68 Vietnam´s recent might Opinion Is the American crisis that serious?

/ABF 70 By Mário Garnero oares 24 38 Ideas ndé S i n a 72 The importance of staying tuned nd C a to international organizations By Marcus Peçanha and Jonathas Campos

etrobras Finance /P

out 74 Banco do Brasil goes into US retail market nd a

; H By Juliana Garçon

ichio Globe-Trotter n e B o

d 76 Bradesco invests in Amazon preservation

icar In transit ; R

out 82 Experiences of an airport-goer nd

a 46 62

H By José Carlos Pinheiro Neto

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Letters

totum Year 1 Number 2 Last December, I was important to highlight Dec 07/ Jan 08 on a trade mission in the organizational Brazil, organized by structures of the Brazilian Embassy cooperatives and TAV E X New addition in London and the associations, which are to Santista Brazil-United Kingdom the result of idealistic stable wants to dress Europe Chamber of Commerce, and competent men MARKETING in denim and I had the honor who fight hard to give Coffee from the Cerrado HISTORY of being introduced to coffee growing its true wins customers Two centuries PIB magazine. I saw and deserved value. in Japan ago, Brazil became part it is a very interesting There’s no doubt that of the world publication, published internationalization CAREERS in two languages. of the brand is an Brazilians are going I hope that this essential part of to school to periodical will be made this process. learn global available in London, Juliano Tarabal business where there is an Gonçalves important Brazilian Gepeccafe-Unicerp The Ethanol is showing the business community. Marketing and Management way, and Brazil leads the world in the race Vitoria Nabas Patrocínio – MG

ethanol for clean energy. Nabas Legal The chance is there – it’s just a question Consultancy Ltd PIB’s story on the effect of getting it right London - United Kingdom Cerrado coffee farmers who purchased a The Goiás State stake in a Japanese Industrial company shines light Confederation - on an innovative idea. FIEG, by way of its One great difficulty The magazine is clear, filled International Business is to sell food to the Center, CIN, would Japanese. Cerrado with interesting stories, and like to congratulate coffee growers were projects a realistic image of you for PIB magazine. able to do so, by way of Brazil to the rest of the world. The stories are great. an original strategy. Johanna Guevara Paulo Okamoto The market was crying out for Méndez President of Sebrae such a publication. Foreign Trade Analyst Brasília - DF Paulo Pompilio International Business Director of Corporate Relations and Social-Environmental Center - CIN - FIEG I would like to Responsibility for the Pão de Açúcar Group Goiânia- GO congratulate you for São Paulo - SP the quality and content Excellent story on of PIB magazine: Allow me to congratulate Thank you very much coffee in the Cerrado, excellent, objective and you on the quality of for regularly sending “One Foot in Japan,” different. Keep it up. your publication: PIB me your excellent in PIB’s last edition. Abadia Camargo – Brazilian Companies publication PIB, which I The Café do Cerrado Regional Superintendent of go International. read with great interest. brand name has been CPRM/Brazilian Geological Mauricio Azedo Ambassador Flávio gaining prominence Service - (Goiás, Mato President of the Brazilian Miragaia Perri as a reference point Grosso, Tocantins and Press Association Brazilian Consul General for quality and the Federal District). Rio de Janeiro – RJ London - United Kingdom organization. It is Goiânia - GO

8 P I B Editorial

Totum Excelência Editorial Clayton Netz Nely Caixeta Ricardo Galuppo Defending

PIB BRAZILIAN COMPANIES internationalization GO INTERNATIONAL A TWO-MONTHLY MAGAZINE FOCUSING ON INTERNATIONAL BUSINESS AND ECONOMICS, FROM TOTUM When we first discussed our editorial priorities for Editors PIB magazine, the defense of internationalization Clayton Netz • [email protected] Nely Caixeta • [email protected] came pretty high up on the list. Right from the start Ricardo Galuppo • [email protected] we knew that in addition to showing the world how Contributors to this edition Andressa Rovani, Armando Mendes, Arnaldo Brazilian companies, products and services are faring Comin, Bettina Riffel, Eliana Simonetti, João Paulo Nucci, Jonathas Campos, José Carlos Pinheiro Neto, in terms of penetrating global markets, we also had to speak out in de- Juliana Garçon, Lia Vasconcelos, Lidia Goldenstein, Marcelo Cabral, Marcia Rocha, Marcus Peçanha, fense of the phenomenon itself. Even then, we felt sure that as interna- Marco Justo Losso, Maria Helena Tachinardi, Mario Garnero, Mario Granjeia, Vicente Vilardaga. tionalization forges ahead, there would be those who question or criti- Design and Layout cize both its legitimacy and fairness. Maurício Fogaça / Karina Gentile Página Mestra This is exactly what happened when Brazil’s giant Vale mining Cover and Illustrations Marcelo Calenda group decided to bid for Xstrata, an Anglo-Swiss competitor. As soon Photo Editor as it was announced, the venture came under Mônica Maia / Carla Romero Revelar Brasil fire. Some people feared for example that it Copydesk and Preparation Márcia Melo might lead to dilution of Brazilian ownership, Translation or predicted possible problems in raising the Brian Nicholson, John Fitzpatrick cash needed for the takeover. Others insisted ADVERTISING that Vale should be expanding and diversify- Arines Garbin Consultant ing its investments in Brazil, to create more INTERNATIONAL AND BRAZIL jobs at home. (EXCEPT RIO DE JANEIRO) (55-11) 3097.0849 However, as our cover story in this edi- [email protected] Av. Brigadeiro Faria Lima, 1903 cj 33 tion makes clear, these fears are ground- Jardim América - 01452-911 - São Paulo - SP Rio de Janeiro less – Vale has set aside more than US$ 7 bil- Paulo Avril • [email protected] (55-21) 2557.8580 lion for domestic investment through 2008. Rua Silveira Martins 156/704 - Flamengo - 22221-000 - Rio de Janeiro - RJ In fact, as you read our story the conclusion BrasIlia becomes inevitable that companies which Iracema Ferreira Tamanaha • [email protected] (55-61) 3245-2391 – cel. (55-61)9115-7196 face competition overseas, far from simply SQS 311, bl.K apto.608 - 70364-110 - Brasília- DF exporting capital and jobs, end up gaining PRINTING strength and management ability to survive PROL Editora Gráfica Av. Papaiz, 581 - CEP 09931-610 - Diadema - SP and prosper at home. DISTRIBUTION IN BRAZIL Promoting free trade: Support: Edicase - www.edicase.com.br Marcus Peçanha, a graduate in Interna- Exclusive distributor: Fernando Chinaglia Peçanha, with Tom Mailing: Postal House tional Relations from São Paulo’s Catholic Uni- Rua Benta Pereira, 431 – São Paulo – SP versity, is a great supporter of this magazine. Clougherty of Britain’s 02451-000 – www.postalhouse.com.br Adam Smith Institute Peçanha is a partner in Interaction Times, a EDITORIAL SUPPORT Eliane Montes and Etiene Colhado company that organizes exchanges for Brazilian students and business- EDITORIAL CORRESPONDENCE men with a series of international organizations, and he’s taken to car- Av. Brigadeiro Faria Lima, 1903 cj. 33 - CEP 05426-100 São Paulo SP rying a stack of PIBs with him on each foreign trip. Everyone he meets [email protected] Signed articles do not necessarily represent with receives a copy. But Peçanha does more than just distribute PIB, the opinion of the editors. Totum reserves the right to edit or summarize letters. he writes for us too, in this edition together with Jonathas Campos, his RESPONSIBLE JOURNALIST: colleague at Interaction Times (see page 72). They’re in good company Ricardo Galuppo (MTb 3528-MG) – other contributors to this edition include businessman Mario Garne- PIB – Brazilian Companies go International is published by Totum Excelência Editorial - ro, the president of the Brasilinvest group, and Lídia Goldenstein, one of Av. Brigadeiro Faria Lima, 1903, cj. 33 - CEP 05426-100 - São Paulo, SP Brazil’s leading economists. z (55-11) 3097.0849. [email protected] Print run for this edition Portuguese – 18,000 the EDITORS English – 7,000 Print run audited by PricewaterhouseCoopers

P I B 9 Antenna a n cox /V Eager customers: Brazilian jeweler Vancox is a big hit in the Arab world ha nd out Tailing Tiffany’s Seven years ago, Vancox founder of the company which a luxury magazine published in jewelers began discovering the ventured into foreign markets a English in Bahrain. “Ever since path, paved in precious stones, mere three years after it opened. its work was exhibited here sev- to the Middle East. Today, its ex- In addition to the Middle en years ago, it was able to es- uberant pieces are all the rage East, which accounts for half of tablish strong ties with people among wealthy Arab women. Vancox’s exports, the jeweler and create a relationship of such At the most recent edition of also sells its wares in the United loyalty that some clients nowa- Jewelry Arabia in November in States, Europe and Japan. Vancox days are practically collectors.” Bahrain, women covered head to is sold alongside such well-known Arab and Brazilian women toe in black cloth were fighting for names such as Tiffany’s, Valenti- also have much in common, she space at the Vancox stand. They no, Chanel and Versace in jewelry believes, and that helped. “We were there, at one of the world’s stores in the Persian Gulf , today are in love with all that is beau- most prestigious jewelry and the world’s premier jewelry mar- tiful, we adore new things and watch-making exhibition, to check ket worth US$30 billion a year. value boldness and sensuality,” out the latest work by Wânia Gon- Two factors were fundamen- Dina explains. She notes a curi- tijo, a Minas Gerais artist who tal to the brand’s success in Arab ous fact: in Bahrain and other trained at London’s renowned countries: perception of the lo- Arab countries, fairs such as this Saint Martin School of Arts. cal passion for exuberant jewelry one usually set aside one morn- What lies behind the suc- and the ability to offer exclusive ing just for female buyers. The cess of this jeweler established pieces with bold designs, featur- declared purpose of the “Ladies 26 years ago in Belo Horizonte, ing gold, diamonds and Brazil- Only” morning is to offer local capital of the Brazilian state of ian stones. “Vancox became one women a more relaxed atmo- Minas Gerais and practically un- of the most visible and presti- sphere in which they can peruse known among Brazilian women? gious brands among women in the stands – where there is always “A lot of hard work and persis- the region,” says Dina Fahkro, an unending supply of Swiss and tence,” explains Ricardo Bronfen, editor of Arabian Lady magazine, Belgian chocolate. (Nely Caixeta)

10 P I B magem I olha / F ima L Incursions into the United States, ergio The advance of S Australia, the United Kingdom and the meatpackers Russia by JBS-Friboi, Marfrig and other Brazilian companies make up The recent spate of arm wrestling for part of the damages caused by the between Brazilian beef producers and E.U. embargo introduced in January. European Union health inspection au- The confusion regarding the number thorities did nothing to dampen the of ranches qualified to sell beef to the international appetite of the big Bra- European market is being resolved, zilian meatpackers. Significant deals and Russia’s decision to reopen ex- have been closed recently, and it is ports has cleared the air a bit. At the likely that more acquisitions are right time, Brazil’s minister of agriculture, around the corner. Recently, JBS-Friboi End of the embargo: Minister Stephanes Reinhold Stephanes, celebrated the shelled out US$1.3 billion to purchase offers Russians a celebratory barbeque Russians’ decision with a barbecue two companies in the United States offered to negotiators from Moscow. and one in Australia. With these additions, JBS-Friboi Even so, the E.U. embargo will be costly. The industry now runs seven production plants in the U.S. and another was expecting 15% growth in sales for 2008. Now, in a seven in Australia. The company is, therefore, among the best-case scenario, sales should equal 2007’s US$4.4 top three meat processors in North America, right up there billion, according to the National Confederation of Ag- with Tyson Foods and Cargill. riculture (CNA). (Arnaldo Comin)

The expansion /AFP of Brazilian C aselli Back on the old gleaming route

Da n iel Ever since Varig was taken over partnership network, which already investments by new Brazilian airline Gol in April provides customers with travel to of 2007, the country’s most tradi- 47 cities in Europe, connecting overseas will tional aviation company has been from Paris and Madrid. When Gol have to be working hard to recover the sparkle took over, Varig had a fleet of 18 that made it a reference for quality airplanes. Today, that has climbed carried out at airports around the world. Paris, to 35, and should rise to 43 by the Madrid, Caracas, Buenos Aires, Bo- end of the year. by Brazilian gotá, Mexico City and Santiago are Varig’s growth plans don’t con- among the airline’s current interna- flict with Gol’s own expansion companies. tional destinations. By the end of strategy. This month, the younger Multinational 2008, Varig should resume flights company will begin operating be- to the United States and expand its tween Uruguay’s Punta del Este companies and the Brazilian cities of Rio de Ja- Punta del Este: neiro and São Paulo. It plans mak- installed in Varig back on the ing good use of the fascination the glamour track Conrad Resort & Casino, considered Brazil have one of South America’s most luxu- their own rious resorts, holds for Brazil- ians. In the tourist season, agendas. over 40% of the hotel’s guests come from Brazil. A m b a s s a d o r s A m u e l Pinheiro Guimarães, (Andressa Rovanni and AC) s e c r e t a r y- g e n e r a l o f t h e Foreign Trade Ministry

P I B 11 Antenna poleto /S ha nd out Spoleto in Spain: Italian food chain is an example of Brazilian franchise expansion

opened in Spain over the next five years, at the same time Mama’s cooking reaching out to Portugal and other European countries. The Italian fast-cuisine chain had revenues of R$207.6 mil- Brazilian fast-food chain Spoleto, specialized in à- lion in 2007, and expects this figure to increase by 23% la-carte Italian cuisine cooked according to the taste of each through the end of 2008. customer, is celebrating one year since its incursion into Spain The company is yet another bright example of the ex- and is already a hit with the public. A survey of 2,800 people pansion of Brazilian franchises abroad. Nowadays, Brazilian questioned regarding meals away from home, carried out by brand names can be found in several European and Ameri- the Spanish Confederation of Independent Users-Consum- can countries. Data from the Brazilian Franchising Asso- ers (FUCI), showed that Spoleto is a favorite among Span- ciation shows that Brazil currently has 52 chains in vary- iards. Of Spoleto’s 198 restaurants, 13 of them are outside ing phases of going international. For consultant Marce- of Brazil, in Mexico and Spain. In Brazil, 25 of the units are lo Cherto, this movement should continue through 2008. owned by the company itself, the rest are franchises. The chart below shows the most globalized chains and the Spoleto’s forecast is that at least 50 restaurants will be countries in which they are located. (Andressa Rovanni)

The Brazilian Web Some Brazilian franchises present in overseas markets

Carmen Steffens Portugal, Mexico, United States, Saudi Arabia, Paraguay, Germany, Australia and Argentina. Lilica Ripilica & Tigor Colombia, Italy, Portugal, Peru, Lebanon and Guatemala Casa do Pão de Queijo United States and Portugal CCAA Argentina, Chile, United States, Japan, Portugal, Guatemala and El Salvador China in Box Mexico Colcci Guatemala, Saudi Arabia and Europe Golden Services Mexico and Angola Nobel Bookstore Portugal, Spain, Angola and Mexico Localiza Rent a Car Argentina, Chile, Ecuador, Paraguay, Bolivia, Peru and Uruguay Microsiga Argentina, México, Chile, Paraguay, Porto Rico and Uruguay Rosa Chá United States and Turkey Showcolate United States, Portugal, Spain and Honduras South Africa, Germany, Guadalupe, Cuba, Argentina, Philippines, Chile, Via Uno United Arab Emirates, Spain, Italy, Mexico, Venezuela, Holland, Peru and Jordan Wizard United States, Japan and Portugal

12 P I B

Antenna

Publicity takes talent (and money) abroad Very few segments of the Brazilian economy have suffered more influence from foreign capital over the last decade than advertising. The amount of 100% national groups has dwindled to close to zero. Now, Brazilian agencies are beginning to make a move in the opposite direction, by branching out overseas. At the beginning of March, Nizan Guanaes, founder of the Africa agency and one of the controllers for ABC, a holding company that groups together five agencies, decided to become the major shareholder in Pereira&O’Dell, which is opening an office in San Francisco. At the helm is PJ Pereira, founder of AgênciaClick, Brazil’s largest digital agency. Three years ago in California, Pereira closed a deal with Andrew O’Dell, who presided over the creative area of local agency AKQA. “It will be a complete advertising agency, but very much influenced by digital culture,” says Pereira, /AE Nizan: an agency who has no immediate plans for bringing influenced by the new brand to Brazil. On the contrary, G ia nd alia the digital era his idea is to open offices in New York, aulo P major European cities and even Asia. (AC)

‘Pedigree’ and seal Cachaça, the typical Brazil- produced, and recently received ian spirit distilled from sugar- a Certificate of Indication of Ori- cane, is known locally by at least gin from the National Institute 200 names. Until recently, one of Industrial Property (INPI). Up of these, “Parati”, also the name to now, only three other products of an old town on the coast near from three other regions in the Rio, was not much different from country won similar recognition: all the rest. Now, however, Parati wines from Vinhedos Valley in has won a place of distinction. Rio Grande do Sul, beef from the The region along the Rio de Ja- Pampas region also in Rio Grande neiro coast is one of the first plac- do Sul, and coffee from the Cer- es in Brazil where cachaça was rado region of Minas Gerais.

14 P I B Export-type advertising Havaiana sandals have been exception- ally skillful at international marketing that ties into basic attributes of the Brazilian culture. From here on, the brand’s overseas campaigns will be handled by AlmapBBDO in a systematic manner. Previously, the agency was only used for consultations and preparation of a few isolated marketing materials. Now, following the example of what is already taking place in Australia and New Zealand, consumers from the U.S. and Custom-made: AlmapBBDO will produce Europe will have advertising campaigns that are ads for the sandals all over the world custom-made for each country. (AR)

However, Brazil’s most cov- erties in the product’s character- eted certificate, the Certificate of istics determine if the seal can be Denomination of Origin, has yet granted or not. to be awarded. The DOC also re- In the competition to receive flects the concept of geographi- the first DOC, rice from Rio Grande ha nd out cal location, but instead of just do Sul looked to be ahead of the certifying a region specialized in a game and should be the first certain type of production, it also Brazilian product so recognized. attributes a number of unique as- Another four products are awaiting pects – the impact of climate and Geographic Indication Evaluation: soil, plus other geographic prop- oysters from Florianópolis, Santa Catarina; Paraíba’s colored cotton; Wines from Vinhedo cheese from Minas Gerais and Valley: certified origins Maria Rosa saffron. (AR)

P I B 15 On the Road • Clayton Netz recent moves by brazilian companies overseas

Oriental Fascination as president. Castello Branco head of state. Last year, around n Executives at Santista Têxtil was recruited from the executive the same time as Kirschner began should really be racking up the committee of French company her mandate, the Paquetá group miles on their frequent flyer Vallourec for his global experience opened its first factory in the programs over the next couple of and returned to Brazil with a southern country, at Chivilcoy in years. The company, controlled new mission: to take Usiminas Buenos Aires province. Paquetá will by the Camargo Corrêa group, international. Analysts point to produce Diadora and Adidas sports has begun to study the possibility the example of companies such as shoes at the new unit. Initially, 700 of installing a denim factory in Gerdau to argue that expanding jobs were created, but this should Asia, to make products with outside Brazil is the main option increase to 2,000 once the plant higher added value. Santista open for companies that want reaches full operating capacity. has factories in Brazil, Chile, to have sustained new growth. Mexico, Spain and Morocco and CVC’s IPO its clients include Zara, Diesel, Pleasing Cristina n São Paulo-based CVC, Brazil’s Blue Cult and Miss Sixty. n Rio Grande do Sul’s Paquetá largest tour operator, is biding its group has gained approval and time and waiting out the turbulence Castello Branco’s popularity with the Argentine on international markets to list Mission its shares simultaneously on n Minas Gerais native Brazilian, U.S. and European stock President Marco Antonio Castello Kirchner: markets. According to Guilherme Branco, a 48-year-old “Argentina Paulus, president of CVC’s Board of metallurgical engineer who is good for Administrators, KPMG consultants went to Germany for his business” have been camped out at CVC PhD, was chosen by the since last October, to help the controllers of steel company company align itself with corporate Usiminas (Nippon Steel, governance guidelines required Mitsubishi, Vale, Votorantim for publicly traded companies. and Camargo Corrêa) to succeed Rinaldo Soares Change of plan n Santa Catarina-based Tigre, Brazilian market leader in PVC Awaiting tubing and connections, had Cristina everything ready to build its n One of the last of the Peruvian plant from the ground Mohicans in the domestic up. It had purchased the necessary auto parts industry, São machinery and was on the hunt Paulo-based Mangels, for an adequate piece of land is doing its sums to for its new factory. At the end of decide if it is worthwhile last year, however, the company producing aluminum revised its plans and decided rims at its own factory /AE to take a shortcut. It acquired

in Argentina. According B arata Plastica, one of Peru’s top three

to Robert Mangels, heir B eto manufacturers in the sector, and president of the for a value estimated between company, all signs point to yes. “la señora”, Mangels, celebrating US$30 million and US$50 million. Holding back any decision is its eightieth birthday this Tigre, which is headquartered in uncertainty regarding the path to year, can get ready to tango. Joinville, currently operates in be chosen by Argentine President “Argentina is good for business,” Argentina, Uruguay, Paraguay, Cristina Kirschner. If it’s up to Kirschner said in mid-March. Chile, Bolivia, Colombia, Ecuador and the United States.

16 P I B The Banco do Brasil in 2007 upheld its leading position in granting loans for investments, contributing to the country’s economic and social growth, while generating jobs and income.

