FLYING HIGH Embraer Was Founded in a School and Makes Planes for the Whole World

totum Year 3 Number 8 Aug/ Sep 09

OIL Petrobras looks abroad for markets for the future production from the pre-salt layer

IDEAS How the Amazon region is making the Argentinean pampas and Brazil´s scrublands fertile FLYING HIGH Embraer was founded in a school and makes planes for the whole world. Forty years later, it continues to pin its hopes on education to reinvent itself

ANTENNA

English training school to play football teaches the Brazilian way By reading, RINO you can travel the world.

Travel to wherever your imagination wants

to take you. Just open a book. São Paulo

State Government, through Imprensa Oficial,

is working to preserve the living memory of

Brazilian daily life, publishing books that

are culturally relevant, democratizing access

to knowledge. There are over 500 titles ready to

present you with new surprises, new experiences,

new universes.

The magic of books closer to you.

www.imprensaoficial.com.br/livraria

IME0409-0057_404x266_bailarina.indd 2 9/1/09 2:47:42 PM By reading, RINO you can travel the world.

Travel to wherever your imagination wants

to take you. Just open a book. São Paulo

State Government, through Imprensa Oficial,

is working to preserve the living memory of

Brazilian daily life, publishing books that

are culturally relevant, democratizing access

to knowledge. There are over 500 titles ready to

present you with new surprises, new experiences,

new universes.

The magic of books closer to you.

www.imprensaoficial.com.br/livraria

IME0409-0057_404x266_bailarina.indd 2 9/1/09 2:47:42 PM Contents

COVER STORY 34 Why education played a vital role in Embraer´s transformation into a giant of the global aviation industry W.F. PADOVANI ISTOCKPHOTO MARCELO CALENDA

INTERVIEW 30 Stable, ﬂ exible and enterprising: Brazil and its people, according to ex-U.S. ambassador Clifford Sobel NELY CAIXETA

BOOK HANDOUT 56 42 A manual to face the legal barriers imposed by developed countries on agricultural imports FLÁVIA CARBONARI, FROM WASHINGTON

ENERGY ANTENNA 44 In search of markets for producing the 10 An English network of mini-soccer schools is pre-salt, Petrobras is shifting its spreading the “made in Brazil” concept international strategy LUCIANNE CARNEIRO TECHNOLOGY 22 A technological center born from a technical school EXPORTS in a small Minas Gerais city wants to dominate the 48 Is anyone capable of standing up to China in digital TV market both here and abroad the European nylon fabrics market? Vicunha JOSÉ MARIA FURTADO Europa believes it can. SUZANA CAMARGO, GENEVA ANALYSIS 28 A strategy still needs to be deﬁ ned, and the support of SURVEY Brazilian multinationals must be better coordinated 51 The ranking of Brazilian RICARDO U. SENNES multinationals

4 P I B ANA ELISA ORIENTE

74 BARBARA KRAFT BARBARA KRAFT

ISTOCKPHOTO 60

FINANCES 52 Brazilian banks are taking their ﬁ rst steps to enter new ﬁ nancial markets CLÁUDIO GRADILONE

MARKET 56 Brazilian craftsmen are ﬁ nding a new ally to expand their sales abroad – the Internet MARÍLIA SCALZO

IDEAS Why the excessive deforestation of the Amazon could 78 60 transform Brazil’s Southeast into a desert JOSÉ RUY GANDRA CAREER HOW IT WORKS 74 Brazilian executives are coming 67 In the debut of our new section, discover how to home, ﬂ eeing the international crisis produce an advertising campaign... in China and attracted by good opportunities right Antonio Carlos Santomauro here in Brazil ROSELI LOTURCO TALENTS 68 Creative Brazilian advertising executives are making GLOBE TROTTER their name in Eastern Europe and the Middle East 78 Executive Travel: The world’s best hotels, by ADRIANA SETTI, BARCELONA Marco Rezende Express Tourism: The must-dos of SPORT New York, by François Payard 73 Hunting the soccer superstars during the transfer window In Transit: Rodrigo Toni’s experience CÉLIA CHAIM of living (comfortably) in Singapore

P I B 5 Editorial

TOTUM EXCELÊNCIA EDITORIAL Letter to Nely Caixeta

PIB the reader BRAZILIAN COMPANIES GO INTERNATIONAL

An experienced Brazilian lawyer recalls that, not A TWO-MONTHLY MAGAZINE FOCUSING ON too long ago, it was standard practice for his fellow INTERNATIONAL BUSINESS AND ECONOMICS lawyers, in international meetings, to change the Publisher /FMZ$BJYFUBt[email protected] topic of conversation when they saw, from his ID tag, Contributors to this edition where he came from. This doesn’t happen anymore. Brazil has Adriana Setti ( Barcelona), Arnaldo Comin, (Madri), Armando Mendes, Andrea Flores, (Paris), Antonio Carlos become a good topic of conversation, due either to ethanol (the new Santomauro, Célia Chaim, Cláudio Gradilone, Flávia talk of the town), the success of Brazilian multinationals in global Carbonari, de Washington, François Payard (Nova York), José Maria Furtado (Belo Horizonte), José Ruy Gandra, markets, or Brazil’s political presence at international forums. Lucianne Carneiro (Rio de Janeiro), Marília Scalzo, Marco Rezende, Nara Vidal (Londres), Ricardo Sennes, Roseli How did this happen? For various reasons, but the presence of Loturco, Suzana Camargo, de Zurique, W. F. Padovani Brazilian companies abroad is certainly one of them. And out of all the cover multinationals that helped turn the world’s attention to Brazil, one jumps Marcelo Calenda Illustration off the page: Embraer, a manufacturer and exporter of high-performance Marcelo Calenda and Tato Araújo aircraft. At the end of the day, when an agricultural and iron ore designer Christiano Cinquini exporting country starts to make and sell modern aircraft, people realize Photo Editor something is changing. Celisa Beraldo photographers And if they look closer, they will see that change was only possible Ana Elisa Oriente.Felipe Christ and Fernando Battistetti because it was based on solid educational foundations – the teaching and Copydesk and Preparation research institutes created by the Aeronautical Ministry in the 1940s, in Márcia Melo Translation São José dos Campos. Loyal to its roots, Embraer continues to prioritize Brian Nicholson, Christine Puleo and Kevin Wall the creation of knowledge and education in general, offering a post- ADVERTISING graduate program to young engineers and continuing to run a first-class INTERNATIONAL AND BRAZIL secondary education school in São José dos Campos, where it is based. (55-11) 3097.0849 [email protected] This is the content of this edition’s cover story. Av. Brigadeiro Faria Lima, 1903, cj. 33 The new image of Brazil is also one of the topics of the interview Jardim Paulistano - 01452-911 - São Paulo - SP PRINTING given by the ex-ambassador of the U.S., Clifford Sobel, who stood down in Editora Parma August. The range of topics extends to a conversation with the scientist DISTRIBUTION IN BRAZIL Door to Door – São Paulo studying the Amazon “water pump” – the mechanism that feeds the fertile Portugal: Malta distribuição – Rua Antonio Carlos, 582 – 5º andar – cj. B – São Paulo lands of the center-south region of the continent with humidity. And we www.maltainternacional.com.br Where to buy: bookstore chains in round off with an article on the international plans of Petrobras in these Brazil or direct from the publisher pre-salt times. Happy reading. Administrative Consultant Luiz Fernando Canoa de Oliveira PIB is on the Internet - At www.revistapib.com.br. Now, our readers [email protected] EDITORIAL CORRESPONDENCE can access the PDF versions of past editions, as well as selected articles Av. Brigadeiro Faria Lima, 1903, cj. 33 from the current edition, which will appear in revolving fashion on the site. CEP 01452-911 - São Paulo - SP [email protected] You will also find summarized reports on what the global press is saying Signed articles do not necessarily represent about Brazil. We thought especially about those with difficulty getting the opinion of the editors. Totum reserves the right to edit or summarize letters. their hands on our printed version, in particular our readers in Brazil’s Legally responsible journalist interior and abroad. Just a few months after its Internet debut, the PIB Nely Caixeta (MTb 11 409) site had already been accessed in over 50 countries, including Angola, PIB – Brazilian Companies go International is published by Totum Excelência Editorial Thailand, the United Arab Emirates, Singapore and even the Seychelles Av. Brigadeiro Faria Lima, 1903, cj. 33 CEP 01452-911 - São Paulo - SP Islands. We look forward to you visiting our site as well. (55-11) 3097.0849 - [email protected] Print run for this edition Portuguese – 14.000 The editors English – 6.000 Print run audited by

6 P I B Letters

totum Year 3 Number 7 Dear editors, May/ property regime during the It’s a pleasure to June 09 Cardoso and Lula administrations GLOBALIZATION . read a very high world CARLOS MAURÍCIO ARDISSONE Spanish multinationals the quality magazine like are conquering BRAND ANALYST AT INPI Discover how they do it! PIB throwing light PROFESSOR OF PROFESSIONAL on emerging contours MASTER’S DEGREE IN INTELLECTUAL of globalized world PROPERTY AND INNOVATION AT INPI specially aftermath RIO DE JANEIRO – RIO current global financial DE JANEIRO STATE crisis. It gives me a deep insight about Brazil, its ETHANOL I’m from Poland I heard After the crisis, biofuel gets economy, its companies, Brazil’s about PIB when the a boost from’ andthe ‘green debate especially as to how they new investments magazine circulated at PIRACY are going internationally. Brazilian an Apex-Brazil event in companies to are protect ghting around I would be pleased to ﬁ ld Warsaw. I’m doing my their brands dli g the world ki provide some articles on t i PhD in economics at t GLOBE-TROTTER il Th A quick guide to Lisbon, ’ iB by Fernando Pinto of TAP Pakistan, one of the rapidly h Y the Warsaw School ENDURINGF PASSION 01.06.09 16:59:35 It’sIt’ ‘‘French Year’ in Brazil. The two countries are rekindling an old growing economies in Asia.” love affair and signing billionaire strategic military and civilian deals of Economics. My SYED TAJAMMAL HUSSAIN thesis is on Brazilian biofuels. COMMERCIAL CONSULTANT AGNIESZKA WOJCIK PAKISTAN EMBASSY CAPA 07 ING.indd 1 WARSAW - POLAND SÃO PAULO – SÃO PAULO STATE I may be Italian, but I speak Portuguese. I had the good fortune to read the excellent I received your wonderful magazine at the PIB magazine in the American Express VIP Think London office, an agency for promoting lounge at Congonhas airport, and I would foreign direct investment (FDI) in London, like to congratulate you on your extremely where I work. I am currently doing my master’s investigative and impartial content. I would degree thesis on International Relations at the like to suggest a topic: regulation of PLC University of Bologna. I believe PIB will be an technology (powerline communications – important source of information for my survey, broadband data transmission, voice and whose focus revolves around new Brazilian video data via energy grids) by telecom investments in Europe – how and why Brazilian sector regulator ANATEL, which will become companies are setting up shop in Europe. a new paradigm in the new technological FEDERICA MIAZZI and telecom markets in Brazil. THINK LONDON- GERALDO GUIMARAES JR. LONDON - ENGLAND PRESIDENT – LATIN AMERICA BPL GLOBAL In my opinion, PIB is the only magazine with SÃO PAULO – SÃO PAULO STATE its nose to the grindstone in terms of our companies´ international activities...of this As an employee at the National Industrial Brazil that is increasingly international and Property Institute and a college professor, PIB operating in a market and context that go always has a lot to offer me. I read edition beyond geographical boundaries. It’s very 5, featuring the “It’s Latin America’s time” simple. Those not in the know will lack key cover story and an interview with Minister information related to their economic survival. Miguel Jorge, both invaluable to my research FERNANDO G. CARNEIRO work for my PhD paper on International MANAGING DIRECTOR Relations, where I am investigating Brazil’s THE ALTMAN GROUP integration into the international intellectual RIO DE JANEIRO RJ

Please address letters and e-mail to: The Editor, PIB – Avenida Brigadeiro Faria Lima, 1903, cj 33 – São Paulo, SP, 01452-911 – Brazil; [email protected]

P I B 7 Petrobras is more than an oil company.

And if you think about it, it’s more than an energy company too.

Petrobras is renowned around the world for its technology and leadership in deep and ultra-deepwater exploration But, more importantly, Petrobras is committed to social development, citizenship, the environment and and production. It’s also a pioneer in biofuels and makes continuous investments in alternative energy sources. sustainability. In addition, it fosters culture and the arts. If the future is a challenge, Petrobras is ready for it.

www.petrobras.com

Petrobras An Generico.indd 1 17/8/2009 19:13:01 Process CyanProcess MagentaProcess YellowProcess Black F Nazca An. Petrobras Genérico - Revista PIB 17 08 Petrobras is more than an oil company.

And if you think about it, it’s more than an energy company too.

www.petrobras.com

Petrobras An Generico.indd 1 17/8/2009 19:13:01 Process CyanProcess MagentaProcess YellowProcess Black F Nazca An. Petrobras Genérico - Revista PIB 17 08 Antenna

Madrid Stock Exchange: Latin American companies register success ÓSCAR MUÑOZ CUEVAS

of investing, as it operates in Spanish stock market has a distinctly euros and with the rules known on the continent”, explains Yvonne Teixeira yellow and green shine to it Marín, director of development at Latibex. “Its importance has also THE HONEYMOON OF BRAZILIAN stock exchange. The national grown as Spanish companies have companies and the international companies, which have their own conquered space in Latin America, ﬁ nancial market isn’t just restricted index, Latibex-Brasil, account for which attracted the interest of to the BOVESPA stock exchange. The almost 60% of the portfolio, including investors to the region.” Latibex, a Spanish stock index featuring heavyweights such as Petrobras, Vale, The main highlight this year, so the main Latin American stock indices, Gerdau, Votorantim and Bradespar. far, is Peruvian mining company marks its 10th anniversary with a “Latibex has grown strongly in Volcan, up 170%, followed by the strong presence of national companies recent years since it is a simple way Mexican companies Alfa (140%), and one of the highest gains anywhere from the petrochemical sector, and this year. From January to August, Sare (120%), from infrastructure. it is already up over 60%, driven by MOST PROFITABLE Brazil is also doing well, with four producers of raw materials, banks COMPANIES* companies among the top ten risers and services companies. The Brazilian STOCK (VAR.) in the year. “The appreciation of stars are Aracruz and Sadia (whose the Brazilian Real after the peak Sadia 130% shares still haven’t been converted to of the crisis and the recovery in the new Brasil Foods name), which Aracruz 125% commodity prices are making are up over 120% since January. Braskem 110% Brazilian stocks more attractive for The Latibex currently features 38 Gerdau 100% foreign investors”, highlights Danny companies, with capital volume of Bradespar 70% Rappaport, from the investment €450bn, equivalent to a quarter of Source: Invertia/Latibex management ﬁ rm InvestPort. the volume of the entire Spanish *Jan-Aug, approximate numbers (Arnaldo Comin, from Madrid)

10 P I B Good at marketing IF ECONOMIC AND political stability are crucial in explaining the high volume of foreign investments in Brazil in recent years, another factor seems important HANDOUT ISTOCKPHOTO in this equation: good self-promotion. In the report “Global investment promotion benchmarking 2009”, of the World Bank and IFC, private arm of the World Bank, which analyzed 181 national agencies and 31 locations for attracting investments, Apex-Brasil Iochpe goes was at the top of the ranking of Latin America and the Caribbean. The agency was also second (behind shopping Austria) in the ranking of the top 25 in providing information services to investors. CRISIS FOR SOME, According to Apex chairman Alessandro Teixeira, the ranking shows how the organizational work has been improving. “This was the ﬁ rst time that the World opportunities for Bank used such an in-depth and detailed methodology to make this type of others. Iochpe- assessment”, he says. “We have gained an important calling card, because investors Maxion, Brazil’s largest follow these rankings.” According to the publication, 65% of foreign companies producer of wheels, use agencies when deciding on where to allocate their investments. “When chasses and rail cars, there is a range of options, the work of these agencies gains major importance”, paid US$180 million explains Robert Whyte, from the IFC. “This result indicates the excellent operation for the business of U.S. of Brazil, which has made the country so attractive to investors”, he states. company ArvinMeritor, But Apex doesn’t want to stop there. The agency has retained the services of one of its main the World Bank itself to assist it in a US$2.3 million project for training and competitors, which capacitating Brazilian states. The idea is to construct an integrated system succumbed to the

ÓSCAR MUÑOZ CUEVAS of promoting investments all over Brazil (Flavia Carbonari, Washington). collapse of the U.S. auto industry. The acquisition includes two wheel Support to micro companies plants, one in Limeira AT THE END OF AUGUST, Banco do Brasil and SEBRAE, the Brazilian (São Paulo) and another Service of Support to Micro and Small Companies, signed a cooperation in San Luis Potosí, agreement for small businessmen looking to grow via exports. Mexico, as well as an The main point of the partnership is the extension of the BB Export office providing logistics Financing Program, which will offer credit at special interest rates and support to clients to micro and small companies. Also, the bank will facilitate access (in Michigan). Although to its Export Counter – an e-commerce tool for exporters. affected by the poor The agreement also foresees training courses for businessmen in matters results of the sector in such as ﬁ nancial management, international credit lines and FX rules. Brazil (net revenue fell 37% to R$ 279 million in the first half of the year), In China, in Portuguese Iochpe continues betting THE PROVINCE OF GUANGDONG, the location of Macau (a former Portuguese on internationalization. enclave in China), has also got its eye on Brazilian companies. A group of The company will invest businessmen and authorities from the region came to São Paulo in August to forge R$ 35 million in the closer ties with Brazilian businessmen. Chinese authorities plan to formalize an inauguration of a chassis agreement of cooperation speciﬁ cally aimed at small and medium-size companies, division for light trucks in a broader plan of partnerships with Portuguese-speaking countries. With a legal next year in India, in tradition more in line with the Brazilian system, Macau wants to become the main partnership with local center for attracting investments of the global Portuguese-speaking community. producer Daimler Hero. The idea is to create facilities for opening companies and providing credit and market information access to those from segments such as construction, where Chinese demand is very strong.

P I B 11 Antenna The Gross National between China and India and has Happiness Index grown at rates of more than 20%

THE SMALL KINGDOM OF BHUTAN may not exactly a year. Could this be a result of ISTOCKPHOTO be an economic power but it is more interested in happiness in business? Not exactly: becoming the world leader in happiness than becoming the goose that lays the golden egg another Asian tiger in economic terms. The Bhutanese is called Tala Hydroelectricity, a King, Jigme Khesar Namgyel Wangchuck, will be giant bi-national hydroelectric in Foz do Iguaçu on November 19 at the invitation plant constructed by India. of Itaipu Binacional to introduce Brazilians to the unusual development indicator promoted by his country, the Gross National Happiness index (GNH). The idea started in 1972 when the current King´s father created it as an alternative to cold statistical Gross Development Product (GDP). The indicator uses four basic pillars: sustainable and equalitarian social and economic development, preservation of culture values, environmental conservation and good governance. At times when social responsibility and sustainability are gaining importance, the GNH attracted the attention of the United Nations and companies such as Natura. Bhutan is located in the Himalayan mountains

The hangover of globalization TAKING PART IN THE GAME by pointing to the sharp fall in of this year and will open a new OF THE GLOBAL ECONOMY demand and says it will now supply plant in Egypt in September. The demands future vision, good the Portuguese market from Brazil. company is optimistic and believes planning, daring and some luck. The 30% fall in sales of buses on the it will recover and grow by 5% by However, sometimes you need to domestic market in the fi rst semester the end of the year. The setback in accept that you have lost. Marcopolo affected the company’s results and Portugal highlights the risks and closed down its plant in Coimbra, led to a drop of 9% in revenues. turns of international expansion. Portugal, at the end of August as Marcopolo is still seen as a model The plant was important at the it had been adversely affected by of the Brazilian company with a beginning as it gave the company the crisis which hit the automobile taste for international expansion. a foothold in Europe. However, industry throughout the world. It exports to more than 100 with production costs, excess The decision had a symbolic countries and has three plants in competition and demand in free fall importance as it was the company’s Brazil and two in India, as well forcing the main auto companies fi rst international plant. It was built as units in Colombia, Argentina, to review their European assets, in 1990 and employed 176 workers. Mexico, South Africa and Russia. It then Marcopolo is now putting all The company justifi ed the decision began operating in China in January its bets on the emerging countries.

