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Brazil's dramatic economic comeback offers Hong Kong big break

São Paulo downtown
IRua Barão de Limeira
- a commercial neighbourhood selling auto parts and accessories
Bom Retiro
- a commercial neighbourhood selling garments and footwear
- one of the major hypermarket/
supermarket chains in Brazil
Morumbi Shopping Centre
- a shop selling imported consumer electronics and household appliances

November 20, 2007 - Brazil is attractive to traders again after bouncing back powerfully from its 2001-2003 economic debacles.

A study conducted by Hong Kong Trade Development Council (TDC) says Hong Kong can make capital of this phenomenon. It points out that the country's GDP per person had risen to US$6,000, the second highest among the BRIC (Brazil, Russia, India and China) economies which are forecast to grow rapidly.

Brazil's amazing recovery is triggered by its successful fiscal and monetary policies in recent years and the global commodity boom. The country's consumers are now able - and willing - to spend more to raise their standard of living. This is particularly evident among its 40-million-strong middle class, compared to Russia's 30 million.

Nowadays, Brazilians look for products that are of good quality, trendy, and reasonably priced. Hong Kong products meet those conditions.

The TDC report reveals that Brazilian consumers are aware of the fact that most "made by Hong Kong" products are produced in the Chinese mainland, but that they nevertheless perceive them as being of better quality and design than their mainland counterparts.

The report says Hong Kong traders can take advantage of this perception, pointing out that the consumer market in Brazil, particularly in São Paulo and Rio de Janeiro, is huge.

In the period between 2001 and 2006, Brazil's retail sales chalked up a 63 per cent growth, representing a compound annual growth rate (CAGR) of 10.3 per cent.

However, Hong Kong companies are advised to concentrate on mid-to-high-end products and to stay away from the low-end market which is fiercely competitive. The report also points out that Brazil's business environment is challenging, made more so by the distance separating Hong Kong from Brazil.

Local companies are advised to find Brazilian buyers here in Hong Kong at places such as trade fairs and exhibitions as an alternative to setting up a direct presence in Brazil.

Hong Kong goods sought eagerly by Brazilians include computers and telecommunications products, electronic household appliances, auto/motor parts and accessories, security and safety products.

Hong Kong's textiles, clothing, footwear, toys and games, jewellery, timepieces and spectacles are also keenly sought.

With a population of 190 million, Brazil is by far the largest country in Latin America and Hong Kong's second largest market in the region, behind only Mexico.

Hong Kong's trade with Brazil has been rising in tandem with the country's economic growth. In 2006, Hong Kong's total exports to Brazil rose by 17 per cent, followed by 11 per cent during the first nine months of 2007. There's still ample room for growth, the report says.

Also noteworthy is Brazil's growing interest in selling to China. Among many others, Brazilian agricultural and mineral products, as well as leather products, are believed to have good potential in China, and more cooperation with Brazilian companies can be sought.

Hong Kong, the report adds, can take advantage of the growing Sino-Brazilian trade and economic relationship by strengthening its role as middleman.

Brazilian companies, like many other foreign companies, feel more comfortable and confident dealing with the mainland through Hong Kong. They also believe that Hong Kong, as a risk manager, can provide them stronger assurance with regard to quality, delivery and payment.

Executive Summary

Media Enquiries
Please contact TDC's Media and Public Affairs Department at 2584 4333.

About the TDC
Established in 1966, the Hong Kong Trade Development Council (TDC) is the international marketing arm for Hong Kong-based traders, manufacturers and service providers. With more than 40 offices worldwide, including 11 in the Chinese mainland, the TDC promotes Hong Kong as a platform for doing business with China and Asia. The TDC also organises trade fairs and business missions to connect companies with opportunities in Hong Kong and the mainland, while providing information via trade publications, research reports and online. For more information, visit www.tdctrade.com

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Content provided by Hong Kong Trade Development Council