“Northern countries are already far ahead. We have to walk together to be able to reach them.” This is the opinion of Rubén Delgado, president of Softex on the current position of Latin America in the global technology market. Softex is a tied agent to the Brazilian state with the aim of helping the country’s technology companies to sell their products abroad.
The speech Delgado took place during the Brazil Technological event, in Lima, capital of Peru, held this week, between 11 and 13 July. The event consisted of a series of lectures and business roundtables between Brazilian and Peruvian entrepreneurs who aimed to show the Peruvian technology solutions that Brazil can offer. And there are many:. Seconds Delgado, Brazil is already the undisputed leader in this market, and should remain so for longer
Knowing your neighbors
The Technological Brazil was sponsored by Apex Brazil (Brazilian Agency Export and Investment Promotion). Apex dialogue with the industry associations of the Brazilian industry, such as the aforementioned Softex, ABIMO (the Brazilian Association of Medical Equipment and Dental) and Abimaq (Brazilian Association of Machinery and Equipment) to help Brazilian companies to reach new markets.
According to Rafael Prado Ribeiro, Business Promotion Coordination of Apex, the purpose of the event is not only close deals (although Apex expect to generate more than R $ 60 million with the event), but also strengthen the image of Brazil as a regional leader in technology. There are many data to justify this image: “South America is the region that matters most high value added products in the Brazilian market. 70% of what we sold here were products of this type, “says
Rafael also brings an interesting data on Brazilian exports: although they have fallen slightly in the last year, the value added of exported products increased. This may seem just a “consolation prize”, but is much more than that: it is a sign that the economy is developing enough to stop relying on commodities (commodities whose price varies greatly, as agricultural items and ores ).
Overcoming this dependency, Brazil can go to also focus on exporting more sophisticated products, which bring more money and development to the country. “You have a greater drop in commodities because the world has slowed, but the value is still growing in exports,” said Rafael.
Already there are a number of Brazilian technology companies with a strong presence in Latin America. One is Totvs, which offers business management software. Totvs already have A 25 offices outside Brazil, as well as a research lab in San Francisco, USA. According to the commercial director of the Andean region, Douglas Medeiros, foreign markets account for about 30% of the company’s revenue.
This is not the only advantage they bring. According to Medeiros, be present in other countries is also stimulating to Totvs other reasons: “The international market is something that brings a constant challenge for us to adapt to new cultures. It takes us out of the comfort zone and prevents the stagnation of the company, which is quite interesting, “he says.
cradle Leaving
Reaching beyond Brazil’s borders, however, was a long process. Totvs began entering it in Argentina in 1997. At that time, the country was in the midst of an acute economic crisis, yet the company ventured there. The results were positive, and in 2003, the company also established in Mexico. More recently, the Bogota office where Medeiros works, meets the countries that are close to the Andes, helping the company to tailor its offerings to regional demands of these countries.
The case Totvs evidence that this process requires years of effort and planning, and many companies are already starting this way. One is Cliever, founded and directed by Rodrigo Krug, who specializes in the production and sale of 3D printers of high precision for companies.
The companies use printers Cliever in phase prototyping: before deciding on the final design of a product, can print several tests to decide with more assertiveness on the best way to build mass. This technique is used in all sizes – as well as printers Cliever. Embraer, Intelbras and GM are some of the company’s customers.
The founder of the company has already taken many “slaps in the face” in an attempt to bring their products beyond Brazil. One came when Krug participated in a business mission in the United Kingdom: “At the time, my product was not competitive. The Chinese product got there at a fraction of my price, so it was a shock, “he says.
Today, however, even companies of China come to prefer their printers to Chinese competitors for very simple reason: quality. Although the Chinese have more competitive prices, Krug feels that the level of precision of its products, coupled with its reliability, makes its customers see the price difference as a natural reflection of a higher added value in the product – and an investment . fully justified
the latest product launched by Cliever is a printer that uses stereolithography technology to print parts with accuracy up to 30 microns – less than a hair. This opens other markets for the company, such as jewelry, medicine and dentistry. Some of printed products with this technology can be seen in the image below:
The Audax is also following the same path of internationalization. The company manufactures LED modules for luminaires assemblers: LEDs offer a number of advantages over traditional bulbs, such as greater energy efficiency. With three and a half years in the market, Audax started its exports in May during business missions in Paraguay and Bolivia, and aims now in the Peruvian market, which is more developed than these.
“the market needs to have a maturity already established to offer this type of product we offer,” said Victor Malassise, managing director of the company. For this reason, the Peruvian market would be even more suitable for the business of Audax. The company even hired a Peruvian representative to help develop this market, as well as the rest of Latin America
Right here on the side
according to Juarez Leal, internationalization coordinator of Apex, there are several reasons for Brazilian companies prefer Latin America when investing in new markets. One of them is the proximity, both physical and cultural. The fact that the countries of Latin America hold many social and cultural similarities makes it easier for Brazilian companies to conform their products to that market.