Banco do Brasil. 200 years making the future. bb.com.br On the Road

New Furniture n Of course, if the exchange rate were better, high-class furniture manufacturers would be wearing even broader smiles. However, most find it impossible to hide an aura of happiness and prosperity sparked by 2007 international sales results: last year, according to Abimóvel, the trade association for the furniture industry, exports reached US$1 billion. For this year, the segment expects a 10% increase in sales, not only to more sophisticated markets such as the United States and Mexico, but also to the United Arab Emirates and emerging markets like Angola and Algeria. Some of the sector’s main brand names already sell their furniture abroad in regional stores. Such are the cases of Artefacto Store: rtefacto /A Artefacto, based in São Paulo and owning five stores in Segment exported US$1 billion in 2007 the U.S. and one in Mexico; and Rio Grande do Sul’s Unica,

ha nd out which should end 2008 with stores in Barcelona and Lisbon.

Against the grain Juquinha in Africa n Very few people in their right n Balas Juquinha, one of Brazil’s mind would consider opening a oldest domestic candy and factory for industrial scale lollipop producers, almost gave up manufacture of consumption goods completely on exporting because in the United States. Well, Rio of the soaring value of the Brazilian Grande do Sul’s Tramontina is real against the US dollar. Last definitely going against the grain of year, however, the sexagenarian common sense. It not only has a company resumed its overseas unit that produces 50,000 sales, which make up two-thirds aluminum pots and pans daily in of its R$6 million in revenues, the state of Wisconsin, but has due to a hike in demand from the decided to build a second plant in African market. With customers Houston, Texas, not far from its in 50 countries Juquinha, based distribution center. Tramontina in Santo André, in São Paulo supplies goods to giant U.S. clients state, does particularly well in

such as Wal-Mart, with whom it has Angola. The African country has arisol /M Donini: more maintained a decade-long special replaced the United States as stores abroad

relationship. Carlos Barbosa’s Juquinha’s biggest customer. ha nd out company, along with selling cooking ware to Sam Walton’s company, Shift change the baton and is sprinting full- also manages some of the domestic n Giuliano Donini, 33 years old, speed into internationalization. utilities shelves in Wal-Mart took command of Marisol, Santa Three brands owned by Marisol supermarkets. Its commitment is Catarina’s main clothing confection – Rosa Chá bikinis, Lilica Ripilica to guarantee an agreed level of company, at the end of March. children’s wear and One Store revenue and profitability per area The previous controller Vicente wholesale clothing – already have used. If this is achieved exclusively Donini, father of Giuliano and main stores abroad. The hallmark of this through the sale of its own executive at the Jaraguá do Sul- new investment phase will be the products, wonderful. If not, based company, is now a member opening of a new Rosa Chá unit in Tramontina uses the competition’s of the company’s board of directors. New York. The company’s 2007 products to reach its goal. The new president has grabbed revenues totaled R$420 million. z

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Not only my software is interactive. My partnership with Apex-Brasil also is. It o ers commercial and technical support to insert my solutions in this demanding global market. Through a Commercial Intelligence service, new niches and potential consumers were identied in Spain, Finland, U.S.A., Portugal and India. Apex-Brasil also promotes fairs, business meetings and trade missions which put me in direct contact with potential buyers. With the support of Apex-Brasil, I get all I need to conquer the world of international business. Apex-Brasil. The exporter’s partner.

Mervyn Lowe - P3D Softwares Exporter Project Apex-Brasil/SOFTEX

www.apexbrasil.com.br Interview • Silvio Crestana

“Brazil is dominant force in tropical technology in the world” mbrapa /E ha nd out

20 P I B The world´s scientific granary With laboratories or small offices in the United States, Europe, Ghana and Venezuela and plans to set up operations in Asia this year, Embrapa wants to be the technological launching pad for the expansion of Brazilian agribusiness abroad Nely Caixeta

he Brazilian Agricultural with more than 150 scientific works of highly qualified researchers in Research Corporation published and has been a researcher Washington, Montpellier, France (Embrapa) was created at the company since 1984. Interna- and the Netherlands. This is the by the military regime tional recognition on its own is not model which we call Labex (Em- in 1973 and is one of the enough, he believes. ìThere is no brapa Laboratory Abroad). We are Tgreatest sources of pride for Brazil´s point in just being the leader. We currently negotiating in the UK and scientific community. Embrapa is a have to transfer our new technol- Germany to place one of our scien- body which is firmly rooted in sci- ogy, win business by disclosing our tists in strategic areas. We opened entific research and aims to provide knowledge and bring the country a an office in Ghana last year. Nego- support for rural producers. It will profitable return,î he added. In this tiations are still underway to have a commemorate 35 years of existence interview with PIB, Crestana, who Labex presence in Asia. More prog- in April with a new lease of life - as a is a specialist in soil studies, reveals ress is being made in China and we technological anchor to supply and how the institution intends consoli- are also talking with India, South develop strategic partnerships to dating its position among the world Korea and Japan. boost Brazilian agriculture abroad. leaders in knowledge of food safety President Luís Inácio Lula da Silva and bio-energy. What does the Labex do exactly? has promised Embrapa a birthday It has a two-track approach. It is nei- present consisting of an investment Why has Embrapa decided to speed ther a consulting model nor a conven- package which will increase the up its international activities? tional training arrangement in which current staff of 2.300 researchers Our aim is to be present on all con- one side passes on its knowledge and to more than 3,000 over the next tinents which are leading the way the other only absorbs it. It involves two years. One of Embrapa´s aims in terms of agricultural science. an intense exchange of information. is to strengthen the body´s inter- We have a small, permanent staff Soybean rust, for example, is not just national ties. It is looking at China a problem in Brazil but also in the and Africa, areas where it believes We have to transfer our United States, China and India which the greatest potential for absorbing are all interested in finding a solution. its uniquely Brazilian agricultural new technology, win Part of Labex´s time is dedicated to technology are concentrated. ìWe business by disclosing expanding the frontiers of scientific are the dominant force in tropical our knowledge and knowledge. The staff carries out re- technology in the world,î says Sil- search together and organizes a net- vio Crestana, Embrapa´s chairman. bring the country a work of bilateral cooperation. An- Crestana is a graduate in physics profitable return other part is dedicated to what we

P I B 21 Interview • Silvio Crestana

call technological prospecting. What company which develops a prod- we want from these countries which Farming does uct and puts it on sale all over the often compete with us is to accom- not operate like a world. It is very different from a pany the advance of knowledge and company but depends production plant which makes a the prospects ahead. computer screen in Korea for sale on ecosystems and, for in the United States, for example. How do you achieve this? this reason, there is Agriculture depends on ecosystems. Research comes well in advance of The soybeans which are planted in any market breakthrough. We have room for cooperation the United States are a different va- to schedule a research program riety from the kind we have in Bra- seven to 10 years in advance before information, knowledge, technology, zil. For this reason, there is lots of a new technology can be used on equipment, tools and many other room for cooperation as in the case the market. We want to get to know items. Exchanging information is of precision farming. For example, consumers in China, India and something which is carried out face- an experiment was carried out in emerging and developed countries to-face with the other side over the Nebraska during the planting sea- better. What kind of foods should negotiating table. son there which occurs, of course, be introduced to these markets? at a different time of the year from Will they need to be monitored or Up to which point is the climate of here. When it is planting time in Bra- certified? Will they be organic? And cooperation genuine? zil the American researchers come what about transgenetic crops? Farming does not operate like a here and repeat the experience. This cuts the time needed for In a world where innovation experimentation by half represents an important ad- and we can get the result vantage In the competitive in one year instead of hav- game, does Embrapa share ing to wait two. its discoveries? We work on a “win-win” What kind of research is and not a “win-lose” prin- on the cooperation agenda ciple. There has to be a mu- with the United States? tual interest and common We have many common benefit. Look at our rela- problems such as greening, tionship with the United a disease which affects or- States and European coun- ange groves in the US and tries: we have the largest Brazil. This is so serious tropical biodiversity in the that if we have not found world and they have the best a solution within 10 years methods for managing the the citrus fruit culture ecosystem of a temperate in the state of São Paulo climate. In this case, there will become unviable. We is great interest in exchang- are also faced with global ing information which goes questions such as bird from the germplasm bank, flu, mad cow disease and genetic material (vegetable global warming. What is and animal) and micro-or- happening in the area of ganisms. Climate change is climatic changes? We will of interest to the two worlds. never be able to give the The same thing is happen- public a reliable answer in ing with precision farming. relation to climate chang- In both regions ñ North and es or the greenhouse effect South ñfarmers are short of Laboratory in the US: Embrapa´s next destination is Asia if we have no way of calcu-

22 P I B mbrapa /E out nd ha PHOTOS: Odebrecht corn and rice plantation in Angola: Embrapa helps groups interested in planting grains in Africa lating the volume of the emissions How does this function? self-sufficient in food. The second and by how much they are heating We have to generate income as well serious problem the Chinese face is up the atmosphere. This problem as financial and economic dividends. related to pollution. China´s energy does not only affect a single country For example, Angola wants to use matrix is based on coal but the de- but needs to dealt with on a world- Embrapa´s technology to produce mand for other sources of energy is wide basis. There must be a global corn and soybeans and is also in- rising. Part of this will be imported model although it has to tuned to terested in producing biodiesel to but they want to use Africa for pro- regional differences. This makes it export to Europe. We have received duction to resolve the other part. essential to have tropical data pro- many orders of thus type. Odebrecht As a result, they are resolving two vided by scientific institutions lo- and Portuguese groups are invest- problems: the industrial need ñ 30% cated in the southern hemisphere. ing in farms in Angola. Germany, of the oil China imports comes from Japan and Korea are interested in Africa ñ and food. China will invest What does Embrapa have to gain our ethanol but they do not want 25 billion dollars in Africa in the by forming closer ties with Africa to become dependent on this type coming five years. ands Asia? of fuel since Brazil and the United Part of our agenda is humanitarian. States currently dominate the mar- But how can Embrapa gain from this? We are helping countries which are ket, with 80% of production. To plant soybeans, corn or rice, the recognized as being in a much worst Chinese will now have to learn to situation than Brazil in terms of de- How can Embrapa see the demand for deal with the ecosystems of tropi- velopment and nutrition. These are food from a country like China, where cal regions. Who has this technol- basically African countries, most of the economy has been growing rap- ogy? We do and they don´t. That´s Latin America and some countries idly for decades? why we need to occupy this space. in Asia. Manioc, for example, is not The Chinese are limited in terms of It´s not enough just being the leader, a commodity but a subsistence plant. the availability of agricultural land having the technology and doing Although it originates in Brazil, we and the water and energy resources nothing with it. We have to trans- are not worried that that it has spread needed to drive their development. form this know-how into produc- to other countries. More manioc is With annual growth of around 10%, tion, teach these countries to pro- now planted in Nigeria than Brazil. China has not been able to become duce and make gains by using our We have all the knowledge of how knowledge. For example, we are to manage this culture. However, Angola wants seeing great business opportuni- when the manioc is being cultivated ties for technology with Venezuela, for commercial purposes, we have to use Embrapa´s where we have just set up an office. manioc with higher productivity. In technology to produce In the medium and long term we cases like this, it is worth the effort corn, soybeans expect this relationship to bring a of protecting our technological area return for Embrapa and for Brazil- and that´s where we stand in terms and biodiesel to ian companies which will invest in of our business agenda. export to Europe agribusiness in Venezuela. z

P I B 23 Design

Brazilian designers win recognition abroad Brazilian products receive awards at one gun to establish themselves as creators of original products. of the world´s most important industrial Two factors have caused this design events Armando Mendes breakthrough - globalization and the coming to maturity of companies and designers red and white seal with (Light Design from Recife won three who felt the need to cre- the letters iF gives the prizes for its lampshades). The de- ate their own language for international stamp of signs were varied and included, as products which were “made approval and confirms well as those already mentioned, in Brazil”. the quality of the de- a surgery table, washing machine, “Exporters were sending signA of a product. Eighteen Brazil- lampshades, gold ring, furniture, products abroad which were cop- ian companies won the right to use ceramic floors, porcelain sanitary ies while those who copied prod- it this year and were officially rec- fixtures and packaging. ucts for the domestic market started ognized at the International Forum The results confirms Brazil´s being hit by the competition from Design 2008. The Forum has been impressive ranking in the German the originals, which began to be held in Hanover, Germany, since competition. During the five years in imported.” That is how the impact 1953 and is one of the most impor- which Brazil has taken part, 99 proj- of globalization on Brazilian com- tant meetings concerned with in- ects have been recognized for their panies which produced consumer dustrial design in Europe. quality. This performance puts Bra- goods was summed up by Fábio Student Daniele Adamo Andreo, zil among the 10 countries with the Righetto, who teaches design at the 21, has still not finished her course best iF Design global ranking. The Armando Álvares Penteado Founda- at the PUC college in Paraná state 2008 event included 35 countries tion (FAAP) in São Paulo. (Another but received an award for his first and 2,771 projects, 821 of which re- highly-regarded institution is the professional project. This was a plat- ceived awards in various categories Higher Industrial Design School in form to help wheelchair-bound pas- and were displayed at the event. Rio de Janeiro which won an iF De- sengers enter buses and was created This confirms an important sign award in 2005). The way out for by the Daiken company from Paraná change which has af- the more flexible com- state. At the other end of the scale fected Brazilian compa- Ursa Maior: sofa panies was to start cre- in terms of professional experience, nies. Whereas they used designed by Maria ating their own designs one of the best known architectural to copy or adapt foreign Bernardete Galvão as a means of escaping firms in Brazil, Indio da Costa De- projects, they have be- from Curitiba from the same old rou- sign, from Rio de Janeiro, was also recognized. It was chosen for its modular furniture system produced by the 3X company (inci- dentally, the system was christened Carrapixxxo, with three Xs).

out A total of 18 of the 98 Brazilian nd a products under consideration won : H the red and white seal of approval hotos P at the iF Product Design Awards.

24 P I B Bossinha: lampshade the vertical columns which form the designed by Lumini was entry to the bus and support the mo- one of 18 bile platform (a kind of small eleva- award-winning tor for the wheelchair which forms Brazilian the step when not in use). “The de- products sign became more ergonomic and sustainable,” she explains. The Índio da Costa firm has won six iF Design seals since its ground- breaking urban furniture project for Leblon. Three of these were versions of the Spirit overhead ven- tilator. The 2008 award was made for Carrapixxxo which aims to be as changeable as people´s own lives, according to Dan Strougo, who says that if design is to be well conceived, it must originate within the actual conception of the product. “It is not a passing stage or only an esthetic in- tine in a market saturated with look- designing equipment to make life tention but performs a strategic role alike products. easier for people with physical de- in companies. This is the main way “This is an area which has been ficiencies, a market niche which is the brand is differentiated,” he said opening gradually,” says Dan Strougo beginning to grow. “Society is now giving Apple as an example. of Índio da Costa, a firm which was making efforts to promote the inclu- Small and medium-sized com- established at the end of the 90s to sion of such people and obstacles panies which are unable to take design urban furniture for the Leblon in the architectural and transport part in the entry competition for district within the Rio Cidade project. areas have to be overcome,” says Hanover on their own can apply to “Since 1994/95 to date, things have Osmar Yamawaki, the Design Excellence begun to change, including market the company´s com- Program Brazil (CDP), demand,” says Shelda Márcia Daluz, mercial director. Be- run by the Design Ex- one of the partners of Facilities do ing located in Curitiba Student cellence Program Bra- Brasil, a company with hands-on ex- helped as 65% of the from Curitiba zil which is run by the perience of the transition. It used to city´s buses have al- is recognized federal government make furniture in traditional English ready complied with and Apex-Brasil. The style to order but began creating uten- a law under which the for her Paraná Design Center, sils it had designed itself. “The news entire fleet must have first project a not-for-profit orga- started to spread, even through the access for wheelchair- nization in Curitiba, Internet and, at the same time, people bound passengers by 2014. Other cit- handles the program. “We choose started asking for lighter things,” she ies are still lagging but demand will the Brazilian competitors through added. The Neo table, designed by increase says Yamawaki. He is plan- a selection committee,” says Letí- Shelda and partner, Armando ning to build 300 platforms like the cia Gaziri, coordinator of the CDP. Sanchez, received an award at model which received an award this Five years of participation may not the iF Design 2008 event. They year. He believes this figure could be much but Brazilian industrial have also won prizes at previ- rise to 2,000 in a domestic market design has already gained a posi- ous events for projects with do- with an annual demand for 10,000 tion to defend in the 2009 iF De- mestic utensils. to 15,000 pieces of equipment. sign Awards. z The Daiken company from Daniele Adamo, the company´s Paraná used to create self-service young designer, used recyclable ABS For further information areas for banks before turning to plastic instead of metallic coating in www.ifdesign.de/awards_product_allgemein_e

P I B 25 Cover story Who’s afraidof internationalization? Vale’s offer to purchase Xstrata reawakened some old prejudices regarding Brazil’s investments abroad. But the basic question remains: in a globalized economy, can you afford to stay out of the game? By Eliana Simonetti, with collaborators

Vale in Carajás: expansion outside of Brazil is the mining giant’s main path to growth

26 P I B ver the last few years, Brazilian companies – especially the larger ones – have become aware of a new imperative, something they had never even dreamed of for most of their existence. For many of them, expansion into the international market has become their only real chance to increase Osales, dilute operational risks and protect their home markets against attack by heavyweight competitors from abroad. For companies such as Vale, Gerdau, Em- braer, Odebrecht and dozens of others, the expansion into new markets has become not just an option, but the main option for growth. “There’s a feeling of urgency because, even if later rather than sooner, it’s increasingly clear that those who don’t get moving, who don’t globalize, will get run over,” says economist Luis Afonso Fernandes de Lima, president of the Brazilian Society for the Study internationalization? of Multinational Companies and Economic Global- ization (Sobeet). “Here we are, taking our first steps when we need to be running, because this movement is not confined to Brazil and it’s not something we can control.” According to Lima, in 2006 there were 78,000 multinational companies in the world, with investments totaling almost one quarter of the global Gross Domestic Product (GDP) – numbers no less than five times greater than in 1980. Just by looking at Brazilian companies, it becomes clear that the number operating overseas has grown and will tend to rise further in the next few years. One recent study by Accenture, a consulting firm, indicated that 10% of the 500 biggest Brazilian companies plan to go shopping for foreign assets. What lies behind all this interest? Looking at the question from the point of view of companies’ needs, the internationalization movement is extremely positive. In an open market regime with companies controlled by private capital, there is nothing that can be done to keep an ever-expanding amount of Brazilian capital from being used to purchase firms, build factories and generate jobs abroad. And therein lies the problem. At the beginning of the year, Brazil- ian President Luiz Inácio Lula da Silva announced publicly that Vale, who had just announced its plans to acquire control of Anglo-Swiss mining company Xstrata, should invest more in Brazil instead of looking so keenly abroad. Two comments on the critique by the Brazilian president. First, Lula was referring specifically to Vale,

/AE but what he said could apply equally well to a consid- erable number of organizations, and second, he was

A morim not the first or only Brazilian to express reservations aulo P regarding international expansion.

