Samba time for the East
HIDETAKE MIYAMOTO, Nikkei staff writer
SAO PAULO -- It turns out the World Cup isn't only about soccer. There's a lot of schmoozing going on too.
On June 12, some 200 executives from all over the world were among the throng on hand at Arena de Sao Paulo for the World Cup opening match, Brazil against Croatia. They paid nothing; they were being catered to by the Brazilian Trade and Investment Promotion Agency (APEX), a World Cup sponsor.
APEX president Mauricio Borges said it is using the soccer extravaganza to raise awareness of the Brazilian economy's potential. It teamed up with companies and organizations to bring executives and ply them with the euphoria of the globe's most popular sports event.
While APEX secured the tickets, Brazilian companies and organizations paid for the participants' travel expenses. Those who showed up were also scheduled to inspect plants and hold business talks.
The 200 invitees to the match, which Brazil won 3-1, were only a fraction of the executives wooed to Brazil by the whiff of soccer. A total of 2,300 employees from 1,600 companies in 104 countries were asked to visit Brazil during the ongoing tournament. From Asia, there were 38 Chinese from 23 companies, five Indians from four companies and four South Koreans from three companies, among others.
Borges stressed the importance of markets in regions other than the U.S. and Europe and expressed his desire to ramp up exports of clothes and software -- not exactly Brazil's traditional exports.
The Asia-Pacific region over the past decade has emerged as a major trading partner for Latin America, said an official at the Latin American Integration Association. The total value of annual trade between the two regions moved between $100 billion and $150 billion from the late 1990s through the early 2000s, according to the Asian Development Bank. But the number began to surge around 2004 and topped $500 billion for the first time in 2013.
Metals and other raw materials have been Latin America's main exports to Asia, which accounts for nearly half the global sales of Vales, a big Brazilian metals and mining corporation. China's economic growth since the turn of the century has been a big boon to the company's earnings. Codelco, the Chilean state-owned copper mining company, has a similar story.
But minerals are not the only exports to Asia. One notable trend of recent years has been food businesses aggressively expanding into Asia. After a bird flu epidemic broke out in various parts of Asia in the 2000s, Brazil's chicken exports to the East began to grow.
Brazil's poultry industry was once a huge collection of chicken farms and meat-packing plants, just like that of many other emerging countries. Big Brazilian food companies organized chicken farms so they could more efficiently supply to large markets such as Sao Paulo and Rio de Janeiro.
In addition to supplying feed to affiliated chicken farmers, these companies also began strictly managing production. They also acquired other companies and took other strategic steps so as to supply huge amounts of chicken to consumers around the world.
Since it is impossible to meet Asia's voracious demand for chicken by simply exporting poultry from Brazil, Marfrig Global Foods decided to lean on a U.S. subsidiary. The American arm was assigned to help Marfrig duplicate its Brazilian chicken industry success in China and other markets.
Marfrig's next big target is Indonesia, which has a population of more than 200 million.
Asia has a gargantuan and vibrant food market. In China, India and Southeast Asia combined, there are more than three billion mouths to fill. BRF, Brazil's largest foodmaker, is to turn a chicken-processing plant that will come on stream in the United Arab Emirates in 2014 into an export center for Asia and the Middle East.
Other Latin American companies are building production facilities in Asia. Marcopolo, the Brazilian bus body maker, operates manufacturing facilities in 12 countries. The company, which supplied bodies for the buses used to carry reporters and spectators during the World Cup, has a joint venture with India's Tata Group. Mexican bakery company Grupo Bimbo, theme park operator KidZania and autoparts maker Metalsa are also expanding in emerging Asia.
So long after the World Cup hoopla fizzles, Latin America-Asia business relationships will still be going strong.