Brazil’s Unrelenting March to Conquer the Arab World

    Brazilian Boticário, a cosmetics company, in Saudi Arabia

    Brazilian Boticário, a cosmetics company, in Saudi Arabia Chicken was among the first to arrive. One container, then two, three, dozens, hundreds, and soon the product of Brazilian poultry farms was a mainstay in the cooking pots of Arab housewives. Later on came other products, such as shoes and clothing. A sandal of the Arezzo brand on the luxury staircases of Riyadh homes, a Dzarm T-shirt in Bahrain, Colcci trousers in the streets of Dubai.

    Buses, perfumes, beef, household utensils arrived there as well. Now, Brazilian banking agencies have their doors wide open in Dubai, and people from Brazil are working on the construction of buildings where the Arabs are going to live and work.

    All of the products and services listed above already have their space in the Arab world. Brazilian chicken has at least two addresses in Dubai, at offices established in the emirate by companies Sadia and Perdigão. This year, Sadia intends to start building a factory that will allow for chicken meat to be processed in Arab ground, in the Emirates.

    However, this is not going to be the first Brazilian industrial unit in the Arab world. Randon, a maker of highway implements, already owns assembly lines in Morocco and Algeria, Neobus, a bus body maker, owns an assembly line in Algeria, and Crystalsev, a sugar manufacturer, is a partner at a recently opened refinery in Syria.

    In other words, Brazilian factories are beginning to switch on their machines and industrial mats over there. The same cannot be said of commercial offices and distribution centers bearing the Brazilian flag, which have already opened their doors for some time now, and abound in the region.

    Just to name a few, other than those of Sadia and Perdigão: the JBS group, which operates in the beef market, has an office in Egypt, bus body maker Marcopolo has one in Dubai, Weg, a producer of engines and electric equipment, has a branch in Dubai, and Tramontina, a household utensils manufacturer, owns a distribution center in Dubai.

    “Having an office there is crucial in order to increase exports,” says the foreign trade manager at the Brazilian Food Processors Association (Abia), Amilcar Lacerda de Almeida. In fact, the branches that the Brazilian industry established in the Arab world have helped increase trade. Exports from Brazil to the region, which stood at US$ 1.4 billion in the year 2000, have reached US$ 3.1 billion, more than double, in the first five months this year alone. Meats and sugar are the most sold products.

    Foodstuffs are one of the strongest and most traditional Brazilian sectors in the Arab world. Sadia, for example, has been exporting to the region since the 1960s. Processing the products in another country, as Sadia is going to do in the Emirates, represents the next step in trade with the region.

    In the case of Sadia, the initiative is justified by the time for which the company has been present there. According to Almeida, the decision of establishing a factory in a foreign country depends on local demand and availability of raw material.

    Sadia is going to import chicken from Brazil and process them in the Emirates. “Many countries are now protecting their markets, thus preventing competitive products from breaking in. Therefore, there is a global trend for producing inputs where it is most effective to do so, and then manufacturing the derivatives in another country, according to the needs and features of each region,” explains Almeida.

    The same should be done at the Crystalsev plant, in Syria. Sugar is going to be imported raw – even from Brazil – and then refined in the Arab country.

    Brazilian Fashion

    Another segment of the national industry that is taking up more and more space at shopping centers in the Arab world is Brazilian fashion. In this case, however, brands are not sewing and embroidering their trousers, shirts and dresses out there, they are selling – at their own stores.

    Those that own stores or franchises in the Arab countries include Hering, Green by Misako, Colcci and Marisol, in the textile sector, and Carmen Steffens and Arezzo, for footwear. The Brazilian Simoni Jabbour owns, in Dubai, a store named Praias (“Beaches”) that sells bikinis made in Brazil.

    Not to mention another sector that walks hand in hand with fashion, which is aesthetics. Brand Boticário owns three stores and two kiosks in Saudi Arabia.

    The director at the TexBrasil program of the Brazilian Textile and Apparel Industry Association (Abit), Rafael Cervone, believes that the number of stores and franchises of Brazilian textile brands in the Arab world tends to increase even further in the next few years. According to him, there is interest from local entrepreneurs in establishing stores turned to Brazilian fashion.

