RESULT BRAZIL

With an export boom and oil finds, Brazil, the sleeping giant of South America is awakening

The Guardian

• Saturday May 10 2008

A young girl plays in front of a Brazilian flag in Rio de Janeiro. Photograph: Douglas Engle/AP

Sitting in his air-conditioned office in Guarantã do Norte, a remote agricultural town on the edge of the Amazon rainforest, local mayor José Humberto Macêdo looked a contented man.

Thanks largely to the global boom in commodities, this soya-growing region has been transformed into the vanguard of Brazil’s march on to the world stage. “This is going to be the new Brazil,” Macêdo beamed, explaining how ballooning commodity prices had made his region, Mato Grosso state, into a powerhouse of the Brazilian economy.

Across the country, similar optimism can now be heard among businessmen and politicians, all convinced that South America’s sleeping giant is finally waking up. Brazil has long been known as the país do futuro (country of the future). But a series of economic and political crises and 21 years of military rule somehow meant the future never quite arrived.

Now things seem to be changing. Brazil’s currency recently hit a nine-year-high against the dollar, inflation is under control and millions of Brazilians are being propelled towards a new middle class. Last week, meanwhile, Brazil was awarded “investment grade” status by the financial rating agency Standard & Poor’s, sending the country’s stocks soaring to an all-time high.

Following the announcement, Brazil’s president, Luiz Inácio Lula da Silva, said: “If we translate this into a language that the Brazilian people understand, it means that Brazil was declared a serious country, that has serious policies, that takes care of its finances with seriousness and because of this we deserve international confidence.”

From oranges and iron ore to biofuels, Brazilian exports are booming, creating a new generation of tycoons. Brazil’s millionaire club grew from 130,000 in 2006 to 190,000 last year – one of the fastest rates in the world, according to a study by the Boston Consulting Group.

“We are the biggest exporters of meat, coffee, sugar, fruit juices and the second biggest of grains,” Brazil’s agriculture minister, Reinhold Stephanes, boasted at a conference in Brasília last month.

Meanwhile, Brazil’s stockmarket, known as the Bovespa, was one of the best performing in the world last year.

Despite the world economic crisis, the Brazilian government recently raised the projected growth rate this year to 5% – lower than the other so-called BRIC nations of Russia, India and China but impressive for a developing country.

“The future has already arrived,” said David Fleischer, a political scientist at the University of Brasília. “Foreign investments coming into Brazil are very strong; inflation is more or less under control; Brazil now has more international reserves than foreign debt, and the commodities are booming.”

Not to mention the oil. A series of huge offshore discoveries by the state-owned energy company Petrobras has led many to dub the president “Sheikh Lula” and claim that Brazil may soon become a major oil producer.

In April, when Haroldo Lima, head of Brazil’s national petroleum agency, made headlines after claiming that another huge oilfield had been found off Rio’s coast, the news appeared to confirm what many Brazilians have long claimed: God is Brazilian.

Lia Valls, an economist at Rio’s Getulio Vargas Foundation, said: “We are now living a singular economic situation we have never experienced before. The international situation is very favourable to Brazil.”

In February, when the government announced that it had paid off its foreign debt, Lula boasted that Brazil had “taken an extremely important step towards transforming itself into a country taken seriously in the financial world”.

“We will transform this country, definitively, into a great economy and a great nation,” the president added.

Keen to transform itself from developing nation to world power, Brazil is also presiding over a 1,200-strong UN stabilisation force in conflict-ridden Haiti. Paulo Cordeiro, the country’s former ambassador in Port-au-Prince, said the presence of Brazilian troops was a “demonstration of Brazil … wanting more responsibility.

“I think Brazil has already reached a certain level of development in which the international community starts calling on it to act more,” he said.

“Brazil’s international leadership has grown a great deal over the last six or seven years,” said the University of Brasília’s Fleischer, citing Brazil’s involvement in the UN mission and its leadership of the emerging nations in the Doha talks. “The tendency is for this influence to keep growing.”

For analysts, much of the euphoria sweeping Brazil is down to the ability to control the inflation that plagued the country in the late 1980s and early 1990s. In 1993 inflation reached 2,490%. Today the figure stands at about 4.7%.

“I think now it is difficult to imagine a return to this,” said Valls.

Analysts are less certain, however, about the effects that a drop in commodity prices might have. Many believe this could bring a dramatic end to Brazil’s boom. Others question whether the infrastructure and education systems are strong enough to maintain the economic momentum.

Valls warned: “All this does not mean you are guaranteed economic growth. Brazil still has serious structural problems; there needs to be lots of investment in infrastructure. There are some serious pitfalls that compromise this growth: education, having a qualified workforce, health.”

Betting the fazenda: a different kind of risk-taking

The Economist

SETTLE down at one of São Paulo’s sushi bars and before long you will overhear a discussion about a start-up business making energy from obscure weeds, or some other bright idea for relieving members of the country’s growing middle class of their disposable income. A field study of this kind displays a strong sample bias, but the point is clear: Brazil does not lack go-getters. Yet according to a more thorough survey backed by the International Finance Corporation (IFC), a sister organisation of the World Bank, Brazilian entrepreneurs are a strikingly different breed to their peers in Russia and China.

