IN MANY LANGUAGES - Revista PIB

EditorialBooks and bytesThe architect Oscar Niemeyer passed away when this editionof PIB was being wrapped up. In the foreign press, more than oneobituary recalled that no one had done more than Niemeyer to trulyput Brazil on the map as a modern country. For our part, we like tothink of PIB as a magazine devoted to Brazil´s international presence.So, what could be more appropriate than to express our sorrowand tribute to the man who did so much to promote Brazil abroad.Our cover story shines the light on other Brazilian artistsstarting to make their mark abroad: young writers like DanielGalera and Michel Laub (or the not-so-young Milton Hatoum)point to the changes in Brazil’s publishing market. Atevents such as the recent Frankfurt Book Fair (largest of itskind in the world), Brazilian publishers did more than justacquiring the publishing rights to international literature, asthey had always done, offering their own publications…booksincreasingly being translated into a whole host of languages.Reporter Denise Turco tells us more from page 40 onwards.Elsewhere, reporter Suzana Camargo investigated a darkerside to internationalization: political risks assumed by transnationalswhen setting up shop abroad, and what to do to avoid unpleasantsurprises such as the ones suffered by heavyweights Odebrecht(Libya) and Petrobras (Bolivia). And we are also treatedto a fascinating report by ex-ambassador Marcos Caramuru, whoshares his vast experience of the Chinese way of doing business.We also run a sumptuous article by Juliana Resende on youngBrazilian entrepreneurs forging solid ties between Brazilian startups(tech-based newcomers) and California´s Silicon Valley – aventure already yielding a rich interchange of ideas and investments.And to round things off in style, have you ever wantedto know more about Singapore, the Asian city-state? Well, nota lot of you I imagine. But the inside track provided by Brazil´sSilvana Hleap, an investment specialist who has made Singaporeher home, should change all that. As they say in Portuguese, boaleitura!Nely CaixetaTOTUMEXCELÊNCIA EDITORIALPIBBRAZILIAN COMPANIES GO INTERNATIONALA TWO-MONTHLY MAGAZINE FOCUSING ONINTERNATIONAL BUSINESS AND ECONOMICSPublisherNely Caixeta nely@revistapib.com.brEditorsArmando Mendes and Marco Antonio RezendeContributors to this editionDenise Turco, Flávio Carvalho,Juliana Resende, Jusimeire Mourão, Maputo,Lucianne Paiva, Rio de Janeiro, Luciano Feltrin,Marcos Caramuru, Suzana CamargoCOVER:Marcelo CalendaDesignerRenato DantasCopydesk and PreparationMary FerrariniTranslationJohn Fitzpatrick and Kevin John WallADVERTISINGINTERNATIONAL AND BRAZIL(55-11) 3097.0849publicidade@revistapib.com.brAv. Brigadeiro Faria Lima, 1903, cj. 33Jardim Paulistano - 01452-911 - São Paulo - SPLetra MídiaRua Teodoro Sampaio, 1020 - cj. 1302CEP 05406-050 - Pinheiros - São Paulo –SPF: 55 11 3062.5405 | 55 11 3853.0606PRINTINGIBEP Gráfica LtdaDISTRIBUTION IN BRAZILSupport: DPA Cons.Editoriais Ltda.(55-11) 3935-5524 – dpacon@uol.com.brWhere to buy past copies: direct from the publisherAdministrative ConsultantLuiz Fernando Canoa de Oliveiraadm@totumex.com.brEDITORIAL CORRESPONDENCEAv. Brigadeiro Faria Lima, 1903, cj. 33CEP 01452-911 - São Paulo - SPredacao@revistapib.com.brSigned articles do not necessarily represent theopinion of the editors. Totum reserves the right to editor summarize letters.Legally responsible journalistNely Caixeta (MTb 11 409)PIB – Brazilian Companies go Internationalis published by Totum Excelência EditorialAv. Brigadeiro Faria Lima, 1903, cj. 33CEP 01452-911 - São Paulo - SP(55-11) 3097.0849 - contato@totumex.com.brPrint run for this editionPortuguese – 20.000English – 5.000TOTUMEXCELÊNCIA EDITORIAL6 revistapib.com.br

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AntennaSuzanaCamargoThe art of sitting62 made in Brazil stoolsended up on display at theDroog Design Gallery inAmsterdam, the capital ofHolland. They were part ofthe In Praise of Diversity expo,with Adélia Borges acting ascurator. The idea was to showthe public how the simpleact of sitting can producesuch different and surprisingideas. Created by indigenouspeople, local communitiesand Brazilian designers,the stools translate theculture of the places wherethey were produced. Theindigenous stools, forexample, were sculpted outof a single block of woodand feature shapes anddrawings full of symbolism.Some imitate animalssuch as the tiger, vulture,monkey and the falcon.“The expo reveals a seminalvalue of Brazilian culture8 revistapib.com.br

New home(s)Brazilianstools inAmsterdam:diversityItaú has decided to reorganize its business basesin Europe as it expands its global operations. ThePrivate Banking activities, which had been basedin Luxemburg, will now be switched to Zurichin Switzerland through Banco Itaú Suisse. ItaúBBA International, which had an office in Lisbon,will now be run from the UK. “London is wheremost of our clients and market counterpartiesare present and it is also a pillar of the globalfinancial market,” said Almir Vignoto, Itaú BBAdirector in London. The London office will servearound 300 of the largest European groups thathave operations or investments in the corporateand investment banking areas in Latin America.A less unequal continentand design”, says Adélia. Theindigenous stools were madeby people from villages fromthe Amazonas, Mato Grosso,Tocantins and Amapá states.The contemporary designstools were signed by MarceloRosenbaum, Carlos Motta,Flávia Pagotti and Ilse Lange.Celso BrandãoBrazil was one of the best performing countries in terms of socialmobility in the region, according to a World Bank study whichshowed that 40% of the increase in the middle class in LatinAmerica and the Caribbean in recent decades occurred in Brazil.The study was published in November (Economic Mobility andthe Rise of the Latin American Middle Class) and shows thatthere has been a big migration in terms of class among the LatinAmerican population following decades of social stagnation.Around 43% of Latin Americans are estimated to have changedclass between the mid-1990s and the end of the first decade of2000. The survey shows that the number of middle class and poorpeople was the same for the first time in history. There were 103million middle class people in 2003, a figure that jumped to 152million by 2009. The authors of the study believe these peoplenow have greater economic security and face a low risk of fallingback into poverty. On the other hand, educational and professionalprogress in the region is still closely tied to the professional levelof children´s parents. This factor is holding back mobility betweenthe classes and shows that universal education has still notfulfilled its role as a driver of social equality on the continent.revistapib.com.br 9

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The world has finally discovered the potential of this greatcountry and how it plays a leading role in Latin America.However, what does it take to succeed in this complexmarket? How to deal with local challenges which canconstitute real obstacles to companies?That is where we come in: developing and implementingstrategic plans for the international expansion of ourclients.Learn more about our company at www.suriana.com.brRua Joaquim Floriano, 72 – Cj. 87 – São Paulo, SP 04534-000 – BRASILPhone +55-11-3589-9021 - Fax +55 -11-3078-2659www.suriana.com.br

Antenna1www.imagensaereas.com.brTime toinvest in portsAt last, some good news for Brazil´sports. After years of being left on thescrapheap, the main channels for thecountry´s exports will receive a capitalinjection of R$ 54.7 billion by 2017as part of the Logistics InvestmentProgram for Ports announced byPresident Dilma Rousseff in December.The investments will be split into twostages: R$ 31 billion in the comingthree years and another R$ 23.2 billionbetween 2015 and 2017. Some of theresources will come from the privatesector as the government intendsauctioning, leasing and authorizingthe construction of private terminals.To reduce the bureaucracy that is anenormous obstacle to Brazilian foreigntrade, the customs, health and marineauthorities will be integrated. Most ofthe investments – R$ 28.6 billion —will go to five ports in the Southeasternregion: Victoria, Rio de Janeiro, Itaguaí,São Sebastião and Santos. AnotherR$ 11.9 billion will be used to upgradeseven ports in the Northeast. The Southand North regions will receive R$ 7.6billion and R$ 5.9 billion, respectively.3New grain routeGrain producers in the north of Brazil will now benefit from anew terminal that will make them more competitive in termsof exports. The Maranhão Grains Terminal (TEGRAM) at theport of Itaqui, around 10 km from the center of São Luís, isscheduled to be inaugurated at the end of next year. The portwill have annual loading capacity of up to 15 million tons ofgrains by 2020, a big jump from the current capacity of 2.5million tons. The new port should relieve the movement at theParanaguá and Santos terminals in Paraná and São Paulo states,respectively, which have been working above their capacity forseveral years. Around 80% of Brazilian soybean exports arecurrently shipped from these two ports. When the new terminalat Itaqui is ready, 11.5% of Brazil´s soybeans, corn and bran areexpected to be loaded there. Itaqui also received an investmentof more than R$ 6 million in information technology which willgive it greater flexibility and control in handling operations.Pictures: Handout12 revistapib.com.br

Copersucar heads towardsthe US and Asia...Copersucar, the giant Brazilian sugar and ethanol company,has increased its global presence with two breakthroughson the international food and biofuels market. In November,it announced the purchase of the American company Eco-Energy. As a result, it became the largest seller of ethanol inthe world, with capacity to supply 10 billion liters a year. Thetwo companies now have 12% of the global ethanol market.(The acquisition is still being examined by the US anti-trustagency.) At the same time, Copersucar began operations at itsnew subsidiary in Asia, located in Hong Kong. A spokesman saidCopersucar Asia was founded to bring the company closer tothe Asian market, particularly countries like China, Indonesiaand Malaysia. The demographic and income growth in theregion should encourage demand for Copersucar products andopen room for new business. Southeast Asia is an importantsugar refining center for the region and the African continent,and Copersucar, which currently exports raw sugar there, isnot ruling out the possibility of setting up a refinery in theregion in the future. It expects to double its regional marketshare from its current level of 10% within three years.... and Odebrecht modernizes plant in Cuba2Companhia de Obras em Infraestrutura (COI), a subsidiary of Odebrecht in Cuba, will take over runningof the 5 de Setembro plant, which belongs to Azucarera Cienfuegos, for the next 13 years. Productivity atthe plant, which was built in the 1980s, has slumped in recent decades. At the height of production, it wasrefining 90,000 tons of sugar annually, a figure that has fallen to around 30,000. The Brazilian companywill modernize the operation in order to recover the agroindustrial capacity and improve the productivityof the sugar cane planting in the region. Cuba used to be among the world´s largest sugar exporters, withannual production of more than eight million tons, but production fell to only 1.4 million tons in 2011.Latin American partnershipsBrazilian companies and those from neighboring countries can now obtain support andservices from the recently-created Mercosul and Latin American Union Chamber of Commerce(CCM-ULA) which is based in São Paulo. The body aims to promote partnerships anddevelop trade and social relationships in the region and the world. It offers consultancyservices in the legal, accounting, business, arbitration and foreign trade areas. Venezuela,Argentina, Colombia and Mexico will have national committees of the CCM-ULA.1 Santos port:some goodnews at last2 Ethanol fromCopersucar:setting up abroad3 Model of Itaquigrain terminal:exportingsoybeans fromthe Northrevistapib.com.br 13

i t is now Br a z i l’s turn.

Year IVNumber 15SEP/OCT 2011PIB15-ENG.indb 1 16/10/11 05:32totumB e one of the f i r s t t o ta k e ad va n ta g e. ad v e r t i s e in PiB ma g a z i n e.If you want to expand the frontiers of your business or even form partnerships and joint-ventures with Braziliancompanies, this is the right place to find information, learn about the latest globalized developments in Brazil,discover trends and publicize your company.PIB takes your brand and message to highly qualified readers all over the world - executives from largecorporations, business leaders, well-known academics, opinion-formers and outstanding personalities in thefinancial market, politics and the economy.The magazine appears in Portuguese and English and is distributed in embassies, universities and the mostimportant international trade fairs.R$ 12,00 ¤ 5,00EXPRESSTOURISMTHE CHARM OF PUNTA DEL ESTEFromapprenticetoteacherBrazil becomes an international cooperation player,transferring successful experiences inagriculture, health and training to poor countriesEMERGING CLIENTSGlobal banksput Brazil at thecenter of theirworld strategiesWORK ABROADPAY ATTENTIONFootwear specialists and TO HER!pilots from Rio Grande Daniela Barone isdo Sul set up Brazilian teaching British NGOscolonies in Chinato be more efficientTake advanTage of The goodmomenT Brazil is experiencing Toexpand your company´s horizons.call now and findouT aBouT Thisspecial offer we have preparedfor your announcemenT.

BMW made in BrazilBy 2015, Brazil will be the world´s thirdlargest auto market, beating Japanand trailing China and the US. Anfavea(National Vehicle Producers´ Association)estimates a 68% rise in sales by 2016– from 3.5mn vehicles sold a year to5.7mn. By 2007, 80% of the Brazilianauto sector was dominated by Fiat, GM,Ford and Volkswagen. According tothe J.D. Power and Associates researchcompany, this % should fall to 70% asother European and Asian brands are nowinvesting in the country. Hyundai startedto produce its HB20 model in Septemberat the company´s first plant in Piracicaba(interior of São Paulo). In October, BMWalso announced it will build a plant here.With investment of 200mn Euros andinitial production of 30k, the plant (tobe built in Joinville; Santa Catarina) willstart producing in 2014. In 2011, BMWcelebrated record sales in Brazil (+54% y/y).1 e 2 Issadress andchocolatewithNiemeyerdesign:auction3 BMWcar: plantin Joinvilleafter 20144 Márcia:awardwinningBrazilianin ParisAward for Brazilian scientist43Created in 1998, For Women in Science is a partnership between UNESCOand L’Oréal to encourage the work of female scientists. The professor andphysicist Márcia Barbosa (Rio Grande do Sul) was this year´s winner in LatinAmerica for discovering a particularity of the water molecule: the anomaly ofdiffusion. The work showed that the water particles, in negative temperaturesand with increased pressure, flow faster. The discovery could shed more lighton the structure of proteins in the human body and help prevent diseases(researchers from the universities of Rio Grande do Sul, São Paulo, SantaCatarina and Ouro Preto took part). Another four scientists received the award,which will be presented at a ceremony in Paris (each of the five winners willreceive USD100,000). Márcia Barbosa is a director of the Institute of Physicsat the University of Rio Grande do Sul and the fourth Brazilian woman tohave her work recognized by For Women in science. For her, the award is a realshot in the arm for Brazilian scientific research. “This award gives visibilityto our research group, which works in a very theoretical area”, she says.revistapib.com.br 17

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Antenna1Brazilian company targets Chinese drinkersChina is a market with huge numbers and the Chineseconsume an estimated 48 billion liters of beer annually.A group of Brazilian entrepreneurs decided to try andget a bite of this market and founded Shanghai Trendsin 2009. The company is based in China to provideservices and facilitate the entry of Brazilian products. In2012, Antonio Freire, Tânia Caleffi, Sergio Madalozzoand Thiago Madalozzo added a café-bar-lounge to theirbusiness area where Chinese and expatriates can trycaipirinha and even traditional Brazilian food like pasteland brigadeiro. However, these tasty samples are only alure at attract clients to premium Brazilian drinks, suchas wine, sparkling wines, fine cachaça, energy drinksand beers. The owners want to make these productsbetter known in China, along with gourmet coffee andother food products. The target market is the higherincome consumer class which is gaining increasinglygreater purchasing powers. Brazilian Gate should endthe year with a turnover of US$ 1.5 million, accordingto the partners. “We are expecting revenues of US$3 million in 2013, with 50% coming from beers, 25%from wine and 25% from cachaça and coffee,” saysSérgio Madalozzo. The company has just opened anew outlet in the city of Dongguan in southern China.Incubators for AfricaFanem, a producer of health equipment for newborn babies, was the first Brazilian company to have a stand atthe 2012 Medic West Africa trade fair, held in Lagos, Nigeria, in October. The São Paulo-based company is pinningits hopes on the IT 158 TS incubator to increase its presence on the African market. The model was created totransport babies in emergency situations. “A panel makes it easier to see the temperature of the air and the skin ofthe newborn baby and a sophisticated alarm system allows the patient to be monitored more flexibly,” says Cícerode Oliveira, CEO of the company. Africa is part of Fanem´s global strategy and it exports equipment to a number ofcountries there. “There is a high level of neonatal mortality in Africa and a lack of top quality equipment, mainly inthe poorer regions and those affected by conflicts,” says Cícero. Around 35% of the company´s production currentlygoes abroad, with Latin America alone representing 45% of exports. Fanem recently won a tender bid in Ecuadorto provide 70 pieces of equipment for treating young children and newborn babies at a hospital in Guayaquil.Pictures: Handout20 revistapib.com.br

