One of the big challenges for an investor in Brazil is the language barrier. The economic evolution, being in recession this year, adds up to this. Mexico is less interesting for investors, even though the biggest challenge is the widespread corruption and uniform distribution of revenues.
Brazil, the largest economy in Latin America, is attractive for investor first of all because of its gigantic potential for development in all economic segments, as any emerging state, as a matter of fact, and so is Mexico. The fact that the country will be, next year, the host of the Olympic Games (OG) forces the Brazilian authorities to massively invest in infrastructure, which is important for many potential foreign investors.
However, challenges are not scarce, the most important one being the language one. Brazilians do not speak the universal language of business: English.
Since 2010, the Brazilian authorities were discussing their high expectations concerning the investment flow from foreign funds and financial institutions and concerning a real boom of business opportunities here, on the background of being the OG organizer.
This is very true, as states the young business developer Octavian Constantin Patrascu, who has been attempting for some time to start a business here, on a market taking its first steps in Brazil, the online trading market. “The Brazilians are very open to foreign investors, however, things are not exactly easy for an investor, as they do not speak English”, said Patrascu Constantin Octavian.
Despite their amazing openness to business proposals from abroad, the Brazilians are slowly advancing in negotiations or concluding transactions, because of this language barrier.
Patrascu Constantin Octavian has attempted to cooperate with a local brokerage company, PrevConsulting, a wide-spread and well-know company from there, with which he hopes to have a strong partnership in the future.
In Brazil, “you must also work with a local brokerage house because of the people’s reticence towards online trading, namely that they are not really used to online payments or with foreign companies, all this on the existing background and considering the control of capital”, added Octavian Constantin Patrascu.
If the partnership will be concluded, “we will bring the platforms and the trading systems, and the Brazilians will bring the local experience and notoriety”, he also clarified.
At any rate, Brazil has added a challenge for the foreign investors, namely the economic evolution. It is estimated that, this year, the country economy will shrink by 0.78%. In addition, the inflation rate, being at a high rate for a long time, will increase from the previous estimate of 7.77% to 7.93%, according to a report of the Brazilian Central Bank published recently.
The financial market analysts have decreased 11 consecutive times their estimates concerning the Brazilian economy, and the forecasts for 2016 show an economic increase of approximately 1.3%.
“The crisis has taken longer than we had expected. Moreover, Brazil has suffered the most devastating draught in the past years”, has recently explained Dilma Rousseff, the President of Brazil, for the AFP press agency. He also stated in an interview for the TV Globo station that “Brazil has a powerful structure. We are facing passing difficulties, which we will overcome”.
Dilma Rousseff has calmed the investors down, stating that the Government has approved budget cuts of over USD 23.3 billion in 2015, in an attempt to relaunch the economic growth, through a vast infrastructure investment plan, amounting to USD 64 million, over which a third until 2018.
Simultaneously, the business developer is successfully overcoming the challenges in Mexico, where he has been operating an online trading business since a few years ago. The country is as attractive as Brazil, yet it has its own special features that complicate a foreign investor’s life. “Brazil and Mexico are caught in-between online trading opportunities and economic barriers”, underlines Octavian Constantin Patrascu.
He states that Mexico is an enormous market, but they have the barrier represented by people’s mistrust in foreign investors. “For example, if an investor wishes to rent an office space, things advance really, really slow, and if they try to expedite things a little, the Mexicans get scared and they no longer let. It takes approximately 3 to 4 months to negotiate an office and lease it”.
In addition to the reticent attitude of potential Mexican business partners, there is always the challenge represented by the country’s economy. For the past ten years, Mexico keeps privatizing businesses, as an attempt by authorities to decrease the state’s role in the economic activity, which undoubtedly encourages investments, yet the wide-spread corruption and tax evasion, the major structural problems the economy of this huge federal state is facing, inevitably affect foreign investments, as well.
In addition, the Mexican economy is being modernized, but there is the major problem of the wide gap between the poor and the wealthy and a non-uniform distribution of revenues. 20% of the population gains 55% of the national revenue.
The size of Mexico is approximately similar to the entire Western Europe. Only the capital, Ciudad de Mexico, has approximately 19 million inhabitants, almost as much as Romani, being on the list of busiest cities in the world. This feature makes the city extremely attractive for developing different businesses. Ciudad de Mexico comprises almost all businesses, foreign and local.
On the other hand, the labor force is cheap and many markets are barely developing or being established now in Mexico, which are advantages for the foreign investors, which make them not give up.
This article was published in capital.ro by Patrascu Constantin Octavian