The Brazil Cost

Suddenly there is concern that the marvel that is the Brazilian economy is slowing down. But then that can be said of every economy this summer, starting with ours.

I visited Sao Paolo and Rio de Janeiro recently to meet a raft of reporters at the outposts of the most important global media. I discovered a sense of enthusiasm and excitement about the future.

As one reporter who writes for Bloomberg, The Daily Beast, The Financial Times and other financial, energy and technology media said, “There was once the joke that Brazil was the country of the future, and it always would be. But there is a real sense of optimism that this time, the country has got it right.”

There were certain themes that emerged in conversations with journalists at BBC, Bloomberg, Dow Jones, Financial Times, Reuters and The Wall Street Journal. But I will focus here just on two of them.

First, these and other global media are so convinced that Brazil “has got it right” that they are expanding operations as quickly as possible. Bloomberg for example has nearly 30 correspondents and continues to add more. And each of these global media is eager to hear from global corporations.

Second, one of the comments that I heard most often from these global media was about what they called “The Brazil Cost.” That is, the apparently high cost of doing business in the country.

“This so-called Brazil Cost,” one journalist explained, “the high taxes, high operating costs, high payroll costs, rampant bureaucracy and latent protectionism all contribute to the regulatory noise that affects business and investment decisions by global companies. But those companies still are coming here.”

There are several reasons why foreign companies keep focusing on the country, despite the Brazil Cost. Perhaps the single most important is the emergence of a large middle class that is more than 50% of the population. That is immense buying power and contributes to sustainable growth despite dips and blips. And this serves to explain why the global media think Brazil is the next big story, and will be for awhile.

As global media stockpile reporters in Sao Paolo and Rio de Janeiro, these journalists continue to look for fresh stories. And there are myriad trends and issues they are following:

  • The efforts to establish quickly the transportation infrastructure, particularly in the run-up to the World Cup and Olympic Games.
  • The efforts to improve quickly the education system, particularly as the experience level is so far below what many companies need to grow.
  • The efforts to facilitate quickly the growth of the domestic manufacturing sector, while still attracting foreign manufacturers as these also offer good jobs.

And more.

The only other occasion in which I have seen this much media interest – and expansion – in a country was China. Some companies masterly seized this media interest to pursue stories that enabled them to differentiate themselves from competitors – and so increase sales opportunities and attract top talent.

What does all this mean for you?

There is a similar opportunity right now to harness this media interest to support business objectives before competitors realize the magnitude of this media interest in Brazil.

Certainly these media are interested in anything that global companies do, think and say about Brazil.

So I have a different Brazil Cost.

Failure to seize this moment in time by using every weapon available to a corporation for which Brazil is important to current and future sales, including communications, that is the real Brazil Cost.

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