Railway wagons for MozambiqueAmstedMaxion, a merger between US Amsted Industries and Brazil´s Iochpe-Maxione, has signed an agreement with Cometal Sarl (owned by Indian group Tata).The binational company will transfer railway wagon production and maintenancetechnology to the Indian industry´s operations in Mozambique. “This partnershipwill reactivate the African rail industry and drive its logistical development”, saysCEO Ricardo Chuahy. It should create 150 local jobs. The rail lines will be the maintool for transporting coal production from the region´s mines, strongly disputedby foreign companies, including Vale – which plans to invest USD7.7bn in Africaover the next few years (in Mozambique, Vale has been extracting coal from theMoatize mine since 2001). For AmstedMaxion, the transfer of technology toCometal Sarl is part of an expansion strategy. “We currently have agreementswith companies from Chile, Argentina and now Mozambique”, says Chuahy.1 Tânia and herpartners fromShanghai Trends:premium Drinksfrom Brazil2 JBS meatproducts: Firstthe US, nowCanada2JBS arrives inCanadaJBS USA — a subsidiary of Brazil´s JBS group— took over the running and operatingof the assets in Canada of the Canadiancompany XL Foods. As a result, it is nowmanaging a meatpacking plant in theprovince of Alberta with daily processingcapacity of 4,000 head of cattle. Theagreement includes a buy option for this andother XL Foods assets in Canada and the US,including another four meatpacking plants(two in each country), a confinement areawith capacity for 70,000 head of cattle anda rural property, both in Alberta. The buyoption must be exercised in the first half of2013 and the total value of the operation— if the option is exercised — will be US$100 million, of which 50% will be paid incompany shares and 50% in cash. JBS isthe largest global meat company. It alreadyhas production units in the US and Mexicobut this is the first in Canada. Brazilianexecutive André Nogueira will become headof JBS USA at the beginning of next year.revistapib.com.br 21

AntennaTOTVS headsfor Silicon Valley...It is not only small and daring Brazilian startupsthat are heading for Silicon Valley, as our specialreport in this issue shows. Established companiesalso believe establishing a presence there is a smartmove. TOTVS is a good example. The company is oneof the leading designers of management software,services and technology in Latin America and hasjust announced the opening of a new business unitin the Valley. TOTVS Labs will study trends anddevelop products in the areas of cloud computing,social media, data management and mobility. Thelab team, which currently numbers a dozen, includesengineers, scientists and designers from Brazil,China, Russia and India. “We are already hiring morepeople for this base,” said Alexandre Dinkelmann,vice-president of finance of TOTVS. The Braziliancompany wants to strengthen partnerships withlocal companies and startups that are aiming togrow internationally and also to cooperate withuniversities and research centers. “We are identifyingthe future technological trends with StanfordUniversity and are the only Latin American companywhich is part of the Stanford Computer ScienceForum,” said Dinkelmann. The Forum encouragescooperation between Stanford researchers andcompanies from Silicon Valley, Europe and Asia.Brazilian design in the United StatesThe Brazilian luxury furniture brand Ornare has taken another step forward in its internationalexpansion with the opening of another store in Miami in December. The company has been in Miamifor five years, attending American clients along with an increasing number of Brazilian residents.It will also open a showroom in Dallas, Texas, at the beginning of next year. “We have also startedlooking at New York, Los Angeles and Chicago,” said Murillo Schattan, a founder and CEO of thecompany. Ornare launched a collection in 2012 designed by the architect Marcelo Rosenbaum in a bidto consolidate the brand as a Brazilian product with a global reach. “Having a presence in the UnitedStates, which is the biggest and most competitive market in the world, has not only led to higherbusiness volume and revenues but also raised our international profile as we are now competingwith the most important global players, particularly the Europeans,” Schattan added. Ornare´s salesin Florida expanded by 12% between 2011 and 2012 and it expects growth of 15% in 2013%.Pictures: Handout22 revistapib.com.br

1…as does PredictaThe company, which is based in São Paulo, hasannounced that it opened a branch in Californiain October. One of the aims of having a businesspresence in the US is to boost sales of SiteApps,a global platform the company developed forthe applications market that helps managewebsites. “This change is essential for SiteAppsas it is focused on the small and medium-sizedcompanies market which is widely spread,” saidPhillip Klien, co-founder of Predicta and in chargeof the innovation area. Silicon Valley specializesin companies with this profile. Klien will leadthe California team. Predicta, which has beenoperating in the e-business sector for 12 years, has140 employees at its head office in São Paulo andhas grown at an annual rate of 50%. However, itis not revealing its earnings goal for the Americanoperation. “The focus in the coming 24 monthsis not financial but on creating the standard ofapplication store for websites,” Klien added. Inthe same week as the California developmentwas announced, Predicta also revealed thatit had formed a new world partnership withGoogle. This makes it the first company tobe an official partner of Google in digital adoperations in the world. (Suzana Camargo)1 Dinkelmannfrom Totvs:partnershipwith Stanford2 Ornare inMiami: USpresenceensuresvisibility2revistapib.com.br23

Antenna3questionsfor AndréSacconatoThe labyrinthine tax system and crushing bureaucracymake Brazil one of the world´s least “friendly”places to create companies and do business,according to reports and international rankingscomparing the laws and regulatory environmentsof different countries. This negative view could bea contributory factor in putting off investors andstifling growth. However, just how fair is this verdict?André Sacconato, director of research at BrasilInvestimentos e Negócios (BRAIN) — a non-profitassociation that aims to make Brazil an internationalcenter for investment and business — believesthe methodology used in some of these surveysdoes not give a fair presentation of the real situationand could damage Brazil´s position in the worldrankings. Sacconato believes this was the case withthe recent Doing Business 2013 report sponsored bythe World Bank and International Finance Corporation(IFC), in which Brazil appears in a humiliating130 th place among the most competitive countriesto do business, behind Azerbaijan, Honduras andUganda. He explains why:HandoutHow do you think the Doing Business 2013 report gotit wrong in its assessment of the business environmentin Brazil?The methodology is faulty. Most of thequestionnaires analyzed are sent by law firmsand we can see that the answers do not reflectwhat is happening in Brazil, mainly because ofthe sheer lack of interest in taking part in thesurvey. We are in a much better situation inHigh taxes, low competitivenessA recent study by the consultancy firm KPMGInternacional revealed that Brazil is at a cleardisadvantage to other emerging markets whenit comes to tax burdens. As per the CompetitiveAlternatives 2012: focus on taxes report, four of the fivecountries with the lowest tax burdens worldwideare India, China, Mexico and Russia. Of the 14countries surveyed, Brazil ranks 11th, ahead onlyof Japan, Italy and France. Some Euro nations– including Germany — also have the highestcorporate taxes. In Brazil, the high tax burdenis one of the reasons for the so-called Brazil cost,which makes national products more expensiveand less competitive abroad. A comparison byKPMG showed that companies investing in Indiapay 50% less tax than peers in the US, while, in24 revistapib.com.br

QuickiesSacconato:rankings madewith faultymethodologiesat least two of the indicators than stated in thereport: investor protection or obtaining credit. Ifthese two items were corrected, Brazil would moveto a position below 100 or even close to 80.What are the indicators Brazil really needs to improveto become more competitive?It currently takes an average of 119 days to open acompany in São Paulo. This is one point. The federal,state and municipal governments are working on anintegration project to set up an electronic system thatcould reduce this average to four or five days. If thiscomes about, the system could be up and runningby next year. Another problem, possible the worstof all, is paying taxes. We are not talking about theactual tax burden but the complexity of the system.There is no way this will be changed in the short termas it is a very broad issue that involves the House ofRepresentatives, Senate and the Federal Revenue.I think we will be stuck in a really bad positionfor a number of years with this poor indicator.How can Brazil become less bureaucratic and more attractiveto foreign investors?This report is widely read abroad and whenforeigners who do not know Brazil look at this index,it could put them off investing in the country. Themain step towards a real change in the businessenvironment would be to cut the tax bureaucracy.A Brazilian company with 60 employees spends2,600 hours a year just to pay taxes. This is themain long-term discussion this report raises for us.Brazil, they would incur 43% higher costs. “In anera of global competitiveness, hikes in corporate taxrates can have immediate and long-term negativeeffects on corporate investments”, analyzes GregWiebe, global head of Taxes at KPMG. Another study(Doing Business in...), produced by the World Bank,assessed the business environment in 183 countries.Brazil ranked 126 th , behind Nepal and Pakistan.:: The wine producer Miolo fromsouthern Brazil has entered theVenezuelan market which has been dominateduntil now by the Chileans and Argentineans. Thecompany sold 550 cases of wines and sparklingwines, including Miolo Cuvée Tradition Brutand Quinta do Seival Castas Portuguesas.:: The distribution center for the IT servicesof Stefanini in Manila, in the Philippines, whichattends clients in Asia and the Pacific region,has obtained ISO 9001:2008 certification.Stefanini now wants to expand in China.:: Russia´s civil aviation authority hascertified Embraer 190 and 195 jets to operatein the country, opening the way for Russianairlines to buy the 112 and 124-seater planes.:: The Lineage 1000 model, the executiveversion of Embraer´s passenger jets, has alsobeen given approval to fly in Russia. The Lineage1000 can carry up to 19 passengers in a cabinredesigned for executive flights.:: Grupo Banco de Tokyo-Mitsubishi UFJ andthe Investe São Paulo agency have formed apartnership to attract and encourage newJapanese investments in the state. The crisis hasled several Japanese companies to leave Brazil.:: With an eye on the growing Brazilianmarket, the Indian software developer,Hotelogix, which is present in 40 countries andspecializes in tourism, has launched a servicesblog in Portuguese.:: NTT Data of Japan, one of the largestinformation technology companies in theworld, has opened its first development centerin Brazil in Curitiba. The group has been inBrazil since 2011.:: The distributor Synagro Comercial Agrícolafrom Bahia state has been recognized for itsgood social and environmental initiatives andreceived the International Dupont World ofRespect award for 2012.revistapib.com.br 25

StrategyArcticOceanCalculated riskFor a transnational, political securityis just as important as economic stabilitySuzana camargo AND nely caixetaIndianOceanIt was a Friday just like anyother in Tripoli, the capitalof Libya, in North Africa.The city seemed tranquilin that month of February2011. But in just under three days,everything changed. A mood of civilwar gripped the streets, on theback of public protests against thedictator Muamar Kadafi, presidentof Libya for the past 41 years. Therevolted masses attacked publicbuildings and looted supermarkets,cornering the government, whichwould eventually be deposed (Kadafiwas killed after fleeing Tripoli). InTo remove staff from Libya,Odebrecht used 2 Boeings,1 ship + 2 catamaransthis short 3-day interval, Brazilianconstruction company Odebrechthad to put together a monumentaloperation to remove 3,558 employeesworking at its construction sitesin Libya. 200 of them were Brazilian.Heading up the operation wasthe director Gustavo Guerra (aged44 at the time and with over 20 yearsat the company). “I had never facedsuch as situation”, says Guerra.“It was a once-in-a-lifetime stress”.As the wave of violence engulfedthe country, the plans of Odebrechthad to be rapidly altered. Initially,the construction company decidedto remove from the country only itsemployees´ relatives. But when theinsurgence — initiated in the city ofBenghazi, some 1,000km away—, hitTripoli, involving the capital city inthe climate of civil war, it was nolonger enough to just protect familymembers. The company decidedthat they had to remove all theirpersonnel. The logistical operationset up to guarantee the safe exit oftheir employees demandedthe charteringof two large Boeing747s, a passenger shipand two catamarans.The employees weretaken to the island ofMalta, a small independentnation in the middleof the Mediterranean, halfwaybetween Libya and Italy (see box onpage 29). The costs of the operationweren’t disclosed, but you can imaginethe amounts involved.The Libyan uprising wasperhaps the most dramatic episodeexperienced by a major Brazilianmultinational abroad. But other tensesituations resulting from politicalinstability or sudden changes in therules of thegame havebeen registeredwith worryingfrequencyin the routine ofBrazilian companieswith internationaloperations.Companies such asPetrobras (Bolivia)and Vale (China) havealready suffered fromgovernment decisionsaffecting the equity orprofitability of their operationsin foreign countries. Such casesreinforce the need for managingpolitical risk at the headquarters oflarge companies.Before deciding to invest abroad,Brazilian transnationals are increasinglytaking into account thepolitical environment in foreigncountries and looking to take preventiveaction against situations ofconflict and danger. They are thususing political risk tools, implementedby in-house teams or specializedconsultants, and taking out insuranceto cover such damage. “It is an26 revistapib.com.br

NorthKoreaIraqAfghanistanLibyaIranPakistanSudanYemenMyanmarIvoryCoastNigeriaCentral-African SouthRepublic SudanSomaliaCongoAtlanticOceanType os RisksExtreme (0.00 – 2.50)High (>2.50 – 5.00)Medium (>5.00 – 7.50)low (>7.50 – 10.00)no datainvestment that has proven important to protectthe interests of the company”, says a spokesmanof mining company Vale. The company has a departmentdedicated to the analysis of politicalrisks based in Rio de Janeiro, follows the localnews of the countries where it operates andalso hires consultants to reinforce its capacityto avoid surprises.But what is political risk? The answer is providedby Keith Martin, director of internationaltrade and investment at the AON insurancebroker in Brazil and one of the leading internationalspecialists in the sector, having worked atthe World Bank. There are four types of politicalrisk classified as “insurable”, He says: the expropriationor nationalization of goods/asserts orinvestments; breach of contract; the risks linkedto currency inconvertibility; and finally, politicalviolence, such as that which engulfed Libya in2011 (there are other types of risk that are uninsurable,such as regulatory and legal and the slo-RED Alert15 countries deemed most risky for doing business1 Somalia Extreme 0.822 Myanmar Extreme 1.673 Congo Extreme 1.804 Afghanistan Extreme 1.825 Sudan Extreme 1.876 South Sudan Extreme 2.087 Iraq Extreme 2.338 Yemen Extreme 2.449 Pakistan Extreme 2.4910 Central-African Republic Extreme 2.4911 Nigeria High 2.8212 Iran High 2.8313 North Korea High 2.8314 Libya High 2.9915 Ivory Coast High 3.00Source: AONrevistapib.com.br 27

StrategyCHOOSE YOUR tYpE OF risKthere are 4 types of threat covered by insurancecompanies:+ EXPROPRIATIONOR NATIONALIZATIONwhen a governmenttakes possession ofthe assets and rightsof the foreign investor.+ BREACH OF CONTRACTwhen a government or state-ownedcompany breaks a contractwith the foreign investoror service provider.Source: Keith Martin/Aon Risk Solutions+ INCONVERTIBILITY OF CURRENCYwhen the Central Bank of the countryreceiving the investment banslocal currency conversion or thetransfer and remittance of moneyoutside the country. This doesn’tinclude the risk of FX devaluation.+ POLiTICAl violence acts ofterrorism, civil unrest, strikes,protests and wars. May includephysical risks and loss of profits.political problems. And the insuredcompany definitely wouldn’t like toadmit to the host government that itdoesn’t trust the country’s politicalsecurity.The work of specialized consultancies,such as AON and Marsh, isto analyze the geopolitical scenarioof the region where the companyplans to invest and signal the bestoptions in the area of insurance. “Weseek solutions to mitigate risks, inthe case of companies with assets orplants abroad or that enter into businessdeals with other countries andgovernments”, explains the consultantfrom Marsh Brasil. Companieswant to know how to protect theirinvestments abroad — either in set-wness of government bureaucracyand/or courts). Brazilian multinationalsare seeking the services ofrisk analysis companies and insurersto protect themselves against thesefour types of risk.“It is a very mature market in Europeand the US and it is starting togrow in Brazil”, says Kiyoshi Watari,leader of the credit insurance divisionof Marsh Brasil, another sectorcompany. AON estimates that itreceived in recent years around 25requests for a price quote for insuranceagainst political risks. However,not every price quote becomesa contract: Keith Martin calculatesthat only four or five national companiescurrently have a policy to coverlosses or damages from politicalrisks abroad. He can’t name names.“The private political insurance marketis highly confidential”, he says.Neither insurers nor insured companiesare interested in revealing theexistence of this policy — insurersaren’t because they expect the governmentto assume the coverageof any costs incurred as a result ofAFP PHOTO/STR28 revistapib.com.br

Expatriatesretained atTripoli Airport:chaosiN tHE EYE OF tHE HURRiCANEWHEN GUSTAVO Guerra arrived inTripoli with his family, in 2009, arebellion against Kadafi seemedunthinkable. “At the start ofthe Arab Spring in Tunisia andEgypt, in 2011, we started to payattention”, he recalls. “No oneexpected that to happen in Libya;we thought the country was different.”But it wasn’t. When thefirst protests started in Benghazi,the second biggest city, Odebrechtdecided to remove, as a precaution,employee´s families. At that stage,Gustavo was head of Odebrecht inLibya, but his base was in Lisbon.“People didn’t realize just howpotentially serious the situationwas, and some were worried theirchildren who would miss school”,he says. It was a Friday in February,and the family members werewithdrawn on Sunday. That weekend,the situation took a quickturn for the worse. Forces loyalto Kadafi patrolled the streets,heavily armed, and dispersed anyprotest with aerial shots. Productsstarted to dry up on shelves, andthe opposition called for protestsin Tripoli on Monday – the first inthe capital city.In Lisbon, Gustavohad to change his ordersas tension in Tripoli grew.After the family membersleft, he also decided to removenon-core personnel.But the order was soonextended to all non-Libyanemployees. “Whenthe climate shifted to oneof preparing for a conflict,with guns on the streets,restricted movement inthe city and supply problems,we decided for a fullexit”, he explains.Some employeeswere grouped in lodgingsclose to the constructionsites. Others stayed in acondominium with watersupply, supermarkets andsecurity. The companyfollowed a previouslyelaborated withdrawalplan, but there were somesurprises: on the Sunday,day three of the crisis,commercial flights weresuspended and Tripoliairport became a chaos. “All theexpatriates were trying to fly out”,recalls Gustavo. “Policemen firedaerial shots at the airport.” Dueto the collapse of regular flights,Odebrecht chartered Boeing 747swaiting in Malta for authorizationto get off the ground. “Gettinga flight out of Tripoli was veryhard, as there were 300 or 400chartered planes arriving in thecountry”, he recalls. The supportof the Brazilian embassy ensuredthat permission was granted, and1,500 people left Tripoli on thesefl i g h t s .Fearing the airport would beclosed to even charter flights, thecenter of operations decided totransport the other employees ona chartered passenger ship in Italy.“We did all this in a matter of hours– speed is fundamental in thesemoments”, says Gustavo. Thecompany had the resources to payfor this removal process, otherwiseit wouldn’t have happened. “Atsuch times, everything is in cash”,he states. “The employee doesn’tescape by ship or get on a placeif he hasn’t got any money. “OnWednesday, the ship left Tripoliwith over 2,000 Odebrecht employeeson board. At the end of thedrama, all the company´s personnelarrived safely in Malta.Gustavo is currently executivedirector of Odebrecht for WestAfrica and Libya. Before facing theLibyan revolt, he received trainingin crisis management and elaboratingescape plans and workedin Angola, where he witnessed acivil war. “At a time of crisis, youhave to apply logic”, he says. “Youreally have to keep your cool.”revistapib.com.br 29

