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  Edition nº 17


 Business Opportunity

In times of worldwide economic crisis, Brazil and Canada intensify their bilateral relations, reinforcing the importance of staging prospection and trade missions to foster imports and exports

Even in light of having achieved investment grade, record foreign direct investment (FDI), the pre-salt layer oil discoveries, among others, Brazil – like all countries on the five continents – will remember 2008 as the year of worldwide financial crisis. Recession, credit cuts, ups and downs in the Stock Exchange are but some of the episodes that became part of the economic scenario in recent months. “Before, the way banks made money seemed like magic. Nowadays, speculation is everywhere and involves trillions of dollars in the financial spiral. The problem is that speculating has become more complicated”, says Stephen Poloz, senior vice-president of finance at Export Development Canada (EDC), who deems it difficult to define figures for the current moment. “Certainly this is the largest crisis since the beginning of the eighties. At the same time, one notices a strong psychological component in action, making it difficult to predict market behavior with precision”, concludes Poloz.

On the list of the most adversely affected countries of Antoninho Marmo Trevisan, chairman of BDO Trevisan’s Advisory Board, are the United States and European and Asian countries. “We still don’t know who is in a lead position, but surely the countries that did not play an active role in this international financial system spiral stand to benefit”, assesses Trevisan, justifying why Brazil ranks in such category. “The country is in the best phase of its economic history, through improved income distribution, the entry of new consumers into the market and companies with well-grounded financial fundaments”, explains Trevisan.

Amidst innumerous forecasts, Canadian companies established in Brazil are holding on to their strategies. An example is Alta Genetics, whose performance in 2008 was considered exceptional. “It was a period of outstanding realizations for the industry. We exceeded our goals by more than 15%”, states Heverardo Rezende Carvalho, the company’s director in Brazil. While not believing in the market’s stagnation in 2009, mainly due to the results achieved last year, the executive is aware of the fact that growth in the world economy will decrease. “The industry follows suit with the market’s evolution, but on the other hand we deal in essential foodstuffs”, explains Carvalho. 

While the outlook for some industries in the domestic economy is bright, Paul Molinaro, vice-president of Scotiabank’s Representative Office in Brazil, emphasizes that according to the overall perception, the country is economically well-positioned. “But a negative tremor, brought about by a decline in export indices, is still a possibility, given that the export sector is likely to suffer the consequences of what is happening globally”, assesses Molinaro. According to the executive, the biggest losers thus far were investors in stocks and companies whose access to credit was reduced. Molinaro goes on to say that “the direct impact of the crisis on Brazil and Canada was mild in comparison with others and as a result of their relatively strong banking systems”.

Data of the Canadian Consulate in São Paulo reveals that in 2007, the flow of trade between Brazil and Canada amounted to 4.9 billion Canadian dollars. The Canadian Minister of Foreign Trade, Stockwell Day, believes this promising scenario will continue in 2009. He foresees that “the solid economy of both countries will encourage business partnering”. In tune with this opportunity, the Brazil-Canada Chamber of Commerce (CCBC) and Apex-Brazil, in December 2008, promoted a Prospection Mission to Canada, with the objective of identifying potential markets. “The Brazilian government has earmarked the country as a priority for its export strategy, which will enhance existing relations”, explains James Mohr-Bell, executive director of CCBC. According to information of the Ministry of Development, Industry and Foreign Trade, Brazilian exports to Canada last year reached more than US$ 1.8 billion, whereas the import of Canadian products by Brazil amounted to more than US$ 3.2 billion.

To increase these figures, apart from CCBC and Apex, representatives of the Association of Medical and Odontological Product Manufacturers (ABIMO), the Brazilian Society for the Promotion of Software Exports (Softex) and the Brazilian Foundry Association (ABIFA) visited the provinces of Ontario and Quebec during the Prospection Mission. This experience, according to Irene Naomi Hiratsuka, business intelligence & international marketing manager at ABIMO, was a “pleasant surprise”. According to her, the Canadian specialization in Research and Development can benefit Brazil. “On the other hand, Canada is not specialized in trading in developed products, therefore providing an excellent opportunity for local companies”, she believes. For Softex, the Canadian software market is no novelty. Gláucia Chiliato, manager of the PSI SW Project, informs that the entity previously participated in trade fairs and business rounds in the country. “We intend to include Canada in Softex’s relevant markets list and foster the participation of Brazilian companies in events to take place in Canada”, she says, while assessing that the mission “allowed to reestablish contact with this potential partner”.

More than reinforce the technological partnership, Bernardo Silva, the Apex manager for North America, believes that business in sectors such as foods, beverages, furniture, and construction materials will be enhanced. “The Canadian market is little explored and gains from growing our activity in the country can be quite significant”, he explains. Silva adds that Apex will now tighten relations with the Canadian government, private initiative and entities associated with the country, such as CCBC. “Trade missions help to identify new business opportunities and to break paradigms that nowadays are barriers to our companies entering the country”, he adds. Roberto Del Papa, commercial director of Indústria Metalúrgica FRUM agrees “the mission allowed us to better understand the Canadian market and entities that supply information about the country”, he says. 

If Brazil intends to intensify its relations with Canada, the same can be said of the Canadians. In recent years, trade relations between the country and the province of Quebec are on the uprise, according to the Quebec Government Office in São Paulo. “One of the main instruments for this are the trade missions that show the existing possibilities in Brazil to companies that otherwise would never have access to such information”, says Jose Castro, the entity’s trade advisor. According to him, Quebec companies are beginning to become aware of the importance of diversifying target markets, since most have practically all their production destined to the United States. “CCBC’s Prospection Mission is very important to enhance this relationship, because apart from positively increasing the visibility of Brazil in Quebec, it creates strong ties with the province’s institutions, and this is essential to foster bilateral trade”, he says.

Castro tells that for 2009 the plans of the Quebec Government’s Office in São Paulo foresee continued support for companies interested in working with Brazil. “Apart from that, we envision undertaking important missions that will help consolidate established ties. Even in turbulent times, we identify excellent business opportunities in the areas of Information Technology, Mining (equipment and services), Telecommunications, Aeronautics (parts) and Forestry (equipment and services), that will potentialize the relationship between the two countries”, concludes Castro.

A two-way path

According to the Ministry of Development, Industry and Foreign Trade, Brazilian exports to Canada in 2008 amounted to US$ 1,866,170,747, while imports of Canadian merchandise by Brazil totaled US$ 3,209,883,255. Understand what main products were traded between the countries last year:

Exportação Brasil-Canadá
Valor (em US$) | Amount (in US$)
Alumina calcinada Calcinated alumina 459.670.291
Açúcar de cana Sugar from sugarcane 216.102.212
Aviões / veículos aéreos Aircraft / airborne vehicles 126.114.112
Automóveis Automobiles 106.229.214
Minério de alumínio Aluminum ore 66.694.877
Importação Brasil-Canadá
Valor (em US$) | Amount (in US$)
Cloretos de potássio Potassium Chlorides 1.244.391.232
Enxofre a granel Sulphur in bulk 395.652.418
Outras hulhas Other minerals 240.215.959
Papel jornal Newspaper paper 197.334.670
Trigo Wheat 106.680.071

Source: Ministry of Development, Industry and Foreign Trade

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