Writing the next chapter
Already set to host the FIFA World Cup soccer contest in 2014, this booming South American giant is a favorite to stage a future Olympic Games.
When the name of the host city for the 2016 Summer Olympic Games is announced in Copenhagen on October 2, there is a good chance it will be Rio de Janeiro.
In its fifth bid to stage the world's greatest sporting event, Brazil's cultural and commercial capital has made the final short list, along with Chicago, Tokyo and Madrid.
If the Olympics do come to Rio in 2016, it will provide an enormous boost for Brazil's international prestige, and it will be the first time that the Games have been held in South America.
There are good reasons to believe this may happen. Rio's staging of the XV Pan American Games in 2007 was highly successful and proved that the city has the facilities and know-how to handle such a major international event.
Furthermore, Brazil is scheduled to host the FIFA World Cup soccer competition in 2014, which in several previous instances has acted as a trial run for hosting the Olympics. Mexico staged the World Cup in 1968 and the Olympics in 1970; Germany did the same in 1970 and 1974; and the U.S. followed suit in 1994 and 1996. Carlos Nuzman, the president of the Brazilian Olympic Committee, provides an even more persuasive reason for Rio's selection: "Our budget is bigger than the others', because we have made clear what we need to do and we have the money," he says.
All three levels of government — federal, state and city — have given guarantees that if Rio is declared the winner, work will begin the next day with $700 million in immediate funding. They have already provided $42 million to fund the bid to host the Games.
Much of the required infrastructure is already in place, and the governments are spending $4 billion to build more. The Olympic movement is presenting Rio — and Brazil — with a historic opportunity, says Nuzman.
"It can have a new city, a new country and a new continent, where the Olympic Games have never been staged before. It will also be ideal for reaching young people. Brazil has 65 million under the age of 18, and the continent has 180 million. These young people will be getting a very strong perspective for the future from the Olympic Games."
Winning the bid to host the Olympics would further underline and strengthen Brazil's increasing international stature. Nothing illustrates Brazil's progress better than the fact that the South American nation is to become a contributor rather than a receiver of IMF handouts.
Just five years ago, Brazil owed the IMF $33.9 billion. Yet today the Brasilia government is lining up as a potential purchaser of a bond designed to increase funds available to economically struggling nations.
"Isn't it chic that Brazil is lending money to the IMF?" commented Brazilian president Luiz Inácio Lula da Silva with delight when he heard the announcement.
The preservation of the natural environment is key to economic development.
Amazonas, located in northern Brazil, is named after the world's largest river (by volume). It is the largest state in Brazil, and forest covers 98% of its area.
For many years, the state's economy depended primarily upon rubber. Now it has diversified, with an economy based on industry, natural gas and oil, mining, fishing and some agriculture. Ecotourism, with an average growth of 6% a year, is the fastest-growing segment of all, according to Getulio Vargas Foundation, the world-renowned Brazilian think tank.
Much of the economic growth of Amazonas falls under the auspices of SUFRAMA, the Manaus Free Trade Zone Superintendency, a federal agency linked to the Brazilian Ministry of Development, Industry and Foreign Trade. SUFRAMA is responsible for constructing a model of regional development using sustainability as a guide, while ensuring economic viability and improving the quality of life for local populations.
Governor Eduardo Braga is a devotee of Amazonas' natural environment. He keenly believes that its preservation is the key to the state's economic development. Amazonas has the largest percentage of tropical forest in Brazil, but recent studies indicate that unless action is taken now, the area could be endangered.
According to Braga, "The Amazonas is the most preserved state in terms of environment, but the forest will remain only if it gains economic value for the population. Otherwise, soybeans, livestock farming and mining will take place in the forest as an economic occupation.
"People now recognize that the world really depends on the maintenance of forests," he continues. "The reduction of deforestation is a highly effective measure in reducing the greenhouse effect. The whole world recognizes this, yet the market does not pay for it. The forest must have an economic value."
Braga fervently believes that the standing forest is worth more than the fallen forest: "We have developed a strategy to cut 70% of deforestation. People living in units of protection must have the commitment not to deforest." To guarantee this, Amazonas instituted the Bolsa Floresta, a system of tax support and financing designed to encourage the production of sustainable products. This policy has contributed to an increase of about 12% for gross domestic product annually.