Marcopolo´s plant in Coimbra: closed down because of the crisis HANDOUT / MARCOPOLO

12 P I B between China and India and has French-Brazilian Brazil in the sights of the Canadians grown at rates of more than 20% MOST PEOPLE WOULD NOT see much in common between Brazil

ISTOCKPHOTO partnership a year. Could this be a result of and Canada, countries located at the opposite ends of the Americas happiness in business? Not exactly: THE BRAZIL-FRANCE PARTNERSHIP and with such different climates, cultures and languages. The two the goose that lays the golden egg continues to bear good fruit. Following countries only began to take notice of each other – and with some is called Tala Hydroelectricity, a the Year of France in Brazil and the signing mistrust – when the trade battles between Embraer and Bombardier giant bi-national hydroelectric of a strategic partnership between the hit the international headlines. However, things do not have to stay plant constructed by India. French and Brazilian governments, the like that. During a recent visit by a Canadian parliamentary mission to Brazilian Chamber of Commerce in France Brazil, the Canadian representative Mário Silva, who was born in Azores, (CCBF) was formed recently. The CCBF was impressed by the similarities between the two countries and the already has 40 members from businesses business opportunities which could arise from a closer relationship. He in both countries and organized the ﬁ rst highlighted some myths which shoot down any idea that Canada is the meeting in Paris on agribusiness in Brazil rich neighbor to the North and Brazil the poor neighbor to the south: and its insertion in the international market. The seminar was held at the • Although Brazil is not a member of the beginning of September supported G-8, as Canada is, its GDP of US$ 1.66 by the Brazilian Agricultural Research trillion in 2008 was higher than Canada´s company (Embrapa) and Companhia which came to US$ 1.56 trillion. Hidro Elétrica do São Francisco. • The ﬁ rst bilateral enterprise occurred 110 years The Brazilian Ambassador in France, José ago when the Canadian company Brascan set Maurício Bustani, said the CCBF would be a up in São Paulo. However nowadays, Brazil meeting place for companies and investors. has more assets in Canada (US$ 11 billion) “Export and import operations bring an than Canada has in Brazil (US$ 8.3 billion). average annual turnover of US$ 6 billion • The trade balance between the two countries and are below the French-Brazilian trade exceeded US$ 5 billion last year with Canada at an capacity. Only 14 Brazilian companies are advantage, notching up a surplus of US$ 3.2 billion. present on the French market compared • Brazilians are showing great interest in their with 38 large French concerns in Brazil, as neighbor and there are currently 17,000 well as more than 600 medium and small young Brazilians studying in Canada. companies,” he said. The president of Renault-Nissan group, Carlos Ghosn, was • Brazil is a peaceful, multiethnic democracy and offers security for investments. It also has a solid invited to be the chairman of honor of the base of foreign currency reserves of US$ 200 billion. new organization and the former French ambassador to Brazil, Philippe Lecourtier, • Both countries not only occupy giant areas of will be a member of the Chamber´s Board the continent but they hold 1/3 of all the world´s of Directors. (Andréa Flores, from Paris). freshwater and have enormous natural resources.

ISTOCKPHOTO • Canada can accelerate its expansion in Brazil – with 27 Federal Units and almost 200 million inhabitants – through its regional ofﬁ ces in cities like Porto Alegre and Recife. AGÊNCIA BRASIL

Bustani and St. Lawrence River in Ghosn: Brazilians Canada: closer to the in Paris Amazon than it might look P I B 13

Antenna

Direct from New York to the / PETROBRÁS Bovespa ANDOUT H THE RAPID GROWTH of the Bovespa and the good results it has posted in recent months is increasing the appetite of foreign investors for the São Paulo stock market. The on-line brokerage Ágora has signed an agreement with the Investment Technology Group (ITG), one of the largest electronic trading companies in New York, to operate in Brazil. ITG will use Ágora´s management system in the United States. Another development which came at the right time for investors was the green light given by the Commodity Futures Trading Commission regulator allowing US residents to buy on the futures market of the BM&F Bovepa directly. A total of six products in the Linking up for agricultural commodities and raw materials areas will be available. biofuels FACED WITH THE GROWING interest Patents in the doldrums in biofuels, the world´s two largest producers, Brazil and the United States, BRAZIL HAS LITTLE TO CELEBRATE when it comes to patents and are intensifying cooperation efforts in technological development. Last year, the American firm, USPTO, which the area. The initiative arose from a is the most specialized in this area in the world, registered only 101 meeting of an American delegation and patents from Brazil, well behind emerging countries like China (1,546) rectors of Brazilian universities in 2007 and India (636). Brazil even lost out to Malaysia which registered and led to the creation of the Brazil- 152 patents. A comparison between the periods from 2005-2008 and US Biofuels Network to broaden the 2001-2004 shows that Brazilian patents have slumped by debate and knowledge of the sector. 12% in terms of all patents registered while China and India The network is financed by the US State reported increases of 93% and 81%, respectively. Department and coordinated by Fulbright Brasil, with the support of Fapesp-Bioen. The initiative aims to Jamaica Connection facilitate interchange between public and DEDINI, WHICH OPERATES in the sugar-alcohol sector and is based private organizations in Brazil and the US. in Piracicaba, São Paulo state, has sold its second alcohol dehydrating Thais Rodrigues, the project Coordinator plant to the Jamaica Broilers Group, a food giant in the Caribbean for Fulbright, says the network should country which has been increasing its activities in the ethanol segment. bring about an exchange of knowledge The plant, which separates the water from the final product, has between the two countries and improve daily production capacity of 700,000 of alcohol from sugar cane. discussions on the issue. The first activity This latest deal takes the total of industrial plants Dedini has sent to took place in July and August this year: Jamaica to four since 2003 when the first plant was destined for the the 1st Brazil-US Biofuels Technology state-owned oil company, Petrojam. In 2005, the Brazilian company Course held at USP. The seminar Coimex also pinned its hopes

brought together 30 postgraduate on ethanol production on the EDINI students and 10 professionals from Jamaican market using Dedini D the area. They are all now part of the technology. Dedini was founded in network which brings together 100 1920 and operates six production Brazilian and 40 American researchers plants in Brazil and exports and specialists. The next course is due industrial equipment to the food to take place in the US in 2010. and drink sectors of 25 countries. (Flavia Carbonari, Washington) Dedini plant in Jamaica 16 Portuguese spoken here JUST AS THE BRAZILIAN GOVERNMENT intends expanding teaching Spanish throughout A.CARNEIRO / HANDOUT the public school network, so Uruguay aims to increase the teaching of Portuguese to all schoolchildren from 2010. The government is currently providing free Portuguese lessons in language centers but now wants it to be obligatory. Lessons will begin in the border region with Brazil where the common language of communication known as “portunhol” is used. The government Stock Exchange of Uruguay expects that most children in the Old Center of São Paulo will speak the neighboring country´s language within six years. The power of ideas DESIGN HAS BECOME a strategic element not only in products but also in the way countries like Italy, Spain and Sweden project themselves internationally. Brazil may still have no status in the large European centers but has been gaining ground. On September 26, the best examples of Brazilian design will be shown in Miami at the Idea Awards, the Oscar of international design. Brazil´s aim is to repeat last year´s experience and appear on stage as one of the most innovative in the world. Brazil came third in 2008, behind the United States and South Korea. The national qualifying stage was held in São Paulo at the end of July, with the support of Apex- Brazil, and presented a good representation of what the Americans will see at the closing stage of the event. The winning works include the “Bossa na Oca” exhibition at Ibirapuera Park and the Livraria da Vila and Loja Havaianas stores in São Paulo. HANDOUT / IDEABRASIL DEDINI

Livraria da Vila bookshop in São Paulo: ﬁ ght for the P I B 17 international prize Antenna O D ACHA Sustainable fashion on the M ARA J BIRA

catwalks of Paris U NOWADAYS BRAZILIAN DESIGNERS are a great success on the wide European fashion circuit and the São Paulo Fashion Week has become a great international success. Now it is the time for sustainability to appear on the catwalks. Six Brazilian luxury brands were chosen by the Texbrasil program, which supports the sector, to represent Brazil at the Prêt-à-Porter Paris salon, the main showcase for world fashion. The NGOs and ateliers Tudo Bom?, 1001 Retalhos, Talentos do Brasil, Algodão Colorido Natural, Amparo Brasil and Empreendedorismo Social showed their works at the So Ethic salon dedicated to companies which run their businesses based on principles of sustainability and fair trade. The Brazilian brands were able appear thanks to the backing Brazilian of Texbrasil, an initiative of the Brazilian Textile summer fashion on the Industry Assumption (Abit) and the Brazilian Trade way to Paris: and Investment Promotion Agency (Apex-Brazil), beautiful and which used the event to expand the visibility of environmentally Brazilian fashion on the European market. correct

Argentina is also raising its standard abroad THE COMPLICATED SITUATION on the domestic Although this is a modest ﬁgure by the standard of developed Argentinean market following the economic crisis in countries, Argentina´s presence abroad is beginning to 2001 led some business groups to take the risky step of attract attention. Last year, its multinationals had expanding abroad. A study by the development agency US$ 19 billion in assets, US$ 21 billion in sales, 42,000 ProsperAr and the American university of Columbia shows employees and 315 installations in 42 countries. that Argentina now has 19 multinationals, mainly in the However, the bulk of the international business is infrastructure, transformation industry and food sectors. still concentrated on the biggest privately-owned Argentinean conglomerate, Techint, which has 91% of these assets (US$ 17.4 billion). Tenaris, The group, which operates in the engineering

star of the / TENARIS

Techint group: OUT and construction sectors, as well as industry and neighboring D agribusiness, was also responsible for the two largest HAN multinational external operations by an Argentinean company in 2008, both in Mexico: the purchase of the corn processor IMSA for US$ 1.7 billion and the investment project amounting to US$ 6.6 billion in a mining and steel production complex. The food group Arcor is also outstanding, with assets of US$ 491 million, and Impsa, which operates in the machinery and equipment sector, has US$ 300 million. Latin America is responsible for around 80% of the Argentinean presence 80% with Brazil representing no less than one-third of the total.

18 P I B And in their own backyards BRAZILIAN SOCCER is on the top indoor soccer, with the blessings of Brazilian soccer players. According to

UBIRAJARA MACHADO of the world. After destroying the Sócrates and Ronaldo – the latter Will Wood, a company executive, no English dream to win the 2002 World encourages children to seek the base one is born with a god-given talent: Cup, its reputation as the world’s of soccer in the indoor game, where “We accept players of all levels and, number one soccer nation remains he himself started off and which, in with correct training, commitment as strong as ever in the land of the his own words, is his true passion. and ethics, we can improve their skills royal family. The chain of Brazilian Now a business with over 600 on the soccer pitch”. You think? Soccer Schools (BSS) was founded franchises in countries such as Finland, That’s why Englishmen are good in England in 1997 by the soccer Holland, Canada, the U.S., India, Hong businessmen and Brazilians coach Simon Clifford, after being Kong, Singapore and Australia, BSS´s are good soccer players! impressed by the professionalism main marketing pull is the geniality of (Nara Vidal, from Londres) displayed by his good friend Juninho in training sessions when he played at Middlesbrough. With a focus on the techniques of indoor soccer, he developed a method for teaching the secrets of Brazilian soccer. According to Clifford, indoor soccer, due to the strong degree of technique required, gives the player the preparation and discipline required to use it on the outdoor pitch. But it isn’t just taught as a platform for soccer pitches: a division of the

company is also concentrated on HANDOUT Conquering Germany in ﬁ ve steps IT IS NOT EASY BEING a Brazilian technology design company trying to break into the demanding German market. However, HANDOUT KitFrame, which makes air conditioners in Cotia, Greater São Paulo, decided to take on the challenge. It believed in the potential of its line of electric storage areas for equipment for sectors such as mobile telephony and is setting up sales units in Germany and Spain. The idea is to maintain production and development in Brazil and invest in a good sales, logistics and client support structure in Europe. Larissa da Costa, the company´s manager in Germany, gives some tips and presents the paths to setting up business on the difficult local market known as the “factory of Europe”:

The simplest way is to open a The manager must live in the Germany´s rigid business culture 1 limited liability company with a 2 country but it does not matter 4 has to be followed. The Germans business contract which describes whether he or she is a European are extremely detailed and inflexible the partners, along with having a or from any other region. when it comes to deadlines. If the bank account with the minimum Lots of planning and persistence first experience does not meet capital required, depending on the 3 are needed to be successful in expectations then it´s “goodbye”. activity. The company can start Germany. KitFrame took part in Post-sales service is crucial. The operating within three weeks if the Hanover Trade Fair for seven 5 company must ensure that the all the paperwork is in order. years in order to create close client has a rapid technical assistance links with potential clients. and support service of a high quality.

P I B 19 6Xîni]Vi^hVldgaYl^YZgZ[ZgZcXZ^cVgX]îZXijgZ!VcYVcdi]Zg!`cdlc ^ciZgcVi^dcVaanVhi]ZBVgkZadjh8în#7gVoâ/VhZchVi^dcVaXdjcign#

Brasília, a totally planned city and the capital of Brazil, is a world reference in urbanism. Rio, in turn, did not get its title only because of its undisputed natural beauties. This city is considered by many to be the place that radiates national culture. On your next vacation, get prepared to know Rio and other Brazilian towns with a diversiﬁ ed cultural scene.

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7gVha^V!;ZYZgVa9^hig^Xi Hj\VgAdV[!G^dYZ?VcZ^gd Technology Santa Rita digital

Far from Brazil’s bustling big cities, a technology center has sprung into life around a small- town technical school. Now it aims to dominate the South American digital TV market – and more JOSÉ M AR I A FURTADO, IN SANTA RITA DO SAPUCAÍ

Vanessa Lima, technology development manager at Linear (digital image on a big screen)

22 P I B After much lobbying and a long Brazilian sales and the prospect digital dispute with proponents of the of boosting exports are bringing American and European digital TV smiles to Linear Equipamentos de systems, ASTC and DVB respecti- Eletrônica, a big fish in the Santa vely, Brazil opted for its own sys- Rita electronics cluster. “We plan tem, a modification of the Japanese boosting our annual billing tenfold standard called ISDB-TB, where the through 2014 (from R$38.4 million ‘B’ denotes Brazil. Now the govern- in 2008),” said Vanessa Lima, mana- ment is negotiating ISDB-TB with ger for technological development its neighbors in South America. So at Linear. Her father, José de Souza far, Peru and Argentina have offi- Lima, is president of the company he cially come on board, but Brasília is helped found with a partner back in offering inducements: countries that 1977, to make electric fences. In the adopt the Japanese- 1980s the company Brazilian standard started focusing on get it for free, and Peru was the analog TV transmit- Brazil will collabo- ters, and now exports rate without charge ﬁ rst country to 40 countries inclu- Far from Brazil’s bustling big Deep in mountains of in implementing and to adopt the ding the United Sta- cities, a technology center has Minas Gerais, some developing the sys- Brazilian version tes, Canada, Sweden 400 km southwest of tem. Paraguay, Cuba, and Mexico. sprung into life around a small- the state capital of Belo Chile, Venezuela and of Japanese Linear began town technical school. Now it aims Horizonte, the 40,000 Ecuador are negotia- digital TV migrating to digi- to dominate the South American Dinhabitant town of Santa Rita do Sa- ting. If everything tal systems in 2000. pucaí feels pretty much like any other falls into place, the result would be Starting from scratch, it invested in digital TV market – and more farming center. Or at least it used to. a single digital TV standard throu- research and development (around JOSÉ M AR I A FURTADO, Today, Santa Rita’s heart beats with ghout Latin America to facilitate in- R$5.5 million this year) and hired en- IN SANTA RITA DO SAPUCAÍ digital precision and the local eco- tegration and reduce costs, by virtue gineers to handle digital signal pro- nomy is focused on electronics, as a of the greater scale of production. cessing, which is different from the cluster of over 130 companies turn All this potentially represents a analog environment that company out TV and radio transmitters and fabulous market for Brazilian manu- technicians were used to. They star- components for cellphones and bank facturers of transmitters and other ted with the American ASTC system. automation equipment. Together, digital TV equipment. Demand in “We worked on that for five years,” these high-tech companies bill some neighboring countries is as great as, Vanessa Lima said, and it paid off. Li- R$ 1 billion or US$ 500 million a year. or even greater than, in Brazil, whe- near has already sold over 200 trans- Exports currently represent just a re TV companies are expected to mitters in the United States, where sliver of this, around US$14 million. need 100,000 transmitters through it has an assembly plant in Chicago. But since December of 2007 Brazil the 2016 deadline by when all equip- Two years later it expanded its range has been transitioning to digital ment nationwide must be converted of products with transmitters for the TV. This could open up new inter- to digital. And the 2014 World Cup Brazilian standard, ISDB-TB. And a nationalization prospects for Santa football competition may well speed year after that, it added European

Rita’s companies. up the change-over. system equipment: DVB. FOTOS: FELIPE CHRIST/FOTONOTÍCIAS

P I B 23 Technology

pment such as modems, for home use. “We are going to facilitate the installation of broadband in small communities,” Lima said. It’s unlikely Linear would have got so far, were it not located in San- ta Rita do Sapucaí. Until 1959, when the Electronics Technical School (ETE) was opened and became the seed that would change the region (see box on page 26), the town was basically agricultural. Political leaders of the time even banned the main São Paulo to Belo Horizonte highway from passing through the municipality, fearing the conse- quences of progress – the highway bypasses the town by 20 km. This posture changed in 1985 Armando when a former mayor suggested Lemes, of transforming the town into an elec- STB: starting tronics hub based on pioneer com- to export panies and institutions. The project

FELIPE CHRIST/FOTONOTÍCIAS gained force as neighboring towns

Now that it has mastered all a distortion; linearization corrects three standards, Linear can fight it. This search for technical quali- FROM BRESCIA TO for markets virtually all around the ty translates into a more efficient world. “DVB is likely to be adopted transmitter, meaning the TV bro- POUSO ALEGRE in 147 countries, including Africa,” adcaster uses less energy. said Lima, who has worked in the Linear is seeking other gains for THE INTERNATIONALIZATION family firm since she graduated clients. Around 28,000 of the analog of the Santa Rita do Sapucaí elec- from university nine years ago and transmitters it has sold can be con- tronics cluster is a two-way affair: today manages a team of 90 engi- verted to digital more cheaply than while Linear exports to 40 coun- neers. An electrical engineer with buying new equipment, via an ope- tries and assembles equipment in a master’s degree, Lima will soon ration known as a ‘flash cut’. The the United States, an Italian com- start studying for a doctorate focu- company is also working on a very pany has formed a partnership with sing on neural networks – a model low cost modulator to bring digital a local ﬁrm to produce its digital of data processing that attempts to TV to small communities. “This is line in Minas Gerais. simulate the structure of the hu- small, you can carry it anywhere Júlio Prado Rocha, formerly the man brain – for application in high under your arm,” she said boss of STB’s Armando Lemes in definition TV. The company plans on hiring Teclar, is the commercial director When she finishes her doctorate, more Ph.D.s and engineers to break and a minority partner in Screen Lima will join a math Ph.D. working into new markets. One future pro- Service do Brasil, a subsidiary of for Linear who is involved in the duct will be developed making use Screen Service, a company based mathematical modeling of signals, of installations and equipment pur- in Brescia, a city between Milan something that is necessary for chased from another local company and Venice. The Italian company perfecting the process known as that shut up shop. It’s a WiMax te- was looking for a partner in Brazil linearization. Putting it simply: am- chnology transmitting station for and came up with Rocha, who plifying an electronic signal creates broadband internet and CPE – equi-

24 P I B like Pouso Alegre Linear has The most impor- are snapped up by local electro- joined in. And so, the tant institution for nics companies. One such, Supe- region became kno- developed Electronics Valley in rior Technologies in Broadcasting wn as ‘Electronics equipment to general and digital (STB), was created six years ago Valley’ – shades of its make digital TV in particular is and competes with Linear in digi- more famous Silicon the National Tele- tal TV technology. Armando Lemes, rival. TV available communications Ins- STB’s commercial director, studied Little by little, the cheaply in small titute, Inatel, which at ETE and then in Rio de Janeiro, local economy inter- towns is based in Santa Rita. where he built a career in the tech- nationalized. Compa- It was at Inatel that nical side of various TV networks. nies that used to buy Linear – with gover- Thirty four years later he returned small quantities of parts from Bra- nment financing – helped develop to Santa Rita, sold radio transmit- zilian distributors now receive fo- the digital TV project. The institute ters for another local company reign trade missions – both buying employs 10 Ph.D.s and 40 master’s called Teclar, then finally took the and selling – and send their own graduates, plus 150 engineers. Half plunge and created STB. missions to China, South Korea and of the institute’s annual revenue of Lemes had no money. But his the United States. The region offers US$7.5 million comes from selling friend Romildo Resende Soares, an an educational environment that fa- services to companies, for example evangelical minister better known vors technology-based businesses: in its software and product tes- as ‘Missionary RR Soares’, was in within just a few kilometers there ting laboratories. The other half the process of setting up his own are schools training labor of all comes from tuition paid by 1,200 broadcasting network called RTI, types, from ETE’s general level to students. and decided to invest US$5 million doctorate engineers at the Federal The institute’s high fliers either in Lemes’ venture so that he would University of Itajubá. start up their own businesses or have his own transmission equip- remains a partner in Teclar, a maker of radio transmitters. Screen Service do Brasil invested some R$10 million for a factory at Pouso Alegre, the next city along from Santa Rita. The plant comes on stream in September without having to worry about product development, which is handled by 60 engineers back in Italy. The technology is sophisticated and the standard of the transmitter is deﬁ ned by software – in other words, by changing the program the same equipment Júlio Prado Rocha and can broadcast in analog or digital Alberto Morello, of Screen Service: Italian technology standard, be it American, European FELIPE CHRIST/FOTONOTÍCIAS or Japanese-Brazilian. “The TV network that buys from us The company even wants to export to “We have the full Italian line of Screen will tend to use our equipment for all the United States, taking advantage – more than 300 products, including its stations, because it’s not advisable of Brazil’s costs, which are much lower transmitters,” said Prado. The Bra- to have stations with different equi- than in Italy. “In theory, given the zilian company hopes to bill at least pment, so we negotiate packages,” characteristics of the transmitters, 15 million Euros in three years. The said Prado, who hopes to replicate the we are very competitive,” said Prado. strategy is long-term relationships. strategy in other countries. “But we’re starting from scratch.”

