Brazil’s Importance to South Florida’s Economy and the Chinese Avalanche

by admin on June 8, 2011

By Michael Diaz, Jr. – Managing Partner
Andre Linhares – Attorney

First publication on The Brazilian-American Chamber of Commerce of Florida

The U.S. is taking its relationship with Brazil for granted, and that may hurt South Florida’s economy.

Consider the facts. In 2009, China became Brazil’s primary trading partner, surpassing the U.S. for the first time ever. The following year, China and Brazil signed several trade agreements boosting trade and energy co-operation.

By 2010, China took top honors as Brazil’s largest foreign investor. The growing importance of China to Brazil will change the traditional north-south flow of Brazilian trade and investment.

For example, Brazilian aircraft maker Embraer recently signed deals for Chinese airlines to buy 35 E190 planes that could be worth up to $1.4 billion dollars. China plans to invest $300 million in technology and research centers in São Paulo and Goias while Marfrig, a Brazilian meat cold storage plant manufacturer, will be investing $250 million in technology and research centers in China.

Taiwan based Foxconn Technology Group may spend $12 billion to build a factory in Brazil to produce the iPhone, iPad and other Apple electronic components in what would be the company’s largest investment overseas. Brazilians will no longer need to buy these electronic devices in South Florida because prices will be much cheaper in Brazil.

South Florida should take note, and take action.

South Florida has long been Brazil’s primary gateway to the U.S. marketplace. During the first 11 months of 2010, Florida’s merchandise trade with Brazil topped $14.4 billion, a 27 percent increase over 2009. Brazilian tourists spend more money in Florida than in any other state. Thirty-five percent of real-estate buyers in downtown Miami are Brazilians.

As Saulo Ferraz de Campos, president of the Brazilian/American Chamber of Commerce in Florida, said recently: “Brazil is to South Florida what China is to the world.” But, like any good relationship, the ties between South Florida and Brazil must be nurtured. Even if the U.S. is playing it cool, South Florida must continue to develop and strengthen its ties with the Brazilian marketplace.

Competition is fierce. Chinese, Japanese, and European manufacturers are investing in new technologies to compete with U.S. products. As Chinese goods flood Brazil, there is a natural fear that fewer Brazilians will visit South Florida to shop. And that trend may accelerate if the dollar rises in value.

Maintaining strong trade, business, and investment relationships with Brazil must become a high priority for South Florida. Brazil’s rich natural resources and worldwide demand for its commodities will make it one of the Western Hemisphere’s fastest-growing economies in 2011 and beyond. With this growth comes opportunity.

Brazil must hire more outside professionals to support its economic growth. The 2014 World Cup, and the 2016 Olympics will generate a need for architects, engineers, and various professionals. South Florida is uniquely poised to fill these needs. The region’s stable of qualified professionals should set their sights on Brazil and capitalize on that country’s proven growth potential.

President Obama certainly realizes the importance of Brazil. On a recent trip, Mr. Obama signed several bilateral agreements. While this was an important step forward in the relationship between the two countries, more progress must be made. Brazil is urging the U.S. to relax trade barriers affecting top commodities like ethanol, oranges, and steel. In addition, Brazil needs U.S. support in its bid to become a permanent member of the U.N. Security Council.

Despite these diplomatic challenges, the ties that bind the U.S. and Brazil are strong. Proximity breeds familiarity, and South Florida is well-positioned to capitalize on the many opportunities offered by Brazil’s exploding market. But, we cannot be idle. Our competitors are smart, efficient, and quick on the draw. Even if our national government is focused on other priorities, South Florida’s business and political leaders must look out for this region’s future.

Let’s not neglect our friends. Our future may well be in their hands.

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