I am currently enjoying an extended Christmas break in Brazil at the kind invitation of my cousin, who is based in São Paulo.
Before we head down to the beaches for some serious relaxation, I was yesterday able to accompany my cousin on a visit to one of his clients. This provided a good opportunity to observe what is happening in the real emerging market world of Brazil. I hope readers will find my anecdotal observations of interest.
São Paulo
My last visit to SP was around 5 years ago. There have been some significant changes in that timeframe. This first, most obvious observation is that the extended shanty town that lined the route from SP's international airport towards the town centre is now much less prominent (though still ever-present). I understand that the govt. has had some success with a subsidised low-cost housing programme, which has enabled some of the favella residents to move to considerably more tolerable housing conditions. On the political/economic policy front, though there will be elections next year and "Lula" will retire as president, his successor (whichever party is elected) is not expected to make any major changes to the successful policies of the last few years.
A second visible change in SP is that industry is starting to move out of the town, slightly further west into the interior of Brazil (for cost reasons). The rapid rate of population growth in SP itself has slowed and the town is becoming more of a residential/commercial/finance centre, rather than a centre of industry.
It is noteworthy that whilst Brazil remains an important car manufacturing centre, its competitive advantage has shrunk as the Real has strengthened. On my last visit, £1 bought you more than 4 Reals, now it is down to 2.5.
Towards Santos
Yesterday's meeting was in the port city of Santos, some 60km west of SP. I observed that the 6-8 lane highway connecting Santos and SP was very busy with commercial traffic. My cousin reported that after the global trade freeze in late 2008/early 2009, business conditions appeared to be returning to normal and growth was resuming, but from a lower base. The general tone appears optimistic (unlike the UK).
Down to Business
My cousin is a yarn import agent. One of his suppliers is a Korean yarn manufacturer. Our visit was to Brazil's largest supplier of…