P I B 25 Technology

ment. Lemes talked a former Teclar it could make itself, Digital In 2010 STB plans director into developing technolo- and it managed to transmission launching digital mi- gy for the new company, and today reduce the cost of crowave equipment they are managers and minority a 1 kW transmitter paves the way for use by TV opera- shareholders in STB. from R$300,000 to for shopping tors and other clients The company expects to bill R$180,000. This year via TV to transmit digitali- R$18 million this year and reach the company will zed signals of audio, R$60 million by 2014. Being a late start offering set-top video and data. With starter has had its advantages – boxes that convert digital signals an eye on the export market, Le- STB has developed a line of radio for analog TV sets and are prepared mes started by selling US$60,000 and TV transmitters based on the for T-commerce – buying things via in analog microwave equipment to new Japanese-Brazilian standard, television. The Brazilian market for Paraguay. “Exports are just starting, ready for easy conversion from set-top boxes is estimated at over but every journey starts with the analog to digital. R$9 billion through 2016. first step,” he said. The company is betting on technological development to bring Santa Rita: a down costs. It paid French con- peaceful rural sultants to substitute components environment with a imported from Japan for others technological heart

SINHÁ MOREIRA – A VISIONARY

SANTA RITA DO SAPUCAÍ is the kind of place where you still hear co- cks crowing and cattle lowing, or see coffee growing beside the processing

plants. But if many of the 40,000 FELIPE CHRIST/FOTONOTÍCIAS local inhabitants today live and breathe bits and bytes, it’s thanks travelled a lot. And in Japan, she saw aggregate billing increased by 15%. to Luzia Rennó Moreira, a lady who the future. Anxious to offer local kids At ﬁ rst, components were assembled was far ahead of her time. Back in the something beyond dirt and drudgery, by hand. Today, several companies 1930s, Moreira divorced her husband she set up a school to train them for use robots and others outsource to and said that women couldn’t just be an activity that was exploding on the four specialized manufacturers. Local housewives. other side of the world. factories draw on 14 local suppliers, Sinhá Moreira – she was always Later, in the 1960s, Santa Rita saw the showing the vertical strength of the addressed in the traditional, respec- creation of the National Telecommu- cluster. Production is expanding and tful manner – was the niece of an ear- nications Institute, Inatel, a privately becoming more sophisticated. Every ly 20th century Brazilian president. funded electronics university. Other day, the town ships out over 1,000 But this product of the traditional colleges came along later, as did small household and industrial electronic rural elite was to trigger the transfor- company incubators, some of them wi- items. Multinationals and major Bra- mation of Santa Rita, by giving land thin Inatel. Of the town’s current 130 zilian banks order up components for and raising money to build the Elec- high-tech companies, 30 were hatched products like cell phones, tokens and tronics Technical School, a pioneer this way. The combination of academic ATMs. Exports are currently some institution in Latin America, full name knowledge and entrepreneurial pione- US$14 million a year, but growing ETE Francisco Moreira da Costa. Why ers gave rise to a technological cluster well. Certainly beyond the dreams of electronics? Because Sinhá Moreira that doesn’t stop growing – last year Sinhá Moreira.

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* *87 ; * *87 ;*) *87 ; *) *87 ;* *87 ; *) *87 ; Analysis Support is vital While the government has woken up to quently, the internationalization process of Brazilian companies remains the importance of Brazilian multinationals largely dependent on the efforts of the being present in global markets, it still needs companies themselves. to deﬁ ne a strategy and better coordinate Internationalization policies can be bracketed into horizontal and vertical the ofﬁ cial initiatives for supporting the policies. Some policies have an indi- internationalization of companies rect impact on internationalization, RICARDO U. SENNES* such as promoting innovation and providing a boost to the capital market, while other policies are explicitly rossing borders is no easy ment began in the 1990s, but has ac- channeled to supporting priority sec- task for any company. In celerated this decade. tors or a group of companies, aiming the specific case of Brazilian The support has mainly come from to make them more competitive on the companies, this process has the BNDES (National Development international scene. In both policies, Cfeatured, in recent years, a change in Bank), but also involves the Foreign the government provides political and the behavior of the federal government, Affairs, Trade and Finance Ministries. economic resources. which is now giving more support to However, while the change in the gov- However, the emergence of non- ensure that national capital gains space ernment’s stance is clear for all to see, central countries, such as China, Rus- in the international market. This move- so is the lack of coordination. Conse- sia, the Arab economies and other

Cajamarquilla zinc reﬁ nery: Votorantim Metais division in Peru PHOTOS: HANDOUT VOTORANTIM

28 P I B Asian countries is intensifying the between the existing initiatives, two BNDES. Brazil needs to foster the de- debate on the degree of support pro- questions are a priority: (i) to strength- velopment of services and financial vided to companies. And the cries of en the financial mechanisms for sup- solutions by private banks and by the complaint are mainly coming from the porting companies; and (ii) defining stock exchange. There are no safety developed economies. a strategy for high-tech, innovation- mechanisms for investments abroad – To illustrate the point, we can say based sectors. In relation to FDI (for- an important exception is the ALADI that there are two internationalization eign direct investment) remittances Reciprocal Credit Agreement. models practiced today: the model of abroad, there are practically no restric- Brazil is very passive when it comes the so-called state capitalist countries; tions on Brazilian multinationals. to tax incentives in this area, which and the model of the OECD countries. However, Brazil doesn’t have many practically don’t exist. There are, how- In theory, the first model is based on agreements that protect direct invest- ever, non-conventional initiatives to the strong and direct participation of ments in other economies. Numer- support internationalization, such as government bodies and governments ous bilateral and regional (Mercosul) those provided by Cade/SDE (Brazil- themselves in supporting companies ian Monopoly Watchdog), state-run oil that, in turn, are either state-owned giant Petrobras and state-owned bank companies or joint ventures of state- The challenge facing Banco do Brasil in other countries, and owned companies. The OECD model, Brazil is to deﬁ ne a presidential diplomacy itself. in theory, features more horizontal strategy of strong So, as we can see, there are initia- government actions to foster the com- tives in place. However, they are partly petitiveness of companies, whose mo- internationalization, an extension or “reform” of previous dus operandi is typically more com- but that is also actions to promote exports, and partly patible with international agreements compatible with one-time government initiatives. and corporate governance standards Brazil is on the path to incorpo- – although, in several cases, there is no the country’s rating the internationalization of denying that OECD countries provide economic and the economy and of companies as a direct support to their multinational strategy for development. With this companies. political conditions aim in mind, the matter needs to ex- Cajamarquilla Where does Brazil feature in this trapolate the federal government and zinc reﬁ nery: context? The answer is in neither of agreements have been signed, but they form part of the Legislative agenda, Votorantim Metais the two models, but certainly closer to haven’t taken effect. The situation is gaining state policy overtones. At the division in Peru the OECD model, despite the fact that slightly less critical for services com- same time, this question should in- it doesn’t have the volume of funds panies, since Brazil is a GATS signa- fluence negotiation strategies in the invested by OECD member countries. tory (a WTO-related agreement). In bilateral, regional and multilateral Brazilian multinationals are gener- terms of intellectual property, it is a spheres, which has yet to happen. ally run in accordance with the OECD signatory of TRIPS (WTO), and of the The matter isn’t only of interest model, but don’t enjoy the broad public patent treaty of the World Intellectual to large companies and a handful of policies financed by the OECD mem- Property Organization. But there is no sectors. Recent studies indicate that ber countries and don’t have the direct international protection for brands of internationalization is already perme- government support seen in the state Brazilian companies. ating the agenda of several medium- capitalism model. Brazilian government agencies do size sectors and companies. Moreover, As a result, the challenge facing Bra- provide technical and information assis- multinationals will continue to go in- zil is to define a strategy of strong inter- tance, especially Apex (Pro-Exports and ternational and drag along with them nationalization, but which at the same Pro-Investment Agency) and Itamaraty smaller companies, who will also exert time is compatible with its economic (Foreign Affairs Ministry). But there is pressure for progress. and political conditions. And now is no question that these services could be the time, since Brazil is in a relatively expanded and professionalized. * Partner director of Prospectiva Consultoria healthy financial situation and several Financing internationalization em Negócios Internacionais e Políticas of its public institutions are interested projects has been the main support Públicas and Professor of International in the matter. policy provided to Brazilian compa- Relations at Pontifícia Universidade Católica

PHOTOS: HANDOUT VOTORANTIM Besides the need for coordination nies, but this is concentrated at the de São Paulo (PUC-SP).

P I B 29 Interview r Clifford Sobel

Bye, bye Former US Ambassador Clifford Sobel highlights Brazil’s progress in recent years and the entrepreneurial spirit of the Brazilian people. At long last, Sobel says, the future has Brazil come to Brazil NELY CAIXETA t the end of August, Clifford Sobel turned in his credentials as the 53rd ambassador of the United States in Brazil.A Many things have happened during his three years in office. “Brazil has been transformed in this period,” he said. “It has become a leader of undeniable regional and global importance.” A significant part of this leadership, Sobel thinks, has to do with the personal charisma of Brazilian President Luiz Inácio Lula da Silva. “People all around the world have become more interested in Brazil thanks to Lula.” These three years in Brazil have also served for Sobel and his wife to grow attached to the country and its culture. “We love Brazilian music, in particular music from Bahia,” said Sobel, declaring himself an unabashed fan of Ivete Sangalo and Carlinhos Brown. A graduate in administration from New York University, the 60- year-old Sobel has vast business experience. During the 1970s and 1980s he created and led various companies. The most recent of these, Net2Phone, was the largest supplier of phone services over the Internet in the US market, Ex-ambassador until it was acquired by Cisco. Sobel: Brazil is Although he bears a vague looking abroad physical resemblance to former more than ever

HANDOUT US President Bill Clinton, Sobel is

30 P I B a convinced Republican. He took relationship that today exists much Brazilian as it is American. part in the financial coordination between the two countries. It is perhaps one of the things of George W. Bush’s presidential that separate the New World from campaigns, and following his Is Brazil’s new international promi- Europe, which is less innovative, victory was named ambassador nence based more on economic flexible or entrepreneurial. Brazil to Holland, where he lived from progress or President Lula’s per- is a country where people take 2001 to 2005. A year later he took sonal charisma? risks the same way they do in the up his position in Brasília. Lula became president at a very United States. There are many Born in New Jersey, married important moment, and won things in common between US and for 43 years to Barbara and the over Brazilians with his vision. Brazilian cultures, and flexibility father of three children – Scott People all around the world have is one of them. (32) and twins John and Julie become more interested in Brazil (28) – Sobel sat down with PIB for because of Lula, who travels a What changed with the election of this exclusive farewell interview. lot and has opened up so many President Barack Obama? In it, he analyzes the country’s new embassies. Moreover, Lula Obama gave the United States progress in various areas, the has improved popular access to a new face. This has helped to entrepreneurial spirit of the housing and consumer goods. He further develop the relations Brazilian people, which he sees as is in many senses an inspirational between the two countries and similar to that of Americans, and leader. with the region. The Summit of the future of Brazil-US relations. the Americas was an extraordinary example. It wasn’t a meeting What were your initial impressions between North and South, but of Brazil three years ago, when you Brazil is a country rather a coming together of became ambassador, and now as where people countries from the American you leave the job? assume risks just continent to face their problems Brazil today is a very different together. It was an historic country from three years ago. like in the U.S. moment – and I believe that in First of all, it’s much more stable, the coming years our relations both financially and politically. will become even closer. More and more, Brazil is looking What do you think of the Brazilian outwards. It’s a country that “jeitinho”? You mentioned the Biofuels Agree- has recently opened 40 new I prefer to describe this trait ment. What has been the practical embassies, wants to be part of with the word ‘flexibility’. It’s result of this meeting? the UN Security Council and an important cultural element There have been many. In today leads regional and global associated with Brazilians, who fact, the agreement is divided forums. Brazilians have always have an exceptional capacity to into three parts. The goal was been optimists, and now they adapt to changing circumstances. to make biofuels a new and seem to realize that their future And Brazil has seen much of this transformational energy resource. has in fact arrived. When I came in recent years. If the country has To achieve this, our first step here many people questioned changed in the last three years, was to expand the technology Brazil-US relations, doubting imagine how different it is from into other countries, so that they America’s commitment. Then, one or two decades ago. Flexibility can develop a local capacity to in March of 2007 we signed the is also related to innovative produce biofuels. Today Brazil and Biofuels Agreement and Lula was capacity, which is an important the US are working with another the first Latin American leader to facet of Brazilian culture. In many 10 countries in the Americas, the be received at Camp David. This senses the entrepreneurial spirit, Caribbean and even Africa, with was an indication of the special which includes innovation, is as Senegal being one of the most [1] ‘Jeitinho’ – an untranslatable word much used in Brazil for facilitating a problem, frequently of a legal or bureaucratic nature; ﬁ nding a way to make something possible [2] The Brazilian Sugarcane Industry Association and the Brazilian Agricultural Research Corporation.

P I B 31 Interview r Clifford Sobel

recent partners. Secondly, in the Without a doubt. Renewable matters that will further drive field of research and development energy is the future. It’s not going trade and investment between we have discussed building a to happen overnight, it will be a the two countries. It’s important closer relationship of cooperation. gradual and difficult process, but to address things like double This is already happening in the I don’t think anyone should doubt taxation, for example. private sector, and our universities that it will be part of the energy are working together. matrix in the future. Many businessmen complain that the Brazilian government is reluc- Can you give any details about this Barack Obama has announced his tant to sign a foreign investment cooperation between universities? support for environmental causes. treaty. Do you see any chance of I talked recently with the How much will this help? this position being reviewed? MIT (Massachusetts Institute He has already declared his One problem about an investment of Technology), which wants support for new fuels. That treaty is that Brazil doesn’t closer links with Petrobras in doesn’t mean to say that he will agree with some fundamentals the area of biofuels. Many other reduce the tariffs, because that’s adopted by some OECD countries universities – Illinois, Purdue – a decision for Congress, but he is – international arbitration, for are setting up partnerships with in favor of investing in research example. It’s difficult to have Brazil. And there’s the National so that we can transform today’s an investment treaty without Institute of Biofuel Research in garbage into tomorrow’s energy. provision for arbitration of Golden, Colorado, where a very disputes. These are fundamental good Brazilian scientist, Helena In a recent interview, you said that questions that Brazil will have Schulmann, is working. there are many opportunities for to decide for itself. But I believe American and Brazilian business- that as Brazilian companies seek Going back to R&D... men. Are there really? protection for their international OK. We are collaborating very Yes, there are opportunities for investments, so there will be closely with Brazilian institu- both sides. Proof of this is the greater emphasis on finding out tions like Unica and Embrapa. A increasing equilibrium between how Brazil can also attract more few weeks ago we had the Unica the two countries. Votorantim, foreign investment. It won’t Ethanol Summit. The major ag- for example, is the largest cement happen overnight, but I hope ricultural producers met with producer in the Southeast of that in a few years we can have large North American companies the United States, Coteminas an investment treaty worked out. that are working in state of the is the largest supplier of textile art processes for cellulosic tech- products to Wal-Mart and Gerdau Do you think that Brazilian nologies involving enzymes. This is a major steel producer in the banks today have a chance of meeting was so successful that States. This balance is creating an internationalizing? the next conference is likely to be ever-greater partnership between This is something that each bank held in Washington in the com- the two countries. My hope is that has to decide for itself, based ing months, without government in the coming years Brazil and on regional, hemispheric and help. Also in this area, the inter- the US can work closely on some international considerations. national scientific community It’s an equation of many factors. has developed a set of standards But I would make one important to be adopted by laboratories comment: Brazil used to have when evaluating biofuels. There No one has any great volatility in its financial have to be standards so that bio- markets, and I think it learned fuels can be sold in international doubt that renewable a lot from that. I think Brazil commodity markets. fuels will form could be very useful for the G-20 part of the world’s and other organizations that are So you think the world will use trying to learn some lessons from more ethanol to the point where it energy sources the financial crisis. These days becomes a commodity? in the future the Brazilian financial sector

32 P I B is seen to be as strong as that I’m proud to say and welcoming. Brazil isn’t rich of any other country. Brazilian just because of its commodities, foreign currency reserves that I’m a big fan but also because of its people. are much higher than those of the music from Among the most vivid memories of many other countries. The Bahia, especially that we will take home with us absence of significant leverage are the friendships we have made was certainly useful for Brazil Ivete Sangalo and here and that we hope to preserve during the crisis; the country’s Carlinhos Brown for many years. financial institutions attract a lot of interest and are much admired And Brazilian culture? Do you these days. Before the last G-20 in cooperating with developing like it? meeting, we invited a group of countries. We could work in It’s very rich and varied. Bahia, very experienced people from the partnership with Brazil in the for example, is so different from Brazilian finance ministry to go fight against HIV-AIDS, given São Paulo, which is different to the United States and talk with that the Brazilian program enjoys from the North, or from Mato our treasury department – not to such international recognition. Grosso. There are many cultures, sit at the G-20 table but to talk Another matter of great concern but just one country. Many faces, before the meeting. We wanted for Secretary of State Hillary but just one family. But despite to know what Brazil thought Clinton and President Obama, the differences they are all very about many of the matters that who spoke about this recently, proud to be Brazilian. Brazil is as we had to fix to face the financial is food security. Excluding the patriotic as the United States. crisis. The Brazilian financial European Union, which is a sector is perhaps one of the most group of countries, the United What did you find most interesting solid components of the country States and Brazil are the world’s in Brazilian culture? right now. two largest food producers. Brazil So many things. Each state has has Embrapa, which is a great its own festivals. The carnivals Former directors of the Brazilian research institution. And there’s in Olinda, Recife and Salvador Central Bank have travelled abroad the ABC, which is an institution are all so different. The Boi- to share the experience they gained similar to USAID. These two Bumbá, in Parintins, is very during Brazil’s many periods of institutions are working together different from Rio Carnival. This financial turbulence. in Mozambique and could work is the richness of the Brazilian No doubt. This is a very interesting together in other countries, like cultural tapestry. My wife and I period for Brazil, and also a unique Angola. The goal is to create love Brazilian popular music. I’ll opportunity for countries like the centers of agricultural excellence quite happily confess to loving United States to define how we that can boost local farming music from Bahia, in particular can build partnerships in various within a program for food security. Ivete Sangalo and Carlinhos areas. The current moment is Maybe we could do the same in Brown. Also, my wife Barbara excellent for entrepreneurship Haiti and other places, increasing collects Brazilian art. in Brazil. The question now is food production capacity in to identify the opportunities on countries that need it. Food Finally – does Brazil figure in your which we can continue to build security is a great place to start so future plans? our relations. that in the coming years there’s a Yes, it does. I don’t have anything still greater convergence in terms finalized yet apart from waiting Do you think that Brazilian and of multilateral cooperation. for the birth of my second grand- American companies could work child, which should happen together in Africa? Have you made many friends in very soon. But I’m assessing It’s not impossible that this Brazil? opportunities as they arise and could happen in the future. Of yes, we were received with would certainly love to keep up Africa has become an interesting open arms. That’s the way in the many connections I have made demonstration of Brazil’s interest Brazilian society; it’s always open here over the past three years.

P I B 33 Cover Story

high How education and professional training formed an aeronautical industry in Brazil – and made Embraer the world’s largest manufacturer of mediumsize commercial jets, with businesses in around 90 countries and a delivery order book of US$20bn W.F. PADOVANI

or at least a decade, the other, with various applications, dif- vision of the future are the differen- list of the world’s largest ferent sizes and various recourses, in tials in the company’s success story, jet manufacturers has in- an uninterrupted long-term series. which in 2009 will celebrate its 40th cluded a company that was To achieve this, it is essential to have anniversary. At the start of the 1950s, previously a mere bit-part more than just the plane; you need re- when the embryo of today’s Embraer Fplayer – Embraer (a Brazilian aero- search, intelligence and studies. “The was taking shape, Brazil had barely nautical company). The aircraft made Embraer pillars were fundamentally finished creating its first bicycle fac- in São José dos Campos (São Paulo) education”, said company president tory (Monark, in 1948). Embraer, lo- have put Embraer on a prestigious Frederico Fleury Curado. Curado cated in an area the size of 60 soccer podium occupied by giants such as himself is an example of growth pitches in São José dos Campos (in Boeing, Airbus and Bombardier (in within the company via professional the Valley do Paraíba), some 90km 4th place). Even Brazilians, at least training – he joined Embraer in the from the São Paulo state capital, on those who in terms of aircraft only 1980s as a young trainee aeronautical the banks of the Via Dutra highway, understand the takeoff and landing engineer. is today the world’s largest manufac- process, have taken time to get used As we will see later on, the focus turer of commercial jets (in the seg- to the idea that a Brazilian company on education and knowledge and a ment up to 120 seats). Due to this and is now a leading player on this com- other achievements in its operating petitive, high-tech scene. From the niches (executive, military, govern- Bandeirante turboprop, the first Em- The multinational ment and commercial aviation), it has braer aircraft and a type of Fusca (the Embraer led for some time the ranking of Bra- Brazilian version of the VW Beetle) zil’s largest exporters, and continues of the skies, to the latest version of :: Has clients in around to lead the way today. In June 2009, the Legacy executive jet (the starlet 90 countries. it had a delivery order book of some of the current line), its progress has :: Has plants and support US$20bn. With clients spread across been truly breathtaking. facilities in the US, France, 90 countries, Embraer is, alongside The formula for Embraer to have Portugal, China and Singapore. heavyweight players such as Gerdau, become what it is today was the :: Has 17,000 employees Vale, Odebrecht, Votorantim and adoption of a strategy that can be :: Has a US$ 20 billion Petrobras, one of the 20 most inter- summed up by an apparently mean- order backlog nationalized companies in Brazil, ac- ingless phrase – to build a plane you cording to a study by the Dom Cabral :: Had a 2008 gross can’t just make a plane. But instead revenue of US$6.3bn Foundation.

