Monitoring Brazilian FDI in Latin America

Transcrição

1 Monitoring Brazilian FDI in Latin America

2 About us A Research Center which seeks to generate and disseminate knowledge about internationalization process of Brazilian firms.

3 Products Scanning of Brazilian Direct Investment abroad Benchmarking of management practices Diagnostic tools Market index Courses for foreign students Academic research

4 Managerial Reports

5 Website (Dataset)

6 Quem somos? O Observatório de Multinacionais Brasileiras da ESPM é um Think Tank que busca influenciar as transformações científicas, econômicas, políticas e gerenciais por meio da geração e difusão de conhecimento sobre a competitividade internacional de empresas brasileiras. Monitoring Brazilian FDI in LA Research Design

7 Overview The study aims to understand the profile of Brazilian firms investing in Latin America and the characteristics of host-countries business environment

8 Methodology Data was collect from multiple sources Firm-level: primary surveys; open and private databases; firms websites; academic publications; and media Host country-level: World Bank Indicators; Heritage Foundation; World Economic Forum; Global Competitiveness Report among others

9 Sample Composed by 449 Brazilian subsidiaries scattered across 16 Latin American countries in different industry sectors from 1969 to 2014 The sample comprehends operations such as overseas sales offices, distribution centers and industrial plants

10 Quem somos? O Observatório de Multinacionais Brasileiras da ESPM é um Think Tank que busca influenciar as transformações científicas, econômicas, políticas e gerenciais por meio da geração e difusão de conhecimento sobre a competitividade internacional de empresas brasileiras. Prime Outcomes (Firm-level)

11 FDI Location # COUNTRY % 1 Argentina 30,07% 2 Mexico 14,03% 3 Chile 11,36% 4 Colombia 10,47% 5 Peru 9,13% 6 Uruguay 8,24% 7 Venezuela 4,90% 8 Bolivia 3,34% 9 Paraguay 3,12% 10 Ecuador 2,45% 11 Costa Rica 0,89% 12 Puerto Rico 0,67% 13 Dominican Republic 0,45% 14 Panama 0,45% 15 Cuba 0,22% 16 El Salvador 0,22%

12 Largest Firms in LA # Company Number of foreign subsidiaries 1 Petrobras 29 2 Camargo Correa Contrutora 17 3 Ibope 17 Countries Argentina, Bolivia, Chile, Colombia, Ecuador, Mexico, Peru, Uruguay, Venezuela Argentina, Bolivia, Chile, Colombia, Paraguay, Peru, Venezuela Argentina, Chile, Colombia, Costa Rica, Ecuador, Mexico, Panama, Paraguay, Peru, Puerto Rico, Uruguay, Venezuela Argentina, Chile, Colombia, Mexico, Peru, Uruguay, Venezuela 4 Gerdau 16 5 Marfrig 16 Argentina, Chile e Uruguay Argentina, Bolivia, Chile, Colombia, Mexico, Paraguay, Peru, Uruguay, Venezuela 6 Odebrecht Construtora 15 Argentina, Chile, Colombia, El Salvador, 7 Natura 14 Mexico, Peru, Venezuela Argentina, Chile, Colombia, Paraguay, Peru, 8 Vale 12 Uruguay Argentina, Chile, Colombia, Mexico, 9 Weg 11 Venezuela 10 Artecola 10 Argentina, Chile, Colombia, Mexico, Peru

13 Industrial Sector Services 33% Primary 19% Manufacturing 48% Most part of manufacturing firms produce low value-added products

14 Industry vs. Year of Entry Service Manufacturing Primary Antes de In the last years, IT companies are looking for more cost effective countries

15 Firms Age Mature 11% Young 28% New Born 61% New Born: Less than 10 years old Young: Between 10 and 19 years old Mature: Over than 20 years old 89%

16 Entry Mode IJV 9% Acquisition 31% Greenfield 60% Historically, Greenfield investments are the favorite ones

17 Entry Mode vs. Year of Entry IJV Acquisition Greenfield Antes de But this has been changing in the last years

18 Entry Mode vs. Industry 13% IJV 6% 7% 21% Service Acquisition 31% 51% Manufacturing Primary 66% Greenfield 43% 62% Services: preference for Greenfield Manufacturing: preference for Greenfield Primary: preference for Acquisitions