P I B 27 Cover story

One of the most highly-regarded economists in the lion purchase of Canadian mining company Inco had in country, former finance minister Antonio Delfim Netto, making 2006 the first year ever in which Brazil’s over- for example, decides to express a similar opinion every seas investments exceeded inward FDI. In terms of ac- now and again. Others go even further: quisitions, Vale has been especially voracious. Between “Vale is a big company, with vast revenues, but it is 2001 and 2007, the mining giant acquired no less that digging up ore from our ground, ruining our country 18 foreign companies. It has not, however, neglected and carrying away our wealth,” a source close to the its operations in Brazil. In October 2007, the company president told PIB. “It generates few jobs and doesn’t announced its 2008 investment plans with a project- pay very much tax. So I ask: should this type of company ed total value of US$11 billion, the greatest amount in get incentives? Should it receive special treatment?” Vale’s history. Investments will be split 65% for over 30 Perhaps the question should be: does international projects in Brazil, and the remaining 35% for projects expansion of companies rep- in eight other countries. resent any risk of harm to the Two of the Brazilian projects country as a whole? Could jobs Vale: key data are typical of the company’s di- that national companies create in perspective versification of activities and abroad be generated at home The Brazilian company has announced sound like an answer to Presi- if the financial resources that the largest 2008 investment plan of all dent Lula’s concerns. The first, fund globalization were invest- mining and steel companies in the world previously announced, is the con- (investments in US$ billions, excluding acquisitions) ed inside Brazil? That, perhaps, struction of a US$3 billion steel is one of the main issues to be Vale 11.0 mill at Marabá, southwest Pará, debated at this moment when in the Eastern Amazon region. BHP Billiton 5.7 an increasing number of com- The second, also a steel mill but panies have unfurled their sails ArcelorMittal 5.2 this time in the Northeast state in search of new ports in which Votorantim 4.8 of Maranhão, is being discussed to drop anchor. Rio Tinto 4.5 with the Indian Tata group. This For the Brazilian govern- US$3.9 billion investment would Anglo American 4.3 ment, the internationalization of also involve the Brazilian Devel- a company like Vale gives rise to Xstrata 3.7 opment Bank (BNDES) and the two worrisome issues. The first Alcoa 1.9 Gerdau steel group.

is with regard to payment con- ies This mountain of money will Freeport-McRan Copper & Gold 1.5 n ditions and eventual changes in add up to many jobs. At the end Gerdau 1.1 ompa the company’s shareholder pro- : C of March, Vale announced that Norilsk Nickel 1.0 file. The second is the need for ource over the next five years it plans S the company to increase its pres- hiring 62,000 employees to work ence in Brazil by amplifying and ...and is the champion in returns according to the at its operations all around the diversifying its activities. “It has Total Shareholder Return Ranking (TSR) world. Nearly 80% of these will to add value, create income, cre- (TSR per year between 2002 and 2006) be destined to boosting Vale’s ate jobs,” said one government 1. Vale 54.6% workforce in Brazil. “Besides minister (see box on page 31). hiring, we are also investing 2. América Móvil 53.3% In the specific case of Vale – heavily in employee training,” which in the last week of March 3. Apple 50.6% says Maria Gurgel, Vale’s direc- announced its decision to tem- 4. British American Tobacco 25.8% tor of Human Resources plan-

porarily withdraw from ne- roup ning. This year, roughly 3,500 5. Genentech 24.5% G g gotiations with Xstrata, while n people will undergo intensive 6. Anglo American 23.2% indicating it may resume talks sulti internal training courses. n 7. BHP Billiton 3.2% o

through the next six months – n C The possible acquisition of

the situation must be analyzed 8. Endesa 20.8% osto Xstrata over the next few months B

with care. he could tip the scales in the other

9. Toyota 20.7% : T Much has been said about direction. Xstrata mines copper, 10. Boeing 20.1% the role that Vale’s US$17 bil- source coal, nickel and zinc in coun-

28 P I B I magem olha /F M oraes F er n a nd o

Votorantim Celulose: the group should double offshore revenues in 2008, following acquisition of various cement companies tries such as Argentina, Canada, Chile, A study by Rio de Janeiro’s Federal Colombia, the Philippines, South Africa University showed that, throughout the and the United States. Even so, US$7.1 10% of major 1990s, direct investments abroad by Bra- billion of Vale’s cash is set aside for new zilian companies did not exceed US$2.5 projects at home. Brazilian billion, and the bulk of that sum could be “Apart from China, which has an companies traced to Petrobras. Today, the country has astounding domestic market, national plan foreign at least 20 companies that are prominent companies that are focused on their globally, with over 50 industrial units op- respective internal markets will tend acquisitions erating abroad. The continued, and more to disappear,” says Stephen Cooney, an widespread, trend of internationalization industry specialist at the U.S. Congressional Research of the Brazilian economy has also been detected by the Service. “To compete in a global arena that is in a pro- United Nations Conference on Trade and Development, cess of consolidation, Brazilian iron and steel compa- or Unctad, which tracks international investment flows nies must diversify and grow.” in annual studies. The phenomenon is especially clear There is one last aspect to be analyzed. in sectors that are natural resource-intensive, but it has Vale is currently the number two mining company in also begun to appear among industrial companies. Two the world, and is the world’s most profitable company Brazilian firms made the list of the 25 largest transna- for shareholders, among companies worth over US$50 tional, non-financial companies in developing economies, billion. It placed first in the 2007 Value Creators Report, classified by assets held abroad, published in Unctad’s a global ranking list organized by the Boston Consult- World Development Report 2007. They were Petrobras ing Group. The survey analyzed the performance of 610 (13th place) and Vale (18th place). companies in 44 countries between 2002 and 2006. Vale The trend has been stimulated by the need to im- was also (understandably) Wall Street’s favorite foreign prove competition, of course, but also by recent favor- company last year, according to average daily trading of able market conditions. Major infrastructure invest- American Depositary Receipts, or ADRs. BHP Billiton, ments in China and soaring worldwide steel production the world’s largest mining company, ranked seventh. have stimulated the formation of large groups in both Judging by the moves made recently by a number mining and steel. Other segments are also benefited by of Brazilian companies, their overseas investments are Chinese advancement. Take, for example, the case of likely to continue expanding. airplane manufacturer Embraer.

P I B 29 Cover story

In 2002, the company began to manufacture aircraft from 2004, leapt from a modest US$139.9 million in in China. A joint venture with the Chinese communist 1990 to US$3.3 billion in 2006. The rise in petroleum government resulted in the creation of Harbin Embraer prices has given Petrobras increased liquidity, but this Aircraft Industry Company, located in the city of Harbin, only partly explains the company’s determination to be- 150 kilometers northwest of Peking, for the production come a worldwide oil player. “We will be one of the five of ERJ 145 jets. The company is working on an order largest integrated energy companies in the world,” says of 50 jets to be assembled at the Chinese unit. China Petrobras President Jose Sergio Gabrielli. To get there, has also purchased another 50 Embraer 190s, built the company has approved investments of US$112.4 bil- in Brazil. “I believe we would not have lion between 2008 and 2012, of which sold the nationally produced airplanes 13% is destined to other countries and had we not been present in China,” says 87% to Brazil. The United States, Nigeria, Horacio Forjaz Aragones, vice-president Offshore Argentina, Angola, Venezuela, Colombia of administration and communication at expansion and Turkey are some of the destinations Embraer. “Results obtained with inter- will seem for the company’s resources. nationalization more than compensate Movements such as this have the for the energy and dedication required natural in the potential to be considered increasingly to overcome obstacles.” coming years natural business decisions from here on. The most ingenious entrepreneurs One of the trailblazers along this path, have already discovered this. They have come to real- the Gerdau group, is now in its second year as top of ize that exports from Brazil do not guarantee a global the international company list in the Brazilian Trans- presence, something that becomes much easier when a national Ranking, produced by the Dom Cabral Foun- foothold has been firmly achieved in production areas dation of Minas Gerais in conjunction with Columbia of other countries. The overseas presence helps compa- University of the United States. In 2007, Gerdau totaled nies increase their awareness regarding local needs and 12 international acquisitions. Brazilian units accounted contributes to reducing the cost of accessing clients. “It for 47% of the steelmaker’s R$34.2 billion gross rev- is an absolutely natural trend that the leading compa- enues that year. Industrial plants in the United States nies in emerging countries become international,” says and Canada contributed 33.3%, Latin American units Wieland Gurlit, a McKinsey consultant specialized in (excluding Brazil) accounted for 10.6% and Spain rep- mining and steel. resented 9.1%. “The growth platform for the Gerdau The trend impacts both private compa- group in the international steel scenario nies like Vale and state-owned Petrobras. Embraer: factory in China has been enlarged. We will follow our The oil giant’s international investments, guarantees orders for strategy of growth with profitability and adjusted by the dollar-real exchange rate aircraft made in Brazil maintain elevated standards of competi- magem I olha /F a d lmei A e d alo ) L right — ( mbraer /E out nd ha ) left (

30 P I B The government position PIB interviewed one of President Lula’s closest ministers regarding Vale’s possible purcha- tion,” said the group’s president, Andre Gerdau Johan- se of Xstrata, now temporarily on ice. Below, the peter, when he announced the company’s results. government’s general position on the operation: The Dom Cabral study comes at a good time. “We “The government is not for or against internatio- evaluated how much representation each company has nalization. It is an inevitable process, a fact of life. abroad, in terms of assets, sales and jobs,” explained The consolidation of the Brazilian economy, with Luiz Carlos de Carvalho, the Dom Cabral Foundation’s an ever-increasing presence in the international international business coordinator. The survey showed scenario over the last 10 years, has also resulted in that the 20 Brazilian companies with greatest over- increased activity by Brazilian companies overseas. seas assets have over US$65 billion invested outside Brazil’s government has every interest in the con- of Brazil. It also showed that Brazil is Latin America’s tinuing extension of Vale’s presence all around the greatest investment exporter, and the second among world. If it does end up buying Xstrata, it will have all developing countries. more clout in South America, which is very positive. Be that as it may, what is certain is that despite pas- The problem is the following: what is good sionate discussions sparked now and in the future by for a company is not necessarily the best for the the question of internationalization, Brazilian compa- country. Vale has to say how it will pay for Xstrata. nies will continue to tread the global path. Autoparts If payment is carried out in voting shares (common manufacturer Sabó already has factories in Germany, shares), it may be a problem because, in theory, Austria, Hungary and the United States, it is building you may not be internationalizing as much as de- one in China and is reaching out to India (see story on nationalizing. One argument could be that parti- page 42). Meatpacker JBS-Friboi is on a non-stop ac- cipation used as payment will be smaller than the quisition drive worldwide (see Antena section). And sum total that all Brazilian shareholders possess. like Friboi, other sectors with little or no experience in Maybe, but that doesn’t prevent the creation of a international investment are seeking new spaces abroad. situation of potential weakness, one that makes It is an exceptional moment for a number of reasons. Vale vulnerable to a maneuver of share compo- First of all, there are many businesses for sale, not sition and consequently to undesirable offers. just in developing countries but also in developed and We cannot have another AmBev. It all looks very industrialized countries. Second, there is presently a pretty, but in fact it (AmBev) ceased to be under vast supply of credit available and Brazil is no longer Brazilian control. seen as a high-risk country. Besides, with the strength- At the same time, Vale, in becoming a large ened real, external investments have become relatively multinational, has to make sure it is careful to cheap. Thus it is that Rio Grande do Sul custom-made continue being fundamentally a Brazilian company. furniture company Unica, which controls the Dell It needs to have a strong presence in Brazil, and Anno brand, has been multiplying its stores in Latin not only in mining segment, but also in activities America and is now also present in Europe, with ex- that add value to the product. Why don’t they have tremely positive results: an increase in the number of a steel mill in Pará? Or Maranhão? They argue that employees, along with expansion of installations and they cannot compete with their clients. Well, they revenue in Brazil. “We have a bold plan for growth and could join their clients and bring some stability into internationalization,” says the company’s export man- the whole thing. They have to add product value, ager, Juliano Barreti. generate income and create jobs. Wherever you look, there are more examples of how The BNDES and investment funds have an this process is irreversible. The beginning of 2008 has enormous participation in Vale. The deal with been incredibly busy for Votorantim, for example. The Xstrata will go through only if the government ap- group took over the Colombian steel mill Acerias Paz proves it. But the idea is not to get in the way. The del Rio in which it already had minor participation. Vo- president has neither illusions nor prejudice regar- torantim Cimentos purchased U.S.-based Prairie, one of ding businessmen, with whom he has negotiated the largest concrete and aggregate companies in the U.S. his whole life. He knows they are people, flesh and Midwest. The new acquisition has been integrated into bones, wanting to take advantage of situations – the company’s subsidiary Votorantim Cement North which is part of the game – but what they say or America, which operates in conjunction with Canadian sell is not always the truth.” (Nely Caixeta) group St. Mary’s Cement, purchased by Votorantim in

P I B 31 Cover story ale /V ha nd out

Inco: purchase of the Canadian mining company by Vale in 2006 was a landmark for Brazilian investments abroad

2001. By 2008, Votorantim Cimentos plans to double relations for Odebrecht’s engineering and construction overseas revenues to US$1.5 billion. activities, Roberto Dias. “We know each country has its These are just a few examples of a phenomenon that own reality, customs and laws; everything is very specific, can be seen in several segments of the Brazilian economy, and we prepare people to understand this and integrate in all regions throughout the country. There are many ad- themselves to the environments in which we function.” vantages to this movement, according to Welber Barral, A more or less generalized standard procedure foreign trade secretary at the Ministry of Development, among companies that invest in international opera- Industry and Foreign Trade. “There are benefits for com- tions is to begin their international career as exporters panies and for the country. Companies are able to work – allowing them to gauge market receptivity to their around trade barriers and gain more stability, access to products, evaluate the competitiveness of what they raw materials, scale and productivity. Furthermore there have to offer, and identify at which locations around are intangible gains with regard to brand publicity and the world it would be most advantageous to sink roots. reputation on the international market. For the coun- Sadia is a case in point. The foodstuffs company has try, the expansion of investments generates new export just built its first overseas meatpacker at Kaliningrad, opportunities and makes the Brazil brand widespread in Russia. A similar, although much older, experience – which effectively multiplies business.” belongs to Weg, a Santa Catarina company which is At this point, an example of a company in the ser- one of the world’s top three electric motor manufac- vice segment would be quite appropriate. Constru- turers. Since 1996 the company has used the strategy tora Norberto Odebrecht (CNO) has a high degree of of acquiring small factories and then consolidating its internationalization in terms of geographic dispersion, operations. Weg has subsidiaries in 20 countries and overseas activities and international ex- industrial units in Argentina, Mexico, perience. It began its activities outside Portugal and China. From the very start of Brazil in 1979. One notable character- of the company’s operations outside of istic is the domino effect it causes in the There are Brazil, direct exports have also grown country (see box on page 54). Another is plenty of very quickly. Today, about 70% of Weg’s the incredible capacity Odebrecht has to examples that external sales are destined to the com- adjust to markets where it has staked a pany’s overseas units. presence. “Our experience is highly suc- globalization Internationalization also has a num- cessful,” says the director of institutional is irreversible ber of positive side effects. One of these

32 P I B P I B 33 Cover story

is the increase in Brazil’s average industrial productivity, by 8% per year since the 1990s, that is most likely due to the greater competitiveness that companies were forced to achieve after the opening of the Brazil- ian market. Another example: in 2006, sales growth of the country’s top 500 companies exceeded the national annual GDP growth rate – 5.8% compared to 3.7%, according to data from the yearly Biggest and Best business almanac, published by Editora Abril’s Exame business magazine. “Foreign direct investment is blamed for harming the interests of workers and the country,

but the fact is that if a company grows overseas, it gains / AE strength and stability to face periods of crisis,” says ueiroz Dante Mendes Aldrighi, a professor at São Paulo Uni- Q iago

versity’s college of Economics and Business. “Foreign T and domestic investments are not mutually exclusive: they can, and should, complement each other.” countries. Therefore, we can arrive at an ideal situation, For Henri Kistler, the Finance Ministry’s secretary in which the country’s external accounts can be taken of international activities, the recent globalization out of the red thanks to royalties and profits generated demonstrates an inversion in the fundamentals of the by investments made by Brazilian companies overseas.” Brazilian economy that has taken place over the last Kistler says repatriated resources account for 10% of two decades. “In the nineties, Brazil needed foreign capital invested outside of the country. money to close its payment balance. There were no real International experience shows that working in the conditions to invest internationally,” he said. “With the larger scenario of the global economy is a challenge, accumulation of consecutive positive trade balances, but it generates dividends for businesses, shareholders, the situation has changed. The growth of reserves has employees and the company’s country of origin. This provided an incentive for direct investments in other has been verifiably the case in South Korea and Italy.

article conditions and when carried out in a certain fashion. Misplaced resistance Slowly but surely, and with great Prejudice against the internationalization of Brazilian companies effort, the economic debate has still permeates current economic debates by lídia Goldenstein broken free from ideological binds that previously impoverished it, and Brazil’s long years as a and those it is currently undergoing, is now enriched with the myriad op- closed economy generated several should not be underestimated. On portunities that are opening up. negative consequences for the coun- the contrary, in at least some sectors It is therefore surprising that, try’s productive sectors, and these they have been very substantial. despite these unquestionable ad- are now being gradually overcome. However, some issues that were vances, the current economic debate Investment rates climb year after truly taboo, like privatization, have should still be permeated by preju- year, several sectors, following sig- been overcome. Nowadays few peo- dice against globalization. nificant restructuring, have been ac- ple still stick to the outdated ortho- There are still those who believe quiring internationally competitive dox idea of state-owned companies. that company internationalization capacity, and inflation is currently Even these old-fashioned sticklers means exporting jobs – that any ad- under control. have, to some extent, accepted that vantages internationalization may The transformations that the privatization in some segments may bring are restricted to the compa- economy has already passed through, be a “necessary evil,” under certain nies themselves and their respective

34 P I B Gerdau: 12 foreign tries, cultures and contexts, Samsung not only recruited acquisitions in 2007; employees of several different nationalities from the 47% of total revenues world’s main universities: it created an internal training now come from abroad center for performance management. By the end of 2008, Sobeet expects to develop a “Italian medium-sized compa- study to verify the effect of exposure to different ex- nies have gone global, gained periences and cultures in the degree of technological productivity and new markets, innovation and the aggregate value of products manu- and have neither reduced their factured by Brazilian companies. One project by Iedi, local operations nor the num- the Institute for Studies in Support of Industrial De- ber of employees at home,” says velopment, that investigated exporting companies has Victor Sonzogno, manager of already concluded that exports are good, not only for the São Paulo branch of Italian companies’ trade balances, but also for the managerial consulting company Ambro- quality of its products and operations. Most analysts setti. One Korean example is studying internationalization wager that the bigger Samsung, one of the most suc- and more diverse the activity, with operations in dif- cessful emerging-market companies. First, Samsung ferent parts of the globe, the better the results obtained. accumulated experience in the development of prod- There’s no lasting gain, however, unless the manage- ucts and operations. Then, it made use rial and productive modernization and of its expertise in innovation to launch the productivity gains carry over into its business in the United States and domestic supply chains and markets, re- Europe. Next, it invested heavily in re- Soaring foreign sulting in lower prices and higher quality search and development and in its global reserves for domestic consumers. brand, further boosting its participation encourage The Brazilian Development Bank has in the global market. Moreover, as the promoted meetings, including events global operation requires executives offshore overseas, to stimulate businesspeople to who know how to work in diverse coun- investments think and act globally. Other organizations

stockholders, and that of course it non-tariff barriers is just one of them. would already justify support for would be absurd for the government In addition, there’s the possibility of company internationalization. to fund this process. generating income in dollars or euros, Those firms that are best Without doubt, this type of re- gaining protection against oscillations at internationalization are also sistance is one of the legacies that or other problems in the domestic leaders in global trade and in gen- survive from the time when Brazil market, creating more agile distribu- eration of innovation. It couldn’t was closed, both from an economic tion channels and obtaining access to be any other way, given that the point of view and also to the great more sophisticated financial markets. success of internationalization debates and movements that were Besides helping companies depends on a company’s capacity transforming the world. grow bigger and stronger, however, for innovation. It depends even Only ignorance regarding the globalization is also an important more on the innovative capacity role that globalized companies can instrument to increase a country’s of its suppliers, which often ac- play in terms of making the economy ability to compete. company their client in the inter- of its home country more dynamic Worldwide experience shows nationalization process. In other can explain the negative vision that that companies’ base countries words, these are companies that many still harbor. have many important and diversi- become a positive influence in the From a company’s point of view, fied gains that are not limited to the whole production chain, imposing there are many reasons to go inter- possible repatriation of profits and standards and modernization of national. Getting round tariff and dividends, although this by itself their partners.

P I B 35 Cover story etrobras /P ha nd out are working towards the bia and Chile have in trade Brazilian economy being relations with the United able to benefit from compa- States,” he explains. nies’ internationalization Michel Alaby, a consul- processes. This year the tant specialized in interna- Dom Cabral Foundation tional markets and presi- will promote a seminar that dent of the Association for has been unofficially chris- Brazilian Companies for tened “Top Stars.” Its goal Market Integration, sug- is to study the globalization Petrobras in Colombia: 13% of investments are overseas gests that more and more process of companies from deals should be negotiated emerging economies. The Boston Consulting Group first to avoid double taxation of profits remitted to Brazil. “A brought attention to this issue with a list of 100 rapidly significant part of Brazilian investments in other coun- developing companies from emerging countries, who tries have to go through tax havens in order to avoid col- have risen to the challenge of going global. Seventy of lection of taxes on profits abroad and dividends in Brazil,” them have their headquarters in Asia, 18 in Latin America says Alaby. He suggests, also, that Brazil follow China’s and the remainder are from countries such as Russia and example. In 2000, the Chinese launched their “Go Global” Turkey. Among the Brazilians are Braskem, Vale, Embraer, strategy, with a goal of having 30 to 50 internationally Gerdau, Petrobras and Sadia. competitive companies by 2010. The government offers What else? Well, conditions in which companies op- tax, financial and labor breaks to investors and promotes erate can always be improved. Right now, according to the signing of deals involving trade, promotion and mu- Ambassador Samuel Pinheiro Guimaraes Neto, secretary tual investment protection. Results can already be no- general of the Ministry of External Relations, the pro- ticed in 2007: the number of Chinese multinationals has cess involving Brazilian direct investments overseas has leapt substantially, from 48 to 8,500, with presence in the government’s full support. “This support is given, for 167 countries, and China is now the world’s fifth largest example, by negotiating free trade agreements so that investor. “Brazil can improve its performance if its plans we can have the same rights other countries like Colom- are better planned and thought-out,” says Alaby. z

Internationalized companies of view of the countries, therefore, it infrastructure and bilateral trade and/or those with global brands makes sense to support the interna- agreements in Brazil. open paths and opportunities for tionalization of its own companies. Be it for healthy motives or de- other companies and products from Although Brazil is a late bloomer fensive strategies, internationaliza- their country of origin. As they face compared to other countries in similar tion represents a gain both for the larger and more demanding mar- stages of development, the inter- companies themselves, and for their kets they take with them an impor- nationalization process of Brazilian supply chains and their country. tant intangible asset, which is the companies has advanced significantly Brazil began this process rela- enhanced reputation of a country as over the last few years. In 2007, over tively late in the game. Many coun- a producer of quality merchandise. 25 companies invested abroad, for a tries have had active international- Internationalizing a company total of US$12.14 billion. Some, such ization strategies and policies for does not mean halting invest- as Vale, Embraer, Petrobras, Votoran- decades. Others, such as China, de- ments in the company’s home tim and Gerdau, invested as part of spite having begun globalizing their country. Quite the contrary, is aggressive and victorious strategies. companies fairly recently, are much many cases it means enhanced Others invested not always for the more aggressive in their strategies. trade relations among branches healthiest of reasons, but rather In conclusion: there is no justi- spread all over the world, requir- through defensive strategies seeking fication for Brazil to not strengthen ing complementary investments to overcome obstacles to growth such its international participation at headquarters. From the point as an increased exchange rate, lack of through its companies. z

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revista pib ing - pag 36.indd 1 3/29/08 9:38:51 AM Reports ichio n e B o d icar PHOTOS: R Fancy footwork

Following the success of a nyone arriving at Mauri- much the boss. He was invited, last- character based on soccer cio de Sousa Produções minute, to create mascots celebrating in the São Paulo neigh- 100 years of Japanese immigration to star Ronaldinho, Brazilian borhood of Lapa needs Brazil, and had only two days to draw cartoonist Mauricio de to cross a Japanese-style his characters Keika and Tikara. As Sousa seeks international portalA in order to reach the elevators. has been the case over the last 30 years, “We’re all breathing in Oriental airs he had the assistance of his wife and fame for his “Mônica” around here,” says cartoonist and art director Alice Takeda. “Tikara is strip by João Paulo Nucci businessman Mauricio de Sousa, very a mix of my youngest sons. Keika, on

38 P I B Mônica (and friends!) worldwide Over 30 countries receive editorial or consumption products, through licensing

Region Products

Africa Food, diapers, bags, school and party supplies and “Monica’s Amusement Park”

North America Food, clothes, watches, comic strips

South America Clothes, shoes, bags, furniture, toys, diapers, school and party supplies, rugs, handkerchiefs, suitcases, photo albums, toiletries, food, games and cartoons on Cartoon Channel

Asia Comic books, comic strips, toys, books, soda, party articles and educational material, food.