another one, and another, and an- The company has thus become MARCELO CALENDA

34 P I B ALENDA C MARCELO

P I B 35 Cover Story

a standard-bearer of the high-tech Brazilian industry. It’s no exaggera- tion to say that it played a strong role in constructing Brazil’s international image as one of the four large emerging markets: the B in BRIC – an acronym rounded off by the initials of Russia, India and China. “The regional jets [of Embraer] really captured the imagination of the US flying public – they are fast, classy and fun to fly”, said the aeronautical consultant Peter Goelz, ex-director of the National Trans- portation Safety Board, the agency in Engineers in the charge of transport safety in the U.S. training program of “They will be a mainstay in US aviation Embraer: learning for years to come.” how to make AND sell aircraft It took decades to earn this reputa- PHOTOS: HANDOUT/EMBRAER tion. Proving itself as the option for an evolving line, based on academic and military industry. They set up base in idea. Result: Argentina continues pro- professional training, made the differ- Córdoba and constructed a highly ad- ducing incomparable alfajores (sweet ence in the birth of the Brazilian aero- vanced plane for the start of the 1950s cakes/biscuits). But it buys its aircraft nautical industry – just look at the ex- – it was called Pulqui II and had a nose, from Embraer. ample of Brazil’s neighboring country, wings, body and tail similar to the leg- “[Embraer] is the result of a very Argentina. At the end of World War endary Soviet MiG-15, heavily used long-term vision and of a State (not a II, President Juan Domingo Perón in the Korean War. But the program government) decision to establish the planned to turn his country into a didn’t progress – it didn’t go beyond a bases to create aeronautical construc- super power. The whim of Perón in- few prototypes and didn’t help Argen- tion training in Brazil”, says Curado. cluded making military tina compete globally The company was officially founded, combat aircraft just as Argentina built a in the production of as a state-owned entity, in August 1969, good as anything that aircraft. In Brazil, when Brazil’s president was General the Americans, Soviets high-tech plane at the challenge was Arthur da Costa e Silva. But its origins or Brits had at the time. the end of World met differently. In the date back much earlier, to the imple- He sought a shortcut: War II, but it land where aircrafts mentation, in the mid-1940s, of the by recruiting German were first invented, Technical Aeronautical Center (CTA) engineers who had didn’t create an the aim was to make – currently the Department of Science worked in the Nazi industry an industry out of an and Aerospace Technology (DCTA)

The ﬂ ight of Embraer Some of the main events in the company’s history

1946 1950 1969 1971 Technical Aeronautical Inauguration of Creation of Embraer Start of production of the Bandeirante Center (CTA), the Technological aircraft, a pioneer in Brazil now known as Aeronautics the Department of Institute (ITA) Science and Aerospace Technology (DCTA), starts operating

36 P I B – and of the Techno- Engineers trained have to train profes- zil. Lasting 18 months, the program logical Aeronautical sionals capable of pro- has around 3,500 candidates for 200 Institute (ITA), linked at the ITA and jecting, constructing spots each time the entry exam is to the then Aeronau- CTA aeronautical and perfecting them. held (implying an average of around tical Ministry. Both institutes were Training is in the 17 candidates for each course on offer). institutions are, in es- DNA of Embraer and Candidates that pass the program are sence, Brazilian cen- at the heart of its planes. In 2001, the virtually ensured a job at Embraer – ters of excellence in Embraer company created a since the course is strongly related to engineering, not just professional training the prospects and production needs aeronautics. Generally speaking, the course in aeronautical engineering of the company. CTA is the think tank, and the ITA is that is more disputed than many ca- Located in a modern building at the place where the ideas are put into reer courses at the University of São the Eugênio Melo unit, near the com- R

AE practice and disseminated. Paulo. Called the Engineering Special- pany’s headquarters, in São José dos R

EMB “Embraer was constructed after a ization Program (PEE), it is targeted Campos, the PEE headquarters are T/ U critical base of engineers (from the at engineers from other fields – civil, part of the Casimiro Montenegro NDO A ITA and CTA) was formed”, notes mechanical, electronic, computer and Filho People Development Center. : H S its current president. “It took over production engineering – with up to Casimiro Montenegro Filho is the HOTO P 20 years to go from the academy, the two years of a degree completed at name of the air marshal of the Bra- engineering school, to some R&D any institution or university in Bra- zilian Air Force (FAB), who first had work, and to arrive at the industry”. This period of two decades between Class with use of models at Engineering the birth of CTA/ITA and Embraer Specialization Program featured numerous experimental aircraft projects, and shows that the company’s forerunners were already concerned in not just wanting to build a plane, but rather an entire industry. Embraer was thus born with a vocation and preparation for longer flights (both literally and metaphori- cally). The company was privatized at the start of the 1990s. Thereafter, it took off definitively, gaining market share and visibility around the world. In the hands of its new stockholders, the company has maintained its vision that, in order to make aircraft, you

1985 1994 2004 2009 First flight of the Brazilian Embraer is Embraer 40-year anniversary prototype of the AMX fighter plane, privatized 170 aircraft of Embraer produced in partnership with Italy makes first flights in the U.S. and Europe

P I B 37 Cover Story

the idea that Brazil should have an aeronautical industrial facility. With three floors and an auditorium, the building is equipped with advanced digital technology for designing and EMBRAER / projecting aircraft. Embraer´s training T Curado: the academy

program, which is accredited by the NDOU created the base A : H

Brazilian Education Ministry, is run S O

for the industry T

by Embraer. The professors are from HO P the ITA. The objective of the PEE is to train financial consultancy offices, aware Grande do Sul, is already perceiving professionals already acclimatized of the technical training required for the benefits of the course. “One day I with the company’s level of excellence, an engineer from the sector, are used was chatting to a pilot and, from what therefore meeting the lack of profes- to trying to recruit talents at Embraer, I was saying, he thought I was a pilot sional talent on offer in the market. offering the lure of higher salaries and as well”, he says. “We really do learn With the need for a highly specialized benefits. The course also helps fill the a lot in this course.” team, Embraer, depending on needs gaps caused by the natural turnover Embraer currently has around and timing, is having problems find- ratio at the company. 4,000 specialized engineers, out of its ing adequate professionals. Since it The students approve the training total headcount of 17,000 employees. was created, the company’s program program. “When I finished university In its state-owned days, it captured has formed 1,000 engineers. Brazil’s I thought I was ready to go”, says Mau- practically all the students trained universities don’t supply the market ro Lopez, who has just completed the by the ITA. This is no longer the case with the same number of graduates Embraer/ITA course. “I wasn’t. Now, today. The market has changed. Em- with talent and vocation for the aero- however, I do feel prepared to work braer has changed. ITA has changed. nautical industry. To boot, the course at a company like Embraer.” His col- Currently, it is estimated that of the also helps to counterbalance the at- league Felipe Soares, another ex-stu- 30 aeronautical engineers launched tacks of talent hunters from other dent of the mechanical engineering in the market each year by ITA, only segments of the economy. Banks and course of the Federal University of Rio a third go on to work at Embraer. And,

EXEMPLARY COLLEGE The secondary education course of Embraer for underprivileged children even has a bank where students breed chickens and sell the eggs LOCATED IN A LARGE SPACE of çalves, 16. Also in her second year, the Eugênio de Melo unit, a short Marília Sales Martins (16) agrees: distance from the company’s ope- “It’s great studying like this – and rating base in São José dos Cam- it improves with the certainty of a pos, the Juarez Wanderley school better future”. – with modern classrooms, computer rooms, laboratories, sports How does the school do this? grounds and a mini orchard – has Some clues: a daily routine that fuses learning }To take the school entrance exam, and leisure to stimulate students the candidates must have taken the from underprivileged surrounding last four years of basic education in communities. “I feel so good here the public school network. Students at the Juarez Wanderley library that I want to go to school even }The students spend 10 hours per students receive free food, uni- when it’s closed”, says the second day at school. forms, transport and educational year student Renata Lopes Gon- }In addition to no fees or tuitions, material.

38 P I B of the 90 engineers from other areas is somewhat obsolete. Embraer´s acteristics of the PEE also trained by ITA each year, the “This also shows how program – such as giv- number that stays at Embraer is even the market is always secondary ing a 360 degree vision less (10%). Beyond the salary rat-race changing”, he says. And education school to the student. “In this in the market, there is another factor it’s with this focus that is the best in São course, the engineer explaining the exodus. When it was Eunice Rios, director th learns not only how to a government institution, Embraer of Human Resources, Paulo and the 8 make aircraft, but also recruited more technical engineers, and one of the influen- best in Brazil to sell them – the more used to obtaining solutions individu- tial people at Embraer complete the profes- PHOTOS: HANDOUT/EMBRAER ally – now, as a privatized company when it comes to retaining profession- sional, the better.” with broader businesses, it needs pro- als, looks to the company’s own past. Here we can also note the educa- fessionals that are, in two words: more “Embraer was constructed by vision- tional vocation of the company. Lead- globalized. And thus more used to the ary people, concerned with training”, er of the group that created Embraer, concept of teamwork. she states. “And this remains one of its first president and a living symbol This scenario is depicted by Cláudio the main characteristics of those of the Brazilian aeronautical industry, Jorge Pinto Alves, professor of Civil working, or wanting to work, here.” At Ozires Silva, an engineer formed by Engineering and head of the Student the company there are no employees, ITA and a Brazilian Air Force colonel, Division of ITA. “The aircraft sector is of any level, who haven’t at least taken preaches that vision only becomes re- very dynamic – and this type of change a secondary education course. Eunice ality if it’s based on education. Ozires, is normal in the market”, he says. The places special emphasis on some char- a paradigm of visionary entrepreneur- coordinator of the PEE course and head of the Aeronautical Engineering Constructing division of ITA, Paulo Rizzi, says that the Phenom to work in the construction of aircraft, fuselage: precision an engineer has to understand two or engineering more areas involved in the mission. In fact, in his opinion, speaking ex- clusively in aeronautical engineering

}The school offers students its University Preparation Program (PPU). With 800 class hours, it covers the areas of sciences, math and biomedicine -courses respectively developed in partnership with the Center of Occupational Research and Development (in the U.S.), the Pitágoras education network and the Sírio-Libanês Hospital. }The students participate in ex- tracurricular environmental, social and cultural activities, }In one of them, they breed chickens, sell the eggs and, with the money raised, they run their own form of bank for investing in the business.

P I B 39 Cover Story

students, ranked 1st in the National Eunice Rios, Secondary Education Exam (Enem) from Human Resources: history in 2008 in São Paulo. In the overall of visionaries Brazil ranking, it was 8th. In other words: with seven years of existence, it is one of the top ten secondary education schools in Brazil. Juarez Wanderley is, in practice, a sort of private super school, for free, for teenagers from public schools – in general boys and girls from underprivileged families or with limited financial resources. Their education is fully financed by Embraer, cost- ing R$1,000 per month per student (totaling R$7.2mn per year). It is an unconditional contribution since the students, obviously, are free to choose ialism in Brazil, is also obsessed by cial initiatives. The rest goes to other what they want to do upon leaving. teaching. “Embraer is one of the best activities (also of an educational na- And most don’t plan on doing aero- examples of the success that educa- ture and that in general are carried nautical engineering – or any other tion provides”, he says. “Education is out by volunteer-employees from the segment of engineering that can be the best investment that a country can company itself – a work activity that absorbed by the company. And on make.” Now in his 80s, Ozires contin- is highly valued internally). the subject of higher education, here ues working – and, given his life story, Inaugurated in 2002 and acces- is another exceptional achievement where else could he be other than in sible (via a disputed entrance exam) of the Juarez Wanderley school: in the educational segment? He is presi- only for students from the São José 2008, all the students – that’s right, dent of the University of Santo Ama- dos Campos public system, the college, all of them – who took exams to gain ro - Unisa, a private institution in São based on the performance of its 600 entry into university were approved, Paulo, and is also involved in his latest and 80% of them in public univer- project, a biotechnology company. sities (the most disputed in Brazil). Precisely because of its strong links THE STRENGTH This is an average that very few of with passing on knowledge, Embraer the most expensive private schools, has decided to concentrate its social OF SÃO JOSÉ frequented by the upper classes, and responsibility projects in a single area: LARGELY THANKS TO only a handful of the most renowned education. “It’s the basis of every- EMBRAER, and its suppliers in courses, attended by the same social thing”, says Pedro Ferraz, director of the city, or around it, São José dos classes, can boast. For all these rea- the Embraer Education and Research Campos is the 7th largest city in the sons, the competition to gain a place Institute. “It’s what, on its own, gener- state of São Paulo, the 30th biggest at the school is intense – there are in ates the social and economic develop- in Brazil and the third largest in general 25 candidates per spot (read ment of a nation.” Embraer created and the interior of Brazil (i.e. outside more on page 38) maintains, in São José dos Campos, a the metropolitan regions) – in this At a first-tier company, profes- secondary education school (free of category, it only trails Campinas sional training even helps to over- charge) that has become a model in- and Uberlândia. The city’s growth come tough times – such as those stitution: Colégio Engenheiro Juarez vocation is also reﬂected by the that Embraer, like so many other Wanderley (name of the company’s presence of other large-scale com- companies, has been facing since first president after the privatiza- panies operating in the municipal- the economic crisis started to haunt tion). Known in São José dos Campos ity – including Petrobras, General the global economy. To survive in a as “Embraer College”, it accounts for Motors and Johnson & Johnson. market where profit margin isn’t as 90% of the company’s budget for so- big as imagined, the company re-

40 P I B RAER B Model of Phenom 100 executive jet test in wind tunnel in Russia HOTOS: HANDOUT/EM P cently laid off 4,000 workers (it had of minuscule or giant parts – all high out, Embraer delivered 204 aircraft – a headcount of 21,000). But it has a tech, and that come from all over the 202 of which were large-scale planes. tool to reposition itself as soon as the world. It is estimated that 70% of the The 2009 target, a number conceived crisis starts to show, as it is already, aircraft components of Embraer are before the crisis, was 350. The actual signs that it may fade away – its made abroad – including turbines and number will be 242, implying almost business intelligence department. electronic systems. To facilitate con- one plane per working day – of which This division collects and studies all tact with companies abroad, and also 132 will be large-scale. Expected gross types of information, including tiny via its service and post-sales network revenue: US$5.5bn, with net revenue details such as the number of indus- (plus, of course, its own plants in five of around US$400mn, implying zero trial packaging boxes that a specific countries), the company has a large growth over the average of the last country uses – which shows the level network of operations around the five years. of industrial activity of world. It has 1,000 em- In relation to 2008, gross revenue that country and what it ployees abroad, with- was lower, but the net amount also is producing. All the students out including indirect depends on other factors, such as ef- The intelligence work from the Juarez subsidiaries. From the ficiency in the processes. For 2010 and helps Embraer to define client order to delivery 2011, little change is expected, since new operating scenari- Wanderley of the aircraft, the pro- the clients of aeronautical companies os. Other aspects, such College who cess takes, on average, don’t make orders overnight. Due to as growth in cities and took last year’s a year. The operational the maturation of the business, post- the consequent creation part, the construc- crisis growth should start to give fur- of new airl routes, or university tion of a jet, takes four ther positive signs in 2012 – and the the multiplication of the entrance exam months. The remaining business intelligence division is now number of executives, passed part refers to contact working to discover the market niches determine what type of with suppliers, which that will open up as a result of the re- plane the company can offer in each in fact, due to the company’s business vitalization of the economy. “Crisis location. Still in industrial secrecy engineering, have largely become risk or no crisis, the future of a company stage, Embraer is outlining new plans partners (a form of production that the size of Embraer always involves based on these studies, which going helped the company emerge from a its degree of knowledge”, says Paulo forward will result in new products difficult phase at the time of its priva- Rizzi, coordinator of the engineering and businesses. tization) and to the logistics of the program of Embraer. Since its creation, Constructing aircraft is like as- materials and parts for the assembly the history of the company has indeed sembling Lego made from thousands line. In 2008, when the crisis broke proven this to be the case.

P I B 41 Book Anti-protectionism manual

In her book, Brazilian lawyer unravels the complex legislation of international agricultural trade in order to help companies face the barriers imposed by the wealthy countries FLÁVIA CARBONARI, FROM WASHINGTON

razil is now a heavy- nisms of how these policies work: weight player on the “Agricultural Subsidies – Interna- agricultural scene. De- tional Regulation” (Saraiva, 416 spite the global crisis, pages). Brazilian agribusiness With a degree from the Univer- Bposted a trade surplus of over sity of São Paulo, and professional US$50bn in 2008, while agri- experience in Brazil and Switzer- business GDP grew almost 7% p.a. land, Adriana currently works at Exports of basic products repre- King & Spalding LLP, one of the sented 37% of overall exports last biggest law firms in Washington. year. Data compiled by CEPEA In an interview to PIB, in Wash- (Center of Advanced Studies in ington, Adriana pointed out that Applied Economics) revealed that Brazil became a leader in agricul- the Brazilian agricultural sector tural exports due to its physical represented approximately 19% of and natural conditions and its national GDP. advanced technology, developed So, what’s preventing even “with grit and determination”. stronger growth in Brazil’s ag- On the other hand, she argues, decades ago...it’s big business”, ricultural exports? One of the the U.S. and the European Union states the author. reasons is the pro- are also leaders in tectionist policies the agricultural >> Inequality in numbers of the world’s rich sector, mainly due The ag ricult ural sector employs countries. Brazil- to the subsidies in over two thirds of the population ian lawyer Adri- place since The of the poorest countries, and rep- ana Dantas, who Great Depression resents on average one fifth of na- represents some (in the U.S. case) tional income. World Bank data DIVULGAÇÃO / EDITORA SARAIVA of the main sec- or (in the latter show that GDP growth derived tors of Brazilian case) sewn into from agriculture is 2.7 times more industry (such as the agreements efficient in reducing poverty in the ethanol, aero- that helped struc- Latin America than GDP growth nautical and tex- ture the creation generated outside the sector. tile sectors) in the of the European However, despite the fact that U.S., wrote a book Union itself. “This developing countries are more to examine in de- is the result of a economically dependent on ag- tail the mecha- lobby structured riculture, 12 of the world’s 15

42 P I B I sy over the nomination of Thomas the WTO, while enabling, in prac- ONAR B Shannon to the post of U.S. ambas- tice, the protectionist policies to A CAR

I sador in Brazil. Like most demo- run roughshod over all the talk of

FLÁV crats and academics in Washington, deregulation. “These rules are ex- Shannon opposes the import tariff tremely complex because they were on Brazilian ethanol. But the pow- made not to work”, says Adriana. erful U.S. agricultural lobby, headed She explains that the U.S. and by a senator from Iowa, threatened EU themselves were mainly re- to veto Shannon’s approval if the sponsible for creating the rules, Obama administration didn’t con- and made room to accommodate firm that it had no intention to in- their interests in the loopholes of terfere in the import tariff – which the legal apparatus in place. “The proved to be the case. very aim of my book was to break The U.S. rural lobby also had down this complexity, mainly for its say in the Climate Change Law, the private-sector players, who passed in June 2009. “The method will be able to gain comparative adopted was, in fact, a cover-up advantages by facing the barriers to serve the interests of ethanol and exploiting the opportunities producers, who succeeded in post- that these very same rules cre- poning the decision on the criteria ate”, points out the author. defining the type of To shed further “clean” ethanol, ac- light on the situation, cording to Adriana. The [WTO] rules chapter 6 contains a Due to this scenario are extremely detailed analysis of of persistent rejection the difficulties and of free competition, complex possibilities of ac- which was worsened because they tivating subsidies Adriana in front of the by the global crisis, were made not mechanisms under U.S. Supreme Court: Adriana believes that to work the WTO Agree- facing the rural lobby “the time has now ment on Subsidies come for the Brazil- and Countervailing ian private sector to take an even Measures, revealing the loopholes largest exporters hail from the more aggressive stance”. that can facilitate the process. In OECD, and represent 65% of summing up, Adriana concludes global agricultural exports. This >> The loopholes of the law that agricultural producers and state of affairs would not be pos- In her book, she suggests strat- the Brazilian government need to sible, notes Adriana, without the egies and paths. For example, she be ready to fight on two fronts: in strong schemes protecting these assesses to what point the WTO in- the legal arena, she stresses the countries´ agricultural produc- ternational trade rules have helped need for a solid strategy to face ers. According to OECD studies change countries´ behavior, and in- the protectionism embedded into designed to calculate the level of vestigates if the regime created by the current rules. But the political support provided by its member the WTO to govern the granting of fight to change these rules also countries, the agricultural sector agricultural subsidies has produced needs to move forward in forums is the most distorted and subsi- the desired results: of promoting such as the (WTO) Doha Nego- dized – accounting for 38% of all the deregulation of global agricul- tiations, currently on standstill the subsidies granted globally be- tural trade. due to major bones of contention tween 1994 and 1998. The conclusion is negative. Her between rich and poor countries A clear example of the power and book exposes the loopholes that – an uncertain path, therefore, but sway held by the agricultural lobby continue to favor the interests of one which Dantas believes should in the U.S. was the recent controver- the most powerful countries in continue to be walked.

