# Presentation: 375937

## U.S Commercial Service São Paulo

- U.S Consulate General
- São Paulo, Brazil

## President Luis Inácio Lula da Silva

- Took leadership on 1st of January, 2003
- Political party: Labor Party- PT
- 2002 - Won by 61.27% at the first mandate
- 2006 - Won by 60,83% at the second mandate

## Doing Business in Brazil

**Doing Business in Brazil**

## Brazil Compared:(Size of the EconomyUS$ Billion)

**Notes:**

(Note: The Source here is The Economist Intelligence Unit, hence the minor disparity with the GDP value reported on the previous slide.)

GDP:
Venezuela rated here as number four in terms of GDP size. 

GDP Per Capita:
Venezuela’s GDP Per Capita nears US $ 5,000, more than in any country in the region except for Mexico and Chile where per capita income exceeds US $ 6,000.

## Brazil Compared:

**U.S. Exports to Latin America ****(US.$ Billion)**

**Source: U.S Census Bureau**

**Notes:**
U.S. Exports to Latin America were on the rise in 2006.

Notice how Venezuela and Colombia  are similar markets in size to Chile. 

In Venezuela’s case, U.S. exports are increasing due to higher oil revenues and economic activity.

## Brazil’s GDP US$ Billions

## Robust trade surpluses, with both exports and imports on the rise.

**Strong trade adjustment dampening external financing needs.**

- Source: Ministry of Commerce

- Source:BCB

**Trade Balance, Exports and Imports**
- (12 months rolling)

**Current Account and FDI**
- (12 months rolling)

- X, M

- TB

## Composition of Brazil’s GDP 2007

**Composition of Brazil’s GDP**** ****2007**

**Notes:**
The 2003 GDP in Brazil is composed of:

51% - Services

39% - Industry

10% - Agriculture

## Slide 9

## Inflation Rate (1993 – Dec/2007)

- Source: Agência Estado

**2,477%**

- 1993

- 1998

- 2002

-  2003

- 2004

-  2005

- 6%

- 8.5%

- 1.8%

- 4.5%

-  2006

- 2007

- 3.5%

- 3%

- 5.5%

- 2001

- 1.8%

**Notes:**
 Big point to make here is stark contrast between early 1990’s and the fact that current administration is continuing 8 years of solid, fiscal inflation targeting - even at the risk of slower economic growth.
 Inflation issue is critical for investors, since the value of debt is eroded by high inflation, and the currency may devalue further.
It’s just another risk that foreign investors shouldn’t have to worry about, and Brazil recognizes its importance to overall economic health.

## Interest Rates

- The SELIC interest rate is currently 11.5%  (per year)
- Mortgage loans range from 2% to 4% per month
- Businesses generally pay from 2% to 4.5% (per month), depending on their creditworthiness

## São Paulo and Brazil

- 22% of inhabitants

- 3% of area

- 34 % of GDP

**Brazil**

**São Paulo**

- 41% of industrial GDP

- 32% of exports

- 43% of imports

- 68% of financial operations

- Source: IBGE, Seade and Banco Central do Brasil, 2005

**Notes:**
Importance of Sao Paulo to Brazilian economy

## São Paulo

**40%** of Brazilian refining oil production.

**70%** of Brazilian sugar and alcohol production and exports. World’s biggest producer of orange juice.

**53%** of Brazilian motor vehicle-production

**45%** of world trade of medium aircraft
- (30-60 passengers).

**60%** of Brazilian capital goods  production.

## Slide 14

## 47 NUSA SITES IN BRAZIL 02 NUSA SITES IN PARAGUAY

**Anápolis – GO****	****	****Aracajú –SE****	****Belém – PA**
**Belo Horizonte – MG****	****Belo Horizonte – MG****	****Betim – MG**
**Boa Vista – RR****	****	****Brasília – DF****	****Brasíia – DF**
**Campinas – SP****	****	****Campo Grande – MS****	****Campo Grande– MS**
**Contagem – MG****	****	****Contagem – MG****	****Caxias do Sul – RS**
**Cuiabá – MT****	****	****Curitiba – PR****	****Divinópolis – MG**
**Florianópolis – SC****	****Fortaleza – CE****	****Goiânia – GO**
**Goiânia – GO****	****	****João Pessoa – PB****	****Juiz de Fora – MG**
**Londrina – PR****	****	****Macae – RJ****	****Macapá – AP**
**Maceio – AL****	****	****Manaus – AM****	****Natal – RN****	**
**Novo Hamburgo – RS****	****Palmas – TO****	****Petrolina – PE****	**
**Porto Alegre – RS****	****Pouso Alegre-MG****	****Recife – PE****	**
**Ribeirao Preto  - SP ****	****Rio de Janeiro-RJ****	****Salvador – BA**
**São Luís – MA****	****	****São Paulo – SP****	****Teresina – PI**
**Uberaba – MG****	****	****Uberlândia – MG****	****Uberlândia – MG**
**Vitória – ES****	****	****Vitória – ES**
**Asunción****	****	****Ciudad del Este**