Overall, some 82% of entrepreneurs in all three countries came from families with at least one other entrepreneur. They also tended to be taller than the average. But there the similarities end. In particular, Brazilian entrepreneurs seem to have a much lower appetite for risk.

The researchers measured this by offering interviewees hypothetical bets of varying risk and reward, and offering a choice between cash now or more money at a later date. The entrepreneurs in the sample were no more risk-taking than other Brazilians, and were also more likely to retire if offered a windfall than their peers elsewhere.

Perhaps this lack of staying power is because there are many more pleasant things to do in Brazil than work. But why should Brazilians be so risk-averse? Simeon Djankov, one of the study’s authors, hypothesises that in real life Brazilian entrepreneurs run bigger risks than those elsewhere. Starting a business takes 152 days and requires 18 different procedures, according to the IFC’s annual worldwide “Doing Business” study. It takes 2,600 hours for a medium-sized business to keep up with its taxes each year. The same hypothetical business would pay 69% of its second-year profits in tax, if it played by the rules and did not receive special tax breaks.

Brazilian entrepreneurs show an unsurprising willingness to bend the law. “Essentially what determines good entrepreneurship in Brazil is the ability to navigate around the bureaucracy,” suggests Mr Djankov. Eduardo Giannetti da Fonseca, an economist, concurs: “If Bill Gates had started Microsoft in a garage in Brazil, it would still be in the garage.” Harder to explain than why Brazil’s entrepreneurs are as they are is why they exist at all.

Brazil has evolved in many areas in the last 10 years, since 1998. The numbers below give us a better vision.

Subject            1998  ==> 2008

Population      141,3 M   191,8 M

Voting POP    75,8 M     127,5 M

GDP (R$)       1,55 Tri    2,63 Tri

GDP/capita     10.973      13.718

Poverty           20.9%       11.4%

Gini index       0.62          0.57

Export(US$)   33,8 Bi    182,8 Bi

Inflation          980%        4,5%

A Wi-Fi Alliance, entidade certificadora de aparelhos compatí­veis com esta tecnologia, obteve recorde de pedidos de autenticação de novos dispositivos em 2006, e identificou uma tendências do Wi-Fi para além dos tradicionais laptops, com grande número de pedidos de certificação de câmeras digitais, PDAs, e, especialmente, telefones móveis.

A Alliance certificou mais de mil novos dispositivos nos ultimos 15 meses, tres vezes mais que a taxa de certificacoes obtida nos ulltimos 3 meses. Destes mil dispositivos, cerca de 20% se referiam a aparelhos nao-tradicionais, ou seja, nao eram dispositivos padrao para a conexao de laptops com roteadores Wi-Fi. Ao contrario, muitos eram servidores de mi­dia, como set top boxes da Sony, Philips e Apple; video-games moveis como o Play Station Portatil da Sony; grande numero de cameras digitais e tocadores de musica portateis, e mais de 100 diferentes celulares dual-mode, que congregam Wi-Fi com outra tecnologia, como GSM, por exemplo.

A ABI Research estima que em 2012 mais de 1,2 bilhao de chipsets Wi-Fi serao vendidos, e destes, cerca de 500 milhoes estarao embutidos em celulares moveis. Os 700 milhoes restantes estarao divididos quase igualmente entre outros aparelhos eletronicos e os tradicionais equipamentos de redes para computadores. O segmento de telefones tem recebido atencao particular das operadoras dos EUA e Uniao Europeia, que lancaram comercialmente suas redes em frequencias moveis nao licenciadas (UMA, na sigla em ingles), que dependem de Wi-Fi e de uma conexao banda larga caseira para rotear as chamadas de volta para o nucleo de voz das operadoras.

IBOPE/NetRatings released this week their latest official report about Internet usage in Brazil. Total number of users in September 2007 have reached 37 Millions, being more than 20 Millions at home. Brazilians continue to lead worldwide the average monthly time using the web, with average 22 hours per month, ahead of USA and Japan with average 18 hours per month each.

Growth was higher for kids and teens, showing a number 53% higher than in September 2006. Average annual growth in total number of Internet users at home was 47%.

The categories with biggest growth in traffic were house and fashion, up 73% from last year, travel and tourism up 67%,  and automobiles up 57% from Sep 2006. Gastronomy, real state and human beauty were the sub-categories inside house and fashion that account for highest growth.

Search, portals and communities lead among other popular activities, reaching almost average 5 hours per month per Internet user, around 30% than last year. New multimedia tools are the reason behind such additional amount of time spent on line, specially by women and young people.

O número de usuários residenciais no paí­s que navegam mensalmente na internet atingiu 20,1 milhões em setembro, um crescimento de 47% em relação ao mesmo mês do ano passado, de acordo com relatório mensal do Ibope/NetRatings, divulgado nesta quarta-feira (31/10).