P I B 43 Energy Oil to consume and sell Petrobras is changing its international proﬁle and is now prioritizing reﬁning and distribution, in search of markets for the future production of the pre-salt LUCIANNE CARNEIRO

lmost 40 years ago, focus of internationalization today ing, transport and sales”, confirms Petrobras took its first is to expand access to our products Zelada. In refining, Petrobras is baby steps abroad by abroad”, says the director of Petro- studying new projects abroad since investing in Colom- bras´ International Area, Jorge the pre-salt production forecasts ex- bia, in 1972. At that Zelada. ”With this in mind, we plan ceed the company’s installed capaci- time,A the company was driven by to add value to this excess pre-salt ty in Brazil, even taking into account the need to guarantee oil reserves production”. However, he remains the new facilities scheduled to come for domestic consumption. Its pri- guarded on the amount of pre-salt on stream in the future. In distribu- ority was to discover oil abroad to production that will be considered tion, Petrobras is looking at the U.S. supplement the limited Brazilian excess and exported in the form of and Europe, where there is strong production and meet the growing refined products. He claims that this demand for gasoline and diesel – the domestic demand. is a strategic decision to be taken by main fuels of their vehicle fleets. Today, times have changed. the company. “I can’t ignore the U.S. market, Petrobras is now one of the largest What is clear, however, is that and I can’t turn a blind eye to Eu- companies in the Americas and is this decision represents a major rope”, says Zelada. He confirms the the eight largest listed company in shift in how Petrobras conducts its studies to establish the Petrobras the world (in terms of market val- business abroad. “The balance of brand in both places. In the U.S., ue), according to a survey by Ernst international operations will shift where Petrobras is already active & Young published in August. Even from the exploration and production in exploration and production, the more importantly, the outlook for (E&P) sectors to the areas of refin- company will start to produce oil exploring the giant pre-salt re- in 2010 in the Cascade-Chinook serves, which are potentially project, among others. In the much larger than domestic de- U.S. market, it also holds a 50% mand, is leading the company to stake in the Pasadena refinery. reevaluate the course of its in- Given this reality, says Zelada, it ternational operations in order is a perfectly logical step to start to adapt to the new scenario. operating as an integrated com- The order of the day now is to pany in the U.S. market. seek international markets for the excess Brazilian oil. Howev- Flexibility er, this doesn’t necessarily imply The plans, however, don’t that Brazil will export crude oil. necessarily include running The think tanks at the upper ech- gas stations with the Petrobras Zelada: the aim elons of Petrobras are planning is to become a name, as is the case in Chile and to refine and sell oil distillates global company other South American countries. HOTOS: HANDOUT

such as gasoline and diesel. “The In addition to service stations, P

44 P I B NUMBERS :: Petrobras has operations in 28 countries :: The company derives 12% of its revenue from the international market PHOTOS: HANDOUT The largest country investment :: Petrobras gas station (28%) by Petrobras between now in Argentina:P I B priority45 and 2013 will be made in the U.S for South America Energy

they are studying Petrobras wants the different busi- erations of the International Area, other forms of op- ness cultures in the and enables us to better select the erating in the distri- to reﬁne the 28 countries (exclud- offers we receive”. bution segment – i.e. excess pre- ing Brazil) where the A fervent supporter of the com- at sale terminals for salt and sell company operates. pany’s internationalization, Zelada retail companies and His office, on the admits that the process is still tepid airports. Petrobras is high-value oil 23rd floor of the compared with the progress of other also analyzing plans distillates such company’s head- Brazilian companies´ international- to distribute its prod- as gasoline and quarters at Avenida ization. In the 2009 ranking of the ucts in Asia. How- Chile, in the center Dom Cabral Foundation (FDC), fea- ever, due to the vast diesel instead of of Rio de Janeiro, turing data relative to 2008, Petro- distance and higher crude oil boasts a spectacular bras ranks 20th in terms of its rela- transport cost, this view of Guanabara tive international presence. It trails step will require a more detailed Bay and the Sugarloaf Mountain. the leader, steelmaker Gerdau, and feasibility study. The company’s re- For this reason, he says the best part the other Brazilian heavyweight, finery in Okinawa (Japan) may be a of his job is in Rio. “I usually make Vale (4th) by a long way. stepping stone in this strategy. sure that visitors have a view of the The FDC´s transnational index Although Petrobras´ new inter- Bay”, he says. “It helps in the nego- uses three indicators to determine national priority is refining and tiations”. But beyond this revelation, the degree of a company’s inter- distribution, the change in direc- Zelada keeps quiet on the negotia- nationalization: the ratio betwe- tion will be gradual. Exactly 79% tions underway in other countries. en international revenues and the of the US$15.9bn that Petrobras He says only that there are a large company’s total revenues, its in- plans to invest outside of Brazil by number of parties interested in ternational assets as a percentage 2013 will be channeled to the E&P partnering up with Petrobras. of total assets and the number of segment, while the remaining 21% employees abroad versus total he- will be divided up among the other Growing globalization adcount. Since the size of Petrobras´ segments. Investments in explora- The recognition of the capacity operations in Brazil is much greater tion (already underway), such as in and technology developed by Petro- than abroad (its International Area the Gulf of Mexico and in Western bras in deep water oil exploration accounts for only some 12% of reve- Africa, continue apace. But, going means that its services are highly nues), it trails smaller companies in forward, Petrobras´ majority stake prized abroad. “Petrobras is sought the overall ranking. in E&P will be gradually reduced. out to develop operations in many Zelada, however, envisages a “Petrobras is a transatlantic ocean more locations than those where it future (although he doesn’t put a liner. It can’t change course rapidly already has a foothold”, says Zelada. specific date on it) in which in- due to the numerous investments “This is part of the day-to-day op- ternational operations will gain that it has undertaken” explains Zelada. “But we need to see how things will map out, and this will HANDOUT become clear in the company’s up- coming strategic plans”. With a degree in engineering, and almost 30 years at Petrobras, Zelada assumed control of the company’s International Area at the start of 2008, months after the announcement of the pre-salt discovery. The position has required Zelada to travel abroad at least once a month, while also demanding major flexibility to deal with Petrobras worker in Nigeria: 46 P I B investment in Africa nesses, Petrobras is also betting on this growth to achieve its goal of becoming one of the world’s five largest energy companies by 2020. The initial target is to increase total oil and natural gas production abroad by 8.77% p.a. by 2013, enabling it to achieve production of 341,000 barrels per day. For 2020, the plans are more ambitious: to increase international production by 9.03%, to achieve daily production of 632,000 barrels. As in Brazil, Petrobras´ opera- Reﬁ nery in Japan: tions abroad aren’t just limited to Asian base

HANDOUT oil. In Argentina (its largest operation outside Brazil), it produces such importance at the company seeking this and has been gradually fertilizers, as well as generating and that the International Area will no obtaining success in its globaliza- distributing energy. “South Amer- longer have an exclusive board. It tion”. Since its creation, in 2002, the ica is a natural focus of Petrobras”, will be entirely global, like other International Area’s share in overall says Zelada. There are also plans large oil players. “Exxon, Shell and revenues has risen from around 3% for the Okinawa refinery (in which Chevron are organized differently to 12% currently. the company has an 87.5% stake) to because they were always global As well as the pre-salt discover- become a base for the future explo- companies”, he states. “Petrobras is ies and development of other busi- ration of ethanol.

THE INTERNATIONAL MARKET (28% of the US$15.9bn scheduled to be invested between now and 2013). WITH OPERATIONS IN 28 oil fi eld. The company had operated MEXICO - Petrobras has two COUNTRIES, plus Brazil, Petrobras another oil fi eld up until 2001, but contracts (valid until 2018) with is looking at three regions in the long didn’t strike oil. state-owned oil company Pemex, in term: South America, Africa and the VENEZUELA – the company is the areas of Cuervito and Fronterizo U.S. taking part in an international bi- (Northern Mexico), where it produ- dding process to explore the Carabo- ces natural gas. In a visit to Brazil, South America and bo oil fi eld. Mexican President Felipe Calderón the Caribbean expressed interest in building on the CHILE – The largest recent invest- Africa partnership with Petrobras. ment of Petrobras in South America – Angola and Nigeria will represent where it operates in all countries, with 17% of the company’s international Europe the exception of Guyana and Surina- investments by 2013. Petrobras is Petrobras participates in exploration me – was made in Chile. The company also investing in another fi ve African blocks in Portugal, and sells its pro- paid US$500mn to buy ExxonMobil´s countries (Libya, Senegal, Tanzania, ducts in the United Kingdom. stake in Esso Chile Petrolera. August Mozambique and Namibia). 2009 saw the start-up of the fi rst of Asia the 230 Chilean service stations that North America As well as its refi nery in Okinawa will feature the Petrobras brand. U.S. – The company is exploring (Japan), and an offi ce in China, CUBA - Petrobras has returned to offshore fi elds in the Gulf of México, Petrobras explores and produces oil Cuba, where it is carrying out geolo- and the U.S. will receive the bulk of in Turkey, Iran, Pakistan, India and gical studies for the exploration of an Petrobras´ international investments Singapore.

P I B 47 Exports

Conveyor belt denim production Vicunha Europa is betting on its geographical location, planning and operational speed to face the Asian competition and weather the crisis SUZANA CAMARGO, FROM GENE VA

ashion trends have always been dictated by the catwalks and clipbo- ards of European designers. Countries such as FFrance, Italy and Spain produce the patternmaking, prints, wa- shes and trends for the fabrics that will shortly be on store shel- Gisele Bündchen and ves in the rest of the world. To Jesus Cruz at the São get closer to this strategic market, Paulo Fashion Week: the Brazilian company Vicunha Vicunha´s denim and serge fabrics go global Têxtil, one of the world’s largest manufacturers of denim fabrics, twills, knitted fabrics, filaments and fibers, has an operating base them to cease making purchasing innovative clients such as Zara (one in Switzerland, in the small city decisions at the right time. “But of the brands of the Spanish group of Gland, located between Lau- now, they are seeing empty store Inditex). The Zara store chain, an sanne and Geneva. shelves and need to make orders international growth phenomenon It’s there where Thomas Disli- quickly”, he says. in recent decades, has created a ch, a Brazilian with German roots, Vicunha Europa is working hard business model anchored on cons- serves clients from all over Euro- on marketing the concept of quick tantly renewed fashion collections, pe and is looking to gain market delivery to its clients – a concept based on current trends. “If a gi- share in the still incipient post- that it terms “denim and flats in ven product is selling like hotcakes, crisis economic recovery. Its main three days” – to compete with its they start producing faster”, says weapon is its speed in meeting Asian rivals (especially Chinese Dislich. “For this strategy to be orders. The global recession put and Indian). This quick delivery successful, they also need a fast buyers on the back foot, leading time is also important in capturing supplier”.

48 P I B logistics center of Europe, Vicunha has a central warehouse that receives deliveries twice a week. With a regular inventory of 3 million meters of denim fabrics and a million meters of cotton in Europe, the company can rapidly meet the demands of any client. An exporter since the early 1980s, Vicunha Têxtil has subsidiaries in the U.S., Argentina, China and (of course) Europe. It has annual revenue of R$ 1.38bn and exports around 30% of its production. Its Swiss office in Gland controls the European arm of this complex distribution network. Dislich, fluent in six languages, works alongside 10 employees from various nationalities and 40 outsourced workers. “You have to speak the language and, mainly, know the culture of your clients´ country to be able to provide a good service and offer the most adequate product”, he says. Nevertheless, the last two years have been tough for Vicunha Eu- ropa. Due to an over-appreciated Brazilian Real, Brazilian fabrics

I have become expensive, and sales fell from 2007 to 2008. This year, A VASOL I due to the economic contraction, a stronger sales effort is required. “The crisis affects everyone and HOTOS: MÁRC P today we have to fight twice as hard to close an order”, says Dis- Favorable geographical in Ceará and Rio Grande do Norte lich. “The consumption environ- location – it also has plants in São Paulo, and ment has taken a hit but, as far as I How is Vicunha Europa able to recently installed a plant in Ecu- know, our plants are the only ones deliver the orders with the promi- ador. The trip from Brazil’s Nor- in the sector still operating at 100% sed speed? To start with, it exploits theast to the Port of capacity”. its geographical advantage of pro- Rotterdam (Holland) Vicunha´s In the crisis, qua- ducing in South America. All of its takes 9-12 days, whi- lity is also a crucial fabrics sold in the European market le Asian manufactu- ambition is weapon. As well as are shipped at the Port of Mucuripe rers´ fabrics take 40 to become a Inditex (of Zara), (in Fortaleza, Ceará state), the last days, on average, to global company, Vicunha supplies Brazilian stopover for ships headed reach the same des- fabrics to brands to Europe. The company’s produc- tination. serving global such as H&M, Be- tion mainly takes place at its plants In Rotterdam, the clients netton, Mango, Re-

P I B 49 Exports

play, Tommy Hilfiger, Calvin Klein, Diesel and DKNY. To establish its differential vis-à-vis Asian compe-

titors, the company seeks to offer PHOTOS: HANDOUT fabrics with special prints and innovative patternmaking each season. Vicunha’s designers and textile engineers are now working with fabrics for the 2011 winter season. “We seek to be creators and not copiers of fashion”, says Disli- ch. The new products will be Fabric production launched in June 2010 at De- line: creating fashion nim by Première Vision, the mega-event held in Paris to present the latest de- of denim fabrics and twills, as velopments in the glo- well as other fabrics, which, ac- bal textile market. cording to Dislich, makes it one of the few manufacturers in the Uncovering Dislich, from world with the size to supply di- the East Vicunha fferent markets. And although sa- Vicunha Têxtil Europa: eyeing les in Europe represent only 7% of has monthly pro- the Asian the revenues of Vicunha Têxtil´s market duction capacity for denim segment, the segment has 12 million meters proven to be a promising formula for the company. Dislich recently assumed control of the Asian subsidiary of GROWING AMIDST THE CRISIS Vicunha, in Shanghai, where the LIKE OTHER BUSINESS SECTORS, the yarns and fabrics market was also company plans to implement the affected by last year’s economic earthquake. According to a survey by ITMF operational model used in Euro- (International Textile Manufacturers Federation), production fell strongly in pe. However, it acknowledges that the fourth quarter of 2008 compared to the previous two quarters. But the Asia has a very complex domestic impact wasn’t evenly distributed – the market contracted in Europe and North market. “China, for example, is America, but expanded in Asia and in South America. immense, dynamic and attractive, Learn more about the sector: but completely different from our reality”, he says. We are talking about the world’s second largest :: In 2008, yarn production fell 19.9% in the U.S. and 14.6% in Europe. textile manufacturer today – the Latin America, however, posted growth of 5.4% p.a. top eight are Brazil, China, Egypt, India, Italy, South Korea, Turkey :: Fabrics production in 2008 rose 23.3% in Brazil, despite declining and the U.S. In Asia, Dislich wants 4.7% in the fourth quarter of 2008. European countries posted an annual to a have a response capacity as decline of 9.6%. fast as in Europe, to be able to offer the main brands´ Asian subsidia- :: With capacity to produce 400 million meters of fabrics per year ries and retail store chains the (around 6% of global production), Brazilian denim manufacturers same product sold in European exported US$104mn* in 2008. Asian plants still account for over half of stores. “The future of Vicunha is global denim production. as a global company, serving glo- * Data of ABIT (Brazilian Textile and Apparel Industry Association) bal clients”, concludes Dislich.

50 P I B Survey Gerdau leading the way Brazilian multinational companies continued to conquer the world in Gerdau: bigger 2008, but they are losing ground this abroad than in Brazil year, according to an FDC survey MATHIAS CRAMER/TEMPOREALFOTO.COM

n the crisis or before it, Brazi- survey, followed by auto parts maker company with the highest volume of lian multinationals continued Sabó, food producer Marfrig and mi- international assets. But the FDC´s to strengthen their position ning company Vale (see chart). But internationalization index, using a in the international market even the leaders in the ranking have formula created by UNCTAD, consi- last year, as indicated by the suffered from the strong global ma- ders assets, revenues and employees I2009 edition of the Ranking of Brazi- rket contraction caused by the crisis. outside of Brazil as a percentage of lian Multinationals, compiled by the Once the crisis passes, however, the a company’s total size (i.e. domes- Dom Cabral Foundation (FDC). Last stimulus to invest abroad should tic + international). By this criterion, year, Brazilian direct investments be reignited, predicts Jase Ramsey, Gerdau is the most internationali- abroad totaled US$20 billion – the coordinator of the FDC´s Center of zed Brazilian company, with a rea- second highest result ever. This year, International Studies. ding of 0.570 – anything above 0.5 however, the outlook is more conser- Mining giant Vale, with opera- means a company is bigger abroad vative. While Brazilian multinationals tions in 33 countries, is the Brazilian than it is in Brazil. invested US$8.5 billion abroad in the first half THE MOST INTERNATIONAL BRAZILIAN COMPANIES of 2008, this flow re- Position Company Main Sector Transnationality Index versed to almost -US$2 1 Gerdau Steel and Metal 0.570 billion in the first half 2 Sabó Auto parts 0.408 of 2009. In other words, 3 Marfrig Food 0.407 there are more funds 4 Vale Mining 0.385 flowing back into Bra- 5 Metalfrio Metal parts 0.378 zil than there are being 6 Odebrecht Construction 0.357 invested in the rest of 7 Aracruz Celulose Paper and Pulp 0.302 the world (Brazilian 8 Tigre Building Supplies 0.296 Central Bank numbers). 9 Artecola Chemicals 0.259 “The gradual rebound 10 Suzano Paper and Pulp 0.257 in investments abroad 11 Lupatech Metal parts 0.234 should only be seen in 12 Marcopolo Vehicles and parts 0.207 2010 and 2011”, pre- 13 Embraer Aeronautical 0.203 dicts Professor Álvaro 14 Itautec IT Software and Services 0.181 Cyrino, from FDC. 15 Camargo Corrêa Construction 0.177 Steelmaker Ger- 16 Weg Engines 0.172 dau was the most in- 17 ALL Transport Services 0.165 ternational Brazilian 18 Stefanini IT Solutions Technology and Computing 0.141 company in 2008, ac- 19 Votorantim Commodities 0.130 cording to the FDC 20 Petrobras Energy 0.126

P I B 51 Finance The world Brazilian banks are overcoming their shyness and starting to beckons contest markets in the international ﬁnancial arena CLÁUDIO GRADILONE

he timing and location couldn’t be any better. In the first week of April 2009, in the tree-lined streets surrounding the TImperial Palace, in downtown Tokyo, cherry trees were in full bloom, ma- rking the arrival of spring – one of the main popular Japanese festive seasons. In a sumptuous room of the Imperial Hotel, just a few meters from the Emperor’s private residence, around 250 Japanese investors (retail and institutional), were watching the presentations of Roberto Nishikawa, head of Itaú Securities, an investment company linked to Banco Itaú. His objective was to transform the dis- ciplined Japanese savers into fans of the Brazilian capital market. Nishikawa and his employees, all fluent in Japanese, were putting together explanations, already well known in Brazil, to prove that Brazil, after a concerted effort, has become a safe haven for any investor: the good forecasts for the Brazilian economy, whose growth is leveraged on domestic consumption; the solidity of the public accounts; the tranquility provided by the floating foreign exchange rate regime and by the country’s abundant international reserves. All this effort to “sell” the Brazilian economy abroad is paying off, as sho-

52 P I B wn by the change in the profile of ca- in the market as a whole”, he says. pital invested in Brazil. According to “This source of capital is much gre- Revving up the engines Nishikawa, five years ago, practically ater.” The foreigners investing in in Latin America 100% of foreign investments in Brazil Brazil are no longer a restricted club. BNDES export ﬁ nancing for the region (US$ millions) came from specific, Latin America- Nowadays, it’s by no means a stre- dedicated funds – which limited the tch of the imagination to think that Up to 2004 550 amount of funds raised. Today, this a passer-by in a street of any main 2005/6 855 percentage has fallen to 80%. global capital city has some of his/ 2007/8 1.740 her dollars, euros, pounds or yen in- Global investors vested in Brazilian assets. While this percentage still see- The Central Bank numbers show ceipts (ADRs), which are securities ms very high, the change is crucial. the effect of the work being done by backed by Brazilian shares traded on “Around 20% of the money comes executives such as Nishikawa. Be- the NYSE; investment funds that in- from general investors, who invest tween January and July 2008, when vest in the Brazilian market; private the international financial crisis or government fixed income bonds; hadn’t yet fully reared its ugly head, or shares in the banks themselves, Brazil received US$ 17 billion in in- whose funds will finance mortgage vestments in the financial market – and vehicle loans in Brazil. the so-called portfolio investments. One crisis and several bank collap- Disputing markets ses later, the total amount invested In addition to Brazilian banks, the still stood at US$12 billion in the São Paulo Futures and Commodities same period of 2009. And we aren’t Exchange is also gearing up to expand talking about the money of compa- its global presence. BM&FBOVESPA Itaú presentation in nies that build factories and assume will shortly open an office in London, Tokyo: showing the long-term commitments, but rather and already has representative offices good momentum the coltish capital of financial inves- in New York and Shanghai. The aim, enjoyed by Brazil tors – which, in times gone by, was according to BM&FBOVESPA chair- called swallow-capital, since (like man Edemir Pinto, is to promote its the bird) it was always services to investors, ready to take flight and brokers, fund mana- flee at the first sign of Brazil continues gers and other market a storm in emerging players. markets. The volume to receive Raising internatio- of post-global crisis in- inﬂ ow from nal money has always flows, although lower international been part of the daily than in 2008, shows routine of Brazilian that Brasil continues to investors, bankers, which nee- be seen as a safe haven. despite the crisis ded to supply a coun- Itaú alone manages try deficient in capital. US$3.5 billion in foreign capital. Now, however, national banks are As well as its New York and Lon- adopting a new international stan- don divisions (in place for almost ce. Private-sector and state-owned ten years), it recently set up shop in financial institutions such as Itaú Tokyo, Hong Kong and Dubai. “The Unibanco, Banco do Brasil and the intention is to facilitate access to the BNDES (Brazilian Development enormous capital reserves of Asia Bank) are stamping their passports and the Middle East”, says Nishika- to contest markets and to support wa. The investments take various the international growth plans of

HANDOUT / ITAÚ forms: American Depositary Re- Brazilian companies.