Also helping the economic picture is the fact that Amazonas comprises the third-largest state investment in science and technology in Brazil. The region is also educating more of its citizens. To do so, the government is bringing top classroom resources into the state's vast interior through the use of computers, satellites and other technology.
Another boon for the region is the FIFA World Cup. The soccer championship tournament will take place in the capital city of Manaus in 2014. Amazonas is hoping to attract investments totaling $6 billion. "The point is to mix theWorld Cup with investments for environmentally correct tourism," says Braga. "We are creating infrastructure in a sustainable way. We are building a stadium fueled by solar energy. We have proposed to FIFA [the World Cup organizing body] to go carbon neutral during the event."
If major change doesn't occur in the interim, the biggest soccer tournament in the world may kick off a new era of sustainability for Amazonas.
The Name Game
From fashion to furniture, the magic formula for successful merchandising at two enduring Brazilian companies is branding.
Entrepreneurial flair in branding and marketingvare among the key elements in thevsuccess of two of Brazil's longest-established family businesses.
Cia Hering, an apparel, manufacturing and retail company, and Insinuante, a retail network selling furniture and household electrical appliances, have created brand names famous throughout the country.
Two brothers, Bruno and Hermann Hering, founded Cia Hering in 1881, while Luiz Carlos Batista, the president of Insinuante, began acquiring his business acumen from his father and grandfather.
Cia Hering is now a public company with only two members of the Hering family on its board, while Insinuante remains a private concern.
What the two companies have in common, however, is the inspired creation of their brands and the astute manner in which they have updated their products through the years.
"In German, Hering means fish, so our symbol of two crossed fish has a very strong legacy," says Ivo Hering, president of Cia Hering. "But today, we are catering to a younger group of people, and we are more dynamic in terms of purchasing, so we had to consider how tomake the brand more visible.
"The way to achieve this was to control our distribution channel through our own shops and franchised stores, and we now have the largest network of apparel stores covering the whole of Brazil."
Today, Insinuante's brand name and logo is simply IN. "The name Insinuante was too long, so we reduced it," says Batista.
His greatest achievement, he says, has been introducing a new concept for the brand: giving each of the stores large, modern premises with 10,000 square meters of sales space and 5,000 square meters of parking.
Both Cia Hering and Insinuante place great emphasis on their marketing strategy.
"Advertising becomes more effective once you have your own shops and can build a collection with stylistic ideas," says Hering."We give consumers a good relationship between price and quality."
Cia Hering made improvements in product development and pricing, and is constantly reinventing itself to stay ahead of fashion trends. "Brazilians see Hering as a quality product within a certain price range," Ivo Hering adds.
The company launches six collections a year and turns over a large part of its products every two months. Hering says the company has the potential to maintain a growth rate of 30% to 40% per year, as it has done for the past two years. "We want to open more shops rather than growing through mergers or acquisitions," he says.
One of the company's altruistic activities is its involvement in the Fashion Targets Breast Cancer campaign, which raises money for research, detection and treatment. "We made a T-shirt to give visibility to this campaign and won honors in the U.S. for achieving the world's largest sales by volume," says Hering.
Insinuante's commitment to advertising and marketing is even more adventurous. At one point it was spending half of its profits on its advertising campaign, paying for 20 television commercials a day. "To spend 3% or 4% of annual sales on advertising is crazy," says Batista. "Imagine paying 50%!" However, the strategy has paid off, and the company is now the fourth-largest player in its sector.
Having started out in the family shoe and furniture business in Vitoria da Conquista, Batista opened another store in Salvador, where he was attending university.
"That's how I came up with the strategy to keep opening new stores," he says. "I was opening stores in neighborhoods where money was short, because I understood the culture of those people. Then I moved to city shopping centers to meet middle-class needs."
Insinuante soon had 100 stores. Today, the company has its own advertising agency and operates in 12 Brazilian states.
"Consumers have grown up watching or listening to our commercials," says Batista. "In the past four years we have had growth of 200%."
