By Publisher Lee Kyung-sik with Feature Editor Kim Tae-moon
Five is a lucky number not only in Korea but in various other countries of Asia such as Japan, China and other Chinese character-using countries. This year in 2018, Brazil meets with the lucky number three times, and this was immediately apparent at an interview with Ambassador Luis Fernando Serra of Brazil in Seoul.
“2018 is a special year for both Brazil and Korea,” said Ambassador Serra, “as the Korean immigrants in Brazil celebrate their 55th anniversary of arrival in Brazil, Brazil has 50 thousand Korean immigrants and residents and Korea is the 5th largest trade partner of Brazil in the world.”
Coupled with the zeal on the part of Ambassador Serra, the three 5’s between Korea and Brazil could be doubled and re-doubled. All told, it is expected that there would be a great increase in bilateral trade, economic cooperation and various other inter-actions between the two countries. Here are details of the interview with Ambassador Serra:
Question: Economic cooperation between the two countries is very important. What are the main Korean companies to contribute to the promotion of relations between the two countries?
Answer: First of all, the biggest Korean companies investing in Brazil are Hyundai, LG and Samsung. Hyundai Motor produces 180,000 cars a year, and its production plant has invested more than $ 800 million in 1 390 000 pyeong of land area (1 pyeong equals approx. 36 square meters) in Piracicaba, a city in the central part