P I B 53 Finance

In so doing, Brazilian banks are assuming, although behind schedule, a role that always characterized its competitors in developed countries. “When a large corporation starts to operate outside its country of origin, it takes with it its suppliers and its banker”, said the then president of ABN Amro Real, Fabio Barbosa, in a presentation to investors in 2006. “Banks don’t usually explore new markets alone – they generally do so alongside companies.” With this aim, at the end of HANDOUT / BNDES August the BNDES opened a sub- BNDES chairman Luciano Coutinho: supporting Brazilian exporters sidiary in Montevideo. “The Monte- video office reflects the bank’s prio- global forums of bank discussion. Its cultural machinery, buses and oil rity in relation to the regional inte- conferences bring together the main and gas pipelines. gration of South America, especially sector leaderships, and the BNDES Maria Isabel Aboim says the cri- in the Mercosul region”, says Maria will be one of the sponsors of the sis hasn’t affected the internatio- Isabel Aboim, head of the bank’s in- 2009 annual meeting – which will be nalization process of the BNDES. ternational area. “The next step will held in October in Istanbul (Turkey). “On the contrary, we are now better be opening our London office, repre- positioned to take advantage of the senting the start of our presence in Neighboring countries opportunities arising for the bank the international financial communi- are a priority and for Brazilian companies in the ty.” Its presence in the capital of the Luciano Coutinho, president of international market”, she says. Mercosul region helps the BNDES the BNDES, publicly declared that By prioritizing South America, the explore opportunities for Brazilian the bank is analyzing export projects BNDES is accompanying the interna- companies. (totaling US$15.6bn) for Latin Ame- tionalization strategy of companies The BNDES strategy doesn’t just rican countries. In an interview to and even of the Brazilian private-sec- involve the traditional provision of Valor Econômico newspaper, Couti- tor banks that have decided to explo- support to export operations, since nho said that disbursements for the re the international market. For any it also provides advisory services Latin America region doubled in the Brazilian bank looking to grow abro- to companies seeking to establish a 2007-2008 period versus 2005-2006, ad, it makes sense to first of all start in foothold outside of Brazil. In this sen- and should continue growing over its neighboring countries, which are se, the Uruguayan office (the bank’s the next few years despite the crisis. geographically, historically and cul- first international division) and the By 2004, the BNDES had lent, on turally close. In 1998, Itaú targeted fact that the BNDES average, US$550mn Latin America by merging its division has forged ties with The BNDES to the region in each in Argentina with Banco Buen Ayre, multilateral orga- 2-year period – an a movement that gained momen- nizations show the is setting up amount that rose to tum in 2004 with the acquisition of new direction. In operations in US$855mn in 2005- the Brazilian operations of Bank of the first semester of Montevideo and 2006 and almost America. Two years later, the U.S. 2009, the bank joined doubled to US$1.74bn bank had bought the controllers of forces with the Insti- London to support in 2007-2008. Its su- BankBoston in Brazil. Disinterested tute of International the international pport of export ope- in operations outside the U.S. market, Finance, an interna- growth plans rations mainly be- Bank of America conditioned the sale tional association of nefits constructors of BankBoston on the acquisition, by financial institutions of Brazilian and manufacturers Itaú, of its operations in Chile, Peru and one of the main companies of equipment, agri- and small offices in Europe.

54 P I B At the time, the business didn’t With an eye on Banco do Brasil tions where there is a seem to make any sense. “At first expatriates strong concentration glance, it was difficult to explain The growing impor- has already of Brazilian workers, the logic behind the acquisition, sin- tance of immigrants expressed says Garcia. ce the controller of BankBoston in and their descendents interest in The market for Chile wasn’t even a top ten player”, in the U.S. economy offshore remittances says an ex-director of McKinsey has even attracted the buying banks in is a large one. This who handled the Itaú account for conservative Banco do Latin America year, Brazil should re- several years. So what was the ra- Brasil (BB), which is ceive US$7.2bn from tionale? “At the time, Chile was the reviewing its international strategy its countrymen working abroad, and only Latin American country with in order to get closer to the Brazilian 40% of this total should come from investment grade, and so having a expatriate community. On 31 August, the U.S. “We want to intermediate a bank there would be an excellent BB announced the creation of a com- third of these transfers”, says Garcia. laboratory for Itaú.” pany, BB Money Transfer, dedicated BB is already processing 70% of the The bank would be able to take to Brazilians living and working in remittances of Brazilians working in advantage of its experience in Chile the U.S. Operating via correspon- Japan (the dekasseguis). “We arrived to learn how to operate in a low-in- dent banks, such as supermarkets, in Japan at the start of the 1990s, well terest rate country with a stable eco- butchers and bakeries serving the before the competition.” The opera- nomy, in order to then dispute the community, BB wants to facilitate the tions of Bradesco and Itaú in the Ja- Latin American market that was of process of sending money from the panese have been modest. Itaú only most interest to the bank: the enor- U.S. to Brazil. “The idea is that Brazi- initiated its operations in these ma- mous Hispanic community in the lians living abroad can send money to rkets in 2004, shortly after Bradesco U.S. “Any bank looking to grow in their family when they go out to buy signed partnership deals with the lo- key markets abroad has to go beyond milk after work”, says Admilson Gar- cal banks Daito and UFJ (currently the frontiers of the Brazilian com- cia, international director of Banco do Mitsubishi UFG) to capture part of munity”, says the consultant. “The Brasil. “BB will convert the amount the remittances of the dekasseguis. Hispanic population in the U.S. is automatically and will deposit into BB´s decision to dispute the U.S. re- equivalent to the size of a large Latin the beneficiary’s account in Brazil tail investor market heralds a drastic American country, and no financial the amount in Brazilian Reais corres- change in its international operations. institution seeking to be a relevant ponding to the US dollars sent.” The Up until recently, it basically served global partner can afford to ignore target, by year-end 2010, is to regis- wealthy Brazilians at its New York this market.” ter 100 establishments close to loca- branch, on the luxurious Fifth Ave- nue, or (via its Miami office) companies that needed support for their export operations. “Now, we are going to contest a slice of the retail banking market in the U.S.”, says Garcia. The executive doesn’t rule out the acquisition of institutions in a Latin American country, though Garcia won’t specify which one. “It could inflate prices”, he says. If it materializes, the acquisition would mark further progress in what is a new age for Brazilian banks – who, after doing their post-stabilization BB branch in homework, are gradually putting to Hamamatsu: channel one side their bashfulness and are for remittances by now disputing, on level terms, busi-

Brazilian expatriates HANDOUT / BANCO DO BRASIL nesses in other countries.

P I B 55 Markets By the hands of the people

With the support of social organizations like Apex-Brasil and Sebrae, Brazilian artisans are beginning to leverage the internet to gain a greater share in international markets MARÍLIA SCALZO

ince the middle of the them to match the dizzying pace of past decade, Brazilian worldwide e-commerce. “Prompt handicrafts have been delivery abroad is becoming a vi- the target of a tiny revolu- tal path for the entire sector,” says tion. With the assistance Tânia Machado, president of the Sof various organizations and groups, Centro Cape Institute, dedicated (NGOs and other public interest as- to production and business mana- sociations), and the support of official gement training, and director of organs like Apex-Brasil and Sebrae, Mãos of Minas (Hands of Minas), the sector is turning into an income- a group that promotes local handi- generating tool for needy communi- crafts in partnership with Centro ties throughout Brazil. Lately, the- Cape. “We are preparing to launch re has been patient work to restore this sales model in 2009.” traditions, improve production and As the head of Brasil Handicraft techniques, bring together artisans by Minas, export arm of Mãos de through cooperatives and associa- Minas, Arnaldo Galvão currently Iron ants by Márcio Ferreira and tions, and, in particular, to open new sets up stands of handicrafts from glass pieces by Cristina Duarte, markets, especially those abroad. In the Minas region at a dozen inter- artisans from Mãos de Minas: the last two years alone, Apex-Brasil national fairs. However, he laments expecting beneﬁts from e-commerce invested R$12 million in the promo- the fact that even now, no association of Brazilian handicrafts abroad. tion or artisan has been able to se- change soon change. The statistics These projects were executed toge- cure a place in the complete cycle seem to back up the case for budding ther with entities such as the Centro of e-commerce: product displays, advancement. In recent years, in the Cape of Minas Gerais, Siara of Ceará, shopping carts, checkout and onli- wake of globalization, the number of Artest of Paraná, and the Instituto ne payment. “E-commerce deman- Internet users has quadrupled worl- Fazer Brasil of São Paulo. ds managerial capacity, knowledge dwide. Global e-commerce grows Today, the most pressing chal- and some investment to match this robustly each year - and Brazil is no lenge is to provide producers with a velocity,” say Galvão. different. In 2007, e-commerce re- technology base that would permit But this situation, it seems, will venues totaled R $ 6.4 billion in the

56 P I B about 10% are online Prompt Batista, has no doubt sales. Sites like www. delivery about the internet’s brazilhandcraft.org. positive impact on sa- br strengthen the abroad les: “Our sculptures sector’s sales stra- through in wood and clay, and tegy by showing on-line sales our pieces of leather, consumers abroad- rattan and straw, and mainly Europeans has become even our traditional and Americans, who vital for “story on a string” po- are more demanding hand-made etry books became in this area- that much more accessi- these products are crafts ble,” he said. not only guaranteed “Working with han- high quality but were also produced dicrafts, it is also necessary to provi- using sustainable practices and en- de an education about the market,” vironmental responsibility. says Helena Sampaio, executive co- Like many other handicrafts asso- ordinator of Oscip ArteSol / Artesano ciations, José Anísio, owner of Craft Solidário, created in 2002 by former Anísio of Pará, a prestigious brand of First Lady of Brazil Ruth Cardoso. Belém marajoara ceramics in Pará, With projects in more than 100 com- has a Website and offers online sales, munities, with the mission to promo- but only goes as far as to offer a shop- te local sustainable development, the ping cart. A bank deposit is required organization obtained the Fair Trade for payment and the shipping of the label, a certification granted to those merchandise is slow. “Each product meeting all fair trade social and ethi- requires a different size package,” cal obligations. Today ArteSol´s mon- says Anísio. His goal, however, the thly billings are about R$45 million. site is to provide the complete cycle “Each project lasts almost two years of e-commerce. “It helps to market and we aim to identify local techni- our products abroad,” says Anísio. cians legalize the group as an asso- His objective, however, is to offer a ciation or cooperative,” says Helena. complete e-commerce service. “The ArteSol intermediates sales for sto- internet helps us bring our products res in Brazil and abroad and receives abroad,” he says. “Many foreigners missions of foreign buyers brought to come to the showroom after seeing the country by Apex-Brazil. Support

FOTOS: WALMIR MONTEIRO the marajoara on the net.” Already, the internet is also a crucial tool for Brazilian market, 43% more than in the Association of Artisans of Fa- 2006. According to e-commerce mo- ther Cicero, which brings to- nitoring company e-Bit, the country gether 145 producers from HANDOUT will close this year with $ 10.6 billion Juazeiro and Cariri. The in online sales, an increase of 28% in association’s president, comparison to 2008. Hamurabi Bezerra

Fairs Sphere by Leonardo According IBGE data, handi- Bueno, from Maria crafts is the vocation of 8.5 million da Fé, in the south of Minas: the state Brazilians. It is estimated that it will is responsible for contribute R $30 billion to the na- 60% of exports of tional GDP in 2009. Of total exports, Brazilian handicrafts

P I B 57 Markets

Metal angel by Cleber Trindade, from Tiradentes, soapstone sphere by Dionísia Gomes, from Ouro Preto, and ceramics from Vale do Jequitinhonha (below)

says Tania Machado. ped a line of organic sponges in the Still, the current situation is inspi- form of endangered species, for the ring optimism. “It’s the moment for Natura store in Paris. export,” says Andrea Peçanha, coor- Andrea sees an additional advan- dinator of the sustainable business at tage in export. “It’s a good way to Ipê, an NGO working with projects get around the seasonality of the FOTOS: DIVULGAÇÃO related to the environment that also domestic market,” he says. The develops alternatives to increase the group Lã Pura (Pure Wool), of wes- agency also extends to participation income of communities in a sustai- tern Rio Grande do Sul, illustrates in major international exhibitions nable manner. “In the domestic ma- this phenomenon. The cooperative, such as Maison & Objet in Paris and rket, many NGOs pay a great deal in with 58 artisans from the cities of the Gift Fair in New York. taxes to sell anything, but are exempt San Borja, Santana do Livramento The foreign market is truly pro- when exporting.” Ipê sells T-shirts and Uruguaiana, works primarily mising. In 2007, the craftsmen who and handmade puppets, represen- with wool, raw material which the participated in the export projects ting endangered species of animals lowest consumption in Brazil. Lã carried out by Apex-Brazil earned and plants to stores zoos in Denmark, Pura has recently launched a we- US$ 3.31 million. This figure repre- Ireland and Italy. It has also develo- bsite and is already shipping their sents only a portion of industry sa- scarves, shawls, and coats les, and it remains impossible have to Spain and the United Sta- an exact picture of total volume of tes. In 2008, according to the international trade in handicrafts. artisan Cleni Ocampos Feld- According to her, purchases made in berg, the cooperative has sold Brazil are also excluded. “The foreign 1,900 items, including clo- buyer does his or her shopping here, thing and accessories. “This fills a container with the crafts and year we should double this simply sends it to the home country,” production,” said Cleni.

A taste of Brazil LINKS A pioneer in the inter- www.maosdeminas.org.br national expansion of the www.brazilhandcraft.org.br sector, the Centro Cape of Minas works with www.artest.com.br groups of artisans in www.artesol.org.br Minas Gerais, Mara- www.leonardobueno.com nhão, Minas Gerais,

58 P I B Toys made from ﬁ ber and ceramics from Para state (below) by José Anísio from Belém: Amazon craftwork

for the export of such association works to formalize the products. “Foreigners practices of craftsmen and small love this combination enterprises, throughout this process, of design and wood improve its product line. “We focus offering environmen- on appropriateness of products to tally friendly practices,” the market, because here in the nor- Paraná and São Paulo and partici- he says. Leonardo sells to the United th of Paraná we had great craftsmen, pates annually in 15 fairs abroad States, Europe and Australia and ex- but no union,” says the coordinator. - seven in the U.S. and eight in Eu- ports have grown to account for 70% With decorative products made of rope. “We also have a showroom in of its production. With the crisis, he wood (certified or recycled), their New York, where we do promotions is now focusing momentarily on the work attracted the interest of the of products three times a year,” says domestic market. Art Institute of Chicago. Denise Tania. “On these occasions, we also Despite its intensity, the crisis has considers it essential to differentiate offer a “taste” of Brazil, with pão de not affected sales of those who exhibi- Brazilian products, betting on qua- queijo (cheese bread), caipirinhas, ted at fairs in January 2009 in Europe lity. “In terms of price and quantity, Sonho da Valsa (traditional Brazi- and the USA. At the Gift Fair in New the market is dominated by Asian lian chocolate candy) and guaraná York, Centro Cape recorded about US countries.” soda.” Cape maintains a showroom $300,000 in orders. The Association It is this Asian competition that pre- in Sintra, Portugal, in partnership of Craft and Style of Londrina (Artest) sents a challenge to Sol Fair Trade, run with a local company there. of Paraná, closed the two Europe- by Brazilian Ana Paula MacArthur. Minas Gerais is a highli- an fairs --Maison & Objet Her company has been selling Brazi- ght on the national scene. in Paris and the Envi- lian art in the U.S. since 2006, via the A survey of Apex-Brazil ronment, in Frankfurt internet and a wholesale showroom in shows that the state now ac- -- with a total of �100,000 in Seattle. She works in accordance with counts for about 60% of Brazi- orders. “It was fantastic,” says the rules of fair trade and choose com- lian exports of handicrafts. Tâ- the group’s coordinator, De- munities with sustainable practices in nia believes that this is due to nise Mucci. “We never had addition to quality and production vo- strong local organization and so many visitors. There is a lume. “The problem is that Americans the fact that the tax legisla- crisis, but for some products, are accustomed to cheap and inferior tion of the region encourages there is no lack of demand.” products, and they still give more va- craftsman by offering the Artest participate in lue to quantity and low price than qua- ability to issue receipts and fairs in Europe with the lity and fair price,” she says. Some of direct exports. Among the support of APEX-Brazil. her wares are acquired directly from craftsmen participating in Founded in 2004, the producers and taken to fairs and her the fairs with the Centro showroom, where Ana Paula takes re- Cape is Leonardo Bue- quests from shop owners. “We have a no, of Maria da Fé, in the big challenge ahead of us,” she says,” south of Minas. He works to show that beyond the products with wood from managed themselves, we are selling the social forests and is one of the projects that are behind them.” The few to have the green seal internet, with its unique scope and IQS (Institute for Sustaina- breadth, can certainly help her meet ble Quality), which is essential this challenge.

P I B 59 Ideas

The large Andean wall shifts to the South the humid Amazon winds, which in turn bring There rain and fertility to the Argentinean pampas and Brazil’s Center-South region. Now, however, fast deforestation is endangering where this delicate system JOSÉ RUY GANDRA the

60 P I Bwindbends The Amazon Rainforest: Evaporation produces humid mist

he next time you watch the Jornal Nacional news program, pay attention to the weather forecast. If the satellite image features that boomerang-type circulation transversally crossing the continent, then thank the heavens. And you can thank your lucky stars if you live in the Southeast of TBrazil or in Argentina. According to researcher Antonio Donato Nobre, from the National Amazon Research Institute (INPA), if it weren’t for the rainfall that these clouds bring, especially in the summer, the entire quadrilateral delineated by Cuiabá, São Paulo, Buenos Aires and the Andean mountain ridge would almost certainly become a desert. HANDOUT/INPA windbends P I B 61 Ideas

According to No- Forests play irrigation of an area GDP will be needed just to cover the bre, there are only responsible for 70% costs of the losses related to environ- two factors prevent- a crucial role of South American mental disasters.” ing this from hap- in regulating GDP.” The advance Despite this grim outlook, Nobre pening: the presence the planetary of the deforestation says that nothing is effectively being of the Andes, whose process, according done. “The preservation of the Ama- height redirects the system to Nobre, doesn’t just zon rainforest shouldn’t be subordi- steam coming from imminently endanger nated to the interests of development the Atlantic to the Southeast (form- this system that gives South Amer- and of the economy, but vice-versa”, ing this boomerang shape), and the ica its welcome climatic peculiarity. states the researcher. “Without the evaporation caused by the Amazon “Deforestation is responsible, alone, maintenance of this delicate but rainforest trees, which feeds this hu- for 20% of all human emissions of powerful system of global equilibri- midity, enabling it to reach the Andes carbon gas”, he states. We are thus um, the entire economy is doomed.” and beyond without dissipating on talking about a global threat. Inter- Working at the National Space Re- the way. “The Amazon is an impres- national entities recommend that search Institute (INPE) in São José sive water pump”, says Nobre, who 2% of global GDP be immediately dos Campos, Nobre (50), with a spent 22 years in the region. “Each invested in anti-global warming degree in agronomy, specialized in day, it launches 20 billion tons of wa- measures. “If this doesn’t happen”, tropical biology and a doctorate in ter into the atmosphere, ensuring the says Nobre, “in 2020, 30% of global biogeochemistry from the Universi-

Picos dos Andes:

barreira que desvia HOTO os ventos para o Sul P STOCK I

62 P I B Water Pump

the temperature rises exter- nally, the living organisms cool down; and vice-versa. Only life has this capacity. And forests exert a crucial role in the planetary system. They are the largest terres- trial regulator. They have highly complex and efficient systems that other human systems, such as agriculture, are incapable of emulating. The fertility That said, let’s look at a map of mechanism: the the world. The map shows the des- winds carry the erts, always on the same line at 30 humid clouds from the Amazon to make degrees latitude, in both hemispheres. it rain in Brazil´s The Sahara, the Sonoma, the Kalahari, Center-South region the Atacama, the deserts of Namibia RAUJO A and Australia. Why? This fact is due O T

TA water cycle in to a phenomenon called the Hadley the continents de- Circulation. The equatorial part of ty of New Hampshire, gave a lengthy pends directly on the organisms. the planet receives more solar radia- interview to PIB (the main excerpts We know that, in a highly sophisti- tion, is hotter, evaporates a lot of wa- are featured below). In the interview, cated process that occurs on a nano- ter and causes rainfall. In other words, Nobre explains the singularities of scale, at molecular level photosyn- the air rises on the Equator line, loses our climatic regime, analyzes the thesis is the primordial mechanism humidity and rains. When it descends importance of the Amazon in terms of the Earth’s climatic stabilization. on the 30 degree latitude line, the air of how it functions, condemns the In photosynthesis, solar energy is (already dry) consumes the humidity autistic mentality of agribusiness captured and, via chemical reac- of the surface and helps form deserts. and, further more, the passivity of tions, it removes the carbon gas from There are only two exceptions to this governments. And he adds a caveat: the atmosphere and releases oxygen. rule: Southern China, in a region close “By deforesting the Amazon, we It was this exchange of gases that to the Himalayas, and the meridian aren’t burning trees, but instead a molded life and the evolution of the part of South America. living library of the highest technol- environments in the planet over the ogy and incalculable value”. last 4 billion years. >> The green radiator In this period, the concentration South America is different for >> Life regulates the climate of carbon gas in our atmosphere fell two reasons: the Andes and the Today, science is starting to ac- from 95% to 0.039%. Where did all Amazon rainforest. The air, which cept the fact that the biological this CO2 go? What happened in this in the equatorial zones always flows system conditions the atmosphere. period? Without a powerful regula- from east to west, encounters the This is a new development. Meteo- tion mechanism, it would have been Andean barrier, a wall 6,000 me- rology has always considered the impossible for the earth to have, to- ters high that prevents the air (full biosphere to be a secondary factor day, liquid water on the surface and of evaporation coming from the and the atmosphere to be the pri- for the Earth’s temperature to main- Atlantic) from continuing to move mary factor. But all the oxygen we tain a comfortable variation for life forward. This humid air then turns breathe came from the plants; we – a rarity in cosmological terms. towards the Southeast and, in the don’t have toxic gases in the atmo- The only explanation for this summer, it pours its humidity over sphere thanks to the innumerous phenomenon is life. All living organ- these regions – which, without the organisms that remove them; and isms have a sophisticated system of Andes, would be desert-like, with no the balanced maintenance of the equilibrium and self-regulation. If economic life.

