The Brazilian Economic Recession: Threat or Opportunity?

“Oasis. In Search of Extraordinary Business Growth Overseas” was named among the top 10 preferred business books by entrepreneurs in 2015 according to Business News Daily.

After his presentation at the GG Miami Forum 2016, Dr. Doria participated in an interview for GG Newsletter. The following are some of his comments:

GG: You indicated during your presentation that companies from all over the world should consider expanding their business into Brazil now. Could you please share with our readers why you are recommending companies to consider Brazil despite the challenging economic situation that this nation is suffering nowadays?

Dr. Doria: We are moving from a global economy driven by finding new consumers to an economy driven by finding the natural resources needed to produce the products that a growing global middle class is ready to purchase. Brazil is rich in most of the scarce natural resources needed today including a very important one: fresh water.

GG: Why are you specifically referring to fresh water?

Dr. Doria: We need fresh water to produce the food that we eat, to maintain the cities where we live in, as well as to support most of our factories.

We have enough fresh water for everybody on this planet, however, the challenge is that it is not evenly distributed among all nations.

As a matter of fact, some experts predict that about 40% of the global population could be facing water shortages by 2030.

Our vision for the coming decades is that several companies from nations with water scarcity problems will have to relocate their factories into water-rich nations to have access to this fundamental factor of production.

Additionally, we think that many countries with water scarcity problems will begin to monitor their International Water Trade Balances fostering the importation of more water rich products.  Brazil is a water-rich nation; therefore, this scenario could have a very positive impact on its economy.

GG: There are many countries around the planet rich in natural resources, however, their economies are not growing. Why will Brazil be different?

Dr. Doria: What you just said it is a very valid point. Economists call this situation the “Paradox of Plenty” or “The Resource Curse.” It refers to the paradox that countries with an abundance of natural resources tend to have less economic growth. We think the case of Brazil will be different because besides being a natural resources rich nation, it has a democratic political system and a growing percentage of its population demanding continuous improvements in the institutions. I think the combination of these three factors (natural resources, democracy, and involved citizens) will end fostering rapid economic growth there.

GG: There is an agreement among most economists that the Brazilian economy will begin to experience a recovery in about two to three years. Why should companies consider to expand their business into Brazil now instead of waiting until its economy begins to grow again?

Dr. Doria: We believe the perfect timing for foreign companies to expand their businesses into Brazil is during this economic downturn. Some of the reasons are:

  • Distributors and importers are looking for new suppliers to compensate the decline in sales caused by weaker demand.
  • It is easier to hire the right people with the right connections and expertise during an economic recession than when an economy is growing.
  • Competitors are weaker because they are focused on restructuring their operations.
  • It is the right time to consider the acquisition of local companies because you will be able to find better deals.

 

GG: What are your main recommendations for a company planning to expand their business into Brazil?

Dr. Doria: The following are some recommendations:

  1. First, find the right local allies (knowledge + passion + ethics)
  2. Second, test and improve your business model in small steps. This approach will save you a lot of money.
  3. Third, be ready to spend a significant amount of time in Brazil so you can develop social relationships there, which are fundamental to conduct successful businesses in Brazil.
  4. And last but not least,…read our book…

GG:  I already read your book and I found it pretty interesting. I am sure that our readers will enjoy it too. Thanks for this interview on behalf of our readers.

Dr. Doria: You are welcome.

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