SOURCE: The Boston Consulting Group

The Boston Consulting Group

April 23, 2013 00:01 ET

Brazil, on Its Way to Becoming an International Business Hub, Offers Value to the Committed Investor

Pluses Outweigh Current Slowdown and Continuing Shortcomings, Says New Report From The Boston Consulting Group

SAO PAULO, BRAZIL--(Marketwired - Apr 23, 2013) - Investing in Brazil is not for the uncommitted or faint-hearted, but it offers immense promise to those who are well informed, says a new report released today by The Boston Consulting Group (BCG). While Brazilian growth has slowed recently, it retains advantages over the other BRIC economies; it is richer than India and China and larger and more democratically stable than Russia.

"Brazil always has its challenges, and there are certainly ways in which it could be improved as a business environment. But those shortcomings are vastly outweighed by the factors in its favor -- terrific consumer and employment demographics, political stability, and world-class financial regulation," said André Xavier, a BCG partner and coauthor of the report.

The report, titled Charting A Steady Course : Turning Brazil into a Business and Investment Hub, has been produced in cooperation with Brasil Investimentos e Negócios (BRAiN), a private nonprofit organization whose mission is to reinforce Brazil's position as an international business and investment hub. It follows BCG's support for BRAiN's report, The Attractiveness of Brazil as an Investment and Business Hub, which was published in October 2012.

The Seven Pillars of Attractiveness

Brazil is analyzed in terms of seven key pillars -- ranging from macroeconomic environment to image -- that help determine its attractiveness to potential investors. Its performance is examined, using authoritative data relative to other countries including other BRICs, hubs such as the U.S. and Singapore, and economically advanced nations including France and South Korea.

"We can't expect potential investors to take Brazil, or any other market, on trust. They need serious information on which to base their decisions. Comparisons with other countries provide an effective framework for thinking constructively about its strengths and weaknesses," said André Xavier.

A Good Place to Do Business

The analysis shows Brazil as a country that, in spite of its current economic slowdown, still has plenty going for it. These attributes include the following:

  • A Huge Market with Rocketing Consumer Demand. Of Brazil's nearly 200 million people, 55 percent were members of the middle class in 2011 -- up from 38 percent in 2002 -- as economic progress drags millions out of poverty.
  • Favorable Workplace Demographics. While many countries face labor shortages, Brazil projects a surplus over the next decade. The workforce is young and increasingly well educated.
  • Political Stability. Brazil has traveled a huge distance from the 1980s and 1990s and has public finances that reflect this progress.
  • World-Class Financial Regulation. The IMD World Competitiveness Yearbook rates Brazil's system of regulations ahead not only of the other BRICs but also of historic financial hubs such as the U.S. and the U.K. This underpins a banking sector that is in excellent shape by international standards
  • An Open-Minded Country That Welcomes the Outside World and Major Global Events. The 2014 World Cup and 2016 Olympics come on top of a rapid increase in international events being held in Brazil.

At the same time, the report does show some areas of continuing weakness, particularly endemic bureaucracy and underfunded physical infrastructure that keep the roads snarled and the airports overcrowded.

"There's still a fair way to go in areas such as bureaucracy and infrastructure, but those weaknesses are being addressed and targeted. As a matter of fact, they can be seen as opportunities. If you are an investor focused on infrastructure or domestic consumer markets, Brazil can be a great place to do business," said Paulo Oliveira, CEO of BRAiN and coauthor of the report.

A copy of the report can be downloaded at www.bcgperspectives.com.

To arrange an interview with one of the authors, please contact Eric Gregoire at +1 617 850 3783 or gregoire.eric@bcg.com.

About The Boston Consulting Group
The Boston Consulting Group (BCG) is a global management consulting firm and the world's leading advisor on business strategy. We partner with clients from the private, public, and not-for-profit sectors in all regions to identify their highest-value opportunities, address their most critical challenges, and transform their enterprises. Our customized approach combines deep insight into the dynamics of companies and markets with close collaboration at all levels of the client organization. This ensures that our clients achieve sustainable competitive advantage, build more capable organizations, and secure lasting results. Founded in 1963, BCG is a private company with 78 offices in 43 countries. For more information, please visit bcg.com.

About bcgperspectives.com
Bcgperspectives.com features the latest thinking from BCG experts as well as from CEOs, academics, and other leaders. It covers issues at the top of senior management's agenda. It also provides unprecedented access to BCG's extensive archive of thought leadership stretching back 50 years to the days of Bruce Henderson, the firm's founder and one of the architects of modern management consulting. All of our content -- including videos, podcasts, commentaries, and reports -- can be accessed by PC, mobile, iPad, Facebook, Twitter, and LinkedIn.

About BRAiN
Brazil Investments and Business (BRAiN) is a private nonprofit organization whose mission is to reinforce Brazil's position as an international investment and business hub through a regional focus and a global projection, contributing to the sustainable economic and social development of Brazil and Latin America.

Contact Information

  • The Boston Consulting Group
    Eric Gregoire
    Global Media Relations Manager

    Tel +1 617 850 3783
    Fax +1 617 850 3701
    gregoire.eric@bcg.com