Caribbean Cartoons, lunchboxes, hot dogs and clothes

Europe Ronaldinho comic books and es çõ

products, Mônica comic books u d

and products, food, toys, ro P cartoons, toiletries, school ousa S

supplies and lunchboxes e

d THE STARS: Middle East Poultry products under Ronaldinho is the Perdigão brand; children’s auricio today Mauricio : M clothing under the Tip Top brand; de Sousa’s main

hairbrushes under the Fidalga brand source international business the other hand, looks like Alice when Souza’s first strip featuring Amusement Park in Luanda, Angola. she was a child,” he states, confessing Bidu, a little dog copied from the He is finishing up some educational to his habit of garnering inspiration family pet, was published in 1959 material that will help to teach 180 from his own family when it comes in the newspaper currently known million Chinese to read and write, time to create. His “Mônica” charac- as Folha de S. Paulo, where Sousa finalizing details for the launch of ters, probably Brazil’s most popular began as a police reporter. Now, 72 his Ronaldinho comic book in Scan- kids’ cartoon strip, have starred in years old and about to complete dinavian countries and negotiating the country’s highest selling comic five decades as a cartoonist, Sousa production of a videogame for one books from 1970 until now and were is preparing for the international of the segment’s global giants. The based on the personalities of his 10 expansion of his company. And he’s name of the game is being held un- children or their friends. Today his not taking it easy: along with a trip der wraps for now. extensive offspring begin with 49 scheduled to Japan for the launch Working in other countries is year old Mariângela and end with of his new creations, Sousa is pre- not new for Sousa. In the 1970s his Marcelo, 10. paring for the opening of a Mônica Pelezinho character, based on soc-

P I B 39 Reports /AE alvez nç o B e n ichio G ria é al V R icar d o The two Mônicas: Mauricio’s daughter inspired the character, today she takes care of licensing Well planned path all laid out: Mônica and friends have universal appeal and adapt to any culture

cer giant Pelé, was a worldwide hit. by Maura, his comic books have been gold mine: licensing. In Brazil about A contract with a North American published successfully in Indonesia 70% of Mauricio de Sousa Produções distributor guaranteed the publica- for over eight years, South Korea’s earnings, which he chooses not to di- tion of comic strips in dailies from main newspaper has daily strips vulge, come from over 2,000 products several countries. In the early 1980s drawn by Sousa, and a cartoon series licensed by about 70 companies. The Victor Civita, the now-deceased is highly successful in Italy. The in- remaining 30% come from magazines, founder of Editora Abril, a major ternational flagship is just as toothy comic strips, books, a Monica Park in Brazilian publisher, partnered Sou- as Monica, but carries a soccer ball São Paulo and cartoons. sa in a venture to publish Mônica instead of a stuffed bunny. The company is currently final- comic books in 14 countries. The Ronaldinho, who became a Sousa izing a series of 13 Mônica cartoons experiment ended, according to character in 2005, is a sales hit with for television. A new feature film is Sousa, because of pressure from a licensed products in Spain and Por- also on the way. Everything is cov- large global competitor whose name tugal. “Ronaldinho is paving the way ered in globally-friendly packag- he chose not to reveal. for us,” says Sousa. “He is allowing ing. Along with strengthening the us to offer Mônica to the world.” De- product line with new audiovisual Buck-toothed soccer player spite the success of these initiatives offerings, Mauricio is advancing in Obstacles imposed by the Brazilian and with Mônica comic strips once professionalizing his business, in or- economy between the 1980s and again distributed worldwide by a U.S. der to attract international partners. 1990s, when inflation was rocket- company, the final attack on the glob- He believes that through strategic ing, led Sousa to rein in his foreign al market is still being prepared. alliances he will gain access to new ventures and centralize his efforts on Sousa believes the markets and gain the domestic market. “We stopped business can achieve financial strength. everything we were doing outside of larger scale in other “Come here again in Brazil, and waited for the right time countries only when Some 70% of three months and you to pick it up again.” Finally, Sousa be- his characters are on will see a very differ- lieves the time has come. The com- TV and in the movies, the company’s ent company, geared pany’s new globalization cycle prom- not just comic books revenues come towards the exter- ises much more consistency. Sousa’s and newspapers. It from over nal market,” he says. sister, Yara Maura, has had an office would then be pos- Sousa keeps a routine in New York since the beginning of sible, he said, to tap 2,000 licensed of at least 12 hours of the decade. Thanks to doors opened into the market’s true products work per day, makes

40 P I B At the end of 2006, Sousa broke off resilience the Mônica cartoon has an almost 20-year partnership with shown in Brazil, surviving strongly Brazil’s Editora Globo publishing as kids’ favorite despite competition house and delivered the distribu- from the internet and kids’ chan- tion of his work in Brazil to Panini, nels on cable television – Mônica’s which has offices in 18 countries and older cartoons have a weekly hour controls distribution channels in a on Cartoon Channel. Even Chico number of others. Besides a willing- Bento, inspired in a stereotyped ness to invest in the local market to country yokel, has won over ad- raise the volume of comic book sales mirers all over the world. “Every from 2 million to 4 million – a level country has a rural area for which previously reached in the 1980s – people feel a certain nostalgia,” says Panini is ready to take Mônica out Sousa. Despite being an altar boy in into the world. For now, aside from an officially atheist country, he is Brazil, the only country that receives the strip’s most-loved character in the partnership’s products is Portu- China. He also has admirers in In- gal. Details of the internationaliza- donesia, a mainly Muslim nation. Well planned path all laid out: Mônica and friends have universal appeal and adapt to any culture tion strategy are still kept secret, but Going international has meant word in the market is that they are translating some of the characters suggestions and touches up all of his very promising. “Panini presents special traits. Cebolinha, one of the productions, and even deals directly Sousa in Italy as the Brazilian Disney, band of kids in the Mônica strip, has with the company’s main contracts. so that the public can grasp the scope difficulty in pronouncing the letter The company is 100% controlled by of his production,” says comics critic ‘r’ in the original Portuguese. Known Sousa and his family. Ruy Jobim Neto. as Gimme Five in Eng- Sousa’s future lish, due to the five

Succession partners should be B e n ichio strands of hair on his Besides his wife, Alice, several chil- strongly involved head, the boy trades

dren and relatives work at Mauri- in the business, like R icar d o ‘r’ for ‘w’ instead of cio de Sousa Produções. “They only Panini. “I don’t want ‘l’. Gimme Five also have jobs here because they are re- investors, I want speaks “incowectly” ally good at what they do,” says the somebody who in languages based on patriarch. His daughter Mônica, knows about this other alphabets, such now 48, was not only the inspira- business,” he says. as Greek and Chinese. tion for the Mônica character but is He believes there As the translations are also responsible for the commercial is ample potential not simply transcribed department and licensing. His other for Mônica to grow but adapted to local daughter Marina, 23, also the muse abroad, judging from Tikara and Keika: mascots cel- realities, some equiv- for the strip’s Marina character, is previous experience. ebrating 100 years of Japa- alent verbal quirk is considered her father’s artistic heir- “Our little group’s nese immigration to Brazil always to be found for ess. Mauricio prefers not to com- potential is equal to each character. General- ment – he says he doesn’t want to that of stronger competitors in the ly, exported stories are the same as “put pressure on anyone” – but it was area,” says Mônica Spada e Sousa, those that run in Brazil. Adaptations likely that the two women will share his daughter. “Our main, final tar- are minimal, like a censorship bar his main functions: businessperson get is the United States. Until we get placed over Chico Bento’s private and cartoonist. “I need to make sure there, though, we have to look good parts when he bathes in Indonesian this matter of succession is resolved, in other markets.” rivers, or the substitution of a bikini because my future partners will be Mauricio and Monica are posi- for a full length bathing suit for U.S. asking me about it.” tive that their characters have uni- readers. Nothing that Mauricio and The only partnership inked to versal appeal. Proof lies in the ex- his team can’t fix with a quick dash date is with Italian publisher Panini. perience in other markets and the of the pen. z

P I B 41 Reports The secrets of Sabó In the early 1990s, the Brazilian auto parts manufacturer found an outlet in Europe that would keep it from being smothered by foreign competitors. Today, it is one of the most international of all Brazilian companies by Bettina Riffel, de Teilheim, e Marcelo Cabral

ack in the early 1990s, It seemed logical that Sabó only because we went overseas,” when Brazil removed would be doomed. The São Paulo- says Luis Gonzalo Guardia Souto, protectionist barriers on based company appeared destined director general of Sabó for South the automobile sector, to share the fate of other major America. “Internationalization al- all Brazilian auto parts locally-owned parts makers such lowed us to grow and accumulate Bmanufacturers seemed on the verge as Metal-Leve, Cofap and Nakata, knowledge.” Almost half of Sabó’s of disappearing. They didn’t appear had its shareholders not decided 2007 revenue of US$310 million strong enough to resist the influx of to venture in a completely oppo- came from its international opera- international competitors that were site direction during this period of tions (see chart). moving into the country attracted sharp change. Sabó, a seals and con- In 1993, Sabó, owner of two fac- by the need for modernization of nections maker, turned its attention tories in Brazil and one in Argentina, big companies, and many big brands outside of Brazil in search of com- purchased Kaco, a competitor with changed hands and names. panies to purchase. “We survived three plants in Germany and one in

42 P I B Austria. The name of the company, into India. According to an annual which was founded in 1914, was study by the Dom Cabral Founda- US$ 310 million kept by the new stakeholder. Lat- tion, Sabó, whose control remains Total Sabó billings in 2007 er on, the Brazilian company set in the hands of its founder, ranks Company’s principal markets up an office in the United States. as the third most internationalized (in US$ million) Last year, Sabó USA inaugurated company in Brazil. Not bad for a its first factory in North Carolina. company seeking space worldwide, 200 In a kind of return to its origins, it to avoid being crushed at home. built a plant in Hungary a few years Sabó makes those little rubber 150 160 ago. The Eastern European coun- hydraulic seals that cause oil stains try, which attracted a large num- to appear on your garage floor when ber of automobile manufacturers they need to be replaced. They are 100 after the fall of the Berlin wall, is hidden away from sight in the mid- 100 the original homeland of Brazilian dle of the motor, but are vital in pre- 50 immigrant José Sabó, the company venting oil, fuel and other necessary 50 founder. Back in 1942 Sabó lent the fluids from leaking out. For anyone new venture his own name. Today underestimating the importance of 0 Sabó is the second largest European these parts and imagining that any brazil europe usa manufacturer of hydraulic seals. backyard company can make them In 2008, exactly 15 years after with a plastic injector, Sabó has a col- the company’s major global expan- lection of stories that show exactly Sabó’s Brazilian operations sion, Sabó is due to start opera- the opposite. Here are two: tions in China. The company’s fac- 1) The excellent quality of seals tory near Shanghai is almost ready. produced in Brazil was key to open- exports Plans for 2009 include advancing ing European doors to Sabó and its US$ 43 products in the late 1970s. Engi- million Domestic neers at Opel, GM’s German sub- market petrole sidiary, noticed that the Chevette US$ 117

d a built in Brazil did not have some of million

the leakage problems characteristic ó ab

of the European model. They found : S that Sabó had resolved a defect that had bothered them for a long time. source “Conditions of Brazilian streets and true with regard to logistics, de- highways demand stronger, more livery deadlines, guarantees and resistant, parts,” explains Gonzalo. maintenance. When the Brazilian “First of all, we showed the Opel automobile market opened up to people how to solve their problem, international competition, Sabó and later on we became their sup- was one of the few companies ca- pliers.” This increased contact with pable of supplying large interna- Opel helped Sabó become a global tional producers. authority in the matter of hydraulic 2) Sabó, via Kaco, has been work- seals, and, at the same time, it was ing since 1999 on development of required to meet standards that a seal to be used in automobile air were uncommon in Brazil during conditioning starting three years those times. This was especially from now, in 2011, when a Euro- pean law that bans the use of freon Sabó in Germany: next in vehicles’ air conditioning comes step is to open an into effect. Freon is a generic term innovation center used to describe the fluorocarbons

P I B 43 Reports

used – amongst other things – in er power than their suppliers, the air conditioners. The law requires parts makers must be near to the that air conditioners use less toxic vehicle assemblers at all times. This substances and the company’s engi- is the only way to increase partici- neers have been studying adequate pation in operations. “For the big seals for these new substances. “At car makers themselves, it is advan- first, it is likely that we will be able tageous to have a number of suppli- to meet the supply needs only of ers spread out all over the world,” the European market, says Markus explained Cyrino. “In this way, they Schwerdtfeger, responsible for the do not become overly dependent on factory in the German city of Teil- a small number of companies. It’s heim. German-born, Schwerdt- called risk sharing.” feger worked at Kaco long before Be that as it may, being close to the company was purchased by the its main clients was a process that Brazilian group. demanded Sabó’s redoubled atten- One of the secrets regarding tion to details that might have oth- the quality of products manufac- erwise slipped by unnoticed to the tured by Sabó is that most of them managers of a company that had are produced using machines developed by the company itself. Up to now, European efforts in technological advance have been conducted in partnership with German universities. In 2009, Sabó is scheduled to inaugurate its own Center for Technological Innovation in the city of Kirchardt, Germany. “We have opted for the construction of our own Innovation Center here,” said Schwerdtfeger. “This way, we are close to decision-making centers of several important automobile manufacturers.” The option to work as closely as possible to the people who make big, strategic decisions in Euro- pean automakers is not a choice never ventured outside of its tropi- Production in Teilheim: born of chance. It is the result of a cal home. In places that face at least of the 250 workers at the factory, deliberate strategy, quite common six months of very cold weather no less than 80% say they in companies that are tied into each year, it’s essential to have a fac- like their jobs a production chain led by other tory heating system with a degree companies. “It is the classic strat- of efficiency unheard of in Brazil. egy of following your client,” said About two years ago, the company’s Another issue that requires the Álvaro Cyrino, professor at the Dom factories were equipped with a new company’s permanent attention is Cabral Foundation. According to system that recovers the heat gener- the quality of its work environment. Cyrino, the logic behind this strat- ated by assembly line compressors Half of Sabó’s 500 employees in egy is actually quite simple. As the and uses it to heat the inside of the Germany are based at the Teilheim companies that lead this particular building. This saves the company at factory, and one of the company’s production chain – the automobile least 20% in energy costs, compared main concerns is worker morale. manufacturers – have much great- to the previous system. “This is a permanent concern,” says

44 P I B tion. When this process began, the United States had very little influence on automobile production in Brazil. Although both main Ameri- can makers – GM and Ford – were present in the country, the models they built in Brazil were created by their European subsidiaries. As Sabó became a global company, its connection with the Bra- zilian market have remained very important, but it is no longer the determining factor for choice of investment locations. The North Carolina plant, for example, is completely dedicated to production for the U.S. market. It has one additional advantage: as a lot of the petrole

materials used in auto parts manu- a d

a facture are produced in the United : d States, presence in that market ends

photos up generating benefits for the company all over the world. Schwerdtfeger, who has a habit of It goes without saying that Sabó addressing people by their first has had to face a number of diffi- names when he runs into them on culties throughout its history. “Per- the assembly lines or in the offices. haps the main difficulty for us was A study showed that although 80% to learn how to create an interna- of employees demonstrate satisfac- tional culture,” says Gonzalo. Inter- tion with their jobs, many complain nationalized companies have differ- about the lack of information re- ent ways of handling this question garding expansion plans and prog- – some implement their own rules ress towards meeting goals. “Many and ride rough-shod over local cus- of them want to know details of our toms. Others seek to maintain local plan for growth and to receive up- ways of doing things. Evidently, dated information regarding attain- finding the ideal mix – if indeed ment of targets,” Schwerdtfeger said. such a thing exists – is not easy. Sabó To solve the problem, the company adopted a simple rule: always keep, installed digital monitors in several at the head of an overseas opera- spots around the factory, including tion, someone who is a native of the locations close to the assembly line. country in question. “These are the The monitors will function as a sort people who help us understand local of internal news service. One excel- culture and carry our principles to lent indication of the overall posi- every country,” Gonazlo says. That tive environment at the company is applies for major business strategies the average time employees remain as well as small daily gestures – in in their jobs: 20.7 years. Germany, for example, it’s not cus- There was a good reason for tomary to address any employee by Sabó’s choice of Europe as its his or her first name, in the way that starting point for internationaliza- Schwerdtfeger does. z

P I B 45 Special Report Necessary, but insufficient Sustainability is a vital tool in the strategy for internationalization. But it’s not the whole answer By Lia Vasconcelos

ustainability has never based on sustainability will be more been as big an issue as successful than any other, but there it has become nowadays. appears to be no doubt that the tri- Fear sparked by global pod created by Elkington is increas- warming has catapulted ingly present on negotiation tables Sthe issue to the forefront of world throughout the corporate world. For debates. Carbon credits, greenhouse companies in emerging countries gas emissions and the melting of po- such as Brazil, and especially those lar ice caps have become everyday attempting to stake their claims topics in conversations all around in the global market, the essential the world. Not only has the subject question is: at the end of the day, invaded political agendas and citi- will being sustainable help them zens’ daily lives, but innumerable garner overseas business? Putting it companies have repeated, mantra- another way: how harmful can not style, the sustainability concepts cultivating sustainability really be? established by John Elkington, Brit- According to The Economist, ish founder of the highly respected a UK-based magazine, emerging SustainAbility consulting company. economies have gained more and For Elkington, no company will more clout in global trade since survive in this day and age without 2002. Investments originating in taking into consid- developing coun- eration the so-called tries totaled US$16 triple bottom line: billion in 2002, and environmental, fi- The 32 companies grew to a whop- nancial/economic in Bovespa’s ping US$120 billion and social aspects Sustainability in 2005. No wonder (including address- the eyes of the world ing issues such as Index are worth are on companies in employee relations, US$400 billion Brazil, Russia, India ending child labor, and China, coun- paying attention to communities tries comprising the BRICs acronym, with which the company maintains coined by prominent United States

relationships and support for initia- investment bank Goldman Sachs. etrobras /P tives that promote inclusion). As they gain muscle and become

There is no simple formula to en- relevant players on the internation- H a nd out sure that a business strategy firmly al stage, threatening the hegemony The Tamar Project: turtle protection on the Brazilian coast is supported by Petrobras, a company with some environmental accidents in its past

46 P I B etrobras /P V ieira G arcez Má rcio

of traditional corporations, these companies attract the attention, and critical eye, of governments, media and activists in the developed world, in turn forcing them to pay attention to their own impact on society and the environment. According to one of the most renowned specialists in business management, U.S. economist Michael Porter, this new scenario has turned social responsibility into a vital strategic concern for companies. “Competitive advantage lies in integrating societal demands with strategy and operations,” Porter wrote in the Harvard Business Review. The good news is that, in Brazil, the issue of sustainability seems finally to have registered on companies’ radars. Bovespa’s Corpo- rate Sustainability Index (ISE) was created in 2005 to track companies with shares publicly traded on São Paulo’s Bovespa stock market that demonstrate the best sustainability practices. The number of companies in the ISE has risen from 28 in 2006 to 32 this year, with an estimated market value of R$700 billion – some US$400 billion – the equivalent of 48.5% of total capital on the Brazilian bourse. “Some companies are more advanced than others, but this is a trend that has come to stay; The Tamar Project: turtle protection on the Brazilian coast is supported by Petrobras, a company with some environmental accidents in its past it is not a fad,” says Roberta Simo-

P I B 47 Special Report out nd ha / eles T o d icar PHOTOS: R

Suzano’s eucalyptus: the company believes sustainability is key to doing business in demanding markets

netti, coordinator of the corporate ucts and services. Case in point is duction reaching 500,000 per year. sustainability program at the Cen- Braskem, Latin America’s lead- “The United States, Japan, and ter for Sustainability Studies at the ing petrochemical company, part several European countries have Getúlio Vargas Foundation, a lead- of the Odebrecht Group, which is already shown interest,” says Ro- ing business school and research preparing to start the world’s in- berto Simões, Braskem’s vice-pres- institute in São Paulo. dustrial scale production of plastic ident. The company recently signed This opinion is backed by the manufactured from renewable raw a five-year cooperation agreement 2007 edition of the Sustainability materials. This is slated to begin in with Fapesp, the São Paulo State Guide, published by Brazilian busi- 2010, as a result of nearly three de- Foundation for Research Support, ness periodical Exame, which also cades of research and development, with investments pegged at around demonstrates how much space the and forecasts are that production R$50 million. subject has gained in the corporate costs of the ethanol-based prod- The idea, according to Simões, world. Of the 140 companies that uct should be lower than those of is not only to provide incentive for answered the questionnaire sent equivalents made from petroleum scientists to develop projects for out by the magazine, 63% have a derivatives. Output is estimated production of polymers (common sustainability committee, and 72% around 200,000 tonnes per year, plastics used in supermarket bags, of them publish an annual sustain- with expectations for future pro- packaging and automobile compo- ability report. More good news is nents) from renewable raw materi- that 31% of participants adopt a als, but also to improve competitive system whereby remuneration of conditions by adding value through executives is directly tied to the so- technology and innovation. “Re- cial and environmental results they International newable sources are our main con- have achieved. clients want details cern,” says Simões. “Client demand The questionnaire goes on to of sustainability is increasingly tied to sustainabil- point out that 46% of the respond- ity principles.” He is betting that ing companies see sustainability as programs operated by “green plastics” will provide an an opportunity to launch new prod- Brazilian companies opening for expanding the com-

48 P I B Suzano pulp mill in Mucuri: plant capacity expanded by 60%, without jeopardizing the environment pany’s business abroad. “Clients up close and personal. “The most overseas always ask about our sus- complicated country to negoti- tainability indexes,” he adds. All of Suzano’s ate with is Germany,” says André 462,000 hectares Dorf, director of Suzano’s paper Quality guarantee business. “They want to see, in One decisive factor in the interna- of forest are loco, the sustainable maintenance tionalization process of any com- duly certified of our forests, the treatment of our pany is access to cheaper resources by the Forest residues, the state of our carbon overseas, in order to make invest- emissions, and what sort of rela- ments viable. “Although Brazilian Stewardship Council tionships we have established with companies feature among the most our community.” ‘internationalized’ of developing resources, sectors such as petro- The São Paulo-based Feffer fam- countries, they still lack a strong chemicals, oil and paper and pulp ily which controls the Suzano com- global image, either positive or production, that suffer the most pany is well-placed with respect to negative,” says Jodie Thorpe, di- pressure from investors, clients the first of these issues: 100% of Su- rector of SustainAbility’s program and consumers for the adoption of zano’s 462,000 hectares of planted for emerging economies. “In their sustainable practices because of the forests, spread throughout the states case, operating in a country whose impact they can potentially cause. of São Paulo, Espírito Santo, Bahia, interest rates are incredibly high, Suzano can vouch for that, hav- Minas Gerais and Maranhão, are a robust sustainable performance ing recently inaugurated the second certified by the Forest Stewardship helps in allowing companies to ac- phase of its mill located in Mucuri, Council (FSC), an independent in- cess (cheaper) capital that is owned in the northeastern state of Bahia, ternational forest certification insti- by ever increasing numbers of in- expanding production capacity by tute. In other areas, however, there’s vestors who see sustainability as a nearly 60% to 3.1 million tonnes of still room for improvement. guarantee of quality.” Jodie believes cellulose per year. Clients not only According to Dorf, for Suzano it is exactly those companies in sec- ask about Suzano’s sustainability the concept of sustainability is in- tors that deal directly with natural practices, they want to see them, timately integrated into business.