P I B 63 Ideas

The second factor, forests, is leaves form an evap- Economy and exposed, this water even more important. This wind oration area much ecology aren’t wouldn’t return to can only travel for almost 5,000km greater than that of the atmosphere. In- over South America, with sufficient the surface itself on two different stead, it would be ab- humidity to form clouds and rain- the soil. We are talk- things. Ecology sorbed by the earth or, fall, because the Amazon rainforest ing about 10 square is the economy more likely, it would trees receive their water, in the form meters of leaves for descend into the riv- of rainfall, but return the bulk of this each square meter of of nature ers, returning to the water back into the atmosphere via soil. The leaves act as Atlantic. The winds transpiration. The Amazon tran- a radiator in dispersing the humid- would become increasingly dry in- spires 20 billion tons of water per ity. Without this help from the for- side the continent, rainfall levels day – a huge amount. The Amazon est and from its transpiration, the air would progressively diminish and a River, the largest in the world and mass coming from the ocean would process of desertification would oc- responsible, alone, for 20% of all the be unable to maintain its humidity cur in the interior. fresh water that reaches the oceans, from the Atlantic to the Andes and launches 17 billion tons of water into further forward. >> From barn to desert the Atlantic each day. If the Amazon was an entirely The influence of this transpira- It is this vapor created by the for- agricultural region, the air mass tion of the forest, combined with the est that accentuates and prolongs would enter into the continent and it presence of the Andes, shows up in the humid circulation in South would rain. As there wouldn’t be suf- the quadrilateral between Cuiabá, America. The forest functions as ficiently dense vegetation, since the São Paulo, Buenos Aires and the an optimized evaporator, since its agricultural soil is thinner and more Andes. Without the Amazon region, this region, responsible for 70% of South American GDP, would very likely become a desert. But this wouldn’t occur immediately. The first effect of deforestation is a disequilibrium that causes alter- nated excess of rainfall and droughts. This is already happening. Santa Catalina is a good example. In the valley of Itajaí, rainfall caused the deaths of thousands by drowning or landslide. Simultaneously, the west of Santa Catarina was in the midst of a severe drought. The northwest of Rio Grande do Sul and the humid Argentinean pampas, two extremely rich agricultural rgions, are already suffering from production shortfalls. The lack of equilibrium in the regulator system is one of the causes of the current Argentinean agricultural crisis. The country has suffered from an atypi- cal drought, which also led to a lack of water at its hydroelectric plants The Amazon and, as a result, an energy shortage.

Rainforest today: an RESS P evaporation machine If, for South America, the Ama-

FOLHA zon is a heart that pumps humidity,

64 P I B for the world it is a heart and also a liver, since it processes and filters the atmosphere’s air on a planetary scale. Studies show that the forest absorbs a significant part of the abuses in the gas emissions that are at the root of global warming. The Amazon region is a type of human- ity insurance policy against these abuses, but isn’t used as such.

>> Agricultural autism Our agriculture doesn’t seem capable of interacting socially. It is reminiscent of an autistic savant, who has an extraordinary ability to develop a single capacity – while all the other capacities are affected. Here we can draw a parallel to the robust and dazzling soybean fields, achieved at the expense of the entire surrounding biological equilibrium. Our system stimulates this autism; it boosts it. Economic exploitation is the name of the game. The rest is an obstacle. Blairo Maggi (state governor of Mato Grosso and one of the world’s largest soybean producers) once said: “People need to decide if they The Atacama want to eat food or trees”. This is a Desert: a glimpse

false dilemma, since, without trees, NSTOCK of the future? I you don’t have water, and, without LAT water, there’s no food. “Thinkers” such as Maggi believe the forest it will shortly dry up in other places copy them and implement them in merely takes up space, which in my as well, such as São Paulo or Buenos industrial solutions. opinion is utter ignorance. A cancer- Aires. This warning is the role of sci- Nature has incredibly sophisticat- ous tumor does the best it can in its e n c e , w h i c h w e c a n n o t r e l i n q u i s h . ed technological solutions. A study desperation to grow, it doesn’t know of the wing of the morpho butterfly it is malignant – and this mentality >> Biomimetics (that large, iridescent metallic blue, of agribusiness in Brazil is a tumor Ecology is the economy of nature. butterfly) discovered that it manip- that needs to be removed. Its principles and technological pos- ulates light with an organic crystal, Economy and ecology aren’t sibilities can provide a massive boost which is also an optical amplifier. two different things. It is impor- to the human economy. The Ama- The same principle of this crystal tant to explain that, if the forest is zon rainforest is home to one of the can be copied and implemented chopped down, an entire giant and largest sources of high technology in optical fibers to enhance data delicate equilibrium system will be known to man. There is a new fron- transmission. The vehicle industry destroyed and, with it, economic ac- tier of engineering called biomimet- is studying the coating of tree leaves, tivity. Brazilians need to know that, ics, which seeks to take inspiration with the aim of creating new inks to if the water supply ends in the forest, from natural processes, in order to make self-cleaning cars.

P I B 65 Ideas

If a simple butterfly wing con- the end of last year, Since no is happening, and the tains a technological system worth a week later a series clock keeps ticking. billions of dollars, imagine an entire of measures were al- measures are The so-called Amazon forest! NASA, GE, Boeing ready being taken. being taken, we Stern Report (coordi- and many other companies are al- The stress caused are in a worse nated by the English ready retaining consultancy services to the Earth’s climatic economist Nicholas of biologists to seize this knowledge system is much more situation than Stern, ex-vice-pres- for themselves. When we destroy devastating and, yet, it the passengers ident of the World the Amazon, we aren’t burning trees, doesn’t spark practical of the Titanic Bank) recommends but rather we are destroying forever responses. If around that 2% of global a living library of the most state-of- US$15bn was invested GDP be invested in the-art technology. annually in agricultural producers, to anti-global warming measures. conserve the biomes, instead of de- According to the study, if this isn’t >> The iceberg is stroying them, all of the world’s tropi- done now and destruction contin- straight ahead cal forests could be saved. ues at this pace, in the year 2020 When governments see them- Instead of destroying forests, 30% of global GDP will be needed selves in the face of major danger, these agricultural producers would in order for us to continue existing they take swift action. When the be providing environmental services, as a global economic system. Japanese attacked Pearl Harbor, the and being paid in return. If we were Since no measures are being U.S. went to war immediately. When to eliminate the deforestation of the taken, we are in a worse situation the PCC (a criminal organization in Amazon, human emissions of carbon than the passengers of the Titanic. Brazil) spread violence in São Paulo, gas would fall by 20%. This would We are navigating at full speed in the São Paulo government put the en- have immense value in the carbon the dark; but on a much more frag- tire police force on the streets. When quota market currently under dis- ile ship, with the prow pointing the current global crisis erupted at cussion internationally. But nothing straight at the iceberg.

Clearing of land by burning in the Amazon: dismantling a delicate mechanism HOTO P ISTOCK

66 P I B A Rocky Road Censorship in Mandarin

When advertising in China, barriers extend beyond language ANTONIO CARLOS SANTOMAURO

ith more than topics, but di- 1.3 billion inha- rect competi- bitants and di- tor attacks can zzying growth, also be banned. China is beco- Television ads Wming a Mecca of sorts for busi- must also pass nesses aiming for international through cen- DIVULGAÇÃO / VALE Ronaldo in an ad for Vale in China: from Portuguese to expansion. However, it is a diffe- sure within English to Mandarin rent market, and a highly compe- the television titive activity like advertising must stations themselves. then into Mandarin, the predo- adapt to the singularly Chinese Even so, many of the ma- minant language of China. combination of a relatively free jor multinationals in China are Adaption for the Chinese ma- economy and iron-clad control of doing advertising and media work. rket and media schedule was exe- communications, including books, Throughout the country, an array cuted by multinational group Om- newspapers, and magazines, and of diverse media –thousands of nicom (a partner of Africa through more modern digital communica- newspapers and enormous high- the Brazilian agency DM9DDB). tions. The Chinese live behind a definition electronic billboards in Despite having to undergo the barrier ironically called The Great the roads of the main cities—offers ritual of censorship, some of the Firewall of China, a technological plenty of ad space for some of the steps moved along quite smoo- mechanism that attempts to block best known brands in the world, thly. For example, execution of the population from accessing “ina- like Coca-Cola and McDonald’s. outdoor media, despite including ppropriate “ blogs and sites (among And now, a Brazilian brand more than 500 pieces of enormous them, Wikipedia and BBC). debuts in China: Vale, which last dimensions, was implemented in How to go about advertising in May launched an advertising cam- less than a week (including the China? To begin with, campaigns paign appearing in outdoor media, entire process of media buying, must pass through pre-publica- airports, newspapers and TV. De- production and installation). tion censorship by veloped by the Bra- “Perhaps we could not have done the China Adver- Since 2004, zilian ad agency the same in Brazil,” said Francisco tising Association, Africa, and star- Custódio, media director of Afri- a state body that investment ring soccer player ca, who spent the week in China, oversees adverti- in advertising Ronaldo, the cam- overseeing and completing the sing activity in the has grown paign was created campaign. The Chinese model of country. Politics in Portuguese in economic efficiency and political and sexuality are 22% per year Brazil, translated control, it seems, may also extend the more sensitive in China into English, and to advertising.

P I B 67 Talents Global flexibility The Brazilian advertising formula arrives in emerging markets from Eastern Europe and the Arab world ADRIANA SETTI, FROM BARCELONA

hen Guilherme Lovizzaro Ran- Dubai), to begin work on the campaign, budgeted gel (born in Campinas, São (including TV advertising campaigns, printed me- Paulo state) took over as creati- dia ads and radio spots) at over US$2mn. ve director at the Team Young The responsibility on Rangel’s shoulders was & Rubicam advertising agency considerable. When it’s ready, in Dubai, in November 2006, his new workmates at year-end, the project’s Guilherme W Rangel (with had already spent 12 months going back and forth flagship, the Burj Du- Dubai in the in obtaining approval for the launch campaign of bai building, will be background): one of the most megalomaniac real estate projects 818 meters high – culture shock known to man – Downtown Burj Dubai. But it more than twice was only one year later – a lifetime in the helter- the height of the skelter advertising world – that they got the green legendary Empi- light from the marketing board of Emaar, one of re State Building, the world’s largest real estate developers (based in which measures MATTHEW PEREIRA

68 P I B a “mere” 381 meters, easily making it the world’s tallest skyscraper. The tower is the heart of a colossal resi- dential and commercial condominium planned to be the new center PHOTOS: ALBUM FAMILY of Dubai (hence its name, Downtown Burj Dubai). The cost of the entire condo is estimated at US$20bn. But not even the mountains of cash invested in the project have succeeded in fast tracking the campaign’s approval process by the client. The TV ad script alone of the project launch took a month to be approved. To film the ad, the team had to virtually recreate the condominium thousands of miles away – in New Zealand. “Since the aim was to show that everything in the condominium is connected, the entire ad was plan- Rizuto´s advertising campaigns shocked conservative Arabs: breast cancer ned as a whole, with no cuts”, says alert (above) and campaign combating violence against women (below) Guilherme. The ad begins with an executive waking up in a sumptuous bedroom, with a view of the Burj Du- bai Tower. In the first scene, he gets up and goes to the living room, where his wife is having breakfast. They exchange glances and he pinches a slice of toast from her. After the ca- mera pans round in choreographed fashion, the executive appears wea- ring a suit and the door that, in theory, leads to the kitchen opens out to the office, also in the condo. In other words, no stone is left unturned in the attempt to ensure that Burj Dubai Downtown is seen as a parallel universe, where its residents can, if they wish, spend the rest of their life. When completed, and were shot, at an additional cost of rkets keen to retain qualified profes- submitted to approval, the US$100,000. sionals, such as the Middle East and ad was vetoed by the all-po- These surprises and setbacks cau- Eastern Europe. “Brazilian adverti- werful chairman of Emaar, sed by cultural and methodological sing agents are talented, well paid, on the grounds that the two differences are part of the routine of a recognized and famous” says Dalton actors didn’t really give the growing group of advertising agents Pastore, chairman of the advisory bo- impression of being a mar- leaving Brazil to work in emerging ard of ABAP (Brazilian Association of ried couple and that the markets, at local agencies and the Advertising Agencies), in explaining ad was thus unacceptable offices of multinational advertising the demand for Brazilian executives for Emaar. New scenes agencies. We are talking about main far away corners of the world. “We

P I B 69 Talents

win lots of awards at international Multinational its competitor J. Walter Thompson. festivals and our advertising stan- Two years later, history repeated dards have always been appreciated agency has recruited itself. At a festival in Bucharest (Ro- around the world”. a Brazilian executive mania), he was invited to work as exe- Talent and a good image are of to handle “chaotic cutive creative director at D’Arcy, an course crucial, but flexibility also international advertising agency that, helps to create opportunities. Bra- processes” in at the time, was the most prized in zilian advertising even has a pre- Eastern Europe Romania. There, he was handed the sence in the Russian advertising assignment of heading a team of 35 market – and more than just one. Grey agency in Bratislava (capital of people, five years after leaving Brazil Rondon Fernandes, 37, saw his chan- Slovakia). “In the beginning, they as a junior editor at McCann Erick- ce to switch countries when JWT (J. didn’t really understand what I, a son, in São Paulo. He spent three and Walter Thompson), the agency whe- Brazilian writing in English to be a half years in Romania and two in re he worked in Brazil, started inter- translated into Slovak, could offer”, Latvia, until touching down in Mos- viewing Latin Americans for a post he recalls. But his work was acclai- cow, where he is now creative direc- that had opened up in Russia. “They med when he received an award at tor at BBDO – where he works on ad- needed someone with more flexibili- an advertising festival in the Czech vertising campaigns for heavyweight ty than a European executive to deal Republic. He ended up being seduced clients such as Pepsi, Mercedes-Benz with the chaotic processes of Eastern by the subsidiary of the multinational and Procter and Gamble. Europe”, he says. Fernandes accepted company Leo Burnett in Prague, and Romania also lured the art direc- the challenge and is now the creative he soon became creative director at tor Glazione Rocha (29, from Rio de director of JWT in Mos- Janeiro), who swapped cow – where one of his Darlan´s anti- his job at F/Nazca in São clients is MTS Telecom, evasion campaign Paulo 18 months ago for Russia’s largest telco. in Romania: “Pay a post at Mercury360 More than just finan- your taxes with in Romania. At his Bu- cial ambition (since sala- money, not with charest office, he works prison time” ries in emerging markets as part of a 2-man team rarely exceed wages in alongside a local editor. the Brazilian advertising “It’s a great experien- segment), the people who ce for learning to flee move to Eastern Europe the vices of the Brazi- or the Middle East are lian advertising market, in search of new profes- such as excessive use sional and culture expe- of sensuality and using riences, as well as profes- music in everything”, sional recognition in ma- says Glazione. He also rkets offering the possibi- learnt that using jokes lity of a rapid rise up the in an unknown context promotional ladder. This can be a disaster. At a was the case of Darlan meeting, he suggested Moraes Jr., 41, from São an ad that poked fun at Paulo, another Brazilian a rivalry between Ro- in Moscow, who spent manians and Hunga- time in virtually every rians. He thought it was single Eastern European something superficial, country before arriving like the rivalry between in Moscow. Darlan star- Brazil and Argentina in ted off by obtaining a post soccer. But he made a big as editor at the Soria and mistake. “It left everyone

70 P I B PHOTOS: ALBUM FAMILY

Rondon in Moscow, and his work visa: creative director at JWThompson uncomfortable”, he recalls. Later on, company Ogilvy & Mather, in Dubai, against women. Bold for local stan- they explained to me that this rival- where he has continued his process dards, it was ordered by the Lebanese ry is historical and that an ad making of adapting to the Arab world. “Our organization Dar al Amal and ended fun of this matter could even cause a main market is Saudi Arabia, where up being shown only in Lebanon, the diplomatic conflict.” everything is stricter in terms of re- most liberal Middle East country. In Like Glazione, the art director Ra- ligion, with strong censorship: but, at other markets, conservative pressure fael Rizuto (27, from Pernambuco) has the same time, these limitations force led to the ads being censored. also learnt to tread carefully. Three me to be more creative”, he says. In Guilherme Rangel, the other years ago, he left Recife and ventured some ads, women need to wear veils; Brazilian executive living in Dubai, out into the unknown. More precise- in more cosmopolitan markets, such points out another peculiarity of the ly to Bahrain, a country that occupies as the Arab Emirate countries, Syria United Arab Emirates: sometimes, it’s an island in the Persian Gulf and that and Lebanon, advertising is more harder to sell the simplest and chea- is home to 600,000 inhabitants. He global. pest products than the top of the line. went after (and got) a job opening This “forced” creativity seems to The legendary Land Rover Defender at the multinational company RGA, be working. Last year, Rizuto was (the basic 4x4 version, produced by an advertising agency that manages one of the candidates at the Cannes the British manufacturing giant since the regional accounts of companies Lions Young Competition festival, for 1961) was selling less than the luxury such as the luxury hotel chain Ritz- which executives under the age of 28 Range Rover models. To change this, Carlton and Audi. He says the expe- are eligible, where he represented Guilherme created a campaign that rience has taught him to perceive di- the Middle East (after coming first appealed to the passion of the native fferences and break down clichés and at the regional “qualifiers”). He also population of the United Arab Emi- preconceived beliefs. “You get used created a groundbreaking campaign rates for off-road adventures. to people leaving the office in the warning of the dan- Living up to their middle of the day to go and pray, and gers of breast cancer Bedouin heritage, they other customs that we aren’t used – for the lingerie com- Issues such use the desert as their to”, he says. But he also had to bite pany Bare Essentials own private backyard his tongue in matters that leave him – which created major as health and – where they go cam- furious, like watching the locals sys- ripples by using the women’s rights ping, have a barbecue tematically mistreat Indian workers image of a manne- provoke a and drink tea with – who generally have the lowest-paid quin with only one friends. Guilherme jobs at the agency. breast. Another con- conservative recalls how he turned After eight months in Bahrain, Ri- troversial campaign response in the things on their head zuto was hired by the multinational combated violence Arab world by exploiting the Land

P I B 71 Talents

Rover’s fame as a global benchmark for mands intimacy with Globalized the world, the Russian all-terrain vehicles: in the ads, savan- the language and advertising evolution promises to nah and desert animals, such as camels the popular culture be swift. “It takes Rus- and cheetahs, are told that this is the of a country. “Today, culture helps sia one year what it takes Defender’s habitat. The client liked the these barriers are to smooth over other countries five ye- campaign, which made it through to minimized due to a the cultural ars to evolve”, observes the finals of the Cannes Festival. process that we can Darlan, the other Brazi- In countries where the recent ca- call “pasteurization differences lian advertising agent in pitalist movement still lives alongsi- of culture”, which Moscow. “Internet ad- de the remnants of the communist makes it easier to export talents”, says vertising, since it is limitless, is now on culture, such as in Eastern European Dalton Pastore, from ABAP. a level par with the rest of the world.” countries, or new societies as Dubai (a Nevertheless, the process of adapta- And what was the outcome of the place that practically sprung up from tion could be more difficult in Russia, saga involving the launch campaign out of the desert in the last two deca- for example – a more closed country of the Downtown Burj project, hea- des), it’s logical that advertising needs than Romania, the Czech Republic or ded by Rangel in Dubai? In the end, a maturation period in order to rea- Slovakia, which joined the EU several after so much going back and forth, ch the level of countries where it has years ago, or Dubai, where 85% of the the campaign was approved. But the been in place for over a century. Still, population are foreigners. “With very story doesn’t end there. Without ex- in a world where information flows few exceptions, the Russian adver- plaining why, Emaar decided to shel- via the Internet, what we can see is tising industry uses ideas that more ve it, taking an additional hit of US$ that advertising, both in Dubai and in often than not have no link to the re- 500,000 spent on the printed media Eastern European countries, follows a levant benefit of the product, using a and radio spots. “What’s US$ 2mn for global aesthetic. The process of accele- joke for a joke’s sake as a 1980s-esque someone that spent US$ 200,000 on rated globalization helps to get round recourse and esthetic”, criticizes Ron- one of the building fountains?”, asks a complex question – the international don. However, with money to invest Rangel. The truly rich are indeed transfer of people in a business that de- and due to its progressive opening to truly different. UM The cheetah and B LY AL LY the all-terrain jeep: I campaign to sell the Land Rover in Dubai HOTOS: FAM P

