When engaging in business in Brazil, companies are aware that emerging markets require the investment of local content. Historically, this has been pretty simple to meet, but requirements are becoming more stringent. The forthcoming ANP Resolution 36 will require 3rd party approval to certify that local content has been used. This can be both labor and materials. Naturally, this is about jobs. Fortunately, the Brazilian government acknowledges the spirit of the directive and wants to work with companies to grow their businesses.
There are many concerns for companies as they make this transition into Brazil. Having a skilled labor force, controlling intellectual property and supply chain management are a few of them. Naturally, once all these are addressed, a final concern is whether the quality of the products will meet global standards. The last thing anyone wants is to set up shop in Brazil only to have the quality of their brand erode. This leads to lack of reliability in plants.
As global companies move into developing nations, there is a propensity to only have low-skill and basic manufacturing done. I think this is a mistake. Companies need to recognize that Brazil has vast resources and will become one of the major producers of energy. The energy markets require high quality products that will perform in challenging services. Reliability cannot be sacrificed. Competition will be fierce and lowering manufacturing standards will not bode well. In other words, put your best stuff in Brazil.
I am a firm believer in doing the right thing and good deeds will be rewarded. As the global economy grows, Brazil will likely become a valuable business partner to companies globally. Start making the investment now – and brush up on your Portuguese!
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