P I B 49 Special Report

Natura’s Ups and Downs

In Brazil, sustainability At least until now, however, the is synonymous above all with one image of a sustainable company has company: Natura. Good practices in not been enough for Natura to ensure corporate citizenship are deeply rooted success in the international market. in the country’s largest cosmetics Its first international operations manufacturer, and have been cultivated date from 1994 in Chile, but Natura almost since the company’s birth in has yet to replicate, internationally, the 1970s. Even before such issues the success it has obtained in the came under the business spotlight, domestic market. International Natura was already including clauses revenues remain stubbornly at around against child labor in contracts with its an average of 2% of total revenues. suppliers. Its work with the Sustainable The company has still not achieved Development Reserve on the Iratapuru the right model for international River, where 30 families in the state of development, and losses on overseas Amapá make a living from harvesting expansion were among the causes of Brazil Nuts, has gained public Natura’s poor performance in 2007, admiration and earned Natura ample when then company’s market value media coverage. dropped by a staggering 45% in Natura

/ just one year, while competitors like Pioneering: the company’s project Avon become stronger and faster in

ha nd out in Amapá benefits river-dwellers Natura’s own backyard. (CN)

“The German market purchases Sea turtles Paulo Cezar Aquino, corporate execu- only certified pulp,” he said. “If Su- Included in the highest risk group by tive manager for Petrobras’ interna- zano did not have sustainable prac- SustainAbility, Petrobras plans to be tional sector. “We have to be aware tices, we would certainly have lost one of the five largest integrated en- of these demands and characteristics, several deals.” For paper and pulp ergy companies in the world by 2020. and comply with them.” executives like Dorf, a recent deci- The company is present in such di- One of the company’s goals is sion by Staples, one of the largest of- verse countries as Angola, Argentina, to eliminate 21.3 million tonnes of fice supply companies in the United the United States, Singapore, Pakistan, carbon dioxide emissions between States, to cancel existing contracts the United Kingdom, Iran, Japan and 2007 and 2012. Another goal speci- with Singapore’s Asia Pulp and Pa- Turkey. “Each of these countries has fies investing in renewable energy per (APP) was a very significant its own particular set of demands, sources that may, according to the case. Motive for the cancellation? according to its characteristics,” says company’s calculations, reduce the Suspicions that APP deforests na- use of fossil fuels in their transpor- tive vegetation in the production of tation sector by 7% to 15%. To this pulp and paper. end, Petrobras is investing in a hy- Listed on Bovespa’s ISE for more Petrobras aims to drogenation process that blends die- two years, Suzano is living proof that sel produced from vegetable oils or being sustainable is, above all, good reduce fossil fuel animal fat into mineral diesel. HBio, business, just like SustainAbility consumption between as the project was christened, has consulting’s Jodie Thorpe argues it 7% and 15% by the great advantage of allowing the can be. Between July 2006 and De- introduction of renewable energy cember 2007, the company’s share 2012 with the use of during the refinery process, using price rose roughly 120%. biological alternatives existing industrial installations.

50 P I B Governance More recently, the focus has includ- raskem /B ed matters of corporate governance and financial transparency. After all, ha nd out following scandals such as that of Enron, brought low by dubious ac- countability practices, no investors want to run similar risks. Along with environmental disas- ters such as the one caused by the Exxon Valdez, which dumped 41 million liters of oil onto the Alaskan coast in 1989, episodes like those involving Nike and Enron have a guaranteed place in the hall of fame for corporate image catastrophes. Such incidents often mean heavy losses for market participants and for the finances of companies involved, even threatening their survival. It is difficult to measure how much a company or individual sector has to gain by adopting a substantial sustainability practice, nor if it is a sure pass- port to success. If it were, Natura, one of Brazil’s most admired pioneering companies in the sustainability field, would not be slipping and sliding in the implementation of its internation- Braskem: R$50 million to be invested in biopolymers alization strategy (see box). It is easy to imagine, however, The state-controlled oil giant tors are trained by the company to what they stand to lose without has been responsible for a few en- implement activities such as water sustainability or if they allow suspi- vironmental accidents that have decontamination, sewer system in- cions that they may be violating its had significant repercussions, for stallation and preservation of water principles. Proof of this is the havoc example an oil spill in Rio’s Guana- sources. Some 2,300 Colombians wreaked by the documentary Deadly bara Bay in early 2000. Today, in have been trained so far. Brew: the Human Toll of Ethanol, addition to redoubled care with its Back in the 1970s the concept of aired by the U.S.’s most influential operations, the company is spon- sustainability was initially focused business network, Bloomberg, and soring some successful environ- just on environmental issues, but packed with criticism of worker re- mental programs. Among them is now has evolved to incorporate lations in Brazilian sugarcane fields. the Tamar Project, internationally social aspects such as the promo- By denouncing the existence known for its preservation of sea tion of fair work relations – a trend of precarious work conditions, the turtles. Petrobras also maintains that started in the 1990s. Nike, the high number of deaths and accidents sustainable programs outside of world’s largest sporting goods man- among sugarcane workers, the docu- Brazil. In Colombia, for example, ufacturer, was involved in a major mentary caused serious losses for Bra- a program called Socio-Environ- row during the Nineties when it was zilian ethanol at a moment when the mental Monitors trains community accused of turning a blind eye to the green fuel is gaining ground as one of leaders to exercise guardianship of use of child labor by its sports shoe Brazil’s greatest competitive advan- the environment to local. The moni- and ball suppliers in Asia. tages in the global marketplace. z

P I B 51 Reports Domino effect Internationalization of large Brazilian companies is generating a healthy and virtuous circle, which forces national suppliers to improve their standards of quality and administration By Marcelo Cabral

etalfrio Solutions, in Brazil, the company acquired Latin America’s factories in Denmark and Russia, largest manufac- and installed production lines in turer of freezers Turkey and Mexico. It also added and refrigeration a distribution center in the United Mequipment, didn’t want to end up States. Employees have doubled on the wrong side of this global to 2,000 since 2006 thanks to the process. The São Paulo-based entry into the international mar- company needed to solve a prob- ket, and revenues have leapt ac- lem facing a major client, the beer cordingly – from R$296 million and soft drinks giant that year to R$576 Ambev, which oper- million in 2007. ates in Russia under “Contact with the brand name of Metalfrio our clients that are Brahma. During billings have already involved in the Russian winter, the international

the outside tem- doubled market was essen- C orr ê a perature is lower since the tial to producing

than that inside the company went this increase,” said armargo /C beer fridges, which Metalfrio presi-

means there is a international dent Luiz Eduardo ha nd out real risk of the beer in 2006 Moreira Caio. “We freezing solid. After were forced to im- have begun to adopt international extensive engineering efforts, the prove our knowledge in technical standards in management, prod- solution was found: when the mer- and managerial areas to operate uct quality and executive training, cury drops, freezers begin to work on the global market.” In just one among others, stimulated by their as heaters. year, Metalfrio’s sales coming international clientele. It wasn’t a simple process, but from the foreign market climbed it gave Metalfrio the necessary dramatically, from 1.7% to 26% of Chain of benefits expertise to plunge into the inter- company total. “It’s the so-called domino effect,” national market with customized Metalfrio’s experience is an says sociologist Glauco Arbix, ex- products to meet the needs of example of how one company’s chairman of the Applied Econom- clients including Inbev, Ambev’s internationalization process can ics Research Institute, IPEA and a controller, Heineken, Coca-Cola, generate a domino effect of posi- professor at São Paulo University’s Nestlé, Hägen-Dazs and Unilever. tive results all the way down the (USP) College of Philosophy, Lan- In less than a year, results have supply chain. Many suppliers – guage and Human Sciences. “Over- been significant. Besides Metal- even those that don’t export di- seas, it’s a really common process. frio’s two existing industrial units rectly or own factories overseas – In Brazil, as the whole question of

52 P I B company internationalization is fairly recent, transformation is taking place only now.” Beneficial effects of globalizing the production chain are also emphasized by Afon- so Celso Fleury, head of the Depart- ment of Production Engineering at USP’s Polytechnic School. “On one hand, big companies consolidate a network of suppliers that they are accustomed to dealing with and that they trust to follow through on deadlines, prices and contracts,” says Fleury. “On the other, it’s a chance for suppliers to adopt improved standards and so capture a much larger client base, both inside and outside Brazil.

Angolan qualification Even more than a differential, the presence of qualified Brazilian suppliers has turned into a very real demand for companies operating abroad. Brazilian construction company Camargo Corrêa describes how it is preparing for a project that will focus on support and qualification for service Pacific-Atlantic Highway suppliers in the real estate area, in Peru: Camargo Corrêa uses Brazilian suppliers specifically geared toward its An- on foreign contracts golan operations. “We have needs in that country that often cannot be met by local logistics and labor,” said Arnaldo Cumplido de Souza ha nd out e Silva, director of Camargo Cor- rêa’s International Operations and Infrastructure Management De- partment. “We will pass on to Bra- zilian suppliers our know-how in areas such as logistics, transporta- tion and legislation.” The ultimate goal of the program is that suppliers become qualified to form their own networks further down the road and become international service providers. Camargo Cor- Working together: Alltec rêa purchases over US$90 million participates in the HTA consortium to supply Embraer in materials, services and equipment for its overseas construction

P I B 53 Reports

sites, from a network of roughly tim n

80 national partners. ale é V r Small companies fly high Partnership with big local companies that have a global presence PHOTOS: And was decisive for the success of the HTA consortium, composed of seven companies that produce aeronautical equipment in the region of São José dos Campos, in São Paulo State. The consortium supplies parts to Embraer, Brazil’s major producer of narrow-body passenger jets, which is based in São José dos Campos, and their histories are closely linked. Most of companies in HTA were founded by engineers and technicians laid off from Embraer when it was privatized in the 1990s. Embraer’s rapid expansion process, based on the commercial success of the company’s ERJ-145 aircraft family, helped its suppliers to grow and integrate production processes, quality standards and legislative norms adopted by Em- braer. However, despite orders and positive results flowing from part- Hitching a ride with clients nerships with Embraer, the HTA A network of 2,100 suppliers stands behind Odebrecht’s international consortium decided, in 2002, to construction sites. Total exports add up to over US$400 million per year diversify its foreign clientele. By Mario Grangeia “The fact that Embraer uses extremely rigorous quality and pro- The Odebrecht construction Odebrecht, rooted in the state duction standards lowered the im- group, today Brazil’s largest of Bahia, generated US$2.3 billion pact caused by this transition and service exporter, has construction in foreign exchange earnings for made it easier to negotiate with sites spread through 17 coun- Brazil in 2006. Ever since its ven- other clients,” says Lúcio Simão tries. Today the group’s portfolio ture into international waters in dos Santos, financial and adminis- reveals an incredibly varied mix 1979, the group has spun an intri- trative manager of the consortium. of engineering projects – from cate but solid web of 1,750 goods HTA currently has heavyweights the expansion of the subway in suppliers, and 350 service sup- such as U.S.-based Pratt & Whit- Caracas to the construction of pliers. The export of goods linked ney and Spanish EADS/CASA in its two hydroelectric dams in the to international operations now client portfolio. And the results are Dominican Republic, two termi- totals US$411 million and includes good: consortium revenues reached nals in Libya’s largest airport and tubing, cables, uniforms, helmets, US$37 million dollars in 2007. highways, condominiums and boots and others. This guaran- “Over the last six years, each of the diamond mining. There’s even a tees the construction company a member companies has grown at supermarket chain in Angola. place among the top 60 Brazilian least five-fold,” Simão said. z

54 P I B tor. The company currently exports 30% of its production of 7,000 pairs of boots a day, making full use of exemption of local taxes such as ICMS, IPI and Cofins. “The international market is more demanding, which means that Brazilian consumers benefit from the better quality standards,” says Pastre. The challenge of taking the most diverse supplies to the most remote corners of the world has made it necessary for Odebrecht to improve its management. Previously there were four support structures for overseas operations, which implied a great deal of work getting repeated, the company unified its structures halfway through the last decade and then Global hub: created Odebrecht Logistics and Odebrecht supplies Exports (Olex). Now with 180 projects worldwide employees, Olex meets all the from this Rio company’s needs for materials and warehouse. Inset: labor outside of Brazil. The arrival José Alvarez and departure of teams is intense, averaging 1,100 airport receptions companies that has made full use of a month, and Odebrecht’s total of Odebrecht’s international opera- expatriate executives should soon tions, mainly in Angola. However, reach 3,500. “We have consolidat- before it got richer, the company ed an incredible volume of different had to get better. Bompel has been purchases for projects in infrastruc- an Odebrecht supplier since 1990, ture, projects for real-estate that and exported over 86,000 pairs of have important details of finishing, exporters, ahead of companies boots, amounting to R$1.8 million, and now even for retail projects, such as Suzano, Coteminas and in three and a half years. It has with the Nosso Supre chain,” said Fundição Tupy. Besides increased made major investments to reach José Valentin Alvarez, responsible revenues, internationalization has this level of growth: it created its for Olex. “Supplier qualification is brought a number of changes to own laboratory for testing samples essential to our services.” suppliers: more visibility, in- from each production batch; inten- Headquartered in the Santo creased standards of quality, rigor sified employee training; and set Cristo neighborhood of Rio de in meeting deadlines and routines, up its own tanning installations to Janeiro’s port zone, the Olex increased importance of training guarantee the quality of the leather. cargo terminal takes up an area and new business opportunities. “Supplying Odebrecht helped us of 10,000 square meters. Each Safety boot manufacturer sell our brand outside of Brazil and month, 850 containers, filled with Bompel, based in Brazil’s south- brought us new clients,” says Vilson 20,000 different types of products, ern state of Paraná, is one of the Pastre, Bompel’s commercial direc- are shipped from the terminal.

P I B 55 Marketing Brands that last IMD’s branding specialist considers the likelihood of building global Brazilian names, and says originality is key: “Any attempt to copy competitors is destined for failure.” Juliana Garçon

nyone comparing the size of the country’s economy to the num- ha nd out ber of Brazilian product brands that enjoy internationalA recognition will quickly become aware of an abyssal difference. The eighth largest economy on the planet, but the quantity of local brands that enjoy an established international presence can be counted on the fingers of one hand. Why? Part of the explanation lies, of course, in historical problems that kept Brazil isolated from other markets for decades. Another part, according to Do- minique Turpin, may be found in the way that companies present themselves to global competition. Many companies – and not just Brazilian ones, either – believe that “building a brand” is the same as “marketing.” The concept is incorrect. Turpin (blue shirt): “Companies could seek images that positively identify Turpin, a French strategy and Brazil in the international market – nature, lifestyle and leisure.” marketing professor at the Interna- tional Institute for Management De- worldwide. Following are some of and Audi are linked to German tech- velopment (IMD) in Lausanne, Swit- his opinions: nology, while Sony and Toyota are zerland, has closely followed efforts symbols of Japanese excellence in by Brazilian companies to make their The way people see a country un- innovation and manufacture, and brands well–known in other coun- doubtedly affects the business of Armani is built on Italian sensibil- tries. He considers, for example, the companies that operate within its ity for design, elegance and sophis- Havaianas brand of sandals to be an borders. Think, for example, of tication. These are all examples of excellent example, for its capacity brands like Coca Cola, Marlboro the influence a country has over to “exploit dozens of variations from and Apple, three of the world’s its companies. one, apparently simple, item.” He most valuable brands. All of them also follows the recent attempts by have an image related to American So what about Brazil? “Not many lo- companies such as clothing manu- values. “Marlboro country”, “the cal companies base themselves on facturer Hering, foodstuffs company freedom of Coca Cola”, or Apple’s the country’s image. Few have linked Sadia and cosmetics manufacturer “Silicon Valley creativity”. In the themselves to attributes such as the Natura to disseminate their brands same way BMW, Mercedes Benz importance of nature, beaches and

56 P I B soccer. In my opinion, the chance zilian roots – created in Holland in What concerns should Brazilian to make the best possible use of na- 1818, the company reached Brazil companies have with respect to their tional attributes is especially prom- in 1905 as a minority partner in the brands in the process of globalization? ising for the fashion industry. Other Santista Mill. International success, says Turpin, is companies, from different segments, n Natura, by comparison, is doing an much like beauty, because it is at least can also seek similar associations. I excellent job of building up an im- partly in the eye of the beholder. Sev- believe, for example, that Compan- age around values linked to Brazil, eral factors stand out, however, when hia Vale do Rio Doce’s name change like nature, the Amazon, plants and brands or successful products are de- to Vale was a positive step in that di- exoticism. It is relatively easier for fined. First of all, a strong brand has rection. It is very difficult for some- Natura to build on it Brazilian heri- durability and survives throughout one who doesn’t speak Portuguese tage – Brazilian women are know several generations. It is what could to go around saying Companhia Vale worldwide for their beauty and be called “sustainability” today. Sec- do Rio Doce. The new brand is in- Brazil is famous for its nature and ond, a strong brand captures the teresting, simpler and more Brazil- the variety of species that are found imagination and becomes much larg- ian. It alludes to the country while only in the Amazon forest. er than the product that originated it. at the same time announcing ‘we are n Havaianas has also done a notable The Pan Am brand, for example, was more than just a Brazilian company; job linked to Brazilian beaches and sold for millions of dollars many years we are truly international.’” fashion sandals. Certainly, Turpin after its planes disappeared from says, other companies could base airport radars. Finally, a solid brand What about difficulties encountered themselves on the images that posi- tends to “expand,” effectively coming by Brazilian brands worldwide. For tively identify Brazil overseas – na- to represent much more than just a Turpin, there are not many well– ture, lifestyle, leisure, etc. line of products. known Brazilian name brands out- What should be kept in mind when side of the country. This is especially What are the chances of Brazil creating a global brand? The start- true in the areas of durable and non– becoming recognized as a place ing point for brand building, Turpin durable goods manufacture, as well where innovative brands are born? says, is an original, focused proposal as fast consumption goods. Strangely The success of advanced technol- that has global appeal across markets enough, some of Brazil’s most well– ogy companies such as Embraer and cultures. Any attempt at copying known brands in the world are in- shows that Brazilian companies what a competitor has already done is dustrial or raw materials: Petrobras, can become not only leaders in high destined to fail. Therefore, the brand Embraer, Tigre and Vale itself. The tech segments but also can win rec- must be clearly focused on one ser- service sector is represented as well, ognition as such. However, brand vice, product or solution that is dif- in particular financials, with Itaú, construction requires a long–term ferent and will provide real value to Bradesco and Banco do Brasil. commitment to communicating the the consumer. One example is 3M’s brand’s value as well as having a sig- Post–it. Another is the Nano, sold by Why should this be? There have nificant volume of funds available automobile manufacturer Tata for been few attempts by companies for investment, in order to show under US$3,000. There is also Ralph such as Hering or Sadia to attempt what the brand really represents. Lauren’s style. Clear understanding to build an identity outside of Bra- A likely first step is to survey of the need to invest in frequent and zil, maybe because primary con- what values consumers all over the significant innovation and a commit- cerns were geared towards their world associate with Brazil. Korean ment towards investing in communi- enormous success in the Brazilian technology company Samsung was cation during good times and bad are domestic market. Three examples able to outdo Sony by focusing on both essential. Lacoste, for example, are worth a closer look: Natura, Ha- three product categories: mobile does this. In general, it takes time to vaianas and Bunge, all of which are telephones, semi–conductors and build a good brand. Therefore, a long– now working to build successful flat–screen televisions. It has always term commitment by the company to brands abroad: introduced new developments in its invest in both good and bad moments n Bunge has successfully sold prod- products, but also – a fundamental is critical to its survival. Without these ucts such as margarine in Central point – it has spent twice as much basic elements, any attempts at creat- Europe without mentioning its Bra- as Sony on communication. ing a global brand will fail. z

P I B 57 Career Export-grade talent business,” says headhunter Gino The challenge that faces Brazilian companies with Oyamada, partner in Fesa Global an eye on the world market is preparing their Recruiters and responsible for executives for the job on hand by Márcia Rocha consulting offices in Curitiba and Rio de Janeiro. Not to mention the fact that, in many cases, the dream or most Brazilian com- of a Brazilian company provides of working in other countries can panies, the process of in- an opportunity to gain experience, become a reality even for those ternationalization is only enhance a CV and learn about new who are just starting out in their just in its infancy. The cultures, while all the time keep- careers. Politec, for example, an country is still one of the ing the door open for returning to world’s 10 least globalized econo- head office after a spell abroad.

