São Paulo – The crisis faced by developed countries may affect Brazilian exports. Shrinking domestic markets should result in the Europeans selling their products in other places, which may increase competition for Brazil in the Middle East and North Africa. Good cost-benefit relations of Brazilian products, if compared to European ones, however, may guarantee sales. That is taking place, for example, in the medical product sector. At the Arab Health, in Dubai, in January, the results were better than those obtained one year before.
An International Economics Professor at the Pontifical Catholic University of São Paulo (PUC-SP), Antonio Carlos Alves dos Santos forecasts that countries like Italy, France and Spain should invest in former African colonies. “With the crisis, the countries need to export and competition for some markets should rise,” he said, adding, however, that Brazil has one advantage over the Europeans: the cost of labour here is lower, and that may help Brazilians to compete with their foreign peers in terms of price.
Santos also observed that other factors, apart from the crisis, influence the export sector of a nation. This is the case with the Brazilian “result” diplomacy, employed for several years, and whose example is being followed by some nations. If France and Italy colonised some African nations in the past, Brazil has expanded its presence on the continent in recent years while financing projects in some countries and helping them implement crops in their territories.
Marcus Vinícius de Freitas, International Law professor at Armando Álvares Penteado Foundation (FAAP), observes that Brazil may, during the crisis, pay a heavy price for errors committed before it started, both in industrial policy and in relations with the Arab nations. It may also pay the price for competing with the more advanced European industry.
"As we have not made the necessary reforms, we are going to face the lack of competitiveness of our products,” he said, adding that Brazil was not an "early supporter" of the transition governments that took over some Arab countries in 2011, like Libya and Egypt. In this respect, according to Freitas, the Europeans took the lead by supporting the revolutionary leaders and, after inauguration of the new governments, signed hefty contracts.
"The appreciated Brazilian real and the country’s high logistics cost may stimulate the Europeans to make use of the markets in which we have slipped,” said Freitas. He recalls, however, that markets in which Brazil is already consolidated should not be threatened by the crisis.
Despite the challenges that are coming up, for the time being, Brazil is remaining competitive in some sectors. This, for example, is the case in the medical product industry. The administrative director at the Brazilian Association of the Industry of Medical, Dental, Hospital and Laboratory Articles and Equipment (Abimo), José Augusto Queiroz, said that sector sales grew 12.6% in 2011, as against 2010, and that participation in the Arab Health in January, in Dubai, also brought better results than those of 2011.
In 2011 and this year, 44 Brazilian companies participated in the event, with the support of the Abimo and the Brazilian Export and Investment Promotion Agency (Apex). This year, the business volume generated was US$ 1.089 million. In 2011, contracts signed totalled US$ 970,000. Abimo also keeps its export plan for sector products: US$ 1 billion by 2015.
"We know that there is no captive market. It is always necessary to cultivate them, to participate in fairs, events. Only sending e-mails is not enough. Arabs like seeing you beside them. With the crisis, all is possible. However, the Europeans practice higher prices. Our products have an excellent cost-benefit ratio,” said Queiroz.
Freitas, from FAAP, sees in the crisis an opportunity for Brazilian companies not only to sell, but also to buy. "Brazilian companies may acquire Brazilian companies affected by the crisis to consolidate their production chain and consumer markets. This is the moment to make use of cheaper assets.”
*Translated by Mark Ament