Strategy1“All companies are subjectto surprises: who couldhave seen the Arab Spring?”ting up a plant, in the expatriationof employees or in relations withthe local government. To meet demandfor this type of information,the specialized companies producedetailed diagnoses (broken down bycountry, region or economic sector),often condensed in global politicalrisk maps divulged every year by theworld´s largest consultancies.In the study performed in 2012by the AON brokerage, in partnershipwith the British consultancyOxford Analytica, the list of nationsclassified as high political risk includeVenezuela, Haiti, Iran, Syria andIraq. The so-called Arab Spring— thesequence of uprisings against authoritariangovernments in Tunisia,Egypt and Libya as of 2010 — stimulatedand intensified manifestationsin neighboring countries, alsoleading to a downgrade in ratings onthe region. “This is forcing the CEOsand CFOs of companies with operationsin emerging markets to reviewrisk management and mitigationmeasures”, says Roger Schwartz,senior vice-president of PoliticalRisk at AON.In the AON map, the neighboringcountries Bolivia, Colombia andVenezuela are classified as high-riskzones. Argentina and Ecuador (aswell as Brazil) offer medium risk. Itwas in Ecuador that Odebrecht – acompany with a portfolio backlog in18 countries – experienced anotherdelicate moment. In 2008, PresidentRafael Correa ordered all governmentcontracts with foreign companiesto be broken. At the time, theBrazilian company had four projectsin the country, including the constructionof a hydro energy plant, anairport and a highway. There wereover 4,000 Ecuadorians workingat the company´s construction site.Even the local unions supportedthe constructor, denouncing in thelocal newspapers that the breach ofcontracts would cause unemploymentfor thousands of people. Butthere was no way of maintainingthe construction works. “Fortunatelywe were able to negotiate andreceive what we still had to receive”,says Marco Lima, president of OdebrechtAdministradora e Corretorade Seguros (OCS) — the division ofthe constructor that deals with riskprevention.One of the lessons learnt fromthe international experience of theBrazilian multinational was that, inorder to mitigate political risks, youhave to take preventive action: cultivatinggood relationships not justwith local governments, but alsowith the community and subcontractedworkers, in what is a long--term view and not just a view ofthe immediate construction project.“The important thing is to be seenas a local player, bringing benefitsfor the community”, says Lima. Inthe case of Ecuador, the strategyhelped repair relations after therupture. “We were invited to returnto the country and participate in biddingprocesses for some projects inthe area of energy and infrastructure”,says Lima. Anotherpositive was thecompany´s 21 years ofoperations in the LatinAmerican country.State-run Brazilianoil giant Petrobrasfaced in Bolivia one ofthe most infamous casesof political crisis involving a Brazilianmultinational in recent years.In 2006, the Bolivian President EvoMorales decided to nationalize allthe foreign companies that wereexploring oil and gas in the country,including Petrobras. The armyoccupied the facilities of the companiesand, those not accepting thesituation, had to leave the countryin 180 days. The state-run companyYacimientos Petrolíferos FiscalesBolivianos assumed control of operationsand started to dictate theprices of local and exports. Shortlyafterwards, Morales offered anagreement to the Brazilian government,which was accepted. Boliviaagreed to pay USD112mn for therefineries bought by Petrobrás in1999 for USD104mn (Petrobras hadalready invested USD30mn in thetwo plants).Infrastructure companies arethe most vulnerable to political turbulence.Companies that work inmining, petrochemicals, energy, engineering,telecoms, technology andother services that depend on concessionsor government contractsare also highly exposed to politicalFotos: Divulgação30 revistapib.com.br

1 Martin,from AON:4 types ofinsurablepolitical risk2 Vale supership:changeof course2revistapib.com.br31

Strategyrisks. But any company can be subjectto surprises. “Who predictedthe Arab Spring?”, asks the Valespokesperson.At the start of this year, the Brazilianmining company faced one ofthese surprises: the Chinese governmentmodified the regulation ofports in the country, which affectedits Asian operations. The companyChinese government changedthe rules and bannedValemax from dockinghad invested in the construction ofsuper-ships with capacity to transportup to 400,000 tons of iron orein each trip. Called Valemax, theships reduce carbon emissions by35% per ton of ore transported andreduce the transport costs betweenBrazil and Asia, Vale´s main iron oremarket. But the local shippers whoperformed the route didn’t look favorablyupon competition fromlarger-scale ships belonging to orchartered to Vale. Shortly after thefirst Valemax arrived at the Chineseport of Dalian, the Chinese governmentchanged the rules and bannedthe docking of such ships. Vale hadto create more costly alternativesto transport its ore — the Valemaxsuper-ships now dock in other portsof the region, such as Subic Bay, inthe Philippines, and transfer the cargoto smaller ships, which take it tothe Chinese ports. Thecompany continues innegotiations with Chinato revert the Valemaxban.And this is whereinsurance operationscome in…to preventproblems such as thoseencountered by Vale in China andby Odebrecht in Ecuador and Libya(and to avoid the exorbitant costs).In a project, depending on the size,the insurance can vary from 2% to12% of the contract amount. In 2011,Odebrecht had USD80bn of insuredequity. Of this amount, USD20bncover assets abroad, representingsome USD100mn in insurance. Thetotal amount is never insured withone single insurer. “They (the insurers)assume part of this risk, and1pass on the rest to other insurers– the so-called reinsurance companies”,explains Lima, the presidentof OCS. “Everyone shares the riskso that the system can cover andabsorb it”. To administer amountstotaling billions of dollars, the mainpartners in these operations areinternational insurance firms withstrong guarantee capacity.The protection resources aremanifold, but the director of Odebrechtwarns that insurance shouldbe a safety net if nothing else works— not even negotiations with a newgovernment installed by a popularrevolution. In the case of Libya,Odebrecht´s construction works inthe country were interrupted withthe victory of the revolution. Accordingto the company, the projects –the Tripoli Ring Road and the InternationalAirport, with an estimatedaggregate amount of USD3bn — arefinanced directly by the governmentand have a 30% completion rate.The offices and equipment of theBrazilian constructor are now underthe responsibility of 700 LibyanFotos: Divulgação32 revistapib.com.br

1 Watari, from MarshBrasil: solutions toprotect investments2 Odebrecht project inTripoli: negotiationsto resume worksworkers from the company. “We arein negotiations with the new governmentof Libya to resume works andrecoup the expenditures caused bythe removal of personnel from thecountry in 2011”, says Lima.Just like the Brazilian company,multinationals from other countriesare interested in continuing to investin Libya, now that the governmentof the victorious rebels is trying torestore the country´s stability andreactivate the economy. In recentmonths, Exclusive Analysis, a consultancyspecialized in political riskbased in London, provided aid tovarious international companiesfrom the energy, construction, pharmaceuticaland telecom sectors withplans to enter (or return) to Libya.Exclusive Analysis produces documents,tables and maps that presentits evaluation of the risks of regions,countries, places and even specificevents.If a good relationship with thegovernment is fundamental to preventproblems, it is even better ifthe company´s country of originhas cordial relations with the investmenthost country. Odebrecht,for example, has ongoing projects inCuba and Venezuela, whose governmentsare close to the Brazilian government,although both nations areevaluated as high political risk forwestern companies. Ironically, theexpansion of the Port of Mariel (aproject in Cuba) is causing problemsGood relations with localgovernment and communityhelp mitigate risksfor Odebrecht on the other side ofthe ideological spectrum (and fromthe Florida Straight): in the US. InMay, the state of Florida issued a lawprohibiting foreign companies withinvestments in Cuba from signingcontracts with local governments.Behind the initiative is the influentialcommunity of Cubans exiled inFlorida, sworn enemies of the Havanagovernment. Odebrecht USA,an American subsidiary of the Brazilianconstructor, is challenging thelaw in the courts of Miami. Accordingto the company´s lawyers, it isunconstitutional and inapplicable,since only US Congress and governmentcan legislate on external policy.Odebrecht declinedto comment on thedivergence with thegovernment of Florida,one of its main internationalclients. Since1990, Odebrecht USA,according to informationfrom the companycited by The Miami Herald, carriedout 35 projects for the state governmentor local administrationstotaling USD3.9bn, out of a totalUS portfolio of 60 projects totalingUSD4.94bn. But the fact that theBrazilian company encountered activegovernment opposition in theUS shows, at the end of the day, thatpolitical risk doesn’t choose ideolog-2revistapib.com.br 33

InternationalizationDesigned in BrazilAssemblers take Brazilian engineeringand design to the worldLuciano FeltrinThe time when Braziliansubsidiariesof large automakerswere mere observersof the developmentprocess is long gone. Increasinglydemanding consumers,qualified engineers and designers,competitive costs and its statusas the 4 th (or 5 th ) largest automarket in the world mean Brazilis now one of the big boys whenit comes to developing globalprojects. This path started to bemapped in the latter decades ofthe 20 th century, when Braziliansubsidiaries of multinationalautomakers began adapting andcreating models for the nationalmarket. And the Brazilian autoindustry is now more matureand globalized, with Brazilianteams developing projectsthat will be made or exported34 revistapib.com.br

to several countries, such asthe recent launches of GeneralMotors´ (GM) Spin van and Cobaltsedan, the latest version ofFord´s EcoSport sports utilityand Volkswagen´s Novo Gol.One of the first companies toprepare its operations in Brazilfor this new stage was US automakerGeneral Motors. In September2009, on the eve of markingits 85 th year of operations, thecompany unveiled the expansionof its new Technology Center inSão Caetano do Sul (São Paulo). Theexpansion, which demandedinvestments of US$100mn, createda HQ currently home to creationand development projectsHandoutfor vehicles in several countries.Everything is done there, frominitial car design to assembly.Integrated by 2,000 engineersand 300 designers, the GM centerwas the birthplace of famousvehicle models: the Meriva minivan– made first in Brazil beforeany other country, it hit Europevia Spain, where it started to beproduced in 2009.More recently, we had theSpin, Cobalt and Onix lines — thelatter model has the mission ofsubstituting the Corsa. The Cobaltsedan is already making itsglobal mark. Since last month, itis also made in Uzbekistan. Fromthere, it will be sold in Russia andEastern Europe. The Spin minivan,also produced by Brazilianengineers, will be launched in2,000 engineers and300 designers workat GM´s Tech CenterAsia next year, and producedin Indonesia. The model, withcapacity for up to 7 people, willalso be sold in South America.One commandment should beobeyed by all those workingon each one of these projects:the prototype of a new vehicleis based on the peculiarities ofthe country or region where itwill be sold. From that startingpoint, the engineers develop themodel taking into considerationrequisites such as local climate,preferences of clients from theregion and governments´ regulatorydemands, such as maximumlevels of pollution emissions.More general aspects, such ashorsepower, performance andinternal features, are commonthe world over (GM aims towork with a handful of globalplatforms — basic architecturesof the different vehicle lines —based on which the local modelsare developed).But when it comes to certainitems, the vehicle is prepared toundergo some trauma-free alterationsto adapt to the demandsof each market. In Indonesia, forexample, the Spin will have asteering wheel on the right-handside, to comply with local rules,and will not have warm air conditioning– superfluous in a countrywith average temperaturesin excess of 30 degrees. “One ofthe main challenges of a globalengineering project is to accommodatethe needsand tastes of differentmarkets withoutlosing the identity ofa model created to bethe same all over theworld”, notes AlbinoMarques, engineeringdirector for lightvehicles at GM Brasil.The recipe for minimizingerrors and increasing safety andquality levels involves, amongother things, the so-called “clinics”– spaces developed by automakersto submit the project tothe analysis of the drivers whowill use the cars in their developmentphase. At the very start ofthe project, the prototype undergoesa battery of tests performedby hand-picked potential clients.This stage of the clinic lastsaround two weeks and, basedon observations, criticism, datacollection and interviews, givesthe automaker info on what futureusers liked and didn’t like.revistapib.com.br 35

InternationalizationThe observations help define detailssuch as the size of the glovecompartment, the best place forstoring a bottle and the largestor smallest space for items suchas bicycles and prams. As well asclients´ verdict, the approval ofthe model also depends on testscarried out at the Cruz Alta testingfield in Indaiatuba (São Paulo).The center is a mix of a laboratoryand racetracks, where thenew car is submitted to performancelimits. This stage, knownas technical validation — whichincludes, for example, fuel consumptiontests, acoustic isolation,passenger safety and sealing theentry of water in flooded lanes —can take up to 18 months beforethe project is approved and thecar can be delivered to dealersfor sale.Another US car giant thatconvinced its head office it wasworth investing in global vehicleprojects based in Brazil was Ford.This rite of passage was markedby the development of the Eco-Sport, the sports utility createdat the start of the 2000s in Brazil1and successfully taken to Argentinaand Mexico — and, startingthis year, to the European marketas well. “Brazil became thecaretaker of the EcoSport project”,notes Rogelio Golfarb, vicepresidentof corporate affairsfor Ford in South America. “Weknow that the responsibility forany adjustments and refinementsis up to the Brazilian engineers –this reflects the trust depositedby Ford in the local operation.”Fully developed at Ford´s plantin Camaçari, in the metropolitanregion of Salvador (Bahia), themodel is already made in another3 countries — China, India andThailand — and will be sold in100 markets where Ford operates.To meet the challenge of improvinga product surroundedby solid sales expectations, Fordannounced a R$14mn investmentin the acquisition of new equipmentfor its testing field in Tatuí(interior of São Paulo), one ofFord´s 8 global development centers.The field is formed by 50kmof low-, medium- and high-speedpictures: HandoutHOW tO ABSORB CUltURAl SHOCKSsTreeTs filleD with holes, hazardousroads or even winding roadswith no signaling weren’t the mainobstacles to be overcome in orderto develop global cars in Brazil. Thefirst barrier to be faced, in thesecases, is a corporate one. “Since2006, when the company decidedto adopt global engineering projects,we had to organize ourselvesas if each subsidiary was a columnof the same building, receivingprojects and financial resources inaccordance with their specialty”,says Luciano Santos, director ofexperimental field test engineeringat GM. In other words: the variousregional operations of the multinationalgiant had to coexist to astronger degree, instead of onlyinterfacing with the GM head office.The new model brought to the surfacethe risk of cultural shocks, suchas those caused by the multiplelanguages spoken around the worldand the different forms of dealingwith each subsidiary´s hierarchy.”To absorb these shocks, thebest solutions are time, interfacingand open dialog with leaders of thecompanies”, says Santos. Theseleaders are responsible for harmonizingstandards and guaranteeingthat processes are integrated. “Inthe case of languages, most timesthe leader has to be the mediatorwhen he notes that someone isn’tat ease or interacting enough dueto nervousness in speaking thelanguage correctly”, says Santos.The head of design at Volkswagen,Luiz Alberto Veiga, is betting on36 revistapib.com.br

Cover StoryThe BrazilianPavilion inFrankfurt:new marketsEmergingLiteraturePublishers have begun to write a new chapter onthe international expansion of the Brazilian bookDenise TurcoBuchmesse/Book Fair FrankfurtBefore Barba ensopada desangue, the fourth novelby Daniel Galera, hadeven been launched inBrazil in mid-November,the publication rights had beensold to the US, Germany, Italy, Spain,France and the UK by Galera´s publisherCompanhia das Letras. Galera(33) comes from São Paulo but livesin Porto Alegre and aroused the interestof foreign publishers whilebuilding his literary reputation.This is contrast to other Brazilianauthors — such as Jorge Amado and,more recently, Paulo Coelho — whowere very popular in Brazil beforethey won an international audience.Barba ensopada de sangue is the storyof a teacher who finds refugee onthe beach at Garopaba in Santa Catarinastate and investigates the circumstancessurrounding the deathof his grandfather, in the same area,decades earlier. Like Galera, MichelLaub from Rio Grande do Sul state,will also gain foreign readers. Therights to his latest book, Diário daQueda, have been sold to nine countries.Laub (39) is the author of fivenovels, also published by Companhiadas Letras. He was one of nineBrazil will be the guestof honor at the FrankfurtBook Fair in 2013Brazilian authors who took part inthe Frankfurt Book Fair in Germanyin October, the biggest event ofits kind in the publishing industry.The other Brazilian representativeswere Milton Hatoum, Luiz Ruffatto,Marina Colasanti and João PauloCuenca. The strong presence ofBrazilian writers was a foretaste ofan invasion that will take place nextyear when Brazil will be the guest ofhonor at the 2013 Fair. This is anothersign of the growing internationalinterest in Brazil´s publishing output.The large Brazilian houses tookadvantage of the latestFrankfurt event – themain entry to the internationalmarket – toset up their own standswhile 33 small and mediumpublishers shareda collective space reservedby the BrazilianPublishers project. The aim of thisinitiative is to support the internationalexpansion of Brazilian literatureand it was carried out in cooperationwith the Brazilian Tradeand Investment Promotion Agency(ApexBrasil) and the Brazilian Book40 revistapib.com.br