## (U.S. $ Billion)

**(U.S. $ Billion)**

- U.S. Census Bureau

## Aircraft and Aircraft parts	
Chemicals/Pharma	
Electronics and Electric Power equipment	
Medical Equipment
Oil and Gasfield Machinery & Services
Pollution Control Equipment
Printing/graphic equipment	
Retail/consumer items	
Safety and Security Equipment
Telcom/Computer Hardware/Software	
Transportation Equipment	
Travel and Tourism

- Chemicals/Pharma
- Electronics and Electric Power equipment
- Medical Equipment
- Oil and Gasfield Machinery & Services
- Pollution Control Equipment
- Printing/graphic equipment
- Retail/consumer items
- Safety and Security Equipment
- Telcom/Computer Hardware/Software
- Transportation Equipment
- Travel and Tourism

- Best Prospects for Sales to Brazil** **

## U.S. – Brazil Trade Relations

- Brazil Business Concerns with the U.S.
- Agricultural Subsidies (cotton, ethanol, soybeans)
- Restrictive Tariff Rate Quotas (sugar, OJ, ethanol)
- U.S. Anti-dumping policies
- U.S. Business Concerns with Brazil
- High tariffs (20%) & complicated taxes (Up to 60% FOB)
- Enforcement of Intellectual Property Rights
- Onerous licensing & Regulatory Requirements
- Transparency, bureaucracy, different judicial system, slow customs

## Telecom Market US$ 46 billion

- Best Prospects:
- Wireless equipment & Services for 3G
- HDTV related software & equipment (Set-top decoder boxes; transmitters for digital radio and TV, encoders, multiplexes, automation systems, studio TV cameras, video servers, IPTV solutions, digital transmitters for High Definition Television (HDTV), microwave systems
- Concerns:
- Brazil high tariffs (0-20%) & complicated tax system (Up to 60% FOB)

- Source: Anuario Brasileiro de Telecomunicacoes

## The telecom sector has  almost 150 million fixed, mobile, Internet and pay TV clients

- Fixed phones

- Mobile users

-   Pay TV households

- 35,4 million

- 99,9 million

-   4,5 million

**2006**

*Brazil*

*LA - Most important countries **

- * Argentina, Chile, Mexico and Venezuela

- FIxed phones / household

- Mobile phones / population

- Pay TV  / households

- Broadband  / households

## Internet OverviewThe Brazilian users spend more time than anyone in the world 

**Internet users**
- 32 million Brazilians had used the internet, monthly in 2006.  The forecast for 2007 I to reach 37 million
- In four years, the number of internet users increased 67%

-                 Internet users

-  Time spend in internet

**Broadband Access**
- 2006: the broadband active connections growth was 40,1%. In this same period, the service penetration jumped from 2,2% to 3%
- 2010: it is expected 10 million connections
**Time Spend monthly surfing on web**
- The Brazilian internet user is the one who spend more time online: 22h26 for each user in June 2007 (USA: 19h05)

**Internet Overview****The Brazilian users spend more time than anyone in the world **

## CONSTRUCTION EQUIPMENT

-  Total Market size:  US$ 2.2 billion/year
- Best Prospects:
- Crawler lattice-boom cranes
- Cranes above 60 tons
- Tower cranes above 100 tons
- Rough terrain hydraulic cranes
- Heavy earthmoving equipment
- Large concrete plants
- Paving equipment
- Topography equipment
- Non-destructive drilling and tunneling equipment

## Leisure Boats

- Abundance of cost line – over 5,000 miles long;
- Less price-sensitive market;
- Heavy duties as it is considered a “non-essential” market;
- The market is expected to expand, accompanying the increased number of beach resorts being constructed along the northeastern coast of Brazil.
- Small local production X heavy presence of foreign companies;
- Brazilian boat fleet : Sao Paulo 80%, Rio de Janeiro 9% Santa Catarina and Parana together with 4%.

## Leisure Boats

- Accessories for the boats such as motors, electronics, awnings, GPS, furnishings are mostly imported.
- The majority of the boats are used in the ocean.
- The market is expected to expand as the number of beach resorts being constructed along the north and northeastern coasts of the country increase.
- Major shows in the segment are:
- Sao Paulo Boat Show – October 4-9, 2007
- Rio Boat Show – TBD, 2008

## MAJOR COMPETITORS

- AGCO
- Caterpillar
- CNH (Case New Holland)
- Komatsu
- Randon
- Volvo
- Ingersol Rand
- Dynapac
- Ciber
- BobCat
- Note:  All above companies are manufacturing in Brazil.

## Points of Contact

**São Paulo: **_[Sean.Kelley@mail.doc.gov](mailto:Sean.Kelley@mail.doc.gov)_
**           **
**Rio de Janeiro: **_[Camille.Richardson@mail.doc.](mailto:Camille.Richardson@mail.doc.gov)__[gov](mailto:Camille.Richardson@mail.doc.gov)_
**Brasilia: Rebecca.Armand@mail.doc.gov**
**Belo Horizonte: **_[John.Mueller@mail.doc.](mailto:John.Mueller@mail.doc.gov)__[gov](mailto:John.Mueller@mail.doc.gov)_

**Notes:**
Camille: Here are the main points of contact in all four cities.  We are happy to answer any questions you may have.