Segundo o instituto de pesquisas, considerando todos os ambientes, incluindo residências, trabalho e locais públicos gratuitos e pagos, o número total de pessoas com acesso à  internet no Brasil já é de 36,9 milhões. Em tempo de uso residencial da web, os brasileiros, com 22 horas mensais por pessoa, continuam à  frente dos americanos, que têm 18 horas e 54 minutos, e dos japoneses, que registraram em setembro 18 horas e 21 minutos. No mesmo mês de 2006, o tempo de navegação domiciliar dos brasileiros havia sido de 20 horas.

As faixas etárias que mais têm contribuí­do para a expansão da internet residencial são as criançaas e os adolescentes de ambos os sexos, com expansão anual de 53%, e os homens com mais de 45 anos, que tiveram crescimento de 50%. Em intensidade de uso, vêm se destacando as mulheres de 18 a 24 anos, que no perí­odo de um ano aumentaram em 25% a quantidade de páginas vistas.

Entre setembro de 2006 e setembro deste ano, as três categorias de maior crescimento percentual foram casa e moda, com 73% de evolução da audiência, viagens e turismo, com 67%, e automotivo, com 57%. Sites de gastronomia, venda de imóveis e sobre assuntos de beleza foram os que mais cresceram na categoria casa e moda, enquanto em viagens voltou a aumentar a navegação em sites de mapas, além de sites que oferecem pacotes turí­sticos e passagens aéreas.

Em tempo de navegação por usuário, a categoria buscadores, portais e comunidades passou a sustentar a primeira posição. Esse movimento está relacionado ao aumento do tempo online em comunidades. Devido ao maior interesse por redes sociais e por blogs, o tempo online mensal do usuário de comunidades passou de 3h39min em setembro de 2006 para 4h40min em setembro deste ano, o que significa uma evolução de 29%. Os novos recursos audiovisuais adotados pelas comunidades têm levado os usuários, sobretudo crianças e mulheres jovens, a navegar por mais tempo e a trocarem mais mensagens por meio das páginas de redes sociais.

Um estudo recente divulgado pela Frost & Sullivan, empresa de consultoria e inteligência de mercado, mostra que o mercado brasileiro de telecomunicações obteve uma receita de US$ 58,266 bilhões no ano passado e deve atingir US$ 74,280 bilhões em 2012.

A projeção feita pela consultoria tem como base principalmente os serviços de banda larga, VoIP e telefonia móvel, que registraram forte crescimento de receitas e devem manter a curva ascendente nos próximos anos. Além disso, a empresa avalia que a convergência de voz, dados e vídeo apresenta várias oportunidades de crescimento e deve impulsionar o setor com a oferta dos chamados serviços triple play para os usuários de baixa renda.

“A telefonia tradicional está em queda devido a substituição da tecnologia fixo-móvel, assim como a adoção de novas tecnologias como VoIP, fatores que impactam principalmente nas receitas com a chamadas de longa distância”, afirma Iacy Saraiva, analista de pesquisas da Frost & Sullivan.

Apesar de os serviços de telefonia local e a longa distância ainda serem os principais geradores de receitas das operadoras, respondendo por 46,2% do total do faturamento do setor em 2006, Iacy observa que os serviços de telefonia móvel estão prestes a tomar a liderança, à medida que ultrapassarem a telefonia fixa em termos de tráfico e receita. Juntas, telefonia móvel e fixa lideram o mercado com participação de 84,8% da receita do setor.

Com relação ao mercado de banda larga, a analista diz que se espera que as operadoras direcionem esforços para aumentar a penetração entre os usuários de baixa renda, enquanto os serviços de voz sobre IP devem crescer especialmente entre os chamados “heavy users” de voz e internet.

Thinking of Brazil: Soccer and volley-ball.. Girls and beaches… Amazon forest… Sunshine and caipirinha… Carnival and samba… Coffee… and many dreams more!

Thinking again when doing business: financial sector (high profit margins), industrial segment (broad and robust plants), oil (current source of energy) and biodiesel / ethanol (future source of cleaner fuel), telecommunications (big yet fast growing market), on line networking (after only the US market) and more!

Did you know that:

- Brazil accounts for a large bottom line profit from one of the largest international telecom groups (Telefonica)
- The wealthiest man on Earth (soon richer than Bill Gates) reached this level mostly because of his investments in 2 countries, Brazil being one of them (Mr. Carlos Slim, from Mexico)
- Google, Skype, Microsoft, MSN, Yahoo, IBM have all reached high valuation entering in the Brazilian market sooner than later (Brazil is ranked Top 3 or Top 5 market for these corporations)
- The second largest fleet of private jets and helicopters are based in Brazil (only after the USA)
- The Brazilian branch of a Dutch bank is a key asset under one of the largest deals in the financial industry (ABNAmro in Brazil is a clear target of Santander)
- Very large international banks get nice return on their assets from Brazil when compared to other markets (Santander, Citigroup, HSBC) §