Chamber, local acronym CBL, (seebox on page 42). These small andmedium-size publishers would nothave had the individual resources totake part in such a fair and the initiativeallowed them to hold morethan 900 meetings and sell US$35,000 in authors´ rights. (The bigpublishers would not reveal theirfigures.). “The business only beginsat the trade fair and comes aboutgradually,” said the CBL president,Karine Pansa. “We expect to negotiateanother US$ 135,000 in authors´rights in the coming 12 months.”The numbers are still modest butthey point to a promising change.Brazilian publishers no longer goto the fair only to buy foreign booksbut also to exhibit their own authorson the global market. Countriesthat showed the greatest interest inBrazil´s publishing production inFrankfurt were Germany and theTHE WORLD´S BIGGEST READERSStudy by the International Publishers Associationoutlines the world´s publishing market(€ billion) (PER milLION INHABITANTS)ESTIMATED marketVALUEBOOKS LAUNCHED ORREISSUEDWorld 105.6 -US 31 1,080China 10.6 245Germany 9.7 1,172Japan 7.1 -France 4.6 1,242UK 4.1 2,459Italy 3.4 956Spain 2.9 1,692Brazil 2.5 285India 2.5 -Fonte: International Publishers Association (IPA), Drawing the Global Map of Publishing Markets 2012revistapib.com.br 41

Cover StoryUK, followed by France, the US andItaly. Contemporary literature is thekind that most attracts foreign publisherswhich are looking for newnames to offer readers in the comingdecades. “After a long period oflimbo between the 1970s and 1990sduring which Brazilian prose almostdisappeared from the map, a newgeneration of writers has been arrivingin great force,” said another ofthis year´s guest writers, CristovãoTezza from Santa Catarina who livesin Paraná state. Her novel O filhoeterno, published by Record, wonan award on its Brazilian launch fiveyears ago and has been sold to Italy,Portugal, Australia, Holland, Mexico,Croatia, Denmark, Ukraine, the USand China.During the event, the NationalLibrary Foundation (FBN), linkedto the Culture Ministry, launchedthe first issue of a magazine calledMachado de Assis LiteraturaBrasileira em Tradução. The publicationwas made in partnership withthe Itaú Cultural Institute and aimsto provide a free sample of Brazilianproduction for agents and pub-ApExBRASil GiVES A HElpiNG HANDiT is only natural that that there should be a lack ofknowledge and preparation for going internationalin a market that is so new. Some of the large publishershave experience in negotiating rights with literaryagents and publishers abroad but others are still learninghow to operate. This is the gap which the BrazilianPublishers program created by the CBL and ApexBrasilin 2008 is trying to narrow. There are 57 publishers involvedin this initiative, mainly small and medium-sizecompanies, 33 of which took part in Frankfurt event inOctober. ApexBrasil project manager Christiano Bragasays the challenge is to find the right reader for eachbook. To do so, the program investigates the culture,language, legislation and growth potential of a numberof countries and provides the results of the survey asa consultancy service to the publishers. One exampleshows how it is essential to adapt: German children, forexample, usually read long books of 100 to 150 pagesand are not used to the small colored books which arecommon in Brazil.The program established priority markets where itintends boosting the sales of publication rights. Theseare: Chile, Mexico, Colombia, France, US, Angola,Germany and South Korea. Germany, the third-largestworld market, is a country which Apex has been movingcloser to, says Braga. The approach to France is to le-42 revistapib.com.br

1 Clarice Lispector onscreen: tribute to bepaid to Brazil in 20132 Milton Hatoum:published in 12 languagesand 14 countries3 Bem-Vindo!:Portuguesefor foreignerslishers on the international market.The magazine presents chapters andexcerpts from books translated intoEnglish and Spanish. The magazinehas a quarterly online edition and 1two printed issues a year. The firstissue featured texts by classic andcontemporary Brazilian authors.The second issue will be dedicatedto fiction and poetry and the thirdbucHmesse/book Fair FrankFurtbucHmesse/book Fair FrankFurt1 2to literature aimed at the children´sand adolescent market.It is not only fiction writers whohave been having an impact on theforeign market. The publisher SBS/HUB Editorial from São Paulo hassold 135,000 copies of its book onteaching Portuguese, Bem-Vindos,in recent years, with sales boostedby the higher number of foreignersHandoutinterested in learning the language.Obviously, this new interest in Brazilianliterary production has beenalso spotted by foreign investors.The best example of large internationalpublishers´ interest in havinga presence on the Brazilian marketoccurred at the end of 2011 when theBritish group Penguin acquired 45%of Companhia da Letras. What is be-3verage its strong cultural link with Brazil, boostedby the global influence of French art and languageuntil the middle of the 20 century. In the UnitedStates, it is focusing on libraries that buy lots ofbooks. Within Latin America, Braga highlights Colombiaas a country that is showing great interestin Brazilian works, along with important marketssuch as Mexico and Chile. South Korea is a countrythat is beginning to be looked at. Although little isknown about it, an interest in Brazilian literaturehas been noticed, particularly in children´s books.ApexBrasil supports the Brazilian publishers byorganizing and paying part of their participationcosts in international fairs. On the other hand, itis also trying to attract potential foreign buyers tothe Brazilian Book Fair that occurs every two yearsand it brought German publishers over this year.Another showcase with great exposure abroad isthe Paraty International Literary Festival. CortezEditora says the Brazilian Publishers program isessential when it comes to participating in eventsabroad as the costs would be unviable otherwise.The company also started to make editorial changes,such as translating part of its books into Englishor Spanish to show them to potential buyers at theinternational fairs.revistapib.com.br 43

Cover Storyhind all this movement? There are anumber of reasons, according to thepublishers and the sector´s organizations.The first is that Brazil´s increasedeconomic and political importanceon the global front has ledto a greater interest in its literature,language and publications in general.However, the more professionalapproach by the Brazilian publishers,public policies encouraging thesector and expanded readership1base are also important factors. TheBrazilian Book Chamber says saleson the domestic market (excludinggovernment purchases) rose by 9.8%in 2011 while the average book pricefell by 6.1%.danilo maximoBRAZiliAN AUtHORS tHE WORlD iS READiNGWhaT kinD of Brazilian books do foreign publishers wantto translate? It is difficult to give a definite answer froma literature that is so diverse and from a country as bigas Brazil. “There used to be a certain exoticism in our literaturethat attracted attention,” said Michel Laub, theauthor of Diário da Queda. His book is about a narrator´smemories and thoughts of his childhood and family, particularlyhis father and grandfather, the latter a survivorof Auschwitz and author of a secret diary. “This haschanged but I don´t yet know how the change will comeabout in terms of literary form. Nobody knows.” Amongthe highest regarded authors is Clarice Lispector fromRecife who draws most attention from foreign publishersseeking the support of the National Library Foundationfor the publication of Brazilian writers. Jorge Amadoand Machado de Assis are also in demand. Amado, fromBahia state, was the author of Gabriela and the big internationalstar of Companhia das Letras, with more than60 author´s rights contracts. Alberto Mussa and AdrianaLisboa are outstanding among contemporary writers.Budapest by Chico Buarque was published in 24countries and is a recent success. Others were o Xangôde Baker Street by Jô Soares, Boca do Inferno by AnaMiranda, Órfãos do Eldorado by Milton Hatoum andare all available in 20 countries. Germany is the countrythat publishes most Brazilian books. The most translatedwriter into German in recent years is João UbaldoRibeiro although Hatoum, Chico Buarque and BernardoCarvalho have also been in the top ranking. Apart fromGermany, there is great interest in Brazilian books inRomania, Spain, France, Italy and Argentina.Some other very popular authors in Brazil have44 revistapib.com.br

1 Karine Pansa ofthe Brazilian BookChamber: stand forsmall publishers2 MichelLaub:appearancein Frankfurt3 Paulo Coelho inDutch: he appearsin the GuinnessBook of Records2The Brazilian market was smalland closed until relatively recentlybut has gained weight and visibility.A study of 50 countries by the InternationalPublishers Association(IPA) which was presented at theFrankfurt Trade Fair put Brazil asthe ninth-largest publishing marketin the world, with an estimatedvalue of 2.54 billion Euros. This putsBrazil only behind rich countrieswith consolidated publishing industriesand China, the steamrollerof the emerging markets (see box onpage 41). All these factors — plus thepositive view of the quality of thebucHmesse/book Fair FrankFurtThe number of bookssold in Brazil expandedby 9.8% in 2013works of fiction, academic and technicalliterature and children´s booksproduced in Brazil — have started toposition the country as a producerand exporter and no longer just abuyer of works from abroad.Companhia das Letras from SãoPaulo is one of the publishing houseswith experience of setting up operationsabroad. It has been pinning itshopes on new writers to gain internationalmarket for some time. Itscatalogue includes one of today´smost internationally appreciatedBrazilian writers, Milton Hatoumfrom Amazonas state. Hatoum is theauthor of Relato de um certo Oriente,Dois Irmãos, Cinzas do Norte and Órfãosdo Eldorado. His novels are setamong families of Arab immigrantsin the Amazon region and have wonhim the most important domesticliterary award, the Jabuti Prize, andhave received good reviews abroad.Hatoum has been published in 14countries and translated into 12languages; English,Spanish, French, German,Arabic, Catalan,Chinese, Croat, Greek,Dutch, Romaine andSerbo-Croat. (see below)Companhia dasLetras is trying to repeatHatoum´s successbut all it would say about Frankfurtwas that it had sold more than itbought without revealing any figures.This confirms that the internationalmarket is becoming evenmore receptive to Brazilian works.The same view can be heardfrom publishers of scientific andmanaged to repeat their success abroad. Paulo Coelho is thebest known and entered the Guinness Book of Records in 2009as the most translated author for a single book — o Alquimistawhich appears in 67 languages. Coelho´s publisher, EditoraSextante, says he has sold 140 million books in 168 countriesin 73 languages. Editora Melhoramentos has a strong presencein Mexico and Central and South America with meu pé de laranjalima by José Mauro de Vasconcelos, o menino maluquinho andother children´s books by Ziraldo, which are its internationaldrivers. meu pé de laranja lima is almost an inexplicable phenomenonin South Korea. The company´s superintendent, BrenoLerner, says that when the series was launched on a Korean TVstation in China, the main actress appeared in front of the camerasred-eyed from crying and said she had just read the bookand had been so touched by the story. As a result, Melhoramentosended up selling the book rights to a Chinese publisher.3Handoutrevistapib.com.br 45

Cover Storytechnical, professional and academicworks. Editora Melhoramentos, atraditional publishing house fromSão Paulo, has signed agreements inits three operating areas – gastronomy,children´s books and dictionaries.For example, it has licensedthe content of its well-known dictionary,Dicionário Michaelis, fortechnology companies in Russiaand Japan which need a data base inPortuguese to integrate their computerapplications and programs.Cortez Editora, also from São Paulo,which has been active in the marketfor 32 years, took advantage ofthe chance to get to know potentialpartners and sound out the foreignmarket for education, social serviceand children´s literature, accordingto its executive director, AntonioErivan Gomes. The initial aim is tofly the flag abroad, with 20 titlessuch as A importância do ato de lerby the education specialist PauloFreire. Cortez´s experience on theinternational market has only beenbrief and it is considering makingits international operations moreprofessional.The niche of publications teachingPortuguese language to foreignerswas the theme of a speech inFrankfurt by the CBL book director,Susanna Florissi, who is alsothe international director of SBS/HUB Editorial. She says the numberof people interested in studyingPortuguese has been increasing ona yearly basis as a result of Brazil´seconomy which is attracting a newwave of foreign executives, workersand students. Susanna says thatPortuguese from Portugal is graduallylosing its dominance in terms ofteaching as foreigners want to learnthe Brazilian version. This is whatled SBS, which is based in São Paulo,to create HUB Editorial, a divisionthat produces digital interactivePortuguese teaching books and preparatorymaterial for the Celpe-Brastests, the Brazilian proficiency certificatefor foreigners. (As alreadymentioned, it publishes the languageprimer Bem-Vindos which has beensuccessfully sold abroad.) Susannasaid Brazil has not appreciated theeconomic value of its language. “InEngland, for example, there are twoenormous publishers - Oxford andCambridge - which produce materialfor studies in the English language,interchange programs and preparetranslators for tourism.”The effort to expand the presenceof the Brazilian book abroadhas relied on the support of theNational Library Foundation inanother area. This year the FBNannounced a US$ 35 million investmentprogram that will run to2020 with the resources directed atfinancing the translation of Brazilianbooks and promoting BrazilianSUppORtiNG tRANSlAtiONSHandout1authors and literature through theirparticipation in events, residentialprograms and supporting trips, lecturesand meetings.(see below). TheFBN created the International BookCenter (CIL) in June this year whichwill be responsible for managingin 2011, the National Library Foundation restructured and expanded anexisting program created in the 1990s to support the translation of Brazilianauthors. The FBN finances the work of foreign translators of Brazilianbooks. Over the last 14 months, it has made 141 translation grants (178in total between 1991 and 2010). One example is o Único Final Feliz Parauma História de Amor é um Acidente by the Rio de Janeiro writer João PauloCuenca. The book was issued in 2010 by Companhia das Letras and publishedin Germany this year by A1 Verlag, translated by Michael Kleger withthe support of the FBN.The FBN also supported the publication in Argentina by El Cuenco dePlata of A obscena senhora D. and Cartas de um sedutor, novels by Hilda Hilstwho died in 2004. She had been already translated into a number of languagesand her works will be now recreated in Spanish by the writers TeresaArijón and Bárbara Belloc. Other five books by Hilda Hilst will be translatedinto English and published in the US by Nightboat Books. German publisherswill translate Ronaldo Wrobel, Adriana Lisboa and Haroldo de Campos,while Reginaldo Prandi and Luis Fernando Veríssimo will be translated intoFrench and the work of Jorge Amado will be published in Catalan for thefirst time. Until now the program has included translation of fiction but46 revistapib.com.br

1 Lerner fromMelhoramentos:starting off2 José PauloCuenca: translatedinto Germanthese resources. Besides increasingthe Brazilian presence at internationalevents, it will be working onBrazil´s participation at the upcomingFrankfurt trade fair in 2013, andthe Bologna Children´s Book Fair inItaly in 2014, the most important inthe segment. It will also be involvedin forthcoming events in France(2015), the UK (2016) and New York(2017).The program for 2013 whenBrazil will be the guest of honorat the Frankfurt Book Fair is beingdeveloped. The president of the NationalLibrary Foundation, GalenoAmorim, says the aim is to show thediversity of Brazilian literature andculture without falling into the clichésof football and carnival. DanielaThomas, who was responsiblefor Brazil´s artistic production atthe closing ceremony at the LondonOlympic Games when the baton washanded over to Rio de Janeiro, willcreate the visual look of the BrazilianPavilion. Along with exhibitionsand debates with authors at the fairitself, there will be a parallel programon Brazil in the main museumsand cultural spaces in Frankfurt andDemand has increasedfor books teachingPortuguese to foreignersother German cities.What was previously a merebrush with internationalization,with one-off initiatives, is now developingand becoming a consistentnarrative. “We are at the beginningof an expansion of the publishingmarket on the international front,”says Breno Lerner, superintendentof Editora Melhoramentos whichhas been a pioneer and taken partin publishing events in Germany for40 years. “It will take along time for us to getto the top.” Companieswill have to makeefforts to ensure theydo not to repeat thefailures of the past. In1994, for example, atribute was paid to Brazilat the Frankfurt Fair itself andthe country gained lots of publicitywhich helped companies strike newdeals. The problem was that therewas no continuity. At that time, thepublishers were more concernedabout buying foreign titles than sellingauthors´ rights from their owncatalogues. Now it is time to turnthis story round.from November it will include technical, scientific andchildren´s literature.The FBN has also created a residence program inBrazil for foreign translators to work on a Brazilian book.They can apply for a grant of US$ 7,500 to stay inBrazil for around three months. The first 16 winnersof the grant will be in Brazil from January and August2013. Among those will be the Argentinean translatorsof Hilda Hilst, Dominique Nèdellec, the translatorof Diário da Queda by Michel Laub into French,and Maria Papadima who translated the Machadode Assis masterpiece Dom Casmurro into Greek. Theidea in the future is to house the grant winners inan 18th century mansion in Paraty in Rio de Janeirostate where Julia da Silva Bruhns (1851-1923) wasborn and lived. She was the mother of Thomas Mann,one of the most famous German writers of the 20thcentury and author of The magic mountain. Her fatherwas German and her mother Brazilian and she livedbucHmesse/book Fair FrankFurtin Germany in adulthood. The FBN intends restoring thehouse to welcome the foreign translators during theirstay in Brazil in a similar way as some other countries.2revistapib.com.br 47