F P essoa mies, according to a 72-country Destinations have been incred- study by A.T. Kearney, a consultan- ibly varied and include the Unit- á cio E pit cy. However, this situation looks ed States, Argentina, Chile, Italy, set to change quite rapidly, with England, Russia, China, India and overseas investments by Brazilian South Africa. Besides the chance companies now growing fast. The of running an overseas unit, there trend suggests that are jobs for executives today presents one in the supply, finan- of the most favorable cial and commercial moments ever for pro- Excellent areas. “Today, it is fessionals who seek moment increasingly com- careers overseas with- to launch mon that companies out cutting their ties keep executives sta- to Brazil. Working in a career tioned in the coun- the foreign operations overseas tries where they do

Votorantim completely diverse in terms of the Career polishing professional capabilities, ages and geographic origins of its members, Academy of Excellence prepares executives for different cultures has one goal in common. They are By Marco Justo Losso striving to become the razor-sharp professionals who will carry the busi- the winners are those who are most What are an executive president ness of their employer, the Votoran- clued in to the demands and rigors from the city São Paulo who works tim group, to the four corners of the of the globalized world. No one comin Colombia, a Peruvian commercial world. Votorantim is one of Brazil’s plains about it, either. Far from it. “The manager working in his home coun- foremost business heavyweights. Academy will give you a participative try and other executives from varied Four times a year, these executives education, make concept exchanges segments in São Paulo, Paraná, Rio de take a break from work and plunge possible and allow for international Janeiro and the Brazilian Northeast into a study program organized by the professional experience,” says Gilson doing all together in a hotel classroom company’s own “Academy of Excellen- Danhoni, 45-year-old Brazilian direc- tucked away in the São Paulo coun- ce” that will polish their careers and tor of Votorantin’s Colombian subsi- tryside? This heterogeneous group, place them on a playing field where diary, Acerías Del Paz Rio. Danhoni

58 P I B IT solutions company headquar- A delicate balance tions have not held back in aligning tered in Brasília with 6,200 em- The great challenge for globalized their values, processes and guide- ployees, keeps analysts in Japan companies is to guarantee that its lines in all countries in which they for a period of up to two years. expatriates are worthy emissar- do business. The Votorantim group These executives are responsible ies of the company’s culture in its (see chart) has a school to train the for training local professionals subsidiaries. This is fundamental executives who will be relocated to who will service the company’s for business success. “Brazilian other countries. Other companies clients in that country. Demand is companies still have a certain dif- make the Brazilians they send over- high. “If there were 200 analysts ficulty in acting as global head- seas the spokespeople of the culture ready for this mission today, we quarters,” says headhunter Luiz they hope to implement. would have projects for them all Carlos Cabrera, director of Panelli This is the case of Sadia, a food- over Japan,” says Patrícia Costa e Motta Cabrera consulting in São stuffs giant which exports roughly Silva Lim, Politec’s corporate Hu- Paulo. This learning process is still 250 products to over 100 countries. man Resources manager. underway, but Brazilian organiza- The company has 52,000 employees, mainly in Brazil, and currently has Common goal: 300 Brazilians stationed in other Votorantim countries. Sadia’s policy is to main- executives tain 70% to 80% local labor in its prepare to international units, with the bal- conquer the ance made up of Brazilian expatri- world ates. Sadia’s factory in Kaliningrad, Russia, inaugurated at the end of 2007, has 15 Brazilian employees. “We have attempted to transpose our values to our overseas units, respecting local customs but keeping our basic essentials. To this end, we have prepared informative and training material that we call Cross Cultural. The process ends up being continuous later on, under the

at Votorantim, the Academy’s directors decided to honor the best practices and establish its pilot program. Late 2007, as proof of its importance to the group, the explained that the Academy’s course cultures in Brazil and abroad. The idea Academy added another school. also allows an executive to reduce was to gather the best information In addition to the Future Leaders’ the cultural differences (general and in terms of executive preparation for Preparation School, the Leader corporate) between his homeland international success, seeking to esta- of Leaders and the Team Leader and the country to which he has blish a training school that offers a mix School, the Academy now includes been sent – in his case, Colombia. of models of success in strategic ma- the Leadership Preparation School. The Votorantim Group’s Academy nagement in the country and throu- “They don’t learn just how of Excellence was founded in July, ghout the world, but always rooted tax laws and markets work in 2006 as project created as a result in the group’s corporate values. After other countries,” explains Gil- of a study carried out by a consulting defining the model and examining berto Lara, Votorantin’s director company comparing various corporate 100 people with leadership profiles of Human and Organizational

P I B 59 Career

responsibility of direct leadership of sionals in the countries where we cues but loves the idea of living in each collaborator. Using systematic have branches,” says Osmar Piola, India. It is his second expatriation feedback, leaders reinforce aspects Marcopolo’s HR manager. Today the - he spent nearly four years in Mex- of behaviors that are related to our company has 86 Brazilians stationed ico with Marcopolo. In Lucknow, corporate culture and values, and abroad. One of them is Rio Grande Grochot oversees a factory where make course corrections whenever do Sul native Lusuir Grochot, who 42 Brazilians and 321 Indians work. necessary,” says Eduardo Noronha, has lived in Lucknow, northern India, “We are already producing 100 bus- Human Resources es per month, which

and Management P olo is a record consider- Director at Sadia. ing we began opera- Replicating com- arco /M tions only last Octo- pany culture abroad ber,” he says. There is also a concern for ha nd out is another factory Marcopolo, a lead- currently under con- ing bus body manu- struction in Dhar- facturer that is the wad, southern In- fourth most inter- dia, which will also national company in be under Grochot’s Brazil, according to supervision. It will Dom Cabral’s rank- be the world’s larg- ing. It has factories Culture shock : Lusuir Grochot est production unit, in Argentina, Colom- runs Marcopolo in India with output capac- bia, Mexico, Portugal, ity at 25,000 busses Russia, South Africa and India, along since last year. Grochet, previously yearly. “India is very interesting to with offices in five other countries. the director of industrial operations us from a business point of view Marcopolo employs 12,388 workers at Marcopolo now manages the com- and I am having the opportunity to all around the globe, 9,923 of them in pany’s operations in India, a joint be a part of all this,” he says. Brazil. “It is essential to maintain a venture with Tata motors, India’s balance between our values and the larges automotive manufacturer. Two hands values of other countries so that our Grochot, 47, says he misses tra- WEG, an electric motor manufac- employees can work well as profes- ditional Rio Grande do Sul barbe- turer located in Jaraguá do Sul,

Development. “We educate people paring executives, be they Brazilians or recently announced the opening of to work in different cultures, people foreign nationals, and stresses its effi- an office in Shanghai, to reinforce the who can implement the company’s ciency in comparison to similar training company’s presence in China, where it practices in several areas. The course available on the market. “Compared to has a zinc production unit as a result requires participation in four yearly the MBA, which I am taking now at the of the recent acquisition of U.S. Zinc. modules, 10 days each, prepared Getúlio Vargas Foundation, the Aca- The group also does business in Peru, according to individual functions. demy lacks in nothing,” says Muñoz Chile, Colombia, Bolivia, Canada, the Graduation takes place after three with his Portuguese “nearly” devoid United States and another 10 coun- years - the first class will graduate in of an accent. “Besides, the Academy’s tries, either with its own operations 2009 - and over 2,000 Votorantim course is helpful in integrating other or via a commercial representative. employees have already signed up, units and for the clarity with which it “The preparation that takes place at including Brazilians and foreigners. expresses the company’s concepts.” the Academy helps a lot,” Lara said. One of them is Luiz Muñoz, Voto- He believes the emphasis pla- rantim Metais’ 32 year-old Peruvian Corporate culture ced on the dissemination of the foreign trade manager. Muñoz highli- In line with what is happening in most corporate culture makes it possible ghts the value of the Academy in pre- large Brazilian firms, Votorantim for executives in others countries

60 P I B Santa Catarina that has commercial branches in 20 countries and 58 Brazilian employees working Expatriation package overseas, ranks seventh in FDC and What companies usually offer to employees who will be working overseas: Columbia University ratings. The :: Reconnaissance trips to the country where the executive will live. In some company allows employees to take cases, these trips also include the employee’s family; a reconnaissance trip to the coun- :: Transference premium/bonus; try to which they will be relocated before they move there. Whenever :: Salary increase when the move is to an unsafe location or one where living possible, the company assigns a conditions are more complicated (Iraq, for example); veteran expatriate as a mentor for :: Earnings compatible with what the executive earned in Brazil and with the newcomer in order to help with living conditions in the destination country; adaptation. The efforts made to :: Language lessons for the executive and his family; speed up adaptation often extend RH to the executive’s family and in- :: Some companies offer relocation assistance and classes so that the e d volve the spouse’s professional life. employee’s spouse can find work overseas; At Marcopolo, there was even one :: Training on the culture of the destination country; sultoria n o

case in which an expatriate’s wife C left the country with a guaranteed :: Accommodation and a vehicle; ercer job waiting. “We are really care- :: School for the employee’s children; : M ful with the expatriates’ families,

:: Yearly airline tickets for the executive and his family to visit Brazil. source because we know that family support and well-being is fundamental for expatriation success,” explains 47% of cases in which expatriation Knowing local history and culture Piola, Marcopolo’s HR manager. A does not work out. is essential,” says Carmen Migue- study carried out in 2005 and 2006 An employee’s openness to ex- les, of the Dom Cabral Foundation. by Mercer, an HR consultancy, sug- periencing different cultures is Expatriates need to know how to gests that Piola is right. Looking at also fundamental for expatriation deal with asymmetric information. 200 companies around the world, success. “Many times, a lack of at- “They must be able to decide with the study showed that the family’s tention to the cultural aspects can incomplete information and to learn inability to adapt is responsible for cause the whole project to fail. from their mistakes,” she says. z where Votorantim operates to take of stamps as they advance in a spe- local culture in which they will live. part in the Academy and use what cific course for their given areas. “There is an abundance of cases they have learned in their regional One of the Academy’s main goals is which the professional’s family offices. “We want to establish the is that professionals with strong did not adapt and they were forced standards of a world-class com- technical capabilities also learn to to return to Brazil,” says Lara. pany, prepared to face challenges apply their knowledge towards the With its target focusing on in any country and any culture,” management of human resources. North America, a region into which Lara explains. “The idea is to adapt Votorantim has poured massive executives to our corporate culture Family matters investments over the last deca- and have them take it and adapt it Another important point in the de – the company spent US$250 in their respective jobs, anywhere.” preparation of Votorantin’s glo- million on the purchase of U.S. Zinc The training program, which has bal executives is the Academy’s alone – the Academy, which until yet to have its first class graduate, concern with family matters, pro- recently had been receiving mostly has its own internal qualification viding the employee’s dependents Latin American executives, should system. Executives have passports with information that will help expand its range, incorporating that receive an increasing number them adapt to the country and Canadians and U.S. natives.

P I B 61 Real Estate

which began investing in different Brazilian regions, attracted by the stability of Brazil’s economy and the promise of profitability that far On the rise: global exceeds anything they could dream press stimulates of obtaining back home. acquisitions in Brazil First came the Portuguese, Ital- ians and Spaniards. Next, Scandina- vians and the Dutch. Now it is the British - of all Europeans, it is this last group that invests the most in second homes abroad. Spurred on by prohibitive prices in traditional leisure getaways and investment options like the Portuguese Algarve, Sold! the Spanish coast and Caribbean Lure of high profits puts Brazil on the radar islands, and reflecting the widespread crisis in the U.S. real estate for global investors by Vicente Vilardaga sector (see article on page 70), the British have discovered Brazil. “Buy ascinating, but far too dis- investments. The potential for in- Brazil - profit from an effervescent tant and way too risky. For creasing value of Brazilian land has economy,” the “Investor Chroni- a long time, Brazil seemed, thus gained strength and sparked a cle”, a supplement of the Financial to the eyes of European in- desire to invest, even in those who Times, blazoned across its cover in vestors, a land filled with had never considered purchasing a recent edition. Fopportunity but one in which only houses or apartments in this part The recommendation was fol- those with a taste for risk would of the tropics. lowed to the ‘t’ by some investors. dare place their bets. Now, even In the wake of this movement, Last February, the real estate sec- the more conservative middle class, the roughly 20 property developers tor was caught by surprise with the who generally choose fixed income whose shares are publicly traded on news that one of the last available securities and stay away from po- São Paulo’s Bovespa stock exchange plots on Avenida Brigadeiro Faria tential headaches upon retirement, have raked in US$20 billion over the Lima, São Paulo’s most coveted and have begun to change their minds. last two years for investments in va- prosperous commercial strip, was Since 2004 developers, banks and cationing homes, luxury apartments, purchased for about US$280 mil- consumers in the Old World have resorts on deserted beaches, shop- lion - one of the highest amounts been investing in the most promis- ping malls, commercial buildings ever paid per square meter in the ing neighborhoods in Brazil’s major and condominiums. According to country. According to the report, cities and on the beaches along the Cushman & Wakefield consulting, the 20,000 square meter area, upon country’s Northeastern, Southeast- US$14 billion was raised in 2007 which two towers will be built, was ern and Southern coasts, converted alone. The bulk of the money came purchased by English investors into safe and lucrative real estate from foreign investment funds from McCafferty Funding. One of

62 P I B the towers is slated to house an el- standards and pric- prominent for at- egant Four Seasons Hotel. es are expected to tracting this type of What do all these people have in climb substantially. In 2007 alone, investment is Rio common? They have caught on to an “Real estate deals in developers Grande do Norte. In investment opportunity and are be- Spain and Portugal 2000, the local gov- ginning to see that risks are lowering. have begun to de- raised ernment sponsored “Europeans focus more on financial cline, and small and US$14 billion the promotion of a gains than on a house to spend their mid-sized business- for investment charter flight con- holidays and tourism advantages in es that are no longer necting Brazil to the country,” says Mordejai Gold- able to compete on Scandinavia. Results berg, vice president of Cushman & the domestic market due to lowered are tangible, for example in the large Wakefield’s Latin American branch. profit margins have discovered Bra- number of Norwegians who own “Second homes costing between zil,” explains José Ernesto Marino properties in the state. ¤200,000 and ¤300,000 are very Neto, president of BSH Interna- Foreigners’ investments in hous- attractive to these investors, who tional consulting. es and apartments in Rio Grande do choose to use their homes for one According to Marino, an addi- Norte will be R$2 billion within a month and rent them out for the re- tional factor bringing Europeans total R$5.7 billion to be applied in mainder of the year.” to Brazil is the elimination of a real estate projects over the next bottleneck caused by air access to four years. By 2012, tens of thou- Flocking to opportunities Brazil. “Lisbon has become a hub sands of European families will Further, the consultant explains to Northeastern Brazil and this has have property in the country and that these investors are betting on a facilitated the Atlantic crossing, first will begin to visit the coast regularly, strong value increase in properties with Bahia as the main destination, traveling roughly seven hours by over the next few years, because and now spreading to other states.” airplane. If their assets do increase they are undervalued by European It’s no wonder that the state most as much in value as they hope, they /ABF ndé S oares C a n i ndé

Nice play: footballer Beckham was in Natal to launch a multi-million dollar resort owned by Norwegian millionaire Torben Frantzen

P I B 63 Real Estate

Who’s will be worth two or three times as usually has a fair amount of liquid- much by then. ity and sets up financing with Ode- arriving brecht spanning five years,” Rego Profiles of Europeans who are Luxury explained. “The house is reserved investing in Brazilian real estate “In a few years, Brazil will be a rel- during the fair and afterwards, it evant international destination,” says usually takes two to three months The Well-Off Franklin Mira, sales and marketing to close the purchase.” Purchases estates of over director for Odebrecht Empreendi- The second phase of the Des- R$1 million – currently some mentos Imobiliários in the states of tino Sauípe project, named Casas US$550,000 – and finances Bahia, Sergipe and Alagoas. “Those do Sauípe, resulted in the sale of 113 the purchase directly through coming here now are middle class residences with 340 to 500 square developers with payment citizens who can afford payments on meters each, sitting on 2,000 square spread out over five years at a residence in Brazil by renting out meter plots of land. Prices varied be- most. The well-off is more their homes in Europe.” Mira consid- tween R$1.3 million and R$1.8 million. interested in a paradisiacal ers a 100% to 200% increase in value According to Mira, 63% of the units place to vacation than over the next five years absolutely were sold to foreigners, mainly Portu- obtaining income. realistic for these second-home resi- guese. The third phase of the project, dences being launched in Brazil. Quintas do Sauípe, with a total of 170 The pragmatist Odebrecht is one of the pioneers houses, has seen 70% of homes sold Is looking at the increasing in implementing second residence to date going to foreigners. prosperity of the Brazilian projects geared towards Europeans. market and seeks maximum Its two main projects in the above- Optimism profitability of real estate mentioned category are Destino Forecasts for asset appreciation and investments. Aside from Sauípe, launched in 2002 in the Odebrecht’s generation of business increased value of the property, Northeastern state of Bahia, and for second-home projects are opti- the pragmatist also plans to Reserva do Paiva in Santo Agostin- mistic for the next 10 years. “Global rent out his vacationing home ho, Pernambuco. Both are luxury sales volume in Bahia and Pernam- during most of the year. projects. The company partnered with real estate brokers in several

The tourist European countries for the promo- ha nd out Got to know Brazil on a recent tion of simultaneous inaugurations trip and can obtain resources in Brazil, England and Portugal. to purchase a second home “Foreign investors seek investment through a mortgage in his alternatives, mainly looking for country of origin. Investments capital appreciation, but they also are usually between ¤100,000 envision the advantage of vacation- and ¤200,000. The main ing in Brazil.” motive is to have a place to stay Phase one of Reserva do Paiva, during family vacations. with 67 houses priced between R$1.5 million and R$4 million, was The “flipper” launched at the end of last year and A small-time speculator hoping already 90% of the units are spo- to reap quick gains in real ken for. Of the total sales, 85% went estate investment in emerging to Brazilians and 15% to foreign- countries; brings liquidity to the ers - Portuguese, Spanish, French market. The “flipper’s” deal is to and English. Deals with European buy a middle-class home under customers were closed during two construction and sell after the international fairs: Barcelona Meet- grand opening, obtaining short ing Point and Lisbon’s Real Estate term profits of 20%. fair. “The buyer of this kind of house Sales drive: the Paiva Reserve in Brazil is advertised in a luxury condo in Portugal

64 P I B buco will leap from R$500 million to zilian market. Brazilian Gateway’s tate market. “We are supported by R$5 billion in this period,” says Mira. target is not the second-home buyer, the capital of European companies With an eye on this financial po- but the so-called “flippers,” already from several different segments,” tential, celebrities like Antonio Ban- heavily present in emerging Asian explains Robson Lima, director of deras, tied to Spanish investors, and markets and who have now turned Avenue Brasil. There are 350 units, British soccer giant David Beckham, their focus to short term returns between 60 and 120 square me- partner to multimillionaire Norwe- on real estate built for Brazilians ters, costing between ¤120,000 and gian investor Torben Frantzen are themselves. These investors seek ¤240,000. According to European participating in major real estate low-cost houses and income standards, our projects like the Cabo São Roque apartments that ap- projects are relatively Resort in Rio Grande do Norte and preciate between 15% low-cost.” are advertising stars for the middle and 20% yearly. “The Environmental Another group classes in their respective countries. English and Irish often angle is working on the Brazil- Not yet off the drawing board, the use this modality of in- a critical to ian market is Beltico, Cabo São Roque project, a 1,350 vestment to boost their an association of Eng- house condominium, will have a finances,” says Minas new projects lish and Portuguese in- branch of David Beckham’s World Gerais native Nara vestors that has several of Sport, soccer school and training Vidal, Brazilian Gateway director. large real estate projects underway center open to Brazilian and Euro- One of the strongest investment in Europe using the Praia Del Rey pean clubs. groups geared toward second home brand name, and is now moving In order to meet the needs of the projects is the Brazilian Tourism steadily into Rio Grande do Norte. real estate boom, real estate agen- Real Estate Development Company Beltico recently launched its first cies specialized in the Brazilian (Investur), a publicly traded com- project geared towards foreigners, market are cropping up around the pany that is supported by investors made up of about 40 houses. Beltico world. Such is the case of London- worldwide for the development of owns an area of over 1 million square based Brazilian Gateway, created to hotels and second home projects. meters in Timbau, on the Rio Grande attract British investors to the Bra- Investur, whose main investor is do Norte coast, and has just acquired Portuguese bank Espírito Santo, an additional 2.6 million square raised R$900 million on Bovespa, meters in Barra Bonita, where it is the Brazilian stock exchange. Inves- licensing a project under the Praia tur shies away from obvious desti- Del Rey name. The project will be nations such as Rio Grande do Norte complete with bungalows, marinas and Bahia, and is a step ahead of and entertainment centers. new trends. Among its most recent There is one large ‘but’ amid acquisitions are eight kilometers all of this euphoria: the question of beaches in Alagoas, delta lands of the environmental, which may at the mouth of the Parnaíba River thwart some investments. “Many in Piauí, and investments in Goiás of the projects make the mistake of and Pará. Its Onda Azul (Blue Wave) copying the model implemented in project seeks amongst other things the Mediterranean, where land is to transform Alagoas into an inter- scarce,” says Gil Lopes, director of national luxury destination within São Paulo-based GL Architecture the next 10 years. and Environment. “Because of this, Smaller companies, like Scandi- some projects end up being too navian Avenue Brazil, are also plan- dense and create environmental is- ning new projects. The company sues.” Such is the case of Warapuru, a was already distributing Brazilian luxury resort project in the region of shoes in Europe from its base in Rio Itacaré, southern Bahia. The project Grande do Sul, and starting in 2005 is under embargo since August, 2007, Sales drive: the Paiva Reserve in Brazil is advertised in a luxury condo in Portugal it decided to enter the local real es- for building in protected areas. z