Goiânia, the capital of the central Brazilian state of Goiás, has plans in the works to construct a new recreation park, a zoo, a livestock reserve and a public showground, all aiming to cater to the increasing number of business tourists visiting the city.
Modernization of the airport is already under way, and Mayor Iris Rezende is confident that the city can attract sufficient private-sector investment to fund many of its other projects. "I never saw an investor disappointed after investing in Goiânia," he says.
The city is only a two-hour drive from Brasilia, and this proximity makes it a practical and affordable destination for tourists, particularly the crowds expected to pour into the country during the 2014 FIFA World Cup soccer tournament.
Goiânia was founded in 1933 and is the only city in Brazil other than Brasilia that was completely planned from scratch. Today, it is home to 1.25 million people and is a bustling center of cattle raising, agricultural industry, pharmaceutical clusters and, increasingly, information and communications technology. It is also said to be the greenest city in the country, and worldwide is second only to Canada's Edmonton.
Rezende, age 75, is a veteran political activist. A former member of Parliament and two-term state governor, he is now serving his third term as mayor. "I took office when the city was in chaos," he says. "Goiânia had 130 districts without asphalt. In four years, I paved 1,560 kilometers [970 miles] of streets."
Small Region, Big Potential
A best-kept secret, this unspoiled Brazilian state is investing in its image and economy.
From the untouched glory of its coastline to the colonial architecture of its towns and the fossilized footprints of dinosaurs, Paraíba is still waiting for discovery by tourists and investors.
"We have beautiful beaches, but we must offer quality infrastructure."
Governor José Maranhão.
Located in the northeast of the country at the easternmost point on the South American continent, Paraíba is one of the smaller Brazilian states, with a population of 4 million and a largely agricultural economy.
Situated between Rio Grande do Norte and Pernambuco, two states that are already popular tourist destinations, Paraíba has yet to benefit fully from its own attractions. "We have beautiful beaches, but we must offer quality infrastructure," says Governor José Maranhão.
With this target in mind, the state government is investing $51 million in a convention center for business tourism and is building highways linking the cities of the south coast to the towns of the interior.
It has already made other infrastructure investments. Six months out of the year, no rain falls in Paraíba, so the government has constructed dams and water ducts to bring water to 102 cities and has irrigated almost 5,000 acres of agricultural land. A project is also under way to bring electricity to 90% of the state's rural communities.
The presence of large oil shale deposits in its territory and the prospect of the federal government's investment in a biodiesel production plant are expected to further boost the economy, as will tourism.
The state's potential as a tourism resort and its wealth of high-quality oil and minerals are attracting international investors, says the governor. "We have even received a group from China interested in investment," he says. "Our slogan is, 'Those who are not the largest must be the best.'"
Emphasis on personalized assistance makes life easier for investors.
The tiny northeastern state of Alagoas is the second smallest in Brazil, but it's big on natural beauty. Alagoas is known for its many lagoons and its coastline. From the capital city of Maceio to the northern border, the coast of Alagoas is marked by a fringe of reef and pristine beaches. In recent years, visitors from Europe and other parts of South America have been discovering these shores.
In addition to its natural advantages, the state's way of doing business also gives it a leg up on the competition. According to Governor Teotônio Brandão Vilela Filho, creating transparency in public administration has pointed the way forward. "We needed to rescue the credibility of the state to attract investors," says the former econeconomist. So, Alagoas streamlined its government, reorganized the treasury office and made information about government funds public. "We are Brazil's first state to use this measure so that society can trust in the change that is happening."
"We deal with each entrepreneur as a partner, a friend and a person that we respect."
Governor Teotônio Brandão Vilela Filho
Transparency makes life easier for investors, as does the Alagoan government's commitment to personalized assistance. In fact, the state has a secretary of development who deals with entrepreneurs and investors one-on-one. "The government here is not impersonal, bureaucratic," says Vilela Filho. "We deal with each entrepreneur as a partner, a friend and a person that we respect. As the state is small, we can follow each project with great attention."