19 Quem somos? O Observatório de Multinacionais Brasileiras da ESPM é um Think Tank que busca influenciar as transformações científicas, econômicas, políticas e gerenciais por meio da geração e difusão de conhecimento sobre a competitividade internacional de empresas brasileiras. Prime Outcomes (Host Country-level)

20 Market Attractiveness Country POPULATION 5 YEAR GDP GROWTH (%) GNI PER CAPITA Millions Ranking % Ranking $ Ranking Argentina 41,803, , Bolivia 10,847, , Chile 17,772, , Colombia 48,929, , Costa Rica 4,937, , Cuba 11,258, n.a n.a n.a n.a El Salvador 6,383, , Ecuador 15,982, , Mexico 123,799, , Panama 3,926, , Paraguay 6,917, , Peru 30,769, , Puerto Rico 3,548, n.a n.a n.a n.a Dominica Republic 10,528, , Uruguay 3,418, , Venezuela 30,851, , Source: World Bank (2015)

21 Total Tax Rate (% of commercial profits) # COUNTRY % Brazilian FDI TAX RATE Argentina 30,07% 137,30% Bolivia 3,34% 83,70% Colombia 10,47% 75,40% Mexico 14,03% 51,80% Peru 9,13% 36,00% Paraguay 3,12% 35,00% Ecuador 2,45% 33,00% Chile 11,36% 27,90% Source: World Bank (2015) The tax rate average in Brazil is 69%. In LA the average is 55,38%

22 Trade Tariffs Bellow Average 102 Foreign Subsidiaries Above Average 335 Foreign Subsidiaries Average 6,43% FDI Location Puerto Rico (1,3%) Peru (1,8%) Costa Rica (3,9%) FDI Location Venezuela (12,4%) Argentina (10,5%) Bolivia (8,8%) Source: WEForum (2015)

23 Strenght of Investor Protection Bellow Average 216 Foreign Subsidiaries Above Average 221 Foreign Subsidiaries Average 5,2 FDI Location Venezuela (2,3) El Salvador (3,0) Costa Rica (3,0) FDI Location Colombia (8,3) Peru (7,0) Puerto Rico (7,0) Source: WEForum (2015)

24 Quality of Infrastructure Bellow Average 280 Foreign Subsidiaries Above Average 157 Foreign Subsidiaries Average 3,82% FDI Location Venezuela (2,6) Paraguay (2,7) Argentina (3,0) FDI Location Panama (5,0) Puerto Rico (4,9) Chile (4,7) Source: WEForum (2015)

25 Corruption Bellow Average 353 Foreign Subsidiaries Above Average 93 Foreign Subsidiaries Average 36,54 FDI Location Venezuela (16,5) Paraguay (20,5) Dominican Republic (27,3) FDI Location Chile (72,3) Uruguay (70,6) Costa Rica (50,9) Source: Heritage Foundation (2015)

26 Capacity for Innovation Bellow Average 427 Foreign Subsidiaries Above Average 10 Foreign Subsidiaries Average 3,74 FDI Location Venezuela (2,8) Paraguay (3,1) Peru (3,4) FDI Location Puerto Rico (4,9) El Salvador (4,4) Costa Rica (4,3) Source: WEForum (2015)

27 Highlights 55 % of Brazilian FDI in LA are located in higher economic development level countries (by income). E.g.: Chile (11%) Only 4% of Brazilian FDI in LA are located in lower economic development level countries (by income)

28 Highlights 60% of Brazilian FDI are located in countries with lower level of Political Risk than Brazil Inflation average in LA countries is 8,55% vs. 7,7% in Brazil

29 Highlights Most part of Brazilian FDI in LA are located in: Largest consumer markets, Higher tax rates, Poor infrastructure, Poor capacity for innovation, Higher corruption level.

30 Quem somos? O Observatório de Multinacionais Brasileiras da ESPM é um Think Tank que busca influenciar as transformações científicas, econômicas, políticas e gerenciais por meio da geração e difusão de conhecimento sobre a competitividade internacional de empresas brasileiras. Conclusions

31 Research and Empirical Gaps What is the real importance of institutions in the internationalization process of Brazilian firms? Which criteria are behind the entry mode choice of Brazilian multinationals (managerial mindset)?

32 Contact Gabriel Vouga Chueke Website observatorio.espm.br