Asia eyes Brazil’s growing consumer market
SAO PAULO, Aug 15, 2012 (AFP) – With Europe and the United States in the economic doldrums, Asian manufacturers are setting their sights on Brazil’s lucrative consumer market ahead of the 2014 World Cup and the 2016 Olympics.
This week, the manufacturers took their roadshow to Sao Paulo, Brazil’s economic capital, for a three-day trade fair showcasing samples of products — such as electronics, textiles, home goods and building materials — they hope to sell across the region.
China Sourcing Fairs, the first such event to be held here, drew 340 suppliers from mainland China, 41 from Hong Kong, 29 from India and seven from Taiwan, as well as potential buyers from across Brazil and South America.
With a population of 191 million people and an expanding middle class now estimated at 95 million, resource-rich Brazil is now the world’s sixth largest economy and is expected to ride a bigger boom as it invests billions of dollars in infrastructure projects for the World Cup and the next summer Olympic Games.
“A growing economy, growing disposable income, a growing middle class — when you have those things, you have a growing demand for consumer products: that’s what these manufacturers offer,” said China Sourcing Fairs general manager Bill Janeri.
Vicente Silverio, a partner in a Sao Paulo-based scrap metal company, said he came to have a look at recycling-related products.
“Chinese-made products sold in Brazil are often of poor quality and electrical items, for example, have safety issues,” he told AFP.
“I hope that what is available here is better. Good prices should not come at the expense of quality.”
Brazilian manufacturers have long complained about the influx of cheap Chinese imports. And authorities imposed strict quality controls earlier this year on imports from world number two China and other Asian nations to halt the flow.
The measures apply to 240,000 models of goods, including textiles, steel products, car parts and children’s items, particularly toys.
Brad Kang, a South Korean businessman based in Paraguay, said he hoped to sample consumer electronics at the fair.
“I want to establish contacts with Chinese suppliers here,” he said, noting that Paraguay has no diplomatic ties and no direct trade links with mainland China because it recognizes rival Taiwan.
His company Coree S.A. runs a thriving business by trading in Chinese-made goods in Ciudad del Este, Paraguay’s smuggling capital and black market hotspot located at the convergence of the borders of Argentina, Brazil and Paraguay.
With the World Cup in mind, Richard Chandiramani, the Indian manager of Hong Kong-based sports equipment firm PNS international, brought samples of Brazilian flags, Brazil-emblazoned jerseys and other sports paraphernalia.
“We are trying our luck in Brazil ahead of the World Cup,” he said. “Our prices are very competitive.”
One major hurdle facing Brazilian retailers and their Asian suppliers is the heavy taxation on their products.
“As a result, consumer prices at the retail level in this country are incredibly expensive,” Janeri said. “Brazil has to get past this to encourage economic growth and direct foreign investment, to make it attractive for foreign firms to set up assembly facilities that employ people.”
He hailed the World Cup and the next Olympics as a “fantastic opportunity to show the world what Brazil is and what it can do in the next four years to get ready.”
Janeri said his company held a similar fair in Miami geared to Latin America last month and planned to hold more in other emerging markets such as India, Hong Kong and South Africa later this year.
Official Brazilian statistics show that Brazil-China trade rose seven percent to $37.2 billion in the first half of this year, compared with the same period in 2011, with the South American powerhouse registering a surplus of $5.1 billion.
In 2009, China dislodged the United States as Brazil’s largest trading partner. Beijing is also the largest investor here.
Iron ore and soybeans represent more than 80 percent of Brazil’s exports to China, which in turn sells mostly manufactured goods to Brazil.