Interview Pankaj GhemawatHandout48 revistapib.com.br

Interview Pankaj Ghemawatglobal, 110 years ago, there were nomultinationals to block its progress.There are some advantages tobeing first.What advantages are these?When I think of Indianpharmaceutical companiestrying to expand overseas, theircompetitors are very concentrated,have lots of market power andseem willing to resort to extremelyaggressive tactics to deny thesecompanies a foothold. If they knowthat a company like Ranbaxy orDr. Reddy’s is investing in a newmolecule that would allow themaround somebody’s patent wall, it isa big deal — it is tens, if not hundredsof millions of dollars. More thanonce these companies have beenready to come to market with anew product, and the multinationaleffectively licenses its product– which is about to go off patentanyway – to six other players. As aresult, they end up bringing downthe price structure and crushingthese companies’ economics. Andthat only happens when you haverelatively concentrated playersin a market. If there were athousand multinationals, no oneof them would have the incentiveto do this. But if you’re Pfizer, youdominate a particular categoryand you see others trying to offerLipitor substitutes, there are manythings you can do to make it lessinteresting for them. So, that is thefundamental difference. They havedifferent strengths and weaknesses.But the big advantage that theestablished multinationals have isthat they are established. They arebig. They have the resources. Theyhave power to retaliate.And what strategy can emerging multinationalsuse to offset this power?One interesting variant onstrategy has to do with South-to-South trade, which is the fastestgrowing category of world trade.Take a sports utility vehicle fromMahindra & Mahindra in India.That car, called the Scorpio, willnever make it in the West. It doesn’tgo fast enough, it doesn’t have thefinish, but the point is: it’s designedfor very bad roads, it’s very durable,it’s very simple to repair. And soit has actually been a success inpenetrating markets like Africa,which values the same kinds ofproduct characteristics.Establishedmultinationals areadopting highlyaggressive tacticsagainst emergingcompetitorsAre there any other strategies?In my work, I’ve talked aboutthree broad strategies for dealingwith differences: arbitrage, whichis exploiting those differences,adaptation, which is somehowadjusting to them; and aggregation,nonetheless finding some way toovercome them and achieving atleast some degrees of cross-borderscale economies. Emerging marketmultinationals can either go upagainst the older multinationalsor they can say “Let’s go findother markets close by with needssimilar to what we already offer andpenetrate that”. Which is what themultilatinas are basically about.That’s what Brazilian multinationalsare also doing to go to the Africanmarket, is not it?Yes, Africa as well – and Brazil isnot the only example. You knowOdebrecht very well, so let me tellyou about Turkish constructioncompanies. These are guys that arenow very big, but they basically gottheir start working in geographieswhere US and European contractorsdidn’t really want to go becausethey were difficult environmentsand politically risky.Is it that the case of North Africa?Yes, Libya, for instance, in the oldGaddafi days. It’s been a strategyof partly exploiting geographiccontiguities — so the Turkishexpanded into Russia and CentralAsia —, but there has also been a bigfocus on saying: “Ok, let’s go wherethe multinationals are not willingto go or where they demand triplepay for hazards and such.”Chinese companies are following thesame path, aren’t they?The Chinese are very good at thatas well, which is a reminder that it’smore than product characteristicsimilarities that make it easyfor a multinational to expand. Ifyou’re from Brazil and you have,thankfully, less recent experiencein macroeconomic volatility,perhaps it’s easier to operate insome other markets around theworld compared to, an Americancompany whose headquarters lacksunderstanding of how to managethrough the whole cycle. Yousee it clearly with US companiesoperating on this continent. Theybuild up presence over years andthen, historically, every timethere is a crisis they rush to sellat the worst possible moment. Iremember being in Argentinaduring the corralito. The swiftnesswith which US companies decided50 revistapib.com.br

to dispose of stakes was interesting.My bank at the time — the Bankof Boston — sold assets held fora hundred years to the SouthAfricans, just like that. The SouthAfricans were very happy. I actuallytalked to them in São Paulo andthey were explaining to me howthey got these assets at about athird of what they were actuallyworth because the Americans werein such a rush to leave.Within these political relationships,you also consider important colonialties.The colony-colonizer relationship,in fact, reminds us that these arevery deep-rooted effects. It takes along time to build up internationalconnections. Think, for instance,of Spanish investment in LatinAmerica. Spain’s colonial ties withmuch of Latin America expiredclose to two hundred years agowith the Bolivarian Revolution.Yet, Spaniards still find it relativelyeasier to think of doing business,particularly investment, in partsof Latin America. That was helpeda little bit by the conjunctureof timing. Spanish companiesstarted looking abroad whenLatin America, following Chile’sexample in particular, started goingthrough major privatizations, inthe 1990s. The most obvious thingfor Spanish utilities and bankswas — “Ok, we don’t think we canquite cut it against the Europeancompanies, but looking at thesemarkets, we think we have someadvantages and we don’t think itwill be that difficult.” And so this ishow Santander explained to me itsexpansion strategy. The long-termtarget was Europe, but the shortrunwas Brazil, Mexico and, giventhe success of the operations, theybuilt up here.If you had just one tip for a Braziliancompany going global now, whatwould that be?Let’s start before such a companygoes global. Companies usuallydecide to go global when theyhave run out of room to growat home. That means they havebeen successful. As a result,these companies are particularlyvulnerable to thinking: “If itworked at home, it is going to workeverywhere.” It’s like Wal-Mart.Somebody asked Lee Scott [thenthe CEO] why he thought Wal-Martwould be successful internationallyDon´timaginethat if it worksat “home”,it will workanywhere— this is back in 2004 — and Leesaid something like: “Look, ifyou could move from Arkansasto Alabama, how much harder isArgentina going to be?” That’s thementality that must be avoided, andthat is why I spend so much timetrying to convince executives thatit is not just inaccurate, but verydangerous to believe the world isflat — that differences don’t matter,that national borders have ceasedto have any effect — because it justreinforces this latent tendency todo in a foreign market whateveryou’ve been doing all along thatmade you successful.What should they do instead?Step number one: rather thanassuming that your strategy willwork, try to take a good, hardlook at the differences that mattermost in your industry. Language isgoing to matter more for a customsoftware company, with lots ofinteractions with the client, thanfor a cement company. It is themanagerial challenge to say: “OK,in my industry, which of thesefactors really matters the most?”And then, having figured out whatthe relevant differences are, that’swhere you have to get creative, tryand think of which of those threebroad approaches — arbitrage,adaption and aggregation — you’regoing to try and follow, which alsohas some implications for whereyou want to try and go.What advantages, then, would youadvise emerging multinationals todevelop if they want to be successfulabroad?A lot of it depends on the businessyou’re in. For Embraer [theBrazilian aircraft company] itwas never viable to focus on theLatin American market. It is notlarge enough to support a firstcost of product development. ForAlpargatas [a Brazilian footwearproducer], it is a little bit easier tothink of doing things on a purelyregional basis. So, I avoid saying“never go far away from home”.The basic point of my work is: it isnever a good idea to assume thatoverseas is like home. The ideais not that nobody should evergo to India or China. But, if yourmajor reason for going to India orChina is that you’ve figured outthat there are lots of Indians orChinese, this is not a proprietaryinsight! [laughing]. You would bebetter advised to try and figure outhow these markets are going to bedifferent, and how you will managethose differences.revistapib.com.br 51

Handoutness to investors and partners – tothe best prepared and demandingaudience at the heart of the world’sdigital economy. And the more succinctand persuasive, the better.There couldn’t be a better environmentfor people like RodrigoGriesi and Daniel Wunderlich, thecreators of the Moovia.com platform,from Florianópolis (SantaCatarina), who were part of theBrazilian entourage in São Francisco.Moovia is a professional socialnetwork that wants to go beyondjust sending out CVs. According toits creators, the network enables theuser to manage projects and work ina community in the way the startupcrowd love — always connected online,in teams often physically distantfrom each other and involvedin several projects at the same time.The platform, according to its ownnumbers, already has 13,000 participants,houses 6,000 workspaces andhas already attracted (in addition toBrazilian users) US, Chinese, Philippineand Italian users.The Minas Gerais companytransferred a subsidiaryto Silicon ValleyIn the opinion of Griesi, visitingthe TechCrunch Disrupt event waslike traveling forward in time andwitnessing the birth of the technologiesthat will be used in 2020.“We came back with several potentialclient and investor contactsand, just as important, we broughtback innovative ideas that we canalready start using in our products”,he says. Another participant at theevent, Gustavo (Guga) Gorenstein(born in Pernambuco but now livingin Brasília) wantsto familiarize Brazilianconsumers with theconcept known abroadas cashback: uponmaking an internet purchasevia its startup sitePoup, consumers receiveback part of the priceof the product or service acquired:around 3%, varying from one sellerto another. Poup also makes moneyby directing consumers to the virtualstore (see box on page 54).Some Brazilian businessmenhave already made healthy inroadsrevistapib.com.br 53

Digital Economyinto the path that Griesi and Gugaare starting to plough. Gustavo Lemos,a 32-year old from Minas Gerais,is an example: a telecom engineerwith a degree from PUC-MG,he did his PhD in Finances and Businessat the Stanford School of Businessin California. The companyin which he is a co-founder, IDXP,has developed a technology for monitoringthe behavior of consumersin real time in the physical world —something that was only feasible invirtual stores, where you can followand identify each click of the mouse.“We put intelligent labels on the productsand supermarket carts – as ifthey were a GPS”, he explains. “I doin the real world what retailers alreadydid on the Internet”. The labelsenable us to track the movements ofconsumers and products in the stores…usefulinformation for retailersto plan their offers.xxxxxxxxxxx1 21 2The idea was an award-winningone: IDXP came first at the IBMSmartCamp Brazil 2011, a startupevent organized in Brazil by ITgiant IBM. Going forward, the planethas been the limit: in the disputewith the nine regional winnersfrom around the world, at the IBMSmartCamp Global Finals in February2012, the Brazilian startup wonthe “world championship” in thepeople’s vote (it was second in thepictures: HandoutFiRSt StEpSJoÃo alVes, creator of the startupcompany WineTag (in Rio de Janeiro),was one of those in attendance atthe TechCrunch Disrupt event in SanFrancisco. WineTag operates as asocial network focusing on wine consumption— via the company, usersreceive personalized recommendationson the right wine for each occasionand can create and managetheir own personal wine cellar. “Ourmain goal was to expand WineTagto the US, raise fresh capital and/orseek partnerships with local companies”,says João. He believes the tripwas well worth it. Three partnershipsare being worked on, includingone with an engineer who will helpthe startup adapt the applicationsdeveloped in Brazil to US culture.“And ever since the trip, we havealso maintained contact with a localinvestment fund”, he says.Poup, run by Guga Gorenstein(born in Pernambuco and living inBrasília), shows just how much ofa newcomer a startup can be on arrivingat such an event: the company,which he created with a friend inBrasília, was nothing more than anexperimental blog at the time of theevent. Poup only started operatingfor real, with its own site, at the endof November. Guga believes thevisit was worthwhile for a number ofreasons: from the chance to touch54 revistapib.com.br

1 and 2 Disruptand the Brazilianstand: fairof ideas3 João Alves,from WineTag(d): partnershipsunderwayxxxxxxxxxxx3jury vote).Recognition of this caliber, morethan just encouragement, proved tobe a challenge: “We received callsfrom clients and investors from allover the world”, says the businessman.“It was a real wake-up call!”With the gauntlet laid down andduly accepted, Gustavo and his teamtransferred an IDXP subsidiaryfrom Belo Horizonte to California,where he and two workmates havebeen living for four months lookingto explore the opportunities createdby the award. “Here at SiliconValley, we suffered a reality shock”,3he notes. “It is difficult to do businessin Brazil when you comparethe facilities here and in developedcountries”. Facilities ranging froma highly favorable legal and tax environmentfor new businessmen,to funds and companies willing tomake risk investments. Inhabitingsuch an advanced, startup-friendlyecosystem was the best thing wecould have done, says Gustavo.” Ihope to take some of the cultureback to Brazil” (see table on page 56).On route to California, the BeloHorizonte company took a shortcut:it resorted to the support of Plug &Play Tech Center, a startup investorand accelerator. What exactlydoes an accelerator do? It helpspromising startups for a specificperiod — generally 3 to 6 monthsbase with potential investorsand partners to the exchange ofexperiences with the Silicon Valleycommunity. “I received a lot offeedback!”, he says. He openly admitsthat the trip helped “validate”Poup’s business model: online foronly two weeks, its Internet storeplatform works with around 60of the largest virtual e-commercesites in Brazil and has generatedsales of R$50,000 so far.Dolum et quis solor simusvoluptus dem rem earumeostecae dolum eaolsrevistapib.com.br 55

Digital Economy— offering temporary offices, mentoring,legal and accounting adviceand even small investments, leavingthem able to stand on their own twofeet at the end of the period. Plug& Play is a US company, but a Brazilianalso played a part: FernandoGouveia, manager of Plug & Play’sinternational operations — and alsoin charge of identifying emergingmarket startups that could benefitfrom accelerated internationalizationat Silicon Valley. In addition toIDXP, Plug & Play has helped otherBrazilian startups. “We’re workingwith three Brazilian companies atthe moment: Dabee, Mowaiter andIDXP”, says Fernando. The businessfocus is software and the internetand a “little bit of hardware”.Fernando (25, São Paulo) fitsthe profile of Brazilians commutingbetween Silicon Valley and startupcommunities in different countries(including Brazil): These Braziliansare young and speak several languages(English is the standard languageused on sites, in conversationsand events) and they are comfortableliving anywhere in the world.Fernando has already lived in Mexico,Greece and Taiwan and graduatedin Finances and InternationalBusiness from Santa Clara University(California). From his privilegedobservation point, he endorses thestrategy followed by Gustavo Lemosto internationalize IDXP: “Thechances of a Brazilian startup obtainingforeign investments soar whenpictures: Handoutpain anD pleasureiDXp Was created in 2010 and initiatedits first practical experience oftracking consumer behavior in 2011,with the Minas Gerais supermarketchain supernosso. The results appearedin six months, when it waspossible to link the increase of up to50% in the sales of some productsto the information collected bythe startup system. From there tointernationalization, it was a veryfast leap full of pain and pleasure.One of the pains, says GustavoLemos, is the nightmare of Brazilianbureaucracy, evidenced whenIDXP decided to open its subsidiaryin Silicon Valley. The obstaclesare unending and very costly for astartup company, he laments. “I insiston citing one: the Central Bankdemands a balance sheet validatednot only by our accountant, but byan accounting company certified bythe Central Bank, and the cheapestone we found costs R$15,000”,says the young entrepreneur, indignantly.“It’s investor money, forproduction, that we are spending onred tape “.Such difficulties led Gustavoto face the phenomenon of entrepreneurialismin the country with aheavy dose of reservation. “It is asuperficial movement, consideringthe structural problems of Brazilianbureaucracy”. Gustavo, who isnow involved in his second businessventure, believes Brazilianentrepreneurs need to have a bit ofthe ‘foolhardy’ in them — with itsconnotations of both “stupid” and“crazy” — especially if they decideto go international. “I am makingthe absolute most out of this transition”,he says.But it’s not all pain: there isalso the pleasure. The IBM awardsplaced IDXP on the radar screen of56 revistapib.com.br

1 Brazilians inSan Francisco:uniqueopportunity2 Lemos (r),from IDXP:againstbureaucracythey are based in the US”, he says.That gets the consenting nodof Flávio Pripas, partner-founderof Fashion.me, a social fashion networkin which people (women) createand comment on fashion looks.The company was listed as one ofUS and French retail chains, withwhom it is in negotiations, saysGustavo (the company has anoffice in Paris). And there is a newinvestor on the horizon, alwayswelcome news — startups arealways desperate for capital, tobe able to develop their businessmodels and grow. It would be thethird injection of venture capitalinto IDXP: the first came fromFrance and the second from a Brazilianangel investor (experiencedmarket professionals who participatein startups with intellectualand financial capital).1the 100 most innovative companiesin the world by the Fast Companymagazine. “Americans are an examplefor all budding entrepreneurs”,says Pripas. “It has a large domesticmarket, but thinks internationally “.Flávio steered away from the WestCoast route when he decided toconquer the world — Fashion.meopened an office in New York, thefashion capital of the US. But he isIntel Capital hasalready invested in sixBrazilian startups2also a fan of Silicon Valley: he is oneof the organizers of the BRNewTechevent, a meeting platform betweenheavyweight entrepreneurs to bringthe Silicon Valley’s business cultureto Brazil.Flávio is already in a position totalk of ‘a lesson learnt’, which hecalls “rule number one for internationalization”:you have to focus onthe specific details of your respectivetarget audience, the idiosyncrasiesof other people and cultures. “Inmy business of fashion and interactivity,the US public is much morereserved than its Brazilian counterpart”,he remarks. “Conversationsdon’t flow so easily”.The solution was investingin local partnershipsand expertise,he says. Fashion.me has already hireda US employee and afashion consultancyspecialized in the NewYork fashion segment.In the world of the digital economy,the search for behavioral andtechnological ideas leading to goodbusiness deals is an obsession. DoesIBM promote its SmartCamps tounearth promising startups? Thechip producer Intel injects moneyinto startups via its risk investmentarm, Intel Capital. Again, a Brazilianstartup managed to get its foot in thedoor: PagPop, from the São Paulocity of Ribeirão Preto (and with a technologycenter in Rio). In October,at its Global Summit (an encounterthat brought together hundreds ofbusinessmen from all over the worldin California), Intel Capital announcedinvestments of US$40mn in tenstartups — one of them is PagPop, togetherwith another four in the US,two in China and one in India, SouthKorea and Taiwan. The São Paulocompany has developed a paymentsystem for freelancers that acceptscredit cards via landline phones,mobile phones, smartphones andtablets.“The market to expand this type ofservice transcends Brazil”, believesrevistapib.com.br 57