    “The Arabs enjoy innovative products, with typical Brazilian features,” he says. According to Cervone, United Arab Emirates, Egypt and Saudi Arabia are the leading markets for the segment in the Arab world. “They are very much interested in fashion and style,” he says.

    The Brazilian construction industry has also discovered the Arab world. Some companies from Brazil, such as Odebrecht, have already been active in the region for a long time, but the number of deals closed by national real estate developers in the Arab world is on the rise.

    Queiroz Galvão, for instance, is developing four projects, totaling US$ 500 million, in Libya. Works include water supply, sewage, draining, public lighting, telephony, street paving and urbanism. Andrade Gutierrez also operates in the region.

    And not all Brazilian companies taking up a share of the civil construction market in the region are giants. Engineering and tensioning company Engeprot Engenharia e Protensão, based in Curitiba, capital of the southern Brazilian state of Paraná, laid its foundations in Dubai little over three years ago, when it opened an office there.

    Ever since, it has been providing tensioning services, a technology for increasing the resistance of concrete. By the end of last year, the company had already performed its services in a total area of 450,000 square meters. This year, it should cover 1 million square meters.

    Banking Brazilian Way

    One of the debutants in the Arab world is the Brazilian banking sector. The Banco do Brasil (Bank of Brazil) opened a branch in Dubai last month, and Itaú is going to establish a subsidiary of its brokerage arm, also in Dubai, and a representation office in Abu Dhabi.

    Attracting investment and trade will be the main focuses of the two banks in the Arab country. An executive at Bradesco also told the Brazilian press recently about the plans of the institution for setting its bases in the United Arab Emirates.

    According to Roberto Troster, a partner at financial services provider Integral Trust Serviços Financeiros, internationalization of Brazilian banking institutions is a trend. Currently, according to him, Brazilian banks are present not only in the Arab world, but also in the United States, Europe and Japan.

    “The banks are heading toward these countries due to their economic importance, and also because they are donors of funds,” says Troster. In the case of the Arab world, according to the economist, the sophistication of the local banking system is still an issue. What the region wants, according to Troster, is to take their investments and funds to Brazil.

    Despite not having fixed physical structures in the Arab world, some Brazilian companies already have their brands well established in the region. Such is the case with aircraft manufacturer Embraer and Petrobras.

    Brazilian oil company Petrobras is drilling oil in Libya, sustains an agreement with Algeria for operating in the gas sector, and another agreement with Total, based in France, for operating in the Middle East and Africa.

    Others still use the Dubai Business center, maintained by the Brazilian Export and Investment Promotion Agency (Apex-Brazil) and by the Arab Brazilian Chamber of Commerce, in order to make their business deals in the Arab world easier.

    It is impossible to measure, in terms of figures, the volume of Brazilian capital in the Arab world. However, adverts by offices, factories and distribution centers indicate that the capital is present over there, and in large volumes.

    For the Brazilian companies not yet active in the Arab market, or even for those willing to enhance their action in the local market, the Market Development Department at the Arab Brazilian Chamber prepared a study containing key steps for investing in the Arab world. Read some excerpts below:

    Identifying synergic opportunities – Investment environments are different in each region of the Arab world. Every region has its idiosyncrasies.

    Knowing the incentives – The governments offer incentives in many different sectors, especially in industrial zones, from tax exemption to assistance.

    Studying the market – The market is comprised of more than 330 million consumers. The niche must be narrowed down.

    Quality and dedication to the market – The market environment, in the Gulf, is a competitive one, therefore quality products are a must.

    Brand promotion – Brazilian products are not widely known. Promoting their unique features is a good strategy.

    Innovation – Typical Brazilian features and investment in technology constitute good appeals for selling products in the Arab world.

    Workforce – Some local companies specialize in seeking workforce. Local workers are usually cheaper than Brazilian ones.

    Respecting local culture when negotiating – The notion of time is different from that of Brazil. The Arabs place emphasis on personal relations.

    Local partners – In some countries, a local partner is a legal requirement. Companies already established in the country can help you enter the market.

    Anba – www.anba.com.br

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