Brazil must take advantage of China's investing

Updated: 2015-02-09 05:33

By BRUNA GAMA in Rio de Janeiro(China Daily Latin America)

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Brazil must take advantage of China's investing

Analysts and experts in China-Brazil relations took part in the China Café, a forum held periodically by the China-Brazil Business Council, in Rio on Feb 3.[Photo by Zhao Yan/ China Daily]

Brazil must take advantage of China's increasing foreign investments, but the Latin American country's national policy that mandates a minimum share of locally produced products in manufacturing may get in the way, according to the co-director of a special forum on the BRIC (Brazil, Russia, India,China, South Africa) nations.

"If Brazil continues with its policy to privilege locally-produced content, which is an industrial policy tool but ends up harming competitiveness, I think that the current wave of Chinese investments will be short-lived," said Marcos Troyjo of the BRIC Lab at Columbia University's School of International and Public Affairs (SIPA).

Troyjo made his comments in a discussion on the future of Brazil-China trade with other analysts and experts on the two countries on Feb 3 at the China Café, a forum held periodically by the China-Brazil Business Council, in Rio.

China is Brazil's largest trade partner, responsible for 18 percent of its foreign trade. Despite a slight decrease last year, trade between the two countries amounted to $78 billion.

As in all of Latin America, there is a disproportion between China's weight as a trade partner and as a foreign direct investor, Troyjo said.

China is increasing more and more its presence as a financer and foreign investor, and it is up to Brazil to take advantage of this new opportunity, he said, adding that the country can attract investments in infrastructure, for example, to promote a much needed growth in the sector.

Brazil and China are in different, opposite moments in their development, Troyjo said. China is undergoing a ``great extroversion'', a process by which its economic, political and military importance in the world is increases. The country is also raising its investments in research, development and innovation.

Brazil, on the contrary, he said, is going through an introversion, with its relevance in the world is diminishing, both in the economic scenario and in the political arena for various reasons.

Larissa Wachholz of the investment company Vallya told the forum that China is getting more sophisticated in its investments in Brazil. Chinese investors are hiring consulting companies and local lawyers to help them enter the Brazilian market, something they did not do a few years ago, she said.

Because some Brazilian companies are going through difficulties due to the country's current economic situation, they can be more open to foreign investments, partnerships, mergers and acquisitions in 2015, Wachholz said.

She also said that strong sectors in Brazil, such as processed meats, have the potential to earn great response in the Chinese market.

"It will depend on us, but there is a real interest from them in this area," she said.

Branding is also a great challenge for Brazil because the country, is late in entering the Chinese market, Wachholz said.

"If Brazil can manage to get to the Chinese market with brands and not only products, it would be very interesting, but that is a process which takes years. That will not reflect in the trade balance any time soon. We are so late in establishing a presence in China, compared to other countries, that even with the rising consumption in China, we will take years to establish a good number of Brazilian brands there," she said.

Participants in the forum agreed that Brazil needs to take a strategic position on its trade. Troyjo said Brazil does not have a strategic plan to deal with bilateral relations and trade in the long term, which leaves the country a victim of circumstances. "We will continue to go with the circumstances, unless we do something. And I do not think we are doing it," Troyjo said.