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You are here » Home Page » News » Brazil and its Transformation into a dynamic economy

Brazil and its Transformation into a dynamic economy

2012-02-24 source own

With a lot of the western world still struggling to find growth its not surprising that many companies are turning their attention to expanding their business in the Bric countries of Brazil, Russia, India, China and South Africa. Not so long ago Brazil was groaning under the weight of a un-affordable depth, lurching from one crisis to another and its only way out were financial support from the IMF. Now a few years later Brazil has firmly turned the corner and has just replaced the UK as the 6th largest economy on the planet. Brazil is an integral part of the Bric group as the B in Bric and a key trade partner to Russia, India and China.

Brazil has gone through a radical restructuring in recent years you only have to walk down Central Avenue in Brazilian to see the huge development taking place as in everything in Brazil development there is on a massive scale. The recent construction of new Office blocks in Brazil's capital city is very much a statement in cased in steel and concrete of Brazil's ambition to be taken seriously as a major global powerhouse on the world’s stage. Brazil went through a big boom in the 60’s 70’s but this led to a big decline throughout the 80’s and early 90’s and it's only been since the mid 90’s that growth has returned to Brazil and this constant under achiever has started to fulfill its destiny and reach the top of the class. The seeds of success in Brazil were very much sown quite literally out in Brazil vast interior.

Brazil now has some of the biggest and most efficient farms on the Planet, to appreciate the size of these super farms you need to take a flight to see soy beans growing into the distance all the way up to the horizon. It’s hard to give you a true sense of the size of farms in Brazil but one Farm BricPartner visited in Brazil was over 54km long and had its own freeway running down the length of it. With farms this size then the use of the most modern farming equipment is paramount to efficiency and therefore profitability for the operators of these ventures. During planting season you can great swarms of up to 32 mechanized planters in a row planting the seeds on these super farms, the machines have to use satellite (GPS) to help them plot where to drop the seeds in the ground so that the operation is as efficient as possible. On the vast farm we visited they produce 120 000 tonnes of Soya beans as well as 10 000 tonnes of corn. Brazil has spent a lot of money to ensure that its central belt of farms has the right balance of quality soil to produce Soya and its estimated that on average its spent about € 1200 dollars per hectare on soil nutrients to ensure the farms can generate high enough yields to rake in the profits which are estimated to be € 300 dollars annually per hectare. Logistics are very important for these super farms and the Brazilian Government has invested in a network of freeways to interlink the farms to their local Hub/Port as efficiency is again very important as it's estimated that on average the haulage cost for 1 tonne of Soya bean is $ 90.  Brazil is the world’s biggest producer and exporter of Soya, Poultry and very soon it will probably be the leader in Beef.

It’s often said that Brazil recent rapid development has a lot to do with the rise of the Soya bean Industry in Brazil, Hundreds of towns and Cities, Infrastructure across Brazil was born on the trial of the boom in the agriculture Industry, so you could say that Brazil owes a lot to the Soya industry and the wider agriculture Industry for its recent accomplishment of becoming the worlds sixth largest economy.

Brazil has a lot more to offer than just being the world’s biggest farm soy can offer the world more than just food. Within the Bric group Brazil has a very strong Partner relationship with China and Provides a lot of food produce to feed China and in return China sells a lot of machinery and consumer goods back to Brazil but the Brazilian government is looking at ways of strengthening its industry’s so that it can sell a far more diversified range of products to China and its fellow Bric Partners. Brazil is rich in many commodities Iron ore, Timber and other minerals and the recent discovery of Oil which has transformed the future of Brazil and its national Oil Company Petrobras which by 2020 will be producing over 5million barrels of oil a day.

According to Mr Charles Tang a Chinese born Businessman who has worked all his life in Brazil and is Chairman of the Brazilian China chamber of Commerce, Brazil was one of the countries that benefited the most from China’s rise as a global economic superpower and in the recent decade Brazil has paid off most of its country’s Dept with the export dollars earned from its trade with China and its been able to accumulate up to € 250 billion in foreign currency in reserves from its trade with China and its other Bric Partners. Brazil offers China the resources that it needs to sustain economic growth and the food for China to feed its people. For Brazil to be able to sell more than commodities to China than it Industry needs to become more competitive and one way the Brazilian government could do this would be to simplify its taxes to help keep manufacturing and export costs down and allow the Brazilian industry to compete on a even playing field. Brazilian labor laws, Interest rates and exchange rates are also seen as hurdles to overcome to help drive manufacture goods exports from Brazil to China and its fellow Bric Partners Russia, India and South Africa.

Brazil has recovered its self esteem in recent years and from the days of receiving handouts from the IMF is now a donator of Money, Brazil has lifted over 40 million people into the ranks of the middle classes and in a world which lacks food Brazil will continue to develop and not just being a key Bric Partner but an important global partner for many countries and industries. As Brazil’s develops and through the Bric group is seeking to take a key role in global decision making. Recently Brazil’s finance minister has said that Brazil and other developing nations would be happy to help the Eurozone with its debt crisis in return for more power at the International Monetary Fund (IMF).

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