Despite the world's current economic situation, Banco do Nordeste has given Alagoas a favorable projection in terms of attracting new business. Vilela Filho says that since Alagoas has always been careful about planning for the future, it's now primed to grow. Still, the state needs to overcome poverty by generating new jobs and improving the quality of life for its citizens. Tourism development can do that, while providing substantial returns to investors at the same time.
No Clouds on the Horizon
Ceará offers tourists compensation if it rains and gives a warm welcome to investors.
So certain is Ceará of its tourist-friendly weather that the state offers visitors refunds of their holiday costs if it rains during their stay.
"We have a climate that allows us to have tourists all year round," explains Cid Gomes, the governor. "There is even a period here where we offer a safe-sun insurance. We are so sure about the weather that if visitors come here and experience rain, they will have a refund to compensate for it."
Ceará is on the northeastern coast of Brazil, and its dry season extends from July to December. In addition, the temperature is warm all year.
At present, the state's tourism is predominantly domestic. Brazilians account for 85% of visitors, but with more than 350 miles of sandy beaches, together with mountains, spectacular waterfalls and rain forests, the governor is keen to utilize the tourism sector to its full potential to attract more foreign visitors.
"We are only six and a half hours from Europe, six hours from the U.S. and four hours from the farthest places in Brazil," he says. "We have flights to Lisbon and Atlanta, but it is essential for us to have more flight connections."
With the prospect of increasing numbers of visitors, particularly in 2014 when Brazil hosts the FIFAWorld Cup, Ceará is improving and expanding its tourism infrastructure. "We have three major projects in progress, representing values exceeding $1 billion," says Gomes.
The state is building a golf resort and an aquarium, predicted to be the best in Latin America, at an investment cost of $102 million.
Tourism, however, is only one of three sectors fueling Ceará's economic growth. The other two are agriculture — particularly fruit production — and the port of Fortaleza, which acts as an import-export shipping hub.
"Our irrigated fruit crop has tremendous potential," says Governor Gomes. "In the last three years we have almost doubled our exports annually, and we envisage this happening for many years. People worldwide will not stop drinking coffee or eating melons. These are basic products that we grow, and we can enlarge our market. We need only to improve some of our infrastructure to facilitate this process and to lower the costs."
The state administration in Ceará has established an agency in partnership with the private sector to identify and develop niche sectors of the economy and facilitate investment. "We are the closest state to Europe, and we can be a major hub for exports and processing," says Gomes.
The port of Fortaleza is located at an inlet of the Mucuripe coastline and contains 6,000 square meters of warehouses and more than 100,000 square meters of docks for container shipping.
"Our port has a deep draft, which is rare in Brazil, and we already have all the structures to transform it into an exportprocessing zone," says the governor.
"In the last three years we have almost doubled our exports annually, and we envisage this
happening for many years."
Cid Gomes, Governor of Ceará
Ceará is investing about $174.5 million in the port to double its size and build railroad links.
Ceará has a population of 8 million, and despite development along the coast, much of the interior is undeveloped, with half the population living in poverty.
In addition to supporting the development under way in the tourism sector and the seaport, the state is seeking investment to establish a refinery, as well as steel and petrochemical plants.
"Basic industries are essential here," says Gomes. "There will not be a whole cycle of industrialization until we have these industries. We have a substantial footwear sector, our textile business is second to none, and the people of Ceará have a natural vocation for trade."
The finances of the state are also sound. Gomes, who served two terms as mayor and has completed his first two years as governor, says his first priority was to improve taxation efficiency and create a public surplus. Ceará, he says, now has the largest budget surplus in its history.
His next priority is to attract investment from private-sector industry. "If any manufacturer wants to explore the alternative world of Ceará, we are available to enter as a partner and by buying shares and providing incentives.
"Our economy and the income of the population will not improve without a massive investment."
At the time of press, the currency conversion rate was Brazilian reals to U.S. dollars (R$1 to US$0.499). All monetary figures stated are U.S. dollars unless otherwise indicated.
Photo Credits: VTQuatro — Comunicaçõ es; Antonio Lacerda/epa/Corbis; Aflo Co. Ltd. / Alamy; VTQuatro — Comunicaçõ es; © Franck Camhi / Alamy; © Fan travelstock / Alamy; Yang Lei C/Xinhua Press/Corbis
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