Digital EconomyMárcio Campos, CEO of the startup.The exact amount of the Intel Capitalinjection wasn’t revealed, butthe Brazilian company was includedin the “A” category, meaning capitalinjections ranging from US$2mn toUS$10mn. PagPop’s story is a goodexample of another potential formof mutual discovery discussed at thestart of this report: instead of Brazilianentrepreneurs going over there,Silicon Valley investors are bringingresources here to Brazil. This wasthe sixth investment of Intel Capitalin Brazil in 2012 (Fashion.me, mentionedabove, received one of theseinjections). For PagPop, it was thesecond capital injection receivedby the startup and the first fromforeign investors. “It was a major1The government hasr$40mn to supportstartups by 2015facilitator”, says Márcio. N0w withan office in São Paulo as well, thecompany is gearingup to receive a thirdinjection this year. “In2013, Brazil will be ourmain focus, but we canalready plan on expandingoperations to LatinAmerica”, remarksMárcio, toasting the new investor(who he doesn’t identify). “It’s acaps lock! he says — the slang ofcomputer fanatics for a big fish.Next year, entrepreneurs in Márcio’ssituation will be able to raisecapital right here, via the StartupBrasil program, launched in Novemberby the Ministry of Science,Technology and Innovation (MCTI).The program is part of the government’sPlano TI Maior investmentpictures: HandoutSERiAl BUSiNESSESin The super-fast world of thedigital economy, there is perhapsno better praise than to say thatsomeone is a serial entrepreneur. Inother words, someone who createsone business/deal after the other.If some don’t work out, there’s noproblem: try again. Those lookingto understand how this ferociousbusiness environment works canresort to the book A menina do Vale(The silicon Valley Girl), by Bel Pesce,the Brazilian muse of this generation,who simply had to go and livein Silicon Valley. The book is a mixof a diary and a survival manualwritten by a representative of thespecies of serial entrepreneurs.Born in São Paulo, Bel sold customjewelry door-to-door, graduated atthe respected Massachusetts Instituteof Technology (MIT), workedat Microsoft and did her master’sat Google — all this before the ageof 25. Bel is now running a startup(called Lemon) offering an applicationto control personal expenditures.And she warns: “The pathisn’t an easy one, although it isn’tas hard as it used to be”.And if the budding entrepreneurhas a hard time understandingthe startup tribe’s language,how about looking up a guide to“startup=speak”? It exists, thanksto the Startupí blog, and is convenientlycalled “Startupedia” (itcan be accessed at http://startups.ig.com.br/startupidia/). In the58 revistapib.com.br

1 Pripas (r),from Fashionme: culturaldifferences2 Gorenstein(c), fromPoup: firststeps3 Bel Pescebook:survivalmanualtechnology program to providestimulus to tech-based companies.The objective is to invest R$40mn instartups by 2015 — each one of thecompanies, which will be selectedbetween January and March 2013,will receive R$200,000. The officialprogram, just like so many privatesectorinitiatives, will cultivate theincreasingly strong ties between theguide, you can learn that there is noshame in resorting to “love money”to start a business venture — i.e.the initial investment paid by familyor friends who believe in the youngentrepreneur’s idea (a Brazilianversion is paitrocínio – a play on thewords ‘pai’ = father; and ‘patrocínio’= sponsor). At the end of the day,seed capital — which makes an ideablossom — doesn’t grow on trees,and angel investors aren’t found onevery street corner.Brazilian startup community andSilicon Valley: a division of StartupBrasil in California is expected to beopened, coordinated by the BrazilianPro-Exports and Investmentsagency (ApexBrasil), says RafaelHenrique Rodrigues Moreira, head23of software and IT services at MCTI.The aim is to open up doors to internationalsales and raise investments.“We are a country of entrepreneurs;at an entrepreneurial event in acapital city from Brazil’s Northernregion, we had 3,200 inscriptions”,says Moreira. “Young people wantto have their own IT businesses, andforeign investors believe Brazil hasthis major potential”.No one is denying that the timehas arrived for sun-tanned Brazilians(well, maybe not so suntanned!)to show their worth. Buthype alone isn’t enough — medianoise on the new frontier of thedigital economy — notes Bob Wollheim,Startupí partner. “There isan opportunity in Brazil, but thecountry isn’t a place from the ‘WildWest’ still to be discovered”, he says.“Much of the entrepreneurial energyneeds the hype, since it helps to callattention and instills courage, butwe realized that more consistent informationis needed to guide foreigninvestors in Brazil”.In other words: in a complexcountry, with so many bureaucraticidiosyncrasies, these investors needto understand the advantages andalso the difficulties of doing businesshere. “Showing a well-groundedscenario, with more mature discussionsand participants, sharingsuccessful and failed experiences”,is Bob’s recipe — a task that couldstart in the pursuit of local partnersfor foreigners, “so that they becomemore ‘Brazilian’”. Danilo Amaral,from Trindade Investimentos, apartner of Bob and sponsor of theStartupiCon meeting, Valley MeetsBrazil, created an image for this inevitablestage of acclimatizing to thetropics: “Before doing business inBrazil, you have to learn to eat friedchicken with your hands!”revistapib.com.br 59

ExportsexpensiveanimalsBusinesswoman breeds alligators in Alagoas to exportthe skin and accessories that are coveted on the luxury marketsuzana camargoCristina Ruffo fromSão Paulo now knowseverything about thehabits and how to raisecaiman latirostris,the scientific name for the alligatoralso known in Brazil as the jacaréde-papo-amarelo.However, her firstencounter with the animal gave hera real fright. Cristina was a journalist,living and working in São Paulobut had a heart attack at the age of34 and decided to start a new lifein the less stressful atmosphere ofMaceió, the capital of the Alagoasstate. She opened a restaurant alongwith her second husband, an Italiancalled Silvio Garabuggio. To meetMister Cayman rears16,000 animals,worth r$ 180 millionthe restaurant´s demand for a tastyfreshwater fish known as tambaqui,the couple began to rear them in anartificial pond. Once when she waschecking how the fry were growing,she got a great surprise. “Whenwe lifted the net, there were threeyoung alligators inside,”she said.Her shock gave wayto curiosity and arousedher entrepreneurialspirit. Cristina andher husband discoveredthat these unexpectedguests could also be raised in a sustainableway. Even better, they openedgood business prospects in theluxury goods and accessory market60 revistapib.com.br

Alligatorskin cut andpainted: highadded valueFiNE SKiNSGlobal eXporTs of crocodile andalligator skins 2006/2010Numberof skins1800000160000014000001200000100000080000060000040000020000002006 2007 2008 2009 2010HandoutSource: John Caldwell (2012). World trade incrocodilian skins 2008-2010. UNEP-WCMC,Cambridge.— shoes, bags, purses and walletsmade with alligator skin. The resultwas the creation of Mister Cayman,a company that now has more than16,000 alligators and an estimatedvalue of R$ 180 million. She sold120,000 centimeters of skin last year,with 70% of the total production exported.Cristina is cautious in terms ofidentifying the importers but she givessome hints. “I have clients whowork with alligator skin and maketheir own line of products. The Borellibrand of Turin is one and weA shoe made from alligatorskin can cost more thanuS$ 3,000 in Europeare negotiating with others,” shesaid. This discretion is part of thebusiness as this raw material is greatlyin demand by the big brands whichuse them to make extremely expensiveproducts. For example, shoesmade with alligator skin cost anaverage of US$ 3,200 in Europe, saidCristina. A Hermès crocodile skinbag can be found on second-hand sitesin the United Statesfor US$ 18,000. (If theclient wants to queueup to buy a new piecein the brand´s store, shemay have to wait severalyears and pay threetimes as much.)Cristina had to learn a lot toenter this valuable and restrictedmarket niche. After the three smallalligators appeared on her pro-revistapib.com.br 61

Exports13perty in Maceió, she and herhusband, who is an ethnologist(one who studies thehabits of animals), broughta professor from SãoPaulo University(USP) who is aspecialist in thecaiman latirostrisalligator to Alagoas.A nursery wasset up in 1994 withthe three first alligators,followed by severalyears of investment andstudies. Cristina visitedAustralia and the United States severaltimes as both countries havegreat experience in raising alligatorsand crocodiles. “We were adaptingthe techniques we saw there to theclimate in the Northeast of Brazil,”said Cristina. “Our rearing area wasour laboratory”. The investment inthe first years was not small and sheestimates it came to approximatelyR$ 3 million. However, she wasalways confident that she would geta return.Demand for alligator and crocodileskins is very high throughoutthe world. (see box on page 64)pictures: HandoutNO RiSK OF ExtiNCtiONMisTer cayMan haD to overcomea challenge before arriving on theinternational market which wasto prove that its operation wassustainable and represented no riskof extinction to the Brazilian jacaré--de-papo-amarelo alligator. Theanimal is listed in appendix I of theConvention on International Tradein Endangered Species of Wild Floraand Fauna (CITES). This consists ofspecies which have been removedfrom the list of those threatenedwith extinction in their countries oforigin but still run some risk in otherparts of the world. When these animalsare reared in captivity, they canonly be sold from the third generationon, i.e. the subsequent offspringof the first generation in the nurseryand this has to be demonstratedthrough projects with video andphotographic proof.Mister Cayman only received theauthorization to export its caimanlatirostris skins from the BrazilianInstitute of the Environment andRenewable Natural Resources(IBAMA) in 2011. Cristina and herassistants had to get up very early inthe morning for months over a five--year period to produce the requireddocumentation. The alligators mateand lay their eggs at dawn betweenSeptember and April. The eggshatch after around 76 in an electrichatchery. “We did all the filmingand photographed everything on adaily basis during the mating seasonand the laying period which onlyhappens once a year,” Cristina said.The hatchery is now into itsfourth generation and the fourthgeneration of the original animals.The buyers of the skins want themto be in an excellent state withoutany wounds, scars and scratcheswhich means the animals have tobe looked after carefully and givenspecial treatment. “The skin of thewild animal is blemished by theeffects of drought and rain as wellas fights,” Cristina added. Thosereared in the hatchery benefit fromthe greenhouse atmosphere whichkeeps them healthy and maintainsthe quality of the skin. They arealso used in studies to improve theirgenetic stock.Mister Cayman´s 16,00062 revistapib.com.br

1 Cristina:getting awayfrom the stressof São Paulo2 Hatcheryin Maceió:low costs3 DuMotiershoes andbags: bettingon the brandThe Hermès Group announced in2009 that it was investing to raiseits own alligators in Australia toensure the supply of the skins usedin its bags. At that time, the Frenchcompany was making 3,000 alligatorbags a year and needed three tofour crocodiles to produce a singleitem. A recent study by the UnitedNations World Environmentalprogram - the World Trade in CrocodilianSkin 2008 – 2010/UNEP– stated that 1.3 million crocodileand alligators skin were exportedin 2010. This was an increase over33the previous year when just overone million units were sold. Thebiggest exporters were the UnitedStates, South Africa, Zimbabwe andColombia.The survey shows that the supplyof the caiman latirostris species,which is natural to Brazil and Argentina,has increased in terms of worldtrade. Everything indicates thatthis is not a passing phase. “Fashionaccessories made with this kind ofskin have always been regarded asa very fine noble material and havebeen sold for at least a century, “ saidSilvio Passarelli, director of the LuxuryManagement Program of theFundação Armando Alvares PenteadoUniversity (FAAP). It is not surprisingthen that Cristina decided togo beyond being a mere supplier ofraw material within the productionchain. Last year she has launchedher own brand called DuMotier.The aim is to multiply MisterCayman´s revenues by selling itsown line of accessories, created bya designer contracted in Italy andproduced in a plant that has beenset up in Maceió. Sixty employees3animals consume two tons of poultry everyday, consisting of parts that are unfit for humanconsumption. The maintenance costs for thehatchery in Maceió are low. There are threetechnicians who handle the animals and someadministrative staff. Cristina´s husband Silviotakes care of the feeding and reproduction.“Handling is kept to a minimum and we havebuilt some customized equipment to dealwith the alligators,” she said. The animals areslaughtered between 18 and 24 months. Thedecision on slaughtering is not based on weightbut the linear measure of the broadest part ofthe stomach. When opened the skins must bemore than 40 cm in width. (This maximum measurefor the stomach in centimeters is also thestandard used in the international skin trade.)Two hundred animals are slaughtered per month.The females and larger animals are sparedfor procreation and to improve the genetic stock.2revistapib.com.br 63

Exportswho have been trained by professionalsfrom Florence — some of whomcame to Brazil —produce 400 to 500items a month by hand. These aremen and women´s shoes, bags, purses,wallets and belts. The plant isexpected to produce 1,000 pieces by2013 but no more than that.Rarity means profit at the end ofthe day in this market. “The greatadvantage of this material is its scarcity,”said Gabriela Otto, professorin the luxury marketing course atthe Escola Superior de Propagandae Marketing de São Paulo (ESPM).“It will never be a large-scale businesssince this would upset theconsumers who want items thatare exclusive, rare and difficult tomake.” Cristina agrees with thisview. “We are not considering increasingthe nursery area and we don´twant to slaughter more animals. Weare already gaining enough with thelittle we produce.”The greatest demandfor products made withthe skin of exotic animalscome from thosethat Gabriela definesas the more mature markets:Europe and theArab world. The keenestconsumers in theEuropean countries arethe Italians and French.However, this kindof product encountersgreat resistance in Germanyfor environmentalreasons. A lot of consumersfeel uncomfortableabout buying anythingmade with the skin ofan animal, whether itfaces the risk of extinctionor not. This is alsoone of the reasons whythe international brandsmake a point of ensuring1CROCODilE OR AlliGAtOR?iT MiGhT be difficult for the laymanto differentiate one species from theother but there is no doubt in theeyes of specialists, particularly thoseinvolved in the sale and handling ofexotic animal skins. Crocodiles andalligators belong to different families.The first is a crocodilidae, a namethat cover 14 species. There are eighttypes of alligatoridae, commonlycalled the alligator (jacaré in Brazil)including the Caiman and Paleosuchuswhich are common in Brazil. In biologicalterms, alligators and crocodilesare different in the shape of theirheads and alignment of their teeth.The caiman latirostris is also found inother South American countries andmeasures between 1.5 m and 2.5m.It is believed to have a lifespan ofaround 50 years.One centimeter of the skin of thejacaré-do-papo-amarelo alligator costsaround 2 euros less than that of acrocodile. The skin of the Crocodiloporosus (the best known and raisedin the wild) costs around 24 euros acentimeter. The skin of the Caimanlatirostris sells for 22 euros a centimeter,always measured by the maximumwidth of the stomach of theslaughtered animal, according to theinternational practice. However, only70% the crocodile’s skin is used while100% of the Brazilian alligator´s skinis used. “Our animals have a smooth,delicate skin as they are reared in greenhousesand captivity,” said Cristinaof Mister Cayman . “Crocodile skin ismuch tougher”.264 revistapib.com.br

1 PassarellifromFAAP: finematerial2 Coloredskins:priced bycentimeter3 The caimanlatirostris:South Americanalligatorpictures: Handoutthat their raw materials are of legalorigin and have been certified by theenvironmental and animal protectionbodies. (see box on page 62)The DuMotier shoes and bags arebeing exported to Dubai, Spain, Italyand the UK. To do so, an internationalsupport team was set up withrepresentatives of the brand in theUK and Italy. Cristina, who speaksFrench, Spanish and Italian, makesa point of always being present inthe initial contacts with potentialbuyers. She also shows her productsat the Mipel trade fair in Milan. Sheintends working only with the productionand export of these higheradded value pieces shortly and windingup the skin exporting operation.Her plans have not stopped there.She is considering opening afranchise of the DuMotier brand inBrazil and other countries. At thesame time, she is active on two otherbusiness fronts: MrKrocco, whichsells the meat of the slaughteredanimals — a kilo costs between R$45 to R$ 100s — and the Jacaré Sustentávelproject that offers individualinvestors interested in raisingalligators 80 animals for breeding.The initial investment required isalmost$ 1 million. A new complexis being built in an area covering 45hectares in São Miguel dos Campos,Cristina also createsand sells accessories aswell as exporting the skins50 km from the present nursery. Thework should be ready in three yearsand an estimated 40,000 alligatorswill be hatched every year.Cristina´s Pioneer work led herto receive the Sebrae Woman ofBusiness Prize this year. The Sebraebody which encourages smallbusinesses helped her bring togetherthe documentation required toexport her products. This partnershipsubsequently led her to givelessons on the business to producersin the Pantanal region of Brazil andAlagoas. As we can see,Cristina, who left SãoPaulo for a calmer lifein the Northeast, hasnot managed to slowdown the pace of life.“I only spent 21 days athome between Marchand October 2012. Iwill shortly be making a trip to Chinaas I have received lots of e-mailsfrom people there.” Asked if she isnot afraid of the business becomingtoo big, she replies with a laugh: “Italready is!”3revistapib.com.br 65

