When I first thought about moving to Brazil I was more than excited to see one of new emerging economies in the world. Alright, you got me, I was excited also REALLY excited about going to the beach. The country has now become the sixth largest economy in the world and continues to grow at a frantic pace compared to its deteriorating western rivals.
I was beyond excited to see firsthand how this new world player would start to make its dent on the world stage aside from the popular images everyone of the beaches in Rio De Janeiro which already makes dents everywhere else. I even made plans to invest overseas in Brazil and start a day trading center so I could offer Brazilians the opportunity to work for themselves and learn how to day trade.
The massive common market that Brazil creates is a unique opportunity for the country, and the world, for investment and growth. The reason why Brazil is an emerging economy is because of its massive common market. There are close to 200 million people in the country and its rising middle class are eager to buy everything they didn't have before.
There have been many changes that have brought Brazil to this point and many more changes will be needed for Brazil to continue growing and become a regional power. Brazil won't ever be a global power in my opinion but I digress.
I have been living in Brazil for roughly three months and realized that Brazil is still going through puberty, finding itself playing at the big kids table when in fact, it is not a big kid yet.
Made in Brazil
Everything in Brazil is ridiculously expensive and as you travel to the metropolitan centers of Sao Paolo and Rio de Janeiro, the prices get even higher. The taxes in the country are enormously high compared to others and after living here for a few months I realized that they don't need to be that high.
The problem is Brazil still hardly produces anything and there are extra taxes levied on overseas companies and products. That is now changin;, it used to be very unpopular to buy Brazilian products because the quality was horrendous. Now the country is rising as people and companies are learning how to build products that not only Brazilians want to buy, but that rival global companies as well.
One example is the commercial jet maker Embraer that is rivaling the Canadians to become the world's third largest manufacturer of commercial airplanes. Don't take my word for it, read this post on USA Today about Embraer.
Brazilian car companies? What Brazilian car companies? A country with an extremely low cost of labor (minimum wage is just over $300) and a massive rising middle class has no reason why it can't produce a car. There again lies the problem that consumers do not trust Brazilian products. You ask why then can the country produce airplanes? The primary market is the United States, not Brazil.
Troller is the only Brazilian car company that has recently made any dents in the market with their off-road products. American capitalism got the best of Troller as they were bought out by Ford in 2005.
Lack of A Unified Standard
There are many different ways to govern and in the past there was a serious lack of a unified standard in Brazil. The country is high on regulation as there are still customs from its military government past, but things are starting to change. The best way to describe how Brazil used to be run is very similar to the ancient Greek city-state system.
There was always a federal government but due to corruption and idealism, each region thought they knew the best way of doing things. This even goes to regions within in a city like Rio de Janeiro.
When I was having trouble finding reliable Internet in my first month in Rio de Janeiro, I ventured to find an office where I could conduct my business. I am a day trader by profession and teach people how to day trade via The Day Trading Academy; it's not a matter of having fast Internet -- the most important thing is having reliable Internet.
I found a few office buildings and I was completely perplexed when I found they all had different plugs. One had the European double round plug standard, another had the United States three prong standard, the third building had the new Brazilian standard.
Just think of this for a moment, within roughly a 10-mile radius (16 kilometers) three buildings had completely different plugs. How is that even possible?
Consider also that Brazil is one of the few countries in the world that uses both 120-volt and 240-volt electricity. Can you imagine the chaos that brought years ago before electronics where able to support both voltages? In the past, there was no standards in Brazil, people and local governments just threw things together to have something that worked. Now that the country's wealth and population continue to explode the federal government is now instituting standards across the entire country.
This is a problem that will be fixed with time but time isn't on Brazil's side. It is both an advantage and a disadvantage in business as Brazil has access to millions of people that are willing to work for a few hundred dollars a month. They don't have to export their manufacturing to China as companies could afford to build everything inside the country.
I was lucky enough to experience Carnival in Brazil two years ago and could not forget what I saw. It wasn't just about beautiful woman dancing and people kissing each other as if they knew each other for years, what really blew me away was seeing the income inequality between the people.
While there were people that paid hundreds of dollars to be part of an event there were also people that were picking up beer and soda cans. They collect them in large bags and drag them around in order to redeem them for cash, a recycling effort on the governments part and an opportunity to make a little money for those that are struck in poverty.
Looking To The Future
In conclusion, the decisions that Brazil has made over the course of the last two decades has brought it to the world stage. It is still a developing nation that will have to face many more decisions before it will be able to sit at the big kids table. In the meantime, Brazil should focus more on its strengths rather than its weaknesses as it continues to grow. The only thing is should do is make decisions quickly in order to keep up with the ever changing global world. Things are only going to change quicker and Brazil needs to make sure that it keeps up.