P I B 65 Emerging Markets

ly exports. Prudently, the company decided to focus on Latin America. A time to reap In 1997, Artecola decided to conquer the regional market, which Sales from its five factories throughout then represented a mere 3% of its sales. In one decade, the company Latin America account for a third of revenues set up industrial operations in Ar- for Brazil’s Artecola. Now, the goal is to gentina, Chile, Colombia, Mexico increase profitability by Arlete LorinI and Peru. Last year, about one third of Artecola’s US$125 million total billing came from sales made arly this March, Latin in Latin America gives us a certain by its six factories outside of Brazil, America was shaken by a operational flexibility, in terms of which employ 300 of its total 1,200 brief crisis between Bra- cost, exchange rate, logistics and workers. Forecasts for 2008 are for zil’s northern neighbors even political crises.” foreign sales to reach at least half of Colombia, Ecuador and Kunst, the 40-year-old grandson total revenue. Artecola estimates its EVenezuela. Not only were diplomats of Artecola’s founder, has begun to participation in the Latin American extremely concerned, but there was reap the benefits of internationaliza- adhesives segment, worth US$1 bil- also consternation thousands of tion. The process began a decade ago, lion a year, at roughly 10%. miles to the south, in the state of Rio driven essentially by the new third- Grande do Sul. That’s where Brazil- generation leader as a way to grow Planning ian industrial adhesives manufac- the family business. “We realized Artecola’s globalization process was turer Artecola is headquartered. The that if the company were to survive planned to the tiniest detail, right company owns a plant in Colombia in an environment of globalization, from the very start. “We knew where that supplies both Ecuador and Ven- we couldn’t look only to the domestic we wanted to get to and what model ezuela, and there were threats that market for our sales,” says Kunst. “In we would follow,” explained Kunst. all trade would be halted. If the cri- our segment, we couldn’t really be a Starting from an initial market par- sis between the countries were not global company because our resourc- ticipation described as “sporadic”, immediately resolved, the company es were limited.” In contrast to the gi- the company installed a distribu- had already decided to use its other ants in the industry, such as German tion center in Buenos Aires by way unit in Peru to supply the conflicting Henkel, an adhesives market leader, of commercial representatives. Two countries. “We would not leave the Artecola opted for a strategy of dif- employees were sent to Argentina to market unsupplied,” says Eduardo ferentiation. The company makes investigate the market. “We decided Kunst, president of Artecola. “The customized glues and adhesives that to learn how to run a business abroad, fact that we have various factories require proximity to clients and rare- says Kunst. “Artecola’s characteristic

A decade on the road Key moments in Artecola’s process of internationalization

1997 2000 2002 2003 2005 2007 Globalization first Distribution centers Acquisition of a Bue- Opening of a Acquisition of a Purchase of appears in the are opened in Chile nos Aires factory distribution center company in Co- companies in Chile, company’s strategic and Mexico and beginning of in Peru lombia Argentina, Peru and planning. Artecola Mexican production Mexico opens a distribution (joint venture with center in Buenos Rhenoflex) Aires, Argentina

66 P I B Kunst: “we knew where we wanted to get to.”

Latin attraction One third of Artecola’s revenues now come from abroad Total net revenue Net foreign revenue (US$ million ) (US$ million) 1997 49 1,5 1998 50 1999 38 2000 48 2,7 2001 41 2002 43 5,0 rtecola : A 2003 53 7,7 ource

. S 2004 64 2005 79 16,5 exports

2006 97 rtecola /A ithout 2007 125 41,0 H a nd out *W feature is its conservativeness. We to acquisitions. Simultaneously, the Now on the verge of complet- don’t run unnecessary risks, we pre- company acquired three industrial ing 60 years of activities, Artecola fer to start a small project, learn from plants in Argentina, Chile and Peru, credits its survival to the deci- it and then take bigger steps.” then set foot in Mexico. Together, sion to invest in foreign markets. Two years later, Artecola repeated these four new acquisitions gener- “Had we stayed just in Brazil, we the experience, setting up commercial ated an additional $23 million in would likely be solving financial operations in two other Latin coun- revenues and added about 200 em- problems, or being bought out,” tries – Mexico and Chile – to test the ployees abroad. “The strengthening declares Kunst. “Along with new local market. Another two years were real currency accelerated our acqui- markets, internationalization has needed to make the decision of build- sition process,” said Kunst. “Com- provided us with improvements in ing its own production unit outside of panies abroad became a lot cheaper, efficiency for our Brazilian opera- Brazil. In 2002, at the peak of the Ar- while exporting from Brazil grew tions, as well.” gentine exchange rate crisis, Artecola more expensive.” Another factor Artecola now considers itself saw an opportunity and purchased a that contributed to the acceleration to be in the third stage of the in- factory in Buenos Aires. The decision of foreign purchases was the cre- ternationalization process, having caused Artecola’s participation in the ation in 2006 of a team dedicated gone through the phases of opening Argentine industrial adhesives mar- exclusively to seeking new oppor- distribution centers and making in- ket to leap from 10% to 30%. “We hit tunities for growth. “We define our dustrial acquisitions. With 16 facto- the nail on the head with that deci- target countries by looking at logis- ries in Brazil and five in other Latin sion. We took an opposite approach tics, market potential and existing countries, its operational structure from our competitors and, in less than cooperation treaties,” Kunst says. is in place. The next step is market one year, we had already recovered The increasing internation- consolidation. The company in- our initial investment,” Kunst says. alization of Artecola’s business tends to continue its acquisitions, In 2004, it was Colombia’s turn to becomes evident even in the com- but aimed at seeking logistical and receive a production unit. position of its first administrative industrial gains. It is now the mo- council, created in 2007. Three ment for Artecola to improve prof- Brazil’s strengthening of the five members are external, itability. “Over the last few years, currency from globalized companies such as we left profitability somewhat aside, Artecola’s big leap on the interna- Brazilian bus manufacturer Mar- to focus on growth. Now the time tional stage came in 2007, when it copolo, steelmaker Gerdau and U.S. has come to begin reaping results,” destined over half of its investments giant Dupont. says Kunst. z

P I B 67 New Markets The roar of the new tiger Vietnam is back in the news, this time on the financial pages. The reason? The mouth-watering opportunities of a dynamic economy that blends the best of nearby China and India By Maria Helena Tachinardi

razilian businesspeople Sales of manufactured goods to should pay attention to the European Union should reach what’s going on in South- US$8.3 billion this year, up from east Asia; more specifi- US$6.8 billion in 2006. What does cally, in Vietnam. Gone are this expansion have to do with Bra- Bthe days of bristled nerves in which zil and other developing countries? Jane Fonda, known for her criticism A lot. A whole lot. of Washington’s wartime decisions, There is one worrisome detail was called “Hanoi Jane” and singled nagging at an important segment out as a traitor by American soldiers in the Brazilian economy: some who returned home defeated. Fortu- Chinese companies which already nately, hard feelings about the bloody enjoy a competitive advantage in war between Vietnam and the United the international market are set- States, which left painful scars on ting up factories in Vietnam to fur- both sides, are increasingly scarce. ther reduce their production costs. Company in Vietnam: onetime They have been buried by time, by This trend is catching the attention enemy of the United States is the resumption of diplomatic rela- of Brazilian textile manufacturers, the second fastest-growing tions between the nations, and even for example – and flashing a yellow country in Asia more by the signing of bilateral trade warning light. treaty in 2000. As of the following The relatively young Vietnam- tel, director of the Brazilian Textile year, when Vietnam was officially ese textile industry exports over and Clothing Industry Association named as one of the countries with US$9 billion dollars worth of goods, (Abit). “But another problem is the which the United States maintains equivalent to nearly 1.9% of the lack of preferential import tariff “regular trade relations,” business has US$480 billion global trade in this agreements with the United States not stopped booming. sector. This is modest compared to and European Union, Brazil’s main According to the Vietnamese Chinese exports, responsible for clients.” Ministry of Trade, the southeast between 20% and 25% of the global Many people still recall events of Asian country expects to export total, but it represents a significant the early 1990s, when the first con- the equivalent of US$10 billion to volume compared to Brazil’s elderly tainers loaded with Chinese fabric the American market through 2008. textile industry, which lays claim to and clothing docked in Brazilian Last year, exports totaled US$8.4 a mere 0.5% of the world market. ports. The local textile industry was billion. The country sells textiles, “Brazilian textiles have lost their faced with harsh difficulties, and clothing, footwear, wooden articles competitive edge because of the ex- those who survived were forced to and seafood to the United States. change rate,” says Fernando Pimen- find new ways of working. There

68 P I B tiano Gomes da Silva, president of sonic have recently announced the Coteminas, a major Brazilian tex- construction of important installa- tiles company, announced that he tions in Vietnam. Panasonic now has was considering transferring to two factories in the country, one for Vietnam a factory originally sched- final products such as wireless tele- uled to be built in China. Other com- phones, and another destined to the panies may follow his lead. manufacture of components. Intel It may be one way to at least even already had microchip factories in out the playing field. Vietnam is China, but like other companies, it is considered the last Asian tiger that careful not to keep all its eggs in one is likely to grow emerging market claws. “It is a new basket. Thus, Viet- China with long- nam, a rising Asian term potential,” Coteminas wants star, was chosen to says Abit’s Pimen- to built a factory in host a US$300 mil- tel. “It has a popu- Vietnam that was lion Intel invest- lation of 84 million, ment. “Vietnam is which continues originally planned a hybrid of China to grow markedly.” for China and India,” says The Vietnamese Hicham Abdessa- economy expanded 8.4% in 2005, mad, vice-president of global solu- outperforming India’s GDP growth tion systems for Hitachi Data Sys- for that year. As the second Asian tems. “China is stronger in terms of country in terms of growth after manufactured goods, while India’s China, Vietnam is considered an strength lays in the sum of its infor- alternative to the region’s great mation technology talents. Vietnam emerging markets. Following the is a bit of both.” Chinese example, Vietnam’s pil- This has brought to light an in- lars of growth comprise cheap la- teresting facet of Vietnam. Over the bor, foreign direct investments and last two decades, poverty indexes industries geared towards exports. in the country have fallen to half of It has become competitive enough what they used to be, and income per images

with its current policies to attract capita, after having doubled in five investments away from Indonesia, years, reached US$690 in 2006. getty Malaysia, Singapore and Thailand, Despite all of its economic ad- were significant investments, and Asia’s “small dragons.” vances, Vietnam is still poverty- many companies went through a It doesn’t stop there, though. stricken, with one third of its child modernization process and became Vietnam’s communist government population suffering from malnutri- increasingly competitive. has set about building yet another tion. However, like every developing The current fear – especially in pillar and lavishing it with equally country, it has its pockets of wealth. light of today’s economy, marked special treatment. Along with tex- The luxury articles market is flour- by a strengthening Brazilian real tiles and clothing, the Vietnamese ishing in Hanoi, capital of Vietnam, against the U.S. dollar – is that this government has elected the food- and in Ho Chi Minh City, former new competitor may offer prices stuffs and electronics sectors as Saigon. Thousand-dollar Louis Vuit- even lower than the Chinese. After fundamental to its development ef- ton handbags, four-thousand-dollar all, Vietnam pays textile workers forts. It has attracted foreign direct Roberto Cavalla leather jackets and less than US$0.30 per hour. What’s investments in these sectors, and US$365 Gucci sandals are coveted the solution? Well…some companies the quality of those investments by a slice of society that has directly have begun to seek a solution - in the has improved year after year. Com- benefited from the recent boom in Far East. Last October, Josué Chris- panies such as IBM, Intel and Pana- foreign direct investments. z

P I B 69 Opinion The way of boldness Is this crisis as serious as it is claimed – US$ 30 billion to help overcome the Bear Stearns crisis, promising a recession in the US, a quarantine for also an apparently unlimited loan the rest of the world? Mário Garnero program to the biggest investment companies of Wall Street. These energetic measures by the Fed are rom a word not so cur- Abu Dhabi. Big banks won’t have unprecedented in the world finan- rent in financial circles to close down either in the US or cial history. In fact, by ignoring the less than six months ago Europe, but they will have to burn moral risks possibly entailed by sal- to a now all-too-frequent up those massive profits they made vaging Bear Stearns, the Fed is mak- expression in the news, from succulent subprime deals in ing a concentrated effort to prevent F“subprime” became the veritable recent years. a possibly devastating domino effect prima donna of the latest global fi- They will have to do it indeed, out of this particular bankruptcy. nancial tragedy. A crisis foretold in but with the help of central banks In this way, the Fed is correctly the United Sates, with ramifications and aided by the new world treasury betting on the power and recovery in European countries, subprime holders, Indian, Chinese, Russian, potential of American economy, became something of a daily bread Brazilian and – once more the most

for those who already feel its effects liquid banks in the planet after a hard /AFP in housing prices, in stagnated em- digestion of non-performing credits C ortez ployment, in cautious expenditure – the Japanese. Not all subprimes are Y uri reductions for fear of violent winds non-performing. Once the system´s foreboding financial hurricanes. But, liquidity is recovered, real estate one might as well ask, is this crisis prices will begin its progressive ral- as serious as it is claimed – a reces- ly and the ghost will be transformed, sion in the US, a quarantine for the with the important help of govern- rest of the world? ments, in liquid assets. First, to qualify some worries of In spite of that, it is undeniable the financial markets and, because that the shock started by the Ameri- of all the din, of lots of people in the can real estate market threatens to street, here, there and everywhere: take by storm the world´s entire finan- Insolvency cases with Ameri- cial system. And yet, once again, cen- can banks are no novelty. The lat- tral banks come to the rescue. In fact, est “rescue operation” before this on March 11, the Fed has announced one, created by the subprime crisis, loans of about US$ 200 billion to occurred in the Reagan administra- mitigate the credit problem in the fi- tion. Banks were saved, Citi, Manu- nancial market. The measure had no facturers, Chase, America, all with significant results on the face of the an intelligent combination of low investors´ growing lack of confidence interest rates and extension of loan in the solidity of the main players, a terms which allowed them to clean skepticism made worse by the recent up their credit portfolios. And, more news that an investment bank such as particularly, thanks to Saudi prince Bear Stearns, on the verge of collapse, Al Whaleed´s decision to become, has been absorbed by J.P. Morgan for modest prices, Citi Group´s big- Chase for US$ 236 million. gest private stockholder. Now Citi The Fed charged again, an- pulls it off again, with money from nouncing a new credit line of about

70 P I B increasingly willing to collaborate ment flow compen- by the steady gains with the great actors of the financial sates any lessen- in productivity in market and help them weather the ing of interest for Banks won’t fold, world economies. storm without risking shipwreck. American treasury but they will have The world´s And there is reason for optimism. bonds. The nega- anti-depression In fact, the United States is rap- tive interest rates, to burn up the huge reserves lie in the idly reducing its trade deficit, from below the inflation, profits they made combined force of about 6% of GDP. Within two years will cause – at first, from succulent countries that grow the country will be close to the his- when companies at rates of about toric average of 3.0-3.5%, that is, come to notice a subprime deals 11% a year, such US$400 billion to US$600 billion reversal in nega- as China, added – always an opportunity for coun- tive economic expectations – an to others, such as India and Brazil, tries like Brazil that can increase important surge of investments in with a minimum growth of 5% this their exports. production capacity. year – let alone South Africa, Angola The undervalued dollar relative Thus, I do not believe in the end and other African countries, such as to the euro, real and yen, and the of the world, economically speaking Libya and Morocco. Chinese trade surplus generated by – in fact, I still believe oil prices will To top it off, there are the Gulf the undervalued yuan are creating a reach US$ 150 per barrel, and not countries, and oil producers like Rus- massive rush towards American as- before long at that. And, once again, sia, which add up to more than US$ sets and companies, and the invest- these rising prices will be absorbed 10 trillion of sovereign reserves, that is, the yearly amount of wealth gen- Saudi prince erated by the United States. These Al Whaleed: countries are today´s true IMF. saviour of All this, I believe, serves as a use- Citi Group ful reminder to Brazil that its privi- leged reserves, its fiscal surplus and, more particularly, its trade and payment balance will last indeed. But not indefinitely. The government, the entrepreneurs, society as a whole, all of us have to set ourselves goals. In order to maintain our present comfort, we must go further than just discuss dollar prices or interest rates in a free-fluctuating exchange system. It is our task to invest in our impoverished infrastructure, in technological innovation, in the improvement of systems and procedures, in importing equipment and material inputs vital for gaining and keeping a competitive edge in terms of prices and quality in industrial and agricultural products, in exportation of services – it is our task to make the cherished goal of reaching US$ 330 billion in exports per year come true before 2012. The way is not one of lamenta- tion, but of boldness, as becomes a leading nation. z

P I B 71 Ideas

the international market with an Access to unprecedented appetite. Since 2006, Brazil’s outward foreign direct investments have been greater international players inward FDI. Million-dollar acquisitions such as Vale’s 2006 purchase of Canadian mining company Inco can be strategic for a whopping US$26 billion dollars are the most visible signs of One interesting strategy for generating good business this phenomenon. But there are many others, however. Last year, is paying close attention to the latest thinking, the United States Ambassador to policies and programs of international institutions Brazil, Clifford Sobel, revealed an and think-tanks by M arcus Peç anha e Jonathas C ampos interesting figure. Brazilian investments in the United States, he said, leapt 300% in 2006, compared to razilian companies have the previous year. And they kept recently been discover- right on growing through 2007. ing new and powerful Amidst this scenario of total ex- allies in their ever-in- pansion, where opportunities are creasing process of glo- sought ever more aggressively, the Bbalization: international institu- advantages offered by international tions that formulate cooperation institutions become clear. Closely and development policies, and or- following negotiations about free ganizations dedicated to the debate trade in different parts of the world, of ideas – the so-called think-tanks. for example, can open doors to some Getting to know these players, un- enormous possibilities. Knowledge derstanding the role they play of credit lines offered by the Inter- in the international system and American Development Bank (IDB) hitching a ride on their enormous or the World Bank (IBRD) can also capacity to point out opportunities help. These, plus the correct use of can make all the difference when lobbying – which in Brazil actually it comes to closing good business carries a negative connotation – can deals abroad. Companies that form produce very clear results: access a relationship with these organiza- to markets in other countries, not

tions, participate in the events they a least of them the world’s largest promote and stay up to date with nd economic powers. cale their publications often end up Opportunities can be found ev-

discovering sources of opportuni- arcelo erywhere. Brazil’s entry into the Or-

ties that they would become aware n: M ganization for Economic Coopera- of only months later, through the tion and Development (OECD), if regular media. And by that time, it and when confirmed, may generate illustratio would often be too late to take ad- a significant volume of good deals. vantage of the opportunities. explained by the relative newness The OECD is an intergovernmental This tactic, of seeking a closer of internationalization for Brazil- institution made up of developed relationship with such organiza- ian companies and their relative countries, in which member coun- tions, is used by companies all over inexperience in the area. It’s a tries meet to exchange information the world. In the case of Brazilian recent process, but one that’s ac- and coordinate their policies. This companies, however, it is yet to celerating fast. Over the last few coordination includes tributary become widespread. This is easily years, Brazilian groups turned to systems, for example, which allows