ArticleDon´t turn your back onChinaBrazilian business leaders must losetheir fear of the Chinese andunderstand their way of doing businessMarcos Caramuru de Paiva*An incident that occurredto me recentlyhighlights the ratherodd way we westernersfeel ordinary Chinesethink and behave. I needed tochange home and asked my secretaryto hire a moving company. Shestarted phoning specialist companiesand I became a little concernedwhen I overheard what she was saying.She was underestimating theamount of items to be moved andI thought the estimate would notreflect the real situation. I warnedher: “We will have problems ahead”.However, she was not bothered.She claimed that this was howthings worked in China. When themoving service arrived, they wouldimmediately say there were moreitems than we had told them. If wehad given the true amount, negotiatingthe price would have startedat a much higher level. If we underestimate,she said, the negotiationwill start at a level that will suit usin the end. Nobody ever says theexact amount to be moved and theestimate is only the beginning ofa conversation. The company didnot believe in the price it statedand nor should we. “We will onlyknow what you will pay when yourthings are actually installed in thenew apartment,” my secretary said.On the fixed day, the movers arrivedearly. As expected, they immediatelystarted to complain. “Thereare far too many things here. Theestimate we gave you no longer applies.”This led to a long and bitternegotiation on the cost of the move.The discussion became increasinglyheated and the movers were carryingmy things rather resentfully.“This is terrible,” I said to my secretary.“These guys feel they are beingexploited. They will break everything.”“Don’t worry,” she replied,“this is how things work. When itis all finished, I´ll give them a tip.”To cut a long story short, a pricewas eventually established which Ithought was fairly cheap. I paid, shegave them a tip and my belongingsarrived in reasonable shape.What can this episode can tell usabout the real state of China? Firstly,that pre-fixed estimates and pricedreamstimedo not have the same meaning aselsewhere. They are only the beginningof a conversation. Secondly,the final price always results from adialogue and negotiation. You needto establish a contact between whois demanding and who is supplyingthe service. Although this appearsto be confrontational, interaction isbetter than no contact. Thirdly, youneed to be on the alert from the firstmoment in any negotiation. It is importantfor the party that is payingto have a low base figure while theside that is selling or providing theservice needs to have a high figure.A white lie is part of the game. Notlying just confuses things.66 revistapib.com.br

Rising consumption:China will stop being anexporter and becomean importer of goodsAnyone looking at the Chineseeconomic situation will face practicesand procedures that, just likemy moving episode, seem bizarre.One example, if an investment looksprofitable, there will be such a highnumber of investors interested thatthe end result is chaos on the market.After that, a time will come wheneverybody starts losing and the sectorthat received the investmentswill enter a consolidation process.Those who are best prepared willsurvive. Something similar happenedin the aviation segment, forexample. When China decided toopen the civil aviation sector, thenumber of companies that preparedChina will be the greatestsource of opportunities inthe coming three decadesthemselves to fly passengers was extraordinary.As expected, this led tochaos. From then on, the aviationsector has consolidated and begunto function in a more or less balancedway.A few days ago I was talking to abanker who said: “I never make ananalysis of companies. I never knowhow many investors there are inthe business segment that is askingfor a loan. I ignore how things willprobably happen. I only assess theskills of the executives. In my bankwe send the head office analysis ofpeople, not businesses, with commentson performance, not on figures”.Things happen more or lessas follows. Chinese businessmenoften start investments without anykind of risk evaluation or businessplan. They know that there will besome difficulties ahead and try toprotect themselves to deal with it.They feel the best way of protectionis to build a group of relationshipsthat will ensure they have someoneto turn to when things start to gowrong.I will make now a brief analysisof the political and economic situationin China. I will then deal withinvestments in a more general wayand, finally, give some tips for anyonewho wants to do business. Let´sstart with politics. The CommunistParty has just chosen its new leadersfor the next 10 years. The presidentand prime minister who havebeen chosen belong to a group ofleaders who have often been calledreformers. This means they believethat China needs to open up further,modernize more and make advancesin reforms. On the other hand,there is a large group of politicalleaders who think that the openinghas already caused very serious socialproblems. A biggeropening will expandthe social differences.Besides this split,the country also facesan economic dilemma.China will grow in thecoming 10 years forone simple reason: itis a poor country, with basic needsthat still need to be fulfilled. Poorcountries that are well run tend tohave high growth. This means thatChina´s economy is guaranteed togrow by at least 5% to 6%. However,a country that has modernized andwants to expand its importance inthe world needs to undergo reforms.These occur through greater efficiencyin the financial system, withstronger capital markets, a greaterchoice of investments for savers, anopening of the capital account andthe subsequent free flow of resources,greater freedom of movement bypeople and a strengthening the fiscalsystem. This leads us to believe*Partner in KEMU Consultoria, Shanghai, where he was previously Brazil´s consulgeneral. He has also been ambassador in Malaysia, secretary of International Affairsat the Finance Ministry and an executive director of the World Bank. This isa shortened version of a speech he gave at the Market Focus China seminar held byApexBrasil at the headquarters of the São Paulo state industrial federation (FIESP).revistapib.com.br 67

Articlethat the coming 10 years will be aperiod of radical transformations inChinese life. The country will notremotely resemble its current situationat the end of the decade.One of the problems for Chinaanalysts is to deal with things thatare constantly changing. It is difficultto compete with the Chinese,particularly in the industrial sector.However if the plans announcedfor the coming 10 years bring results,China will cease to be a greatexporter of goods and become alarge importer. It will no longerbe an importer but an exporter ofcapital. This means there will be agreat expansion of opportunitieson the Chinese market. At the sametime, costs will increase which willlead the Chinese to export that partof their industry that depends oncheap labor. The rules for attractinginvestments will become tougherin order to attract companies thatbring technology and innovation toThe Chinese will know howto take advantage of thecrisis in Europethe Chinese economy.This is already apparent to a certainextent. The growth of exportsis cooling and investments in Chinahave become more sophisticated.Chinese companies invested overUS$ 70 billion abroad in 2011 andshould invest even more in 2012,according to the published figures. Iam often asked why Chinese companieswould invest abroad when theyhave an expanding domestic market.The first and most obvious reasonis that it is becoming more difficultto make money, due to thetougher competition. The secondreason is that costs in China arerising. The labor contracts law of2008 had a great impact on laborcosts, particularly as companieswere forced to pay correct pensioncontributions. Moreover, growth itselfis creating demands for higherwages. The third main reason is relatedto the risks of a closed economy.Companies will always be betterprotected if they can maintain apresence abroad. The fourth reasonis the business risk. Investing abroadmeans diversifying risk. Until veryrecently, Chinese investors did notinclude this factor in their strategies.Now they have matured and startedto do so.Where will the Chinese investorsgo? In the short term, I expectthem to head for Europe where thecrisis has brought great opportunitiesthey will certainly know howto exploit. But we should not overlookother possibilities. Are theyinterested in Brazil?First of all, Brazil is thesixth-largest economyin the world and is setto become the fourth.Large economies obviouslyhave to relate toNely caixetaeach other. Chinese investorssaw Brazil for along time purely as an opportunityto invest in strategic sectors likeagriculture, mining and oil but thisview is being gradually replaced bya new approach. Investors are lookingfor opportunities for other reasons,whether because they alreadyexport and believe that if they investthey will have higher gains –as in the case of the auto industry– or because the Brazilian marketoffers new opportunities that canonly be taken advantage of with localinvestment.Is it difficult for Brazilians to investin China? Not really. The Chineseregularly announce the sectorswhere investments can be madefreely, those that require a domesticpartner and those in which foreigninvestment is banned. This does notmean that strategic sectors are notbureaucratic or there are no unexpecteddemands but the generalrule is clear and transparent. It is arelatively simple and fast processto open a company, whether aloneor in a joint venture with a Chinesecompany. The tax side is relativelysimple. There are two main taxes:68 revistapib.com.br

Shanghai´s financialcenter: reformsto bring greaterefficiency3on income and added value. The servicessector pays a tax on business.Apart from these, there are somelesser taxes which change accordingto the location.Overcoming the bureaucraticbarrier is not the main obstacle forthose investing in China. The mainchallenge is the business culturewhich is very different from thewestern approach. I would highlightthe three most important points.Firstly, little importance is paidto contracts. This does not meanthat the Chinese will not insist onprotection clauses in contractualagreements as they are extremelydemanding. However, once a dealhas been done, contracts have littlevalue. What is most importantin Chinese culture is that the twoparties are satisfied and a painstakinglyconstructed contract does notalways allow this.The second aspect is related topersonal contacts. Doing businesswith the Chinese extends beyondthe negotiating table. You need toestablish a relationship with thoseyou are dealing with. This meanseating, drinking and relaxing withthem. There is no business withoutthis personal relationship whichalways outweighs contracts. Evenif the contract is being met 100%,both sides will sit down and listenand try and reach an understandingif one party is dissatisfied. The thirdaspect relates to the regulatory sidewhich is more of a reference thanan obligation. The laws are appliedDon´t expect your salesrep in Shanghai to do agood job in Jiangsuto the letter when they make senseto the investors. When they do not,they are applied pragmatically ornot at all.In concluding, I would offera few pieces of advice. Exportersshould bear in mind that they arenot arriving in China as such but inShanghai, Beijing, Nanjing, Chengduand so on. The country is vast andlocal cultures require a sales representativein every place who knowsthe local traditions and speaks thelocal language. Do not think yourrepresentative in Shanghai will begood at selling in the neighboringprovince of Jiangsu. Find anotherrepresentative in Jiangsu.Two tips if you work with imports.Firstly, check out everythingfrom production to shipment. If youcannot check yourself, hire a goodcustoms agent to do so. He will resolvemany problems. Avoid buyingthings through the Internet at allcost. They work well domesticallybut represent a great risk for theimporter.If you plan to invest in productionor placing a consumer good onthe market, follow the rule, hire agood accountant (this also appliesthroughout the world), maintaingood public relations and keep awatchful eye on your brand, particularlyif you have a partnershipwith a local company. Your view ofthe brand may not be shared by yourcommercial partner and the brandcould easily lose its identity if it isnot looked after.China and Brazilare destined to interacteconomically. There isno other way. Don´ttry and escape fromthis situation as Chinawill impose itself onthe world economy inany case. It is always easier not toface up to a situation that is so differentfrom ours, keep the Chineseat arm´s length and turn your backon China. However, China will bethe greatest source of business opportunitiesin the coming three decadesat least. If you are inclined totake the easy way out, rememberwhat Winston Churchill said: “Apessimist sees the difficulty in everyopportunity; an optimist seesthe opportunity in every difficulty.”You should join the second group,the optimists, as soon as possible.revistapib.com.br 69

CompaniesInternationalizationmoves on holdBrazilian transnational giants reassessinternational presence to face global crisisLUCIANNE PAIVA, Rio de JaneiroBrazil’s two largest companiesare rethinkingtheir internationalpresence, in responseto the effects of the crisisin the wealthy nations and theneed to accumulate cash and concentrateinvestments in their Brazilianoperations. Oil heavyweightPetrobras has slashed its internationalinvestments (in both absoluteand relative terms) ever since thediscovery and development of thepre-salt oil reserves started to dictateits path, while mining giant Valeis suffering from a weaker globaleconomy (hurting iron ore demandand prices and, thus, its revenues)and is reorganizing its assets in orderto focus on the most profitablesegments. But since much of Vale’soffshore activities aren’t part of itscore businesses (namely, productionof iron ore, copper, fertilizers,coal and nickel), its internationaloperations are less relevant in thisscenario.Petrobras’ investments in itsinternational operations slumpedfrom US$12.1bn in 2007- 11 toUS$10.7bn in 2012-16, and in relativeterms the decline is evenstronger. Previously, internationalinvestments represented 14% ofthe US$87.1bn forecasted amountfor 2007-11. Now, this percentageshare has fallen to 4.52% of theUS$236.5bn to be invested in 2012-16. The company’s internationaldivision has been without a headsince former director Jorge Zeladastepped down in July. Petrobrasmerely announced that CEO Mariadas Graças Foster is overseeingthings and that any change will becommunicated at the appropriatemoment. Is this a sign of thereduced importance of operationsbeyond national borders?At first sight, this is also what ishappening with Vale, which is nowstepping on the brakes in its aggressiveoffshore expansion — at thestart of the 2000s, the company waspresent in 5 countries and is nowactive in 37. The slowdown largelyresults from the sharp decline in theprice of its main product, iron ore: atonne of iron ore, which was pricedat US$151.26 in 3Q11, now costsUS$83.69. This 44.7% price slumpExternal front52.3% of Vale’s operatingrevenue comes from abroad(32% from China alone)The share of internationaloperations in Petrobras’global investments fell from14% to 4.5%.is a direct result of weaker demandfrom China, a major iron orebuyer. Iron ore prices have alreadyrebounded a bit and were close toUS$116 at the start of December, butprice levels remain a concern. Datafrom its last balance sheet show thatmore than half of Vale’s operatingrevenue comes from Asia. Chinaalone accounts for 32% (equivalentto US$7.109bn).The scenario has forced the70 revistapib.com.br

Vale Omanplant: newpartner gets30% stakecompany to reduce its investments.By year-end, it will have investedUS$17.5bn, 18.2% less than theUS$21.4bn initially planned and below2011’s US$18bn. For 2013, theforecast is US$16.3bn, 6.8% less thanthe 2012 figure. Upon announcingits investment plans at a meetingwith market representatives on theNYSE, at the start of December, CEOMurilo Ferreira acknowledged thestrong prevailing uncertainties.The sales slump has reducedthe company’s appetite for internationalventures and led it to prioritizeinvestments in its aforementionedcore businesses. The strategicreevaluation of Vale’s assets isthe main management hallmark ofCEO Murilo Ferreira, who in May2011 replaced Roger Agnelli (responsiblefor the company’s stronginternational expansion). Adverseinternational waters have led theHandout/Valecompany to sell non-strategic assets,implementing what is referredto internally as an active portfoliomanagement program. A shortwhile ago, it concluded the sale ofits manganese alloy assets in Europeand transferred its 30% stake in thepelletizing plant in the industrialdistrict of Sohar (Oman). This year,it has also divested its thermal coalassets in Colombia.Vale executives insist that thesedivestments don’t mark a turnaroundin the company’s internationalizationstrategy. In a recentinterview, Luciano Siani Pires (CFOand IRO) said that internationalresources represent some 35% ofthe company’s total investments, apercentage that has held constantin recent years. That’s one thing.The other is the need to focus onbusinesses with greater potential.“We aren’t just pursuing growthor volumes without creating valueas well”, said Luciano Siani Pires,Vale’s executive director of Financesand Investor Relations. Weighing upthe company’s performance in Q3,Mr. Pires admitted that most of thenon-core (and thus ‘sellable’) assetsare located outside Brazil. “Whenwe talk about divesting assets, we’retalking about small assets usuallyoutside Brazil, which really aren’tthat interesting for a business thesize of Vale”, he added.This message has been well-acceptedby the market. “Vale is a globalcompany, you can’t talk about Valewithout mentioning internationalization”,says Pedro Galdi (chiefstrategistat the SLW Corretora brokeragehouse), who has been trackingthe company’s businesses closely.“What the CEO (Murilo) said is thatthe company won’t stop operatingabroad, but instead pull back onnon-profitable projects”. The aimrevistapib.com.br 71

Companies1is to seek low-cost, higher-returnassets during the crisis, focusingon operations that promise a longlife, high-quality production andgrowth capacity. In its last balancesheet, the company mentioned twoprojects that sum up this new phase:the first is Carajás S11D, in Serra Sulde Carajás (Pará state), expandingoperations in what is possibly Brazil’sleading mineral province, withestimated investments of almostUS$20bn. And the other project isthe promising extraction of coal inthe region of Moatize, in Mozambique— a sign that Vale remainswilling to operate beyond Brazilianborders, provided the project makessense from both a strategic and commercialstandpoint.In the opinion of Istvan Kasznar,head of the Support Center forTransnational and National Companies(NUT) at the Getulio VargasFoundation in Rio (FGV-RJ), thisslowdown in the international expansionof Vale and Petrobras is atemporary situation, reflecting thecurrent circumstances. “Both companieshave a solid, qualified andwell-mapped internationalizationpolicy”, he says. In fact, Istvan believesthe current stance of greatercaution on the global economicslowdown is a welcome move. “Anymultinational worth its salt is reviewingits position abroad, and so itwould be worrying if Petrobras andVale weren’t doing the same”.Petrobras is today a story of massivepotential (in the commercialexploration of the pre-salt reserves,which promise to thrust Brazil intothe club of the world’s largest oilproducers) and limited resourcesto make this potential a reality.Pressured by the fact that domesticfuel prices have been kept virtuallystable in recent years – as part of apolicy that helps the Brazilian governmentkeep inflation in check butimpacts the company’s accounts– Petrobras’ response has been tofocus its investments on domesticoil and natural gas exploration andproduction. This strategy has oscillatedin recent years, signals anVale is a global company.Internationalization goeshand in handenergy sector analyst. “When Brazilopened up its oil market in 1997,Petrobras was still the number onecompany in the chain, but lost itsrelative weight, which it would recoverabroad by becoming an oil major”,says Adriano Pires, director ofthe Brazilian Infrastructure Center(CBIE). But the Lula governmentchanged this outlook, he says. “Thepre-salt oil discovery reinforcedPetrobras’ role in the domestic market,putting internationalization toone side”. In the view of Mr. Pires,Petrobras’ current policy is to sell itsoffshore assets to bolster its cash forinvesting in the pre-saltoil exploration.Petrobras has alreadyannounced thatit wants to divest itsoffshore assets. The2012-16 business planforesees US$14.8bn inasset divestments andrestructuring, with a focus on internationaloperations. Accordingto the company, half of this amountwill be in divestments – meaningthat asset sales are estimated atUS$7-8bn in both Brazil and abroad.In the first phase of the program,announced in November, Petrobrassold its 40% stake in an explora-Pictures: Handout/Petrobras72 revistapib.com.br

