8 Aug 2011
Brazil Market Outlook Strong for Hong Kong Companies
HKTDC Study Sees Benefits of Blossoming Sino-Brazilian Investment
8 August 2011 – Brazil, the largest economy in Latin America and the nation with the highest per-capita GDP among so-called BRIC countries, has plenty to offer Hong Kong companies, according to new research conducted by the Hong Kong Trade Development Council (HKTDC).
The HKTDC research report, Brazil: A Latin American star player, said Hong Kong companies will find a strong market in Brazil because of the country’s broad-based industrial sector and increasing consumer demand for a wide variety of electronic products.
“Brazil’s continued prosperity and optimism provide excellent opportunities for electronics firms, while timepieces, gifts, toys and fashion goods are among Hong Kong’s major exports to Brazil, bucking up the important electronics sector,” the report said.
With more than 50 per cent of the country’s 190-million-strong population considered middle class, Brazil’s purchasing power is rising as domestic demand for quality products grows. That paints an auspicious picture for Hong Kong companies planning to make a debut in the Brazil market, according to HKTDC economist Louis Chan.
“Given the rapid growth of the middle class population, their increasing brand awareness and receptiveness to trendy items, Brazil is becoming a promising market for Hong Kong products,” he said.
Brazil has emerged as a star player in Latin America. In 2010, the country posted its highest annual economic growth since 1986 and provided 40 per cent of the region’s GDP and one-third of its total population. Brazil’s per-capita GDP of around US$10,800 in 2010 was also higher than Russia, India and China – the other nations in the BRIC grouping of economies.
“Companies targeting the high-end segment may also ride on the growing number of high net worth individuals in Brazil, who are searching for products that are special and unique, despite their higher prices,” said Mr Chan.
The business opportunities presented by Brazil’s expanding customer base are further enhanced by the fact that the country will soon host two of the world’s premier sporting events. The FIFA World Cup will be conducted in 12 Brazilian cities in 2014, followed by the 2016 Summer Olympics in Rio de Janeiro. The HKTDC research predicted the World Cup football events would generate US$2-2.5 billion in sales of licensed products – more than half coming from outside Brazil.
This trend should favour Asian suppliers with experience handling big projects such as the Beijing 2008 Olympic Games, according to the study. Gifts and premiums – the sector ranked third among Hong Kong’s exports to Brazil – is seen to hold the most promise.
Another encouraging sign for Hong Kong companies is blossoming Sino-Brazilian economic ties. The HKTDC research said this trend is reflected in the fact that since 2009 the Chinese mainland has become Brazil’s biggest trading partner. Bilateral trade has soared from about US$2 billion to more than US$56 billion over the past decade.
Hong Kong’s re-exports of China origin to Brazil and vice versa are also set to soar. Hong Kong’s long-established role as a trade and business platform for the sizable mainland market has drawn a number of Brazilian companies to make their inroads into China by making themselves more recognisable in Hong Kong. From banks to logistics, trading to business consulting, Hong Kong companies are finding new opportunities in the surging bilateral collaboration and partnership between Brazilian and mainland companies.
Looking ahead, however, the HKTDC research advises Hong Kong companies eager to develop the Brazilian market that they must prepare for challenges such as trade formalities and language barriers. The report says that to start successfully and stay clear of problems related to bureaucracy and distance, Hong Kong companies should ride on the growing number of Brazilian companies in Hong Kong and local trade fairs which are attracting a growing number of Brazilian buyers each year.
Please contact the HKTDC's Corporate Communication Department:
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About the HKTDC
A statutory body established in 1966, the Hong Kong Trade Development Council (HKTDC) is the international marketing arm for Hong Kong-based traders, manufacturers and service providers. With more than 40 global offices, including 11 on the Chinese mainland, the HKTDC promotes Hong Kong as a platform for doing business with China and throughout Asia. The HKTDC also organises trade fairs and business missions to connect companies with opportunities in Hong Kong and on the mainland, while providing information via trade publications, research reports and online. For more information, please visit: www.hktdc.com