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Seven ways sustainable businesses can break into Brazil

 
Ipanema Beach in Rio de Janeiro, Brazil

Ipanema Beach in Rio de Janeiro, Brazil. There are plenty of opportunities in Brazil for sustainable SMEs with good ideas and patience. Photograph: Michael Regan/Getty Images

 

Powered by Guardian.co.ukThis article titled “Seven ways sustainable businesses can break into Brazil” was written by Laura Paddison, for theguardian.com on Thursday 5th December 2013 16.22 UTC

On the World Bank’s ease of doing business index, Brazil ranks 116th of the 189 countries featured. Nestled underneath Guyana and above the Dominican Republic.

And while the resource-rich nation of nearly 200 million people is receptive to new technology from international companies, it remains fiercely protective of its own industrial base, legislatively complex and fiscally expensive.

At first glance, that’s not great news for innovative, sustainable small and medium enterprises looking for a slice of the action in the world’s sixth largest economy. Yet last month 17 cleantech startups and SMEs travelled to Latin America’s largest country, funded by the Technology Strategy Board and Shell Game Changers, to try their luck.

Ranging from Papa Pump which produces water pumping systems and Codbod the developer of sustainability reporting software, through to SEaB a waste-to-energy companies and agribusiness Embedded Technology Solutions (cow collars to detect pregnancy and fertiliser from abattoir waste) – they were intended to represent a cross-section of companies that have potential to address some of Brazil’s complex sustainability problems. But, as they learnt, the challenges of cracking the market are enormous.

1. Culture

On a general scale cultural differences are evident from the moment you step onto the streets of Rio de Janeiro or São Paulo. It’s a vibrant, tactile culture, where relationships count and business meetings may just as easily take place in a bar as in a boardroom.

“Brazil has a totally different culture from Europe and the US,” said Frederico Lacerda of the Rio de Janeiro-based 21212 accelerator, which helps international digital startups adapt for the Brazilian market. Contrary to some impressions “that doesn’t mean we need to go to the beach everyday”, he joked. What it does mean is “creating some kind of connection” with the person with whom you do business.

2. Finding a partner

An international company, no matter how innovative its technology or how well it can address Brazil’s sustainability challenges, will not make it without strong, in-country support. “You cannot be alone in Brazil,” Lacerda explained. “You need to have a Brazilian connection in order to get any traction”. This contact can help a young business understand its potential client base, how business partners work and how to hire the best people in Brazil. So it’s vital to pick the right person.

Alice Neves Thomé of Inseed Investimentos, a São Paulo-based venture capital firm focusing on innovation and cleantech, has seen many examples of international startups that leap into relationships with the first Brazilian to express an interest. This isn’t always helpful. “International companies, particularly startups, need to look for the right partner to help them navigate the regulatory framework and find the partner that will have the connections to reach clients.”

Think about geography too. “One agent appointed in São Paulo is not necessarily equipped to deal with the rest of the country,” explained the UK’s Consul General in São Paulo, John Doddrell, part of whose remit is to encourage businesses to look outside the country’s two flagship cities.

3. Knowing when they’re just not that into you

It’s essential to discern when a business opportunity is really on the table. As one source put it, “detecting a genuine yes is a very difficult art”. The Brazilian urge not to disappoint can give false hope.

Julio Ramundo, director of the Brazilian development bank BNDES, compares Brazilian business to dating. “We like to date, so don’t give up after one meeting.” But equally, avoid relentlessly pursuing a date who’s just not that keen.

4. Hierarchy

“There’s a top down culture in Brazil,” said Damian Popola, the former UK vice-consul for science and innovation in Brazil, who explained that, “historically, innovation has been about 98% government-driven in Brazil, it decides which are the sectors that matter.” This can make it hard for real innovation, more often driven by the smaller, nimbler SMEs, to take hold.

 

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