72 P I B for a certain facilitation of bilateral ergy Secretariat, SENER, to evalu- Companies like aircraft manu- deals in terms of taxing, by help- ate feasible scenarios for the use facturer Embraer, steelmaker Ger- ing avoid double taxing of goods of ethanol and other biofuels. It is dau, mining giant Vale and con- and services. This can eliminate a interesting to note that one of the struction heavyweight Odebrecht whole slew of difficulties that Bra- conclusions reached in this particu- have shown that internationaliza- zilian companies face in accessing lar case was that sugarcane was the tion can be a great opportunity markets. Companies that pay close most competitive solution for the for market expansion, not only at attention to these negotiations and local market. moments when begin a process of early approxi- Much like IBD, the domestic mar- mation to such institutions are the World Bank ket is in crisis, but able to know where, when and to promotes develop- Learning about also during times whom they can offer their goods ment through in- IBD and World of normal growth. and services. It should be stressed vestment funding Bank credit Although global- that there is nothing wrong or un- and the dissemi- ization strategies derhand about this practice. It is nation of techni- lines can show adopted by each information, rather than privilege, cal knowledge companies a of them vary, one that is sought. to companies in pathway to thing is for sure: Establishing a plan of action to several segments the high exposure interface with the most varied seg- from developing opportunity of these compa- ments and organizations has proved countries. It does nies’ brands on the to be an important tool for compa- this via the International Finance global market means more orders, nies to defend their short, medium Corporation (IFC). In 2006, the IFC and consequentially an increased and long term interests. A strategic approved a US$25 million loan for volume of opportunities on the presence in Washington, for ex- ECOM Coffee – the world’s num- world market. ample, may allow some companies ber three coffee trading company There is another important in the ethanol segment to invest – to facilitate Central American common denominator among them: in Central America with technical coffee farmers’ access to credit for they all have strategic presence in support from the IDB and funding the expansion of their operations. Washington and in Geneva, Swit- by private North-American banks, IFC also signed an agreement with zerland, where a number of relevant with low interest rates spread out ECOM and Nestlé to implement a international institutions are based. over a longer period. This would consulting project, which may help Furthermore they all support Bra- guarantee free access to the U.S. up to 8,000 farmers in increasing zilian think-tanks such as the Bra- market, as CAFTA (the Central their production. This project will zilian Center for International Re- America Free Trade Agreement) bring local production into line with lations (Cebri), they all closely fol- specifies zero tariffs when export- Nespresso AAA practices, as well low the government foreign policy, ing to the U.S., where production as with environmental and social and they all monitor negotiations of flex fuel automobiles at large car standards established for the inter- for bilateral free trade agreements manufacturers is expected to reach national coffee community and the in several different countries. In 50% by 2012. Fair Trade Labeling Organization. other words, they all actively pur- The IDB is an international Companies seeking to interna- sue sources of information that can organization for the funding of vi- tionalize should also pay close at- stimulate their business. able economic development proj- tention to the results of the World Putting it in a nutshell –under- ects, and constitutes an important Trade Organization (WTO)’s Doha standing the global, political and source of financing and technical round of negotiations. A World economic structures, and putting knowledge for companies and gov- Bank study showed that if the Doha into place programs to interface ernments. According to Arnaldo round produces successful results with the various players in today’s Vieira de Carvalho, from IDB’s En- for the agricultural and industrial international system, will serve not ergy Division, a technical assistance goods sectors, world trade could only to expand knowledge. It is also operation was carried out between grow by roughly US$100 billion useful for opening doors and gener- the bank and Mexico’s National En- per year. ating business opportunities. z

P I B 73 Finance

Looking to migrants

Major Brazilian bank to open retail its number of points on presence on the global map must be increased. branches in the United States This will require an initial invest- By Juliana Garçon and Andressa Zanin Rovani ment of US$44 million and is taking place in a very delicate moment for financial institutions in the U.S. The pening branches people who emigrate to do modest scenario, however, is more reassuring seems like one of the jobs are not fluent in English. than frightening. “It has not altered most obvious ways BB’s US expansion, announced in our original plans, but we have be- for Banco do Brasil February, has been planned through come more conservative regarding to expand its retail the last two years and was drawn up the whole process and its expected Obanking operations. On its home on the understanding that, in order to results,” Marcondes admits. “From turf, the state-owned bank has 3,155 become competitive on foreign soil, the perspective of someone entering branches and 9,277 customer service points – numbers should grow over BB in Japan: the next few years. With over 40 Experience with branches overseas, BB – as it is often Japanese dekassegui called – now plans planting its feet emigration helps firmly in U.S. retail soil, the planet’s penetrate new most highly disputed market. “We markets believe in the future of Brazilian immigrants,” says Sandro Kohler Marcondes, director of Banco do Brasil’s international sector, referring to workers who move country seeking employment. Currently, about two million Brazilians live in the United States. As soon as they are settled, emigrants begin sending money back to Brazil and it is this money BB is targeting. Only the U.S. authorities’ final authorization is needed before the first branches can be up and running. The secret here is in the domino effect that this service should create. If a Brazilian emigrant opens an account at a US branch of BB, there is a significant potential for family members in Brazil to become clients of the

institution. “That will be our great- B rasil est potential,” highlights Marcondes. d o

There will be Brazilian employees at a n co /B the agencies, which should make life

easier for future clients. Many of the H a nd out

74 P I B the market, the existing competition has already been hurt by the crisis.” Snakes shipped In other words, the bank plans opening its doors at a peak crisis moment worldwide for the U.S. credit market, which has Potentially lethal poison is the left part of its rivals out of combat. medicine that stimulates a small business headed by entrepreneur Helena Perez. Discreet revolution Her company, Bratox, is growing at a 50% International market presence is not yearly rate, based on the sale of poisons exactly a new feature of BB’s life. The from the glands of rattlesnakes and native bank maintains subsidiaries in other Brazilian pit vipers, or jararacas. Head- countries to provide support for large quartered in Campinas, in the interior corporate clients. “Our role is to of São Paulo state, the company began Helena, from help Brazilians do business in places obtaining positive results only once it had P ero n Bratox: at BB’s where we are present,” states Nilo begun to use Banco do Brasil’s Business Business Center José Panazzolo, director of the in- Center Project. Last year, the company M arcos stitution’s foreign trade department. grossed R$200,000 in revenues, which should climb to R$300,00 this What is driving the international year. It was thanks to BB’s project that Bratox was able to overcome two expansion model is the increased issues that usually keep small businesses away from exports. The first is focus on individuals rather than cor- receiving invoice payments from clients spread throughout countries such porations. This process began to take as India, France and China. The other is dealing with the red tape that shape in the mid 1990s, when over- usually drowns small businesses intending to sell across national borders. seas retail activity became increas- Bratox’s main clients are companies that use venom from Brazilian ingly strong, especially in Japan. snakes as raw materials for drugs that act on the human nervous system The institution has, from the (rattlesnake poison) and for blood clotting (as in the case of jararacas). very beginning, followed the wave of The Business Center takes care of the whole process: contacting potential dekasseguis, Brazilian descendants international clients, correctly filling out all necessary documentation. It of Japanese immigrants who go back is also responsible for shipping merchandise. “We inform Banco do Brasil to Asia, seeking opportunity in the about the shipment forecast and the system automatically establishes the land of their forefathers. Eighteen delivery deadline,” says Helena. The system has 5,500 registered export- years ago, a change in Japanese law ers, including small businesses and craftsmen. The overseas contact net- opened the country’s doors to sec- work lists 1,700 potential importers. Payments never exceed US$20,000, ond-generation descendants, gener- allowing clients to use a Simplified Declaration of Export (DSE). ating a migratory wave. In next to no The Bratox snakes live in Morungaba, a small town not far from time, 300,000 Brazilians had moved Campinas. The company’s installations are licensed by the Brazilian to the Far East. Of the three million Environmental Protection Agency, Ibama, and the whole process is legal- money orders that BB receives year- ized. Once a month, adult snakes (over two years of age) have their venom ly from overseas, 800,000 originate extracted and crystallized for export. With Bratox’s expansion, the snake in Japan. They tend to be relatively farm is due to expand and new installations are planned for the state of small payments, between roughly Maranhão, in northern Brazil. This year, the company hopes to double in US$50 and US$300. Despite their size and sales volume. (J.G. and A.R.) individual size, however, together they add up to a significant volume. In 2006, the volume of money sent The fight for a foothold in the tion. Once they own a bank account, by Latin Americans in the United North American market promises Brazilians can be identified and “ac- States to their respective countries to be a bigger challenge. First, Bra- counted for,” even if they are in the totaled US$68 billion. It is nearly the zilians are spread throughout the US, country illegally. However, BB and same as the total of foreign direct in- and the vast majority are not legal other financial institutions are far vestments in the region, US$72 bil- residents. For Banco do Brasil, this more interested in identifying clients lion in that year. means conducting a discreet revolu- than in these clients’ legal status. z

P I B 75 Globe-Trotter

In the heart of Amazon Bradesco decided to enter Amazon once and for all. The Brazilian in our company´s DNA,” explains bank embraced, at the end of 2007, a project that brings a new view Milton Vargas, Bradesco´s vice- to the issue of sustainability. Bradesco has co-founded, together president, responsible for the with the state of Amazonas, the Sustainable Amazon Foundation. bank´s sustainability actions. The initial investment amounted to R$ 20 million. Another US$ “This does not mean putting 50 million should go into the project within the next five years. aside profits. We are extending Developed by the government of Amazonas and led by former State our business in order to keep minister Fernando Furlan, the foundation has the goal of preserving 17 it sustainable too,” he adds. million hectares (about 42,5 million acres) in the region and developing Amazon´s great visibility in local communities which use the rainforest as a means of subsistence. the whole planet is one of the The principle is very simple: a family that does not deforest the area reasons for Bradesco´s investment around its house will receive livelihood resources while searching for in the world´s largest green other options. This is the so-called Forest Wage, which already counts area. An action such as this may two thousand families enrolled for a monthly stipend of R$ 600. enhance the Brazilian bank´s Bradesco´s president, Márcio Cypriano, has recently been in international visibility. Being part Amazon checking out the project, together with the Governor of of the Dow Jones Sustainability Amazonas state, Eduardo Braga. Resources will be obtained by Index, together with only six Bradesco through sales of products exclusively related to the initiative, other Brazilian companies, as credit cards, saving accounts, investment funds, insurance Bradesco hopes that private and private retirement funds which may use the Foundation´s socio-environmental investment name. The institution intends to act as a kind of link between may serve as a distinguishing the consumer´s desire for doing good and effective action. mark for corporations looking “We are aligned in our capacities for raising resources and attracting for international deals with

clients for privately-conducted social investments. Actions like these are Brazil. (Andressa Rovani)

out nd Governor Braga, from ha Amazonas (left) and Cypriano, from Bradesco: two thousand families enrolled for the Forest Wage

76 P I B Circuit Conferences, exhibitions, debates and seminars on carbon, the environment and sustainable development are part of the schedule for the next months. Check out some of the most important taking place between April and July 2008.

CARBON MARKETS AMERICAS April 15 and 16, São Paulo, Brazil Third edition of a conference and exhibition bringing together Latin America´s carbon market. Phone: 44 20 7801-6333 www.greenpowerconferences.com

BRAZIL TECHNOLOGICAL Côte d´Azur: May, 26 to 29, Sandton Convention lessons in Centre – Johannesburg – South Africa The event, organized by Apex-Brasil, sustainable promotes Brazilian expertise in tourism for intensive technology segments.

Brazilian H erv é/AFP www.apexbrasil.com.br technicians

H ughes TOWARDS A LOW CARBON ECONOMY 2008 CONFERENCE June 25, London, England Environmental mosaic A Conference focused on development With one year left for the beginning of celebrations connected of businesses in the segment of carbon with the France Year in Brazil, another important partnership has been trading, environmental and carbon- reducing technologies. The event will concluded between Brazilian and French governments. This time, the receive 70 guests from 14 emergent goal is the sustainable development of nine protected areas in the states economies searching for alternatives of Bahia, Ceará, Minas Gerais, Paraná, Piauí, Rio de Janeiro and São to cope with climate change. Paulo, chosen by the Brazilian Ministry of Environment. The high point [email protected] of the partnership is a project baptized as Mosaic of Protected Areas. XVIII WORLD CONGRESS ON France´s contribution consists in exporting expertise, not only SAFETY AND HEALTH AT WORK in maintenance and valorization of environmental reserves, but – SAFETY AND HEALTH: A also in the socio-economic development of such areas. In practice, SOCIETAL RESPONSIBILITY representatives of the nine areas involved and people responsible for June 29 to July 2 – Seoul, South Korea the project in Brazil will be trained and guided by French specialists. The event will receive about 3,000 specialists in the fields A well-defined program with concrete measures has already of labor safety and health. been established by the French last February, in a meeting at the www.safety2008korea.org Federation of French Regional Parks, in Paris. Three training programs are scheduled for this year in France. The first one, at the Rhône-Alps SUSTAINABLE region (near the Swiss and Italian borders), will address the valorization DEVELOPMENT FORUM 2008 of agricultural resources and focus on the Paraná area. “Our products May 2, Cipriani Wall Street – have received a seal of quality. And, in order to keep it, we continually New York, United States Organized by the United Nations instruct our workers and constantly supervise production,” says Association, the second edition of Michèle Eybalin, counsellor for the Rhône-Alps region. The second this forum will have the distinguished program, at Côte d´Azur (Southern France), will have sustainable presences of Al Gore, 2007 Nobel Peace tourism as the subject. The third one, to be conducted at the region Prize winner, and of former President of of Pas de Calais (Picardy), will be about management of sustainable the United States Bill Clinton, among other global personalities such as Prince development projects. The initial investment by the Brazilian National Charles. This year´s forum will address Fund for the Environment is estimated as R$ 2,5 million. The French the need for coordinated action between investment will amount to € 600,000, provided by the French Ministry corporations and governments in order to of Foreign Affairs and by the French regions involved in the project. prevent huge economic damages likely to come from environmental degradation. www.unab.org.br Andrea Flores, from Paris

P I B 77 PIB supports sustainable development.

Some problems are harmful to our planet. Indifferences is one of them.

Sustainable Development Forum 2008 Conﬁrmed Speakers: Al Gore e Bill Clinton Date: May 2nd, 2008 Place: Cipriani Wall Street

More informations www.unab.org.br or 55 11 3094 7990

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78 P I B

anubra202x266.indd 2 3/25/08 12:33:13 AM Okamoto: consortiums are a way to take small enterprises into the foreign market ha nd out / A lmei d a d e F o n seca V i n icius

PIB | What kind of support The internationalization may be offered in this case? Okamoto | One of the most inter- of the small esting possibilities we see are consortiums. They allow someone to A SURVEY on “Micro and small ternationalization of Micro and Small sell jewels, for example, to six or enterprises in Brazilian exports Enterprises. The initiative includes ten companies simultaneously. We 1998-2006”, conducted by the Foun- such partners as Funcex and the Bra- are working with the Ministry of Fi- dation for Foreign Trade Studies zilian Trade and Investment Promo- nance to regulate these consortiums (Funcex), by request of the Brazilian tion Agency (Apex-Brasil), which and open up to them the possibil- Support Service to Micro and Small investigates potentially interest- ity of raising funds on the market. Enterprises (Sebrae) and based on ing markets for Brazilian companies. data provided by the Brazilian Foreign Sebrae´s president, Paulo Okamoto, PIB | In which other areas Trade Secretariat (Secex) arrived at talked to PIB about the organization´s is Sebrae taking action? some startling – and very positive – plans in the international field. Okamoto | We also want to find, figures. In 2006, the average amount through partnerships with other of exports by small enterprises rose PIB | Which are the main countries, a way of integrating Latin by 11,3% (US$ 148,5 million), while difficulties faced by companies America from its pool of small en- that by micro enterprises rose by in order to export? terprises. There are initiatives in this 5,3% (US$ 1,76 billion) in comparison Okamoto | One of the major dif- sense in Brazilian states bordering to 2005. The worrying fact revealed ficulties for small enterprises, be- on other countries, in truly “bi-re- by the numbers is that the universe of sides satisfying the legal proce- gional” projects: Mato Grosso and direct exporters diminished by more dures involved, is to keep special- Bolivia, Mato Grosso do Sul and Par- than 4%, from 14,000 micro and ized personnel to take care of the aguay, Acre and Bolivia, Rondônia small enterprises to little less than exports. These are expensive pro- and Venezuela, Paraná and Para- 13,000 in the period 2004-2006. fessionals, who travel a lot. We are guay and so on. In Latin America In order to expand the basis of en- working together with enterprises as a whole, our goal is to create a trepreneurs abroad, Sebrae is open- that ceased to export to help them virtual marketplace with perma- ing a new front called Program for In- come back to the foreign market. nent business rounds. (Nely Caixeta)

P I B 79 Globe-Trotter

Lemons for the Orient Always on the lookout for new markets, Exportaminas, the state of Minas Gerais´ export program, has chosen the Middle East as a special outlet for small exporting companies in the state. For the next two years, the United Arab Emirates are to be the main entrance gate for Minas Gerais products in the region. In addition to the absence of trade barriers as hard as the European ones, the Arab world is seen as a first class buyer. Minas exporters have sold US$ 591,8 million to Arab League nations in 2007, an 18,4% rise in comparison to the previous year. Food products, industrial and in natura, will be especially favored by Exportaminas due to the demands for this kind of export in the Middle East - lemons will be first.(AR)

Making way: Exportaminas starts with lemons ha nd out FedEx turns to the small FedEx, operating in 220 coun- ready associated to PyMEx Member- tries, is now aiming at small and medi- ship, a support program for export ini- um-sized Brazilian companies. More tiatives. FedEx is promoting a series than 1,600 such companies are al- of workshops throughout Brazil offer-

ex ing foreign trade solutions to entre- d e

/ F preneurs and executives interested in

out selling their products overseas. nd

ha The program is conducted in partnership with industry federations of the Brazilian states of São Paulo and Santa Catarina – FedEx just opened a base in Blumenau to have a closer look at the expansion of foreign sales by Santa Catarina companies.”In Brazil, only 4% of exports originate in small and medium companies,” says Carlos Ienni, FedEx director for Mercosur.”The potential for growth Via Uno: in this segment is huge. In Mexico, sophistication for example, small companies rep- to counter resent 40% of international sales.” unfavorable exchange rates Carlos Ienni: supporting exporters (João Paulo Nucci)

80 P I B Sugar for Syria One of today´s largest private undertakings C ori n thia s in Syria is partly financed by Brazilian capital.I n operation since the beginning of 2008, the country´s g ên cia ./A

J r They got game: first sugar refinery was built with 51% of the capital Santana´s coming from Assaf Invest, one of the biggest

A ugusto new logo on companies in Syria, and 49% of foreign investments. Fortaleza´s shirts Crystalsev, a company from Ribeirão Preto, holds Da n iel 10% of the business and will provide the raw sugar Call me Textiles for the processing. A good deal of the machinery is also Brazilian. Brazil is Middle East´s biggest sugar SANTANA TÊXTIL, a traditional denim producer in the supplier – shipments to Syria only amounted to US$ Brazilian state of Ceará, has changed its name: now, the 111,7 million last year, equal to 57% of all Brazilian company, managed by Raimundo Delfino, will be named exports to that country. In terms of volume, sugar Santana Textiles. The change is due to the beginning of shipments amounted to 349,400 tonnes, half of the the group´s international career, with the opening of an total consumed in Syria. (AC) indigo factory in Puerto Tirol, a town in the Argentine Damascus: province of Chaco, last December. At first, the new /AFP Crysalev´s factory will be able to produce 18 million meters of mages

I new focus textiles per year, reaching 30 million meters by 2010. etty

The new unit is Santana Textiles´ fifth factory – the / G others are located in the Brazilian states of Ceará, Rio alkawi

Grande do Norte (two) and Mato Grosso. The company, M alah also planning to inaugurate facilities in Mexico with a S view to the American and Canadian markets, sports a new logo, which may already be seen on the shirts of Fortaleza, Ceará´s latest soccer champion. (CN)

New breath After the shock suf- gy? More added value. Via fered by the shoe industry Uno, a Southern-Brazilian with the falling dollar pric- brand, is a good example: es, entrepreneurs braced they betted on design and themselves and are begin- sophisticated material and ning to turn the tables. Ac- managed to maintain the cording to Abicalçados, the same results they had be- segment´s professional as- fore the dollar´s undervalu- sociation, the volume of ation, exporting half of their exports in 2007 has fallen production. The company yet again, but revenue is on has grown 13% above the the rise (2,6%). The strate- market´s average. (AC) ha nd out

P I B 81 In Transit • José Carlos Pinheiro Neto*

Live birds Just one of the dishes that the vice president of General Motors do Brasil was required to taste while traveling the world

My professional responsibilities markets. Much like a traveling salesman, I visited Africa, Asia, have made traveling a part of my routine over Oceania, Eastern Europe and the Middle East. This showed the last few years. My job means I have to be me that, on a business trip, everything one needs to know is in constantly present in several Brazilian cities, the details, in the perception and interpretation of a glance, in and often in several different countries. All of the way business is conducted and above all, in each place’s my accumulated experience has taught me particular style of hospitality. that traveling, besides being a professional In every country, a different culture - and in every city a new obligation, is a never-ending source of kno- ritual. There was always the surprise of typical regional cuisine wledge and learning. The experience I have – which really teaches you more about the country you are vis- accumulated after visiting dozens of cities le- iting than any travel guide ever could. If etiquette says that it is aves me no doubt as to the privilege of having the host’s responsibility to introduce the guest to typical region- gotten to know such incredibly different places al dishes, it also holds that the guest should never turn down the as Oiapoque, in the northern Brazilian state of chance to taste what is served. This could often mean surprises Amapá, and the Zang-Zen province in the Chi- that are less than pleasant. Among unforgettable dishes I have nese countryside. had at my table is a live bird, with feathers and beak included, At the end of the 1990s, I was responsible served to me in China. But the magic I performed to taste this for the company’s export sector, which at dish shall remain my secret forever. the time was reaching out to promising new There are always enormous challenges on business trips. Among them is understanding and being understood at meetings in which any type of miscommunication could damage multimil- lion dollar negotiations. If you do not feel confident, use an inter- preter. The notable writer Eça de Queiroz once wisely wrote “a spy must speak a second language fluently, otherwise he is dead.” Obviously anyone who speaks English along with their native language can make do in many countries. It is curious, however, /VALOR to spend hours in negotiation with a Japanese entrepreneur and

I magem notice that every once in a while he nods his head up and down, a gesture any westerner would interpret as a ‘yes.’ Sadly, this is not the case. He didn’t agree with anything you said, and you will have to repeat all of your arguments once again. Knowing the importance of details such as these is fun-

olha GIA ND ALIA/F PAULO damental. It is essential for the success of your business trips that you consolidate the experience accumulated from hours and hours of travel and all of the cultural bag- gage that life has offered you. Even experience gained from tourism is handy. There is no doubt that these trips enrich our cultural repertoire. Being up close and personal with Mi- chelangelo’s David in Florence, or examining the works of impressionist painters in the Orsay Museum in Paris, bring joy to the soul and give us lasting memories. z

*José Carlos Pinheiro Neto is vice-president of General Motors do Brasil

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