By Brian E. Clark
South America holds great potential for Wisconsin companies, a panel of experts said Tuesday at a luncheon sponsored by the Madison International Trade Association.
“Do you want to double your market?” Marquette University marketing professor Syed Akhter asked the 80 business people assembled at the Madison Marriott West.
“If so, we think Latin America is a fantastic idea,” he said. “They are getting mighty serious about improving productivity and competitive performance.”
Moreover, he added, the world economy is being realigned, with a shift in purchasing power moving from Europe to Asia and Latin America, which means countries such as Brazil, Columbia and Chile are attractive customers for everything from machinery to farm products to medical research instruments made by Badger State firms.
“They are getting more sophisticated, their market potential is increasing and they are spending a lot of research and development, especially Brazil,” he said.
“They’ve had a positive growth rate of 3 percent to 4 percent annually … while the U.S. and western Europe have only been growing at around 1.5 percent a year.”
But South American countries vary widely in business practices and taxes, said Glaselyn Miller. She is international sales director for the Americas for Middleton-based Gilson, Inc. which makes automation and liquid separation for the biotech industry.
She said Brazil’s government taxes imports heavily and can be a difficult country in which to work, while Chile – which has had a free trade agreement with the U.S. since 2004 – is considered the most pro-business country in Latin America.
A similar free trade agreement with Colombia is expected to be implemented within the next few months, she said. But while Chile and Brazil are stable, Colombia has an ongoing guerilla war and disputes with bordering nations Venezuela and Ecuador.
Miller, a native of Venezuela, said Brazil is making major investments in science and has made pledges to grow its research budget by 38 percent in coming years. She noted the country is already a world leader in tropical medicine, plant biology and bioenergy.
But she said the country has complex and time-consuming importing guidelines, duties, multiple levels of taxation and resulting high-end user prices that can be two or three times what the same products cost in the United States.
Other difficulties include patent protection, high labor/employment costs and mandatory social benefits that drive up costs for companies that want to do business in Brazil.
Miller said Brazil’s airports and infrastructure are poor, but she anticipates that the billions of dollars in investment for the upcoming World Cup soccer tournaments and Olympics will improve transportation greatly.
She also noted, wryly, that Americans would be wise to learn some Portuguese because Brazil is not a Spanish-speaking country.
Miller praised Chile for its conservative business approach and a strong economy that is becoming more transparent. She said it is far easier to export products to Chile than Brazil and noted that import taxes are relatively low.
She said Colombia, which has extensive territory on both the Caribbean Sea and Pacific Ocean, is committed to growth. However, the country is under a travel warning from the U.S. State Department because of violence by cocaine smugglers and paramilitary groups.
But she said Colombia is committed to stemming crime. Moreover, its science and technology sectors are growing, which makes it worthwhile for many companies to explore for its market potential.
Dr. Marcus Braga-Alves, an assistant finance professor at Marquette, said economic conditions are improving in Brazil — his homeland — with changes made recently to eliminate pension debts, In addition, tax cuts have been implemented to stimulate domestic industries.
Doing business in Brazil can be difficult for U.S. firms, he agreed, but it’s worth the effort because South America’s largest economy is huge and only getting bigger.
Braga-Alves suggested that Wisconsin companies work with the Export-Import Bank of the United States for help in financing, credit insurance and other areas. He also advised his listeners to find business partners in Brazil to help navigate tax issues and other potential headaches.