Despite the difficulties imposed by distance and research costs, Thai businesses, particularly small and medium-sized enterprises, have been urged to penetrate Brazil as a land with a growing middle-class population.
At a seminar this week titled "Brazil: Treasure of Latin America" organised by the Foreign Affairs Ministry, panellists advised Thai entrepreneurs to explore that country for business opportunities, as the initial costs could bring big pay-offs in the long run.
Pitchayaphant Charnbhumidol, Thailand’s ambassador to Brazil, said Thai enterprises had rarely invested in that country, put off by its long distance from home and their lack of knowledge of the market. However, great opportunities are waiting for Thai enterprises that explore this market.
"Seamless trading in the global economy has opened up opportunities for every country to explore Latin America, and Brazil could be an efficient gateway for us to penetrate this region. Thais should not be afraid of distance or the cost of exploration, but benefit from the Internet and high technology to do business with Brazil," said the ambassador.
Brazil is expected to become the fifth-largest economy in the world by 2020, from seventh at present.
Its largest cities are consolidating their positions as global investment headquarters, not only for Brazil but for the entire Latin America region. Currently, more than 240 multilateral companies have headquarters in Brazil. It is a member of the Southern Common Market (Mercado Comun do Sul, or Mercosur) and is connected to all countries in South America by free-trade agreements.
Pitchayaphant said not only large companies could do businesses with Brazil, but also SMEs. Thai SMEs may need to spend some money for initial exploration in Brazil and seek partners, but it would be a worthwhile investment in the long run.
He advised SMEs to contact the Thai Embassy in Brazil for assistance in finding business partners there. After that they can use modern technology to connect with their local partners.
He pointed out that many business opportunities were waiting for Thai enterprises in the near future because Brazil has a large middle-class population with high incomes and spending power. They will want higher-quality goods and brand-name products, as well as quality services.
The Brazilian middle-class population is expected to reach 118 million this year, while it also has a high number of labourers at more than 107 million.
Brazil has one of the largest consumer markets in the world with more than 201 million inhabitants.
Beside businesses in which Thais are already involved in Brazil, including electric appliances, foods, and rubber products, the ambassador emphasised that cosmetics, pharmaceutical products and herbs, furniture with modern design, medical equipment, and natural spas would be in increasing demand in Brazil.
The country is currently the world’s third-largest market for beauty and healthcare products; third-largest for personal computers; fourth-largest for mobile phones, automobiles and television sets; and fifth-largest for medical equipment.
Pitchayaphant said that after the World Cup soccer tournament is held in Brazil in July, some trading opportunities might dry up. But Brazil still has potential for future investment and trading as the country will also host the Summer Olympic Games in 2016.
Thai construction companies could bid on contracts to develop infrastructure, produce and trade more of sportswear, souvenirs, and hotel and spa services.
So far, only one Thai-Taiwanese joint-venture company, Cal-Comp Electronics (Thailand), has invested in Brazil for manufacture of electronic and telecommunication products.
Krisda Piampongsant, adviser to the Board of Trade of Thailand, said many Thai enterprises were interested in doing more business in Brazil as it is considered a springboard to other South American countries.
He expects that if the Thai government forms closer cooperation with Brazil, trade and investment should grow more in the near future.
Krisda said an Asean-Mercosur free-trade agreement would pave the way for Thai enterprises to penetrate the Latin America market.
Somchai Ansuj, director of the Rio Grande do Sul Development Agency, advised Thai enterprises to study the rules and regulations of each Brazilian state they are interested in penetrating, as the central government has no policy to promote investment, but only local governments.