This is a situation which gives Brazil an important advantage over the United States and Europe in this market Another advantage is the geographical proximity, which makes them more relaxed customers. As pointed Juarez, it’s easier to solve a problem if your provider is just four hours flight away than if it is on the other side of the world. And often the technology purchasing companies are willing to pay more to have this feature.
Even companies that want to eventually reach the US or Europe would benefit, according to Juarez, starting in Latin America. An analogy with which Juarez is agree with the football world: the teams must first win the Brazilian championship, the Copa Libertadores and then, only then, the world. “If you do not, it’s as if you were the Brazilian championship to fight the Champion’s League,” he says.
Just like Totvs, CCK also made this way. CCK produces and sells energy management systems for large enterprises and industries, such as Vale, Volkswagen, GM and Ambev. Its systems can generate their customers monthly savings of tens of thousands of dollars in electricity bills.
Cesar Lapa, commercial director of CCK, also points out another difficulty to enter the so-called ” northern markets “(US and Europe): market barriers, both tariff as other types,” to sell a product like ours in Europe, it needs to have that ‘CE’ label. And that seal is a market barrier: it is difficult to achieve and the cost is high. “
The market in which the CCK acts, according to Lapa, is still dominated by European companies even in Latin America. Some of its competitors in the region already have more than fifty years in the market, which gives them an advantage. But this is hardly cause for dismay: “In South America, we are the only ones to offer. In general, South American countries have companies manufacturing with its own technology, and in Brazil we have. “
Market in development
No wonder that the event to promote Brazilian technology exports occurred in Peru: the country is one of the fastest growing in Latin America. In 2016, for example, when the forecast for the region’s GDP is down 0.5%, Peru’s economy has a 3.7% growth projection.
And according to Jorge Valverde CAMAN, specialist agency ProInversión investment promotion investment, these are not the only data to attract investors to the country. Peru has grown steadily in the last decade, more than 5% in most recent years, and one of them, more than 9%.
The country still has one of the lowest public debts the region (in percent of GDP), and a continuity of public policies to encourage foreign investment since the 90s in ten years, the number of tourists that Peru gets doubled, and energy production in the country grew by more than 80%. These data, among other factors, make the country has an even better rating than Brazil regarding the safety of foreign investments.
CAMAN also points out that Brazil can be a partner important in the development of sectors that Peru considers essential, such as energy, food, mining and hydrocarbons (oil and gas). There are also, for Brazilian companies, the advantage that 55% of the products entering the country are not tariffed, which gives them a more competitive price.
Challenges
even with these advantages, Brazil still faces some difficulties exploit the market potential that the region offers. According to Delgado, the president of Softex, the country still does not value enough (either in terms of investments, either in cultural terms) people who want to play their ideas to market. “We have technicians, we have ideas, we know how to do business; what we lack is entrepreneurship, “he says.
In the opinion of Juarez Leal, of Apex, a state policy is necessary to invest in this recovery. Part of this policy would be a special attention to education, with special focus on technology. “For I have 200,000 developers, I need to train 200,000 IT engineers. It is not done in a year, it is 4, 5 or 6 “.
Examples of countries that have made this bet, according to Leal, are Finland, Iceland and South Korea. “Korea has a 20-year policy to bring people to master’s and doctorate, and these people again, and their education was reflected in the success of companies like Samsung and LG “he says.
Douglas Medeiros, the Totvus also see clearly a problem of lack of skilled labor in the area. Shortages of skilled engineers and technicians in this area “is becoming a limiting factor” for the technology sector growth in Brazil. “Some people jump from one company to another but are always the same. When we look at the bottom of the pyramid of people being trained in IT, systems and processes, rather lacking for us yet, “he says.
Turning the game
Medeiros, however, still believes that the formation of people with this training should be accelerated in the near future. “From the moment that we understand as an exporter of software, it is very likely that this whole development chain happens more naturally,” says.
Rafael Ribeiro, Apex also welcomes the current situation of the technology sector in Brazil. “It is a time of growth, more and more companies invest in innovation seeking more competitive, and all this together gives to Brazil a condition to tread a path to the sun to provide technology for Latin America.”
the business promotion coordinator of Apex also noted that Brazil is already the world’s leading technology in some sectors. Some of them are agribusiness (thanks in part to investment in ethanol), financial lines ( “today the banks in Brazil have the most advanced systems in the world,” he says) and aircraft (giving the example of Embraer).
“it is not given to Brazil the right to cease to be a leader in Latin America,” says Rubén Delgado of Softex. Delgado advocates technology as tool change countries, and believes that the country can serve as a locomotive to leverage the technological development of the region. “Brazil must once and for all realize that it is the leader in the region. The country is already a leader in tractors, is already a leader in aircraft, but it has to be a leader in everything “, he says.
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