1 Petrobrasrefinery inPasadena (US):up for sale2 CEO Mariadas Graças:selling assetsabroadtion block in the Santos Basin forUS$270mn to OGX (owned by EikeBatista). The list of possible offshoreasset sales includes refineries in Japanand in the US, such as the Pasadenarefinery (in Texas), assets in Argentinaand a stake in exploration blocks in theGulf of Mexico. But the company ishaving difficulties in the negotiations,says Mr. Pires: the potential buyersare aware of Petrobras’ cash needsand are thus trying to bring pricesdown.At the end of November, CEOGraça Foster confirmed that the Pasadenarefinery is up for sale, addingthat there is no deadline to close thedeal (according to the Dow Jonesnewswire, Petrobras has mandatedCitigroup to find a buyer). Othernews reports state that Petrobraswants to sell all its offshore refineries(Reuters, attributed to companysources) and that the company hasmandated Morgan Stanley to helpDownscaling internationaloperations could weakenPetrobrassell its stake in oil fields in the Gulfof Mexico (according to the WallStreet Journal). Petrobras won’tcomment on the news, but Ms. Fosterhas already said that she is readyto announce all the details of thePasadena deal – she says the currentmoment is different from whenPetrobras first bought the refinery,when there was strong demand forrefined products (so-called oil distillates).Petrobras’ estimated internationalinvestment of US$10.7bn inthe period 2012-16 breaks down asfollows: US$6bn in projects already2Handout/Agência Petrobrasunderway and another US$4.7bn ininitiatives still being evaluated bythe company. The bulk (90%) investmentwill go on exploration andproduction projects. Upon announcingits business plan, Petrobras highlightedthat the focus of the internationalarea is self-financing projects– highly profitable ventures thatbring cash flow into the company. In2012 alone, the company investedUS$2.6bn abroad, just short of theexpected US$2.5bn investment for2012. Offshore revenues rose fromUS$1.277bn in 2010 to US$1.949bnin 2011.Despite the cutback in offshoreinvestments, Petrobras should postgrowth in its international production.In its 2012-16 plan, the companyannounced that its offshore productioncould total 462k barrels of oilequivalent per day (boe/d) in 2020,almost 20% more than the 388k barrels/dayin the previous plan (2011-2015). The production forecast forBrazil declined 14.4% in the samecomparison to 4.2 million barrels ofoil equivalent per day (boe/d) versus4.91 million barrelsof oil equivalent per day(boe/d).“The reduced shareof offshore businessesis a problem, as this wasa way of diluting thecompany’s risks”, saysPires. “It leaves Petrobrasmore vulnerable.” But Kasznar,from FGV, minimizes concerns overthe change in the internationalizationstrategy of the two largest Braziliancompanies. Since it is a caseof adapting to tough times, he says,the companies should start focusingon the international market again assoon as the global storm abates.revistapib.com.br 73

Globe-TrotterEXECUTIVE TRAVELMarcoRezendeT e c h n o l o G y iBYOD – your in-company tableta sTuDy by the American businessand IT consultancy Forresterindicates that within two yearsaround 175 million smart phonesand 60 million tablets will be in usein the corporate world. Currentlyaround 70% of appliances used inthe working environment are thepersonal property of managers – aphenomenon nicknamed “byod”or “bring your own device” - whowant to be connected all the time.The savings for companies generatedby the “byod” is obvious as theemployee buys the appliance andpays for its running. However, asHandoutnothing is perfect, the companies sufferfrom the lack of standardization of thedevices and, above all, their inabilityto fully protect the traffic of data thatgoes from its servers to mobile devices.The main American and Europeanoperators are working to createapplications for smart phones thatallow the personal and professionalparts to be separated, such ascontacts, for example, standardizingand managing the distance ofthe platforms and safeguarding thedata. Apple, Google and Samsungare also pursuing solutions to beinstalled in the new products.74 revistapib.com.br

F A N T A S Y I S L A N DFinance, faith and funThe Republic of Malta, a small Mediterraneanarchipelago between Sicily and Tunisia, only gainedits independence from the UK in 1964 andwas not accepted into the European Union until2004. It is very small and covers 316 km² ofrocky territory. It has a population of 408,000which makes it the island with the highestdemographic density in the world. There is alsoa high density of business leaders and tourists.Malta has joined the club of regional offshorefinancial centers and it receives three times asmany business travelers every year as its entirepopulation. Good hotels, the growing fame ofits nightlife, reasonable prices and a crystallinesea help put Malta on the list of the destinationsof the moment. The island has always attractedthe attention of outsiders, including Phoenicians,Greeks, Romans, Saracens, Ottomans,Napoleonic forces and the British. The apostlePaulo was shipwrecked in its waters and its populationis still overwhelmingly Roman Catholic.Malta and the Philippines are the only places inthe world where divorce is banned.1 Malta: onthe financialcircuit andflavor ofthe month2 Angelinaand Bradat MadameTussauds:cheap thrillsC U L T U R EFive shows to avoid when traveling abroadThere is so much art in the museums of the world´s great cities and somuch beauty in their theaters and concert halls that it is not worthwhilewasting your precious time on low class, inferior events. Right? Well then,here is a short list of semi-cultural programs that you will find in churches,auditoria and places which are alternative or frankly odd that bear as muchresemblance to culture as McDonalds does to gastronomy. Avoid them atall cost:T E C H N O L O G Y I IMy name isDrive, Pen DriveThe LaCie Ruggedkey pendrive is protected by arubber shell that wouldtop any list. It can survivefalls of up to 100 meters,polar temperatures,African heat, water, dustand anything else. It hasa USB 3.0 interface whichensures the fast transferof data, capacity of 16 to32 giga and weighs 30grams. It costs US$ 39.99in the US.www.lacie.comHandout1:: Concerts announced on leafletshighlighting musical shows thatpresent banal popular classics likethe Requiem, The Four Seasons,Carmina Burana etc. If you seean announcement about «MariaCallas», remember that she died in1977 and, at most, you´ll hear anunknown soprano trying to attractan audience with a repertoire similarto that of the diva.:: Exhibitions of «The Inventionsof Leonardo». Ho hum, you´ve seenthis somewhere else.:: "Torture Chamber". Every Europeancity offers a place like this whichis usually a basement filled withchains and whips hanging from thewall. Don´t be fooled by this bait.:: "Wax Museum". What´s the pointof looking at wax models of BradPitt-Angelina Jolie, Putin, Lady Gagaor Bin Laden that are good likenessesof Brad and Angelina, Putin,Lady Gaga and Bin Laden?:: "Erotic Museum". If you haveaccess to broadband you can findeverything this place can offer. Basicallyit is just a store selling eroticitems in the main street.shutterstock2revistapib.com.br 75

Handout1 Don´t worry aboutthe food: NYT revealshealth department´ssanitary concerns3 The Mediaspreein Berlin: HQ ofcompanies wherethe Wall used to run2 New Malongostore in theLatin Quarter:devotion to coffee4 Delta´s Jumbo747-400: moreseats on the US-Brazil routedreamstime2tin Quarter. It has an extensivemenu of expressos and capuccinosto consume on the spot andalso sells a great variety of expressomachines, coffeemakers,using pressure or extractionmethods, and grinders, rangingfrom the most basic to the mosttechnological. It also sells coffeebeans or they can be ground inthe café. These come from a dozencountries in Latin America,Africa and Asia. Moreover, if youwant your coffee green, it can betoasted in front of your eyes in afew minutes. www.malongo.com4Handout3C I T I E SBerlin: New addressfor businessA new business center called Mediaspreewhich was conceived at the turnof the Millennium has finally become areality in Berlin. It is located in a centralarea formally occupied by industrialwarehouses and small factorieswhere the Berlin Wall used to cross.The center´s first intention was to housecommunities of aspiring artists andother alternative tribes but the costbecame too high. Berlin´s main river,the Spree, runs for four kilometersthrough the district which occupies anarea of 180 hectares. The previous occupantseven tried to prevent it goingahead and held an informal plebisciteunder the slogan Versenken Mediaspree(“Sink Mediaspree”). It was notsuccessful and now companies suchas Universal, German MTV, the Allianzgroup, the German Post Office customerservice area, BASF and the eventscompany O2 World com have set up inthis spectacular arena.revistapib.com.br 77

Globe-TrotterExpress TourismSingaporeby Silvana HleapSilvana Hleap is originally from São Paulo and moved with her family to Singapore in 2010 after livingin New York for 10 years. Silvana is an investment specialist at the bank JPMorgan and said she had nodifficulty in adapting to life in the city state situated at the tip of the Malaysian peninsula. Singapore isa former British colony which she describes as cosmopolitan, extremely clean and very green. Silvanaand her husband are preparing their two children for a future that will be less Western-centered. Englishis Singapore’s official language even though its society is marked by different cultures, such as Chinese,Indian and Malaysian. Silvana´s suggested route takes in all this diversity:Timothy HursleyIf you only have a few hours….As the weather is hot (very hot) and you do not have a lotof time, you should make part of the trip by car. Tell the taxidriver to go to the CBD (Central Business District) via theEsplanade. On the way, ask him to point out Singapore´sfamous popular housing projects, known as HDBs, whicheven São Paulo has tried to imitate. These places arehome to 85% of Singapore´s inhabitants and they includeschools, supermarkets, medical clinics and communalareas for sport and leisure. The size and quality vary 2and there are HDBs to suit all pockets.You should also pass the historical Raffles Hotelwhich bears the name of the founder of the city andwhere a tiger is said to have been shot in the gardenonce. Another beautiful example of colonial architectureis the Fullerton Hotel in the old Post Officebuilding. Take a walk around the front and go in ifyou have time. You should then go to the FullertonBay hotel from the same chain and have a coffee onthe fourth floor in front of the bay. From there youcan see the Marina Bay Sands hotel complex withits platform and swimming pool suspended on threetowers.Silvana Hleapcenters? This is the real face of Singapore: large eatingareas created to impose minimum hygiene standards onfood traditionally eaten on the street. You can try all thedelicious local styles of cooking which reflect the populationmix from China, India and Malaysia. Everything isvery cheap. Try coconut water or natural juice from anexotic fruit.After that, take a stroll to the Lao Pa Sat, one of thefamous hawker centers of the city. What are hawker78 revistapib.com.br

1If you prefer a more traditional meal to endyour walk, I would recommend the Din Tai Fungrestaurant chain. One is at the Paragon shoppingcenter where all the chic stores are. You can lookthrough the windows into the kitchen and watchxiao long pao dumpling (little pastries with variedfillings cooked in steam) being made. Every oneof them needs to be folded exactly 18 times.Finally, if you can, have a look at theBuddhist temple called “Buddha’s tooth”,in Chinatown. Ask the taxi driver towait and go in: the surroundings are redand gold and the walls are covered withsmall Buddhas the size of your hand.Each one is unique and even the mostskeptical visitor is impressed.3 41 Sea view: the“flower” ofthe ArtScienceMuseumcatchesthe eyeimmediately2 Lao Pa Sat:good andinexpensivefood in thehawkercenters3 “Buddha´sTooth”: aspecial templeDreamstimeiStock4 Shoppingin Singapore:global luxurybrandsrevistapib.com.br 79

Globe-Trotter: Express Tourism1If you havea whole day….Have a bracing start to the day with a walkin the Botanic Garden which was foundedin 1859. The temperature is milder,thanks to the rich vegetation. The BotanicGarden has provided the plants that haveembellished the streets of the city sinceindependence in the 1960s. Have a look atthe Orchidarium which houses the largestcollection of this tropical species in theworld. Before leaving, have a juice in theCasa Verde close to the Visitor Center.Then take a taxi go to the Marina BaySands complex which includes a hotel, shoppingcenter, museum, theater, casino andrestaurants. If you are tired of walking,have a foot massage. This can be made byhand or by small fish that eat the dead skinaround the toes and heels! The ArtScienceMuseum is worth a look. The frontage is inthe shape of a lotus flower which symbolizeswelcome to visitors from all overthe world. Each of the 10 “petals” in themuseum is a gallery. The roof in the centeropens and the water from the showers isrecycled for use in the bathrooms.If you are hungry by now, you can enjoythe eating area which resembles thehawker centers although in an air-conditionedenvironment. I recommend chickenrice, char kway teow (noodles with meat andvegetables), laksa (cooked with coconutmilk) and popiah (delicate vegetables rolls).If you have made a reservation, you can goto the top of the hotel and lunch in the KuDe Ta. Then it´s time to visit the famousinfinite swimming pool.If it is not raining in the afternoon, go toDempsey Hill which used to be the headquartersof the British army. The militarybarracks in the middle of the lush vegetationhave been transformed into pleasantrestaurants, bars, art galleries and spas.80 revistapib.com.br

21 BotanicGarden: largecollectionof orchids2 e 3 Ku De Tarestaurant at MarinaBay Sands, andits Takara Rolls4 Cable carto Sentosa:fantasyisland34If you havea whole weekend…If you are lucky enough to have a wholeweekend in Singapore, you can even order tailor-madesuits. Yes, this is a local tradition. The tailor goes to yourhotel and takes your measurements on Saturday andmakes a rough version on Sunday. You then receive thefinished version of the suit by mail. The climate requireslight clothing and you should remember to put comfortablewalking shoes in your suitcase to begin the day inthe Bukit Timah Nature Reserve. This is a forest in themiddle of the city that is quite captivating with its varietyof plants and animals: monkeys, birds, lizards andeven snakes. You can have lunch nearby at Smiths whereyou should try fish and chips. The fresh fish melts in themouth and this traditional English dish is even betterthan the original. There is an outstanding selection ofbeers.No visit to Singapore is complete without going to Sentosa,a perfect fantasy island. It is like a little Disneylandand completely artificial, even the beach, but it is worththe visit. You can spend a few hours on Saturday afternoonor the whole of Sunday there. Go by taxi or metroto the Vivo City shopping center and get the cable car tothe island from there. This is the best way to arrive. Youcan move about by mono rail or bus on the island.Fancy some adventure? Try the roller coasters or go tothe iFly wind tunnel which simulates the experienceof a freefall jump from a plane. To ease your adrenalinafterwards, go to the Siloso Beach and have an aperitifin one of the little bars on the shore. On the horizon youcan see a huge number of ships waiting to enter the secondbusiest port in the whole world. (Despite this, thewater is clean.) There is no shortage of places to eat inSentosa. Sunday brunch at the Capela is the nicest andmost luxurious in Singapore.Pictures: HandoutBefore ending, a tip for the traveler who is jet-laggedand cannot sleep. The Mustafa is a kind of 24-hour departmentstore in Little India where they sell everything.It is worth the visit for the experience, not only for thepurchases. Don´t forget to have a look at the jewlery.And to chill out completely, go to the Long Bar at RafflesHotel and have a Singapore Sling, the famous drinkmade with gin and pineapple juice. It is the only placehere where you can drop litter on the floor!revistapib.com.br 81

Globe-Trotter in TransitJusimeire:balancinginterests inMozambiqueFrom the cerradoto the savannahJusimeire mourãoMY FIRST mission to Mozambiqueoccurred in 2009 when I receivedan invitation from the JapaneseInternational Cooperation Agency(JICA) to coordinate the TriangularProgram for the Agricultural Developmentof the Tropical Savannah inMozambique, ProSAVANA. I thenstarted spending increasingly longerperiods in Mozambique and eventuallymoved to Maputo as the programcoordinator in the second halfof this year.The ProSAVANA program aimsto promote the regional developmentof northern Mozambique byestablishing an agricultural systemthat is competitive, socially inclusiveand environmentally responsible.It is a triangular program asit involves three countries: Brazil,Japan and Mozambique. The basicaim is to help the Mozambicanstransform their country into a largeproducer of food for domestic consumptionand export the surplusjust as we Brazilians learned toplant the scrubland (cerrado) of theCentral Plateau from the 1970s.The soil and climate of the cerradoand savannah are very similar.Brazil received technical andfinancial support from Japan atthat time and Japan has now linkedup with Brazil to do the same inMozambique. The Brazilian CooperationAgency (ABC), whichis linked to the Foreign Ministry,coordinates Brazil´s participation.This also includes the BrazilianAgricultural Research Corporation(Embrapa) and the Fundação GetúlioVargas business school. We set upcooperation schemes to strengthenthe local Mozambican institutions,such as the Agricultural ResearchInstitute and the Agricultural ExtensionServices. That basically is whya Brazilian woman is working for aJapanese agency in Mozambique.My mission is to balance out relationsand interests in the implementationof this ambitious program.Easy? Not at all. At first, it was funto come to Mozambique — a beautifulcountry with uncomplicated,happy people — and spend timepreparing, undertaking, negotiatingand coordinating and then go backhome. Now that the program is at amore advanced stage, the approachto technical issues needs to defined.Three partners with such strong culturaldifferences inevitably meansthere are initial misconceptions tobe resolved and interpersonal relationshave to be handled sincerelyPERSONAL COLLECTIONand discreetly. You have to developa strategic patience. The job is afull-time commitment that runs fromeight in the morning until five in theevening without any lunch break,followed by a third working shift athome after dinner.I often travel by plane and car tothe northern provinces of Nampula,Niassa and Zambézia. I do not havemuch time to appreciate the beautiesof the country or enjoy the companyof friends. On the personal side,I miss my family and face the difficultiesof an independent woman ina society that is still patriarchal. Thefirst question that is always askedin a restaurant is: “Are you waitingfor someone?” In terms of food, Ilong for my beloved farinha, (a dishmade of manioc flour), my favoritebeans and rice with garlic and onion!However, I love what I am doing!It feels as though I was bitten by amosquito called ProSAVANA andits “poisonous” effect is increasingas time passes. A passion like this isessential if we are to achieve our aimof helping the friendly Mozambicanson the way to a better future.*Jusimeire Mourão, 35, is the JICA´s Executive Coordinator of ProSAVANA-JBM. .82 revistapib.com.br

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