São Paulo – The Brazilian food company Minerva started out with a focus on exports and opened its first-ever international office in Beirut, Lebanon, 1998. The bus body maker Marcopolo formed a joint venture to carry out manufacturing in Egypt some ten years ago, so it could go on keep selling to Arab countries when the exchange rate made foreign trade disadvantageous in Brazil. And although Arab perfumes are not widespread among Brazilians, Al Zahra Perfumes opened its stores in order to build a market in the country.
Each of those companies paved their way in exporting or importing goods to or from Arab countries through a strategy of its own, and the results they achieved were under discussion this Wednesday (5) at the Brazil-Arab Countries Economic Forum, organized by the Arab Brazilian Chamber of Commerce and held at the Tivoli Hotel in São Paulo. The meeting also covered the peculiarities of the halal market, Islamic finances, consumption potential, innovation in the internet age, and entrepreneurship in Arab countries.
Speaking for Marcopolo, export manager Ricardo Portolan went over how the company deals with the Arab market and how it adapted its products to meet local needs. The bus body maker has supplied vehicles to the Omani police force, to the United Arab Emirates’ nuclear energy company so it could carry personnel, and so that believers could be driven to the Hajj, the pilgrimage in Saudi Arabia. In the latter case, Marcopolo adapted the buses’ ceilings so they could be opened during the Hajj and closed for other types of uses.
Marcopolo began exporting to Arab countries in the late 1980s. It has a commercial office in Dubai, the UAE, and in 2009 it established GB Polo, an Egypt-based company, in partnership with the local business Gabhour. “The stronger real [Brazilian currency] led us to seek a local manufacturing base,” said Portolan. Now, product from Brazil gets shipped to Arab countries only when orders involve more sophisticated buses, while the Egyptian unit caters to higher amount, lower value-added contracts. The export manager said the company has always had a long-term outlook, and that continued sales have yielded results.
The beef company Minerva has done business with Arab countries since it first started selling internationally, and has grown there since then. CEO Fernando Galletti de Queiroz sat in a panel moderated by journalist Sonia Racy and said the company should replicate, on the Saudi market, a business model like the one it employs in South America, with distribution focusing on small and medium retail and on food service chains. That will be done in partnership with the Saudi Arabian company Salic, which bought a stake in the Brazilian beef company in 2015.
Minerva saw BRL 10 billion (USD 3.1 billion) in revenues last year, with 70% coming from exports. Arab countries account for 33% of export revenues. Salic is now the second biggest stakeholder in Minerva. “The deal is being extremely positive, because of the knowledge it affords us regarding that market,” said Queiroz, stressing that he does not regard Salic as a financial investor, but rather as a strategic one.
Taking the opposite route, i.e. that of importation of Arab products, is Brazil’s Julia de Biase, the founder of Al Zahra Perfumes. At the forum, the Italian descendent and admirer of Arab culture retraced the many steps that led her to become an importer of Arab fragrances. An architect by trade, she discovered Arab perfumes on trips to Jordan, Syria and Dubai, prompted by architectural curiosity. The road to becoming an importer was a long one, including several contacts with a Bahraini perfume company, the paperwork required in order to import goods to Brazil, and the certifications needed.
With the products in hand, she went out selling them from door to door, as she explained the peculiarities of Arab culture to her prospective buyers. Through lots of online advertising, Julia carved in a niche for herself, finding several points of sale. Now, she owns a store in São Paulo’s Jardins neighborhood, another at the Holiday Inn Parque Anhembi, and has plans to reach other Latin American countries. She also creates and manufactures her own perfumes, using Arab scents.
Consumption and halal
The potential of the Arab market, with its 392 million people, has been drawing the attention of Brazilian companies. And the unique and growing consumption in the region was one of the forum’s topics. According to the vice-president of Foreign Trade of the Arab Chamber, Rubens Hannun, Arabs are extremely interesting as consumers due to the high birth rate, which makes them a young population, with a Gross Domestic Product (GDP) that grows above the global average. And, according to him, the relations between Brazilian and Arabs facilitate business. “Brazilians like the Arabs very much”, he said.
Among Brazilian companies from the foodstuff sector that were able to conquer a share of this market, the majority specialized in halal, the production done according to Muslim requirements. This is a growing market, according to the president of the Federation of Muslim Association in Brazil (Fambras), Mohamed Zoghbi. The federation issues the halal certification. “With or without a crisis, this market has been growing significantly”, he said. According to Zoghbi, Brazil has one of the most perfect halal procedures in the world. The Fambras’ president said the country has at least 14% of this market. And he believes in an improvement as a supplier.
Also linked to the Muslim religion are the Islamic finances, the topic of a talk by regional manager for Latin America of the National Bank of Abu Dhabi (NBAD), Angela Martins. According to her, there are USD 1.5 trillion in Islamic assets in the world and they should reach USD 3 trillion in 2018. This means that that money is invested in financial operations that follow the Shariah, the Muslim laws based on the Quran. For instance, they don’t allow the charge of interests or the use of the money for speculation. Martins suggested for Brazilians that operate in the Arab market to use the Islamic finances for foreign trade operations.
A modern world
The modern face of the Arab world also revealed itself at the forum. The deputy secretary general for Economic Affairs of the League of Arab Nations, Mohammed Al Tuwajri, invited the featured companies to seek innovation, especially in the digital sector. “We have to work hard to turn the menace into business,” he said about the changes that the digital world will bring to businesses.
A video on fashion designer and blogger Tamara Al Gabbani, owner of Tamara Al Gabbani Fashion Brand was screened to the audience. She was scheduled to speak at the forum, but could not make it. She told her story since her time working as TV presenter and producer until she created her fashion brand and became a reference in the sector, especially due to promotion made on social media. Despite the traditional education she received, she followed the entrepreneurship path. “I grew up in the city of ambition and opportunity,” she said, saying she was lucky to have been born in Dubai.
João Carlos Meirelles, the secretary of Energy and Mining of São Paulo state, also spoke at the forum. He praised the work of the Arab Chamber and endorsed the increase of relations between the state and the Arab world. “I would like to establish closer ties with the Arab communities represented here by you,” he said in a reference to the Arab ambassadors attending the event.
*Translated by Gabriel Pomerancblum and Sérgio Kakitani