72 P I B Sport Big business, with or without a crisis Brazil exports soccer players to the world, but who beneﬁ ts the most from this? CÉLIA CHAIM

he transfer window is now in the first half, the main highlights an idea of the business goings-on closing, before opening were Keirrison, of Palmeiras; and not subject to red cards: that of Tra- again at the end of the Nilmar, of Internacional. ffic, the main soccer player ´broker´, year. We are talking about The factor regulating the soccer and the young soccer player Henri- millions and millions of market is cash. Just think: if a cup que, from Coritiba. Traffic bought Tdollars, euros, pounds, among other of coffee costs R$ 1 in Brazil, in eu- the rights to Henrique (the major currencies, flowing back ros it will cost the equivalent of R$ talent unearthed at Coritiba in the and forth, in the saga 3. A player earning R$ 70,000 per 2007 second division championship) involving Brazilian month at a Brazilian soccer team in March 2008. The price to acquire soccer players who (as leaves to earn the same in Europe, the rights to his contract was R$ 6 Falcão, one of the all- except multiplied threefold. And million. Transferred to Palmeiras, time greats says) “cross we are talking about tons of money he was part of the team that won a borders to sell their skills exchanging hands. One of the many Paulista (São Paulo state) soccer ti- to foreign clubs.” Everyo- cases that the book recounts gives tle, and he was a starter in the team ne makes money when the at the beginning of transfer window opens the 2008 premier – the selling club (frequen- league. In mid-2008, tly up to its eyeballs in debt), he was sold to Spa- the player (desperate to play nish giant Barcelona for a bigger club with more for EUR 10 million (R$ money) and the agent – who 26 million). “Under the agre- is the main beneficiary in any ement [with Traffic], Palmeiras soccer deal. was entitled to 20% of the amount The book Bola Fora: a histó- exceeding the R$ 6 million initially ria do êxodo do futebol brasi- invested, equivalent to R$4 million”, leiro (Panda Books), by Paulo recalls PVC. “Traffic kept the re- Vinicius Coelho (known as maining R$ 16 million. The profit, PVC, a competent and talen- Henrique, in six months, was 166%.” ted soccer journalist, with ex-Coritiba: PVC notes that the most profita- an enviable soccer memory more proﬁ table ble company on the Bovespa stock reminiscent of a computer than the stock exchange in 2007 was steelmaker market database) – gives an idea of Companhia Siderúrgica Nacional this multi-million dollar (CSN), whose shares appreciated exodus of players. In only 157% in one year. Traffic earned 17 rounds of matches in more than this in six months by ne- the first half of 2009, gotiating the rights of fullback Hen- 27 Brazilian soccer rique, says PVC. players were bought Watch out for the next transfer

and sold. In terms of FOLHAPRESS window. the superstars sold

P I B 73 Your Career The PRODIGAL Affected by the crisis, expatriate Brazilian executives put their international careers on hold as they return to Brazil ROSELI LOTURCO Sons he legions of Brazilian executives with international careers are finding themselves in the midst of an unusual sce- Tnario: the inversion of the typical career path. From the start of the global financial crisis and until now, the trend of Brazilian professionals attempting to repatriate has brought a wave of activity to companies specialized in professional relocation, particularly those in major cities. Driven away by tough times in the global economy and attracted by the optimism surrounding Brazilian business, the number of Brazilians who have decided chart a course back home has jumped from 2008 to present. These are the findings of a recent survey, conducted in São Paulo by headhunting firm Michael Page Executive Search, a branch of the American company MP. In the first quarter of this year, 90 professionals with an average age of 43 sought the company’s help for relocation to Brazil. In the same period of 2008 (before the crisis worsened) only 15 used the same service. Most of these executives (52% according to the poll) were stationed in Euro- pe, divided among France, England, Portugal, Germany and Spain. Another 20% were living in the Paola Pazzotto, of Souza Cruz: E United States, with the remainder NT back in Brazil, IE

spread across Africa, Middle East OR A

by way of Chile S I

and Latin America. “The search is EL

and Hong Kong A

still strong today,” says Fernando AN

74 P I B Alvaro Spinolla (now in Ribeirão Preto), formerly of Fannie Mae: at Andraus, responsible for the area the earthquake’s of recruitment at Michael Page in epicenter Brazil. Part of the wave includes Bra- zilians seeking to replace employ- ment lost abroad after the bubble burst and triggered the financial crisis. Others preferred to change course in order to avoid environments that could be detrimental to their development. This was the case of São Paulo native Al- varo Spinolla, an economist who graduated from the University of Pennsylvania, and returned to Brazil after spending nine years in the United States. Alvaro, 28, worked since 2004 at Fannie Mae, an American mortgage giant at the I STETT epicenter of the subprime crisis I late last year. There, he began his executive career, but he witnessed

the crumbling of an empire. FERNANDO BATT He began to worry when he saw the fallout after the implo- Soon afterwards he received dhunting firm specializing in the sion of investment bank Lehman another proposal, this time from financial market, is the set of tro- Brothers. Then, Fannie Mae had CNAA (National Sugar and Alco- ops ushered in to meet the needs to rely on financial assistan- hol Company). He decided to risk of returnees. Fesa has 40 profes- ce from the U.S. government to it, despite knowing little about sionals solely dedicated to execu- avoid bankruptcy, and was virtu- the sugar-alcohol sector. He is tives who want to make their way ally nationalized. He was spared responsible for strategic plan- back. The team’s task is to find a the wave of cuts at Fannie Mae ning and financial modeling at the good place for them. Among the that followed - “I was at the cen- company. His internal experience most sought after areas include ter of some mortgage securitiza- helped. “Professional growth was consumer, telecommunications tions, which was part of an area great,” he says. “When I arrived, and basic industries, where there that made a profit,” he explains. the doors of the Brazilian market are signs of new investment. But in the generally unfavorable were open”. Alvaro says that the According to Aline Zimermann, situation, he feared the worst. greatest difficulties in adapting to a partner at FESA, the Brazilian “I decided to find a life in the U.S. was economy, which is in good enough headhunter in Brazil, missing family and shape at this time to receive these because I felt the time At just one the cultural diffe- expatriates, offers a unique atmos- to return was approa- relocation rences. “Over time, phere. “Brazil has always been a ching.” He arrived in company alone, I got accustomed,” great school owing to the endless January of this year, he recalls. “But it’s crises that it has experienced,” she bringing his North 40 headhunters really good to be says. “Combining that with interna- American girlfriend are working home again.” tional experience makes for a fully (now his wife) and to repatriate Another measure developed professional, able to bring was hired by GWI As- of the growing de- a global strategic vision to the re- set Manager, a wealth Brazilian mand for replace- gion.” Many of them take the oppor- manager in São Paulo. executives ment in Fesa, a hea- tunity to earn an MBA abroad and

P I B 75 Your Career

become fluent in foreign languages. Moreover, the ra- Foreign rkets, foreign trade, According to Aline, those who leave pid reaction of the international law, for the global market become more Brazilian market to multinationals information techno- competitive on the return, and their the global crisis has are seeking logy and brand posi- earnings in Brazil are based on what put the country in Brazilians with tioning. “The market they achieved abroad. the international spo- demands it,” says the tlight. New projects international expert Magui Lins New Projects are starting to trickle backgrounds de Castro, managing The difficult situation abroad, with in from foreign com- to work on partner of Southma- little prospect of quick recovery, has panies, previously rk, an executive re- shaken up some Brazilian companies spooked by the crisis projects in cruiter in Sao Paulo. with operations outside the country. and delaying plans Brazil “The Brazilian exe- Sometimes, the return of an execu- to enter Brazil. Since cutive has this faci- tive is a company decision. “Sadia last June, foreign multinationals lity, and so becomes a professional alone brought back two directors of have resumed searches for country with more mobility.” foreign trade to Brazil,” said Gilberto managers for operations in Brazil, Paola Pazzotto, a 36-year-old Guimarães, president of BPI in Brazil, offering new opportunities for re- from São Paulo, has built a varied a multinational specialized in human turning Brazilians with internatio- career within one company - Bri- resources. He recalls that Itaú Uni- nal experience. tish American Tobacco, represen- banco did the same earlier this year. Michael Page alone is directly ted in Brazil by Souza Cruz. After involved in more than three pro- spending five years abroad, she is jects. “The demands are high and back in Brazil. After earning a bu- it is almost essential to have built siness administration degree from a solid international trajectory,” the University of São Paulo, Pao- says Fernando Andraus, of Micha- la embarked on an international el Page. The professional maturity career and pursued her goal with built in countries with economic determination. She began working structure and a different culture at Souza Cruz - with worldwide does the returning executive many operations in 180 countries - and favors. “Companies that are doing strengthened her CV with an MBA start up in Brazil prefer Brazilian through Coppead at the Federal executives with international ca- University of Rio de Janeiro, and reer path,” said Aline Zimermann became fluent in English and in of, Fesa, which also participates Spanish (with knowledge of Ita- in searches of this type. “It is one lian and French). Today, with 12 hundred percent certain that they years at Souza Cruz / British Ame- will be absorbed.” rican Tobacco and many stories to Versatility also helps. Those tell, she believes the investment who have accumulated interna- was worth it. tional experience working in di- Paola works with trade marke- verse fields earn points when ting and branding. In 2004, she sho- it comes time to hiring time, wed interest in leaving the country particularly in those with and the company gave her a higher a background in finance, position in Chile. In Brazil, she was engineering, new ma- product manager, but in Chile became portfolio manager (of all products in the country). Less than 20 Aline Zimmerman, days after arriving, she faced a trial of Fesa: Brazil is by fire: to make a long presentation

HANDOUT a good school all in Spanish. “It was tense,” she

76 P I B Fernando Andraus, of MP: searching for Brazilians with global experience HANDOUT recalls. “More than 50 people were more heavily on her this time, but took over one of the areas where listening to me, but the acceptance she says she was convinced this is Brazil is a worldwide leader: trade was positive.” In three months, she what she wanted. marketing sales and product distri- says, she had totally adapted. What has been the outcome? To- bution. She earns double what she “The advantage is that the Sou- day, newly returned, Paola believes did when she left the country, and za Cruz has a very strong corpora- that her vision for the brands, com- gives a tip for anyone who wants to te culture and unique worldwide,” petition and strategic decisions is build a career abroad: marry perso- she says. “This allowed me to start much broader.”In Asia, I reported nal interests with the company. And playing.” Besides a pay raise, Pao- directly to headquarters,” she says. finally: “Having strength in adver- la received benefits including rent, “This makes me more secure today sity is also important,” she says. cost of living adjustment, payment in the decisions I make here, becau- Between their departure and re- of essential expenses, airfare to se I know what the executive direc- turn, what do Brazilian returnees see family, and a budget for her tor at company headquarters wants.” find different in the wake of the cri- and her husband Felipe, to study. Paola was privileged in a way many sis? Michael Page research shows Felipe, an enologist by training, newly repatriated executives are that placement times for these pro- did not miss the chance to take a not: she could plan her return with fessionals has increased from three specialized course in the country Souza Cruz. In May this year, she to six months. Exorbitant bonuses that offers some of the best wines for top executives are passé, and of South America. the crisis trimmed the fat off other So life went until 2006, when WHO WANTS TO RETURN? extras. However, with the Brazilian Paola faced new international chal- economy showing signs of recovery, lenge, this time on the other side of Directors-general there is still room for negotiation the world. As she wanted interna- 40% and vice presidents between executives and companies. tional visibility, she determined “The parameters are different now, that the group’s headquarters in Financial more realistic, but they still pay London, or a major Asian country, 20%directors their part for results,” observes should be her next stop. She landed Magui of Southmark. “The execu- in Hong Kong. This time, she was Directors of sales tives with an international career responsible for developing a brand 20%and marketing are worth more,” concludes Gil- - the famous Dunhill – throughout berto Guimarães, the BPI. “Among Asia-Pacific, and in more than 40 Directors of HR, two equally competent people, they markets. Most members of her di- 20%e n g i n e e r i n g a n d end up being chosen and, moreover, rect team of about 15 people were supply chain sometimes with salaries 10% to 30% expatriates. The distance weighed Source: Michael Page research above average,” he notes.

P I B 77 Globe-Trotter – EXECUTIVE TRAVEL r#Z.BSDP3F[FOEF

LUXURY BEDS... The best hotels for executives THE SEPTEMBER EDITION of the eternally cool Wallpaper magazine features a ranking of the world’s 50 best hotels for business travelers. At the top of the list are the Park Hyatt (Shanghai) and the Four Seasons (Florence) – the latter now located (since last year) inside the spectacular Palazzo della Gherardesca, which in the 17th century belonged to the Medici family, and in the 19th century to the vice-king of Egypt, Ismail Pasha. In the peak season, the lowest nightly rate at the Four Seasons (Florence) is 600 euros. Fortunately, the Wallpaper ranking also includes hotels for executives traveling economy class: the Allerton hotel in Chicago offers decent rooms for US$150 a night, while Citizen M, at the Schiphol airport (Amsterdam), offers a post-modern design and minimalist hi-tech luxury (including XL king-sized beds and automated check-ins) starting from 77 euros. http://www.fourseasons.com/ﬂ orence/

The Four Seasons hotel in Florence: a thing of rare beauty PHOTOS: BARBARA KRAFT

...OR NOT SO LUXURIOUS Sleeping in airport lounges The www.sleepinginairports.net site does just what its name suggests: it indicates the best (and worst) airports to spend the night. The survey has been compiled for the past 12 years, based on the experiences of over 6,000 travelers who, for one reason or another (generally a lack of money), decide to sleep in airport lobbies and corridors as they wait for their ﬂ ight. The best two airports are in Asia, Changi (Singapore) and Incheon (Seoul), while the third best is the aforementioned Schiphol airport. The three worst airports to spend the night are Charles de Gaulle (Paris), Sheremetyevo (Moscow) and Kennedy (New York). Galeão airport (Rio de Janeiro) is the best ranked airport in the Caribbean and South America, but only due to the lack of anything better (rather than its own merits). It received 17% of votes (Ezeiza airport, in Buenos Aires, had 15%), and also the negative vote of those lamenting the presence of chairs with arms. Common traits of the worst airports include bad smell, inadequate temperatures, beggars and the poor attitude of airport workers. The best airports offer 24-hour services and entertainment (including cinema), security and even a designated area for those looking to take a quiet nap without having to pay for a hotel. ISTOCKPHOTO 78 P I B Globe-Trotter – EXECUTIVE TRAVEL r#Z.BSDP3F[FOEF

VENICE Destination Pizza THE CITY IS MAGICAL, the local currency is the euro and tourists transform its squares, allies and canals into a throbbing anthill 365 days a year. This is why everything in Venice, especially restaurants, is expensive. This column is pleased to reveal a gem of a restaurant: serving the best pizza slices in Venice, and perhaps anywhere in Italy. We are talking about the tiny Pizzeria Sansovino, which goes almost unnoticed on the short route between Piazzo San Marco (Saint Marcus square) and Galleria della Accademia (the Accademia Gallery). It closes at the end of the afternoon, and is located at 2628 San Marco, almost in Campo San Maurizio. The pizza parlor provides free aluminum packaging for takeaway orders and it doesn’t have an Internet site. MATIAS MATIAS FALCONE DE REZENDE

AVIATION RUSSIA Air Koryo´s outdated Ilyushin aircraft doesn’t Etiquette and leave the ground local customs much these days WHEN PRESIDENT BARACK Obama visited Moscow for the ﬁ rst time in July, the Moscow Times gave some tips on Russian etiquette to the U.S. entourage. These tips apply to foreigners in general, and include: • Apparently, the only two Russians that don’t smoke are President Dmitri Medvedev and Prime Minister Vladimir Putin. Everyone else smokes wherever they want, including restaurants, taxis and hotel rooms. There’s only one place where you can’t smoke (and if you do you’ll be hit with a hefty ﬁ ne): the Red Square. • Toasts (with vodka) are a tradition at the

MARCO REZENDE dinner table. If you feel you haven’t got the stomach, knock back the fi rst dose (when everyone is watching), and cheat Flights per capita on the others. THE ENGLISH COMPANY Offi cial Airlines Guide (OAG), which for decades • If invited to dinner, bring fl owers for has provided services to airlines and passengers (who can still remember the lady of the house, but in an uneven those massive catalogs – before the dawn of the Internet – that travel agents number. An even number of fl owers are for consulted to check for fl ights?) published a survey showing the number of the deceased. commercial fl ights per capita and per month in each of the 214 countries • Russians dress in accordance with their and territories of the aeronautical world. In 1st place is the Principality of lifestyle, and dressing too informally Monaco, with 108 fl ights per 1000 inhabitants (all by helicopter and on the can be seen as a sign of disrespect. The story goes that the fate of Vladimir same route: Monte Carlo-Nice). From 2nd to 39th, we have islands such as Khordokovsky, the ex-powerful owner of the British Virgin Islands and Greenland, with small populations but heavily the oil company Yukos, was sealed when dependent on air transport. The U.S. and Canada are tied in 40th place, with he turned up for a high-level meeting at 5 fl ights per 1000 inhabitants (though Canada’s population of 33 million the Kremlin sporting a polo shirt. represents just over 10% of the U.S. population of 307 million). Brazil is • Don’t discuss domestic Russian politics ranked behind Djibouti, in 120th place, together with Bulgaria, Albania and if you aren’t totally intimate with the the Republic of Guyana, with 0.6 fl ights per 1000 inhabitants. In 214th and person you are talking to. In England, people talk about the weather. In Russia, last place is North Korea (23.5 million inhabitants), with only 38 fl ights per sport is the best topic of conversation for month (or 0.003 fl ights per 1000 people). http://www.oag.com/travel-news/ shooting the breeze. oag-travel-news/1/worldwide-fl ights-per-capita-by-laura-jackson/ www.themoscowtimes.com/index.htm P I B 79 Globe Trotter - Express Tourism

New York, by Steaks François Payard at BLT- carnivore’s HE IS A THIRD GENERATION member of a paradise family of pastry chefs from Nice, France. But HANDOUT he has lived 20 years of his 42 years in New If you have a few hours... York, working in restaurants like Le Cirque and Le Bernardin. François Payard now commands START WITH UNION SQUARE, perhaps picking up fresh fruit his own bistro-pâtisserie, and is head of a and vegetables at the most famous farmer’s market in New York. gastronomic empire that stretches to Korea Just a stroll through this traditional city square is worth it, for and Japan. At the request of PIB, François the beautiful produce and the crowd. Then head up to the Upper suggested a walking tour of his adoptive city, East Side to see the Frick Collection, right in front of Central replete with restaurants and farmer’s markets Park, and stop for lunch at BLT Steak (57th Street between of course, and much more. Park and Madison Avenues) – chef Laurent Tourondel’s popular steakhouse. Best to reserve a table beforehand: the always packed restaurant is a hot spot for beautiful people and executives. If you have the entire weekend...

BEGIN SUNDAY WITH BRUNCH at Le Parker IWAN BAAN © 2009 Meridien, and do some more shopping at the nearby Plaza Hotel. Afterwards, across the street in Central Park, you will ﬁ nd New Yorkers in all their diversity. Now, it´s time to head to the Meatpacking District, an old industrial area on the West Side now converted into one of the most fashionable spots in the city—old butcher shops and slaughterhouses today are host to stores, restaurants, lounges and clubs. Visit the new darling of the city—The High Line, an unlikely park perched atop an old elevated freight railway at the intersection of Gansevoort and Washington streets. Have a drink at Pastis, the celebrity bistro, and continue onwards to Ono Restaurant, in the Hotel Gansevoort, for dinner. Finish the night off at the Brandy Library, in Tribeca, known for its bar stocked with 1,000 scotches and cognacs. SXC

80 P IAutumn B in High Line: Elevated railway Central Park transformed into suspended park MAGE If you have I a full day... GETTY ADD IN SOME SHOPPING IN SOHO, at Broadway and West Broadway. While still downtown, stop for a cocktail in the recently inaugurated Thompson Hotel, with a panoramic view of Manhattan. Have dinner at Le Bernardin, where chef Eric Ripert runs the best seafood restaurant in the city.

Soho: for strolling and shopping

P I B 81 *O5SBOTJUrRodrigo Toni*

Is Singapore in China? Rodrigo and Ana Luiza traveled halfway around the world with three children yearning for rice and beans, and made a discovery: the mysterious Asian state city Rodrigo in Singapore; is nothing like they say it is surprised at the city FAMILY ALBUMFAMILY

WHEN IT WAS FINALLY DECIDED that we nating and surprising city. Despite its 4.5 million inhabitants and one would go to Singapore, we were all a bit scared. of the highest population densities in the world, the city is very gre- It’s a long way away; it’s in Asia and it’s an unk- en, with parks all over the place. Near to our home, in the middle of nown place. Some of my colleagues insisted that the city, there is an ecological reserve with monkeys and a woodland it was indeed in China, even after I repeated that mountain bike trail – something I could never imagine fi nding in the it doesn’t even border China. center of São Paulo. At weekends, we have several indoor options and What we had heard about were the very strict numerous outdoor options for our kids (it rains a lot here – Singapore laws, mainly the ban on chewing gum. I went is above the Equator). It even has a beach and, although they say the straight to the Internet and started to look for in- sea is dirty, I still go for a swim anyway. Even the teenagers and bache- formation. There are fi nes for people who cross lors love the city; they say it has a great nightlife – something that we, outside the zebra crossing or who throw litter on with three small kids in tow, have obviously yet to sample. the ground; vandalism is punished with whipla- There are 1 million foreigners living in Singapore, including shes! We were scared, but, when I thought about workers from Bangladesh, Philippine house cleaners and expatriate it, I had never spray painted a wall... So it was in executives from all over the world; the school alone features 70 na- this vein, pretending everything was hunky dory, tionalities. The origin of the local population is Chinese, Malaysian that we set off. Of course, the going was tough and Tamil. Consequently, the atmosphere is very diverse and no one in the beginning. In the fi rst few days, we had to feels too out of place. Even the language helps. Since each one of drag the children to bed so they wouldn’t sleep these races speaks a different language, English ends up being the on the fl oor – the time difference is 11 hours. We common tongue. But most locals speak with a strong accent and so lived in a fl at for almost two months and we only pigeon English goes unnoticed. ate takeout food. With all these facilities and aided by strong government incenti- When we moved into our house, with our ves, Singapore is now one of the favorite places for multinationals to things, everything miraculously started to im- set up their Asian offi ces. The country is stable politically and econo- prove. Our children’s mood perked up as soon as mically, friendly for companies and has excellent infrastructure; it is they saw rice and beans on the table. They star- safe, has excellent transportation, education and a fi rst-class health ted to learn English and to communicate with system, the best airline and one of the best airports in the world – their classmates. We met many Brazilian fami- which is a major plus for those, like most executives here, who lies at our children’s school, who gave us warm have to travel the entire region. Singapore clearly has its problems support and helped us out in the day-to-day lo- and restrictions. But the overall impression is very positive, and life gistics, with tips on where to fi nd the right beans here has been just great thank you very much. and a good dentist. And what about Singapore, what about that * Rodrigo Toni was president in Brazil of Ipsos, a global market research company. He now runs the company in South and Southeast Asia and Oceania. He has been tense city full of strict rules that we were expecting living in Singapore for almost eight months with his wife Ana Luiza, and their three to fi nd? It couldn’t be more different. It’s a fasci- children Clara (10), João (9) and Miguel (5).

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