How Education and Hard Work Built Up Brazil’s Silicon Valley

    Brazil's Electronics Valley

    Brazil's Electronics Valley The year was 1959. The place, Santa Rita do Sapucaí, a city in southeastern Brazil. The main character in the story is Sinhá Moreira, a very wealthy woman with good connections and a lot of vision. Upon returning from a trip to Japan, in the 1950s, Sinhá Moreira was enchanted with how technologically advanced that country was – despite just having suffered the horrors of the Second World War, the country was already producing technology at full blast.

    Inspired, Sinhá established the first electronics graduate school in Latin America, the Technical School of Electronics (ETE). The seed had been planted.

    Presently, Santa Rita is one of the country’s most successful technology hubs, as it harbors 120 companies that account for 60% of the city’s GDP and employ nearly half the economically active population in Santa Rita.

    And if the city is now an example of a virtually self-sustaining economy, this is due to the investments in education. Six years after Sinhá Moreira’s pioneering initiative, the National Institute of Communications (Inatel) was established.

    Therefore, students who graduated from high school no longer had to leave town in order to go to college. Nowadays, Inatel even offers master’s courses in the field. Finally, the early 1970s saw the inauguration of the Administration and Computing College (FAI).

    Now the city could produce not only ingenious creators, but also business managers with an enterprising spirit. The foundation was laid for what is now known as Electronics Valley.

    But it was not until the 1980s that the interaction between the academic and business realms began to bear fruit. "We realized that we were forming great engineers, but we were not absorbing that supply of brains. They would leave for São Paulo, Rio de Janeiro or even to foreign countries," according to Navantino Dionízio Barbosa Filho, who was the director of Inatel between 1985 and 1990.

    "That was when the idea came up, from talks between the schools and the public administration at that time, to do something that would create jobs in the city, so the city could grow, driven by the natural vocation that the schools provided students."

    Navantino explains that, as a director, he started hearing about students who created products in precarious conditions, "in their own fraternities," and then would sell them to each other or to relatives.

    "When we caught up, there were more than 20 surprising initiatives that we were not even aware of," he says.

    That was when they had the idea of organizing a trade show for the industry, in which anyone could showcase their products, including students with their inventions worthy of Gyro Gearloose (the Disney character). The trade show was so successful that it is now a tradition in the city. At that time, Santa Rita had no more than five companies.

    The next step was participation in a sector fair in São Paulo. With the help of a friend in advertising, a small group that included professors, businessmen and politicians created the slogan Electronics Valley, clearly inspired on the American Silicon Valley.

    During the fair, they gave out folders announcing that the city hall was offering benefits to companies prepared to move there. A climate of euphoria was established. Companies started turning up, papers wrote articles about the city and what began with a school inspired on the Japanese model really became the Electronics Valley.

    Inatel soon noticed that it would have to make some changes if it wanted to keep its students in the city. An incubator was established and students also started having classes turned to entrepreneurship.

    "Today, students do not leave as simple engineers. They leave with knowledge of legislation, they need to know how to make a business plan, ready to be an employee or businessman," stated Navantino.

    A reference in telecommunications, the college has already graduated around 5,000 students since it was established. The monthly fee is high for Brazilian standards, 950 reais (around US$ 460). Still, the college attracts people from all around Brazil. "And we have scholarship programs," stated Navantino, who is still a professor at the college.

    Task Force

    Up to 2006, there were 120 companies in the Valley. Together, they had revenues of 650 million reais (US$ 310 million). Today, according to the Science and Technology Secretary at the city, Elias Kallás, there are already over 25 companies, some are still being implemented. Of this total, most are micro and small companies. Few are large, around fifteen, at the most.

    One of the parts played by the city hall, says Kallás, is sponsoring the birth and entry of new companies in the city. "And we always prioritize micro and small companies. Not that large companies are not welcome. But they are more sensitive to crises. If a company with 1,500 employees goes broke in a city like this one, it is a great tragedy," explained Kallás.

    The city hall also has its own incubators. The first, established in 1999, focuses mainly on IT (information technology). The second, established in 2006, is turned mainly to electronics. According to Kallás, there are already another two under development, one focussed on software and another on agribusiness.

    "If we add our incubators to the Inatel one, we will soon have five cribs for the establishment of companies. As each one houses between 10 and 15 projects, between 50 and 60 new projects may be developed. When considering that each company may spend up to three years in the incubator, it is possible to forecast that in the near future we will have between 10 and 12 new companies per year," estimates the secretary.

    Apart from incubators, the mayor of Santa Rita has an ambitious project: the establishment of a Technological Park with over one million square meters. The idea is for it to be "activated" by the companies in the second half of this year. The Park will be built on a farm bought by the city hall 20 kilometers away from the city, close to other cities that also count on Higher Education in the area of technology, among them Pouso Alegre, Itajubá and even the cities of Campinas and São José dos Campos (in the southeastern Brazilian state of São Paulo).

    There are currently already industrial condominiums sponsored by the city hall. But there, companies can only keep their offices until they can structure themselves outside. The maximum period they may stay is three years.

    Finally, Kallás says that the city is still lacking a convention center for the Industrial Fair and other events. "We currently use the spaces offered by the schools, but that is not ideal," he says. The city hall has already bought the piece of land for future construction of the center.

    Technology Export

    Of total annual revenues of the companies in Santa Rita, between 20% and 25% comes from exports. Although it seems like much for a small city, this total is still limited to a small group of companies, mainly the oldest or largest.

    In December, however, the Union of Industries of Electric Equipment, Electronics and Similar Products of Electronics Valley (Sindvel) signed an agreement with the Brazilian Export and Investment Promotion Agency (Apex).

    For one year, Sindvel is going to count on the Apex know-how to participate in foreign fairs, trade delegations and training courses for businessmen associated to the union (almost 100% of the companies in the city) to start exporting.

    "This year we are going to participate in two great fairs in the United States and in another two in Argentina. Apart from that, we will organize a trade delegation to Brazil’s neighboring countries," explained Carlos Henrique Ferreira, vice president at the Sindvel and manager of the export program.

    In July, the city will receive two groups of potential buyers, one from Mexico and another from Chile. This is the first time that the Union participates in an initiative of the kind.

    According to Ferreira, the focus is on South America for those that are only beginning. This is not just due to the language and the distance, but also because the demands are lower.

    "The more traditional companies are already exporting to Europe and the United States, among other countries," stated the Sindvel vice president. Linear Equipamentos, one of the most ancient, established in 1977 and specialized in solutions for transport and distribution of television signals, for example, has been exporting for over 40 years.

    According to Ferreira, the intention is to grant to small companies the necessary support so that they can export and, in future, make the hub win new markets, like those of the Arab countries. "We already have quality products and the desire to export," he announces.

    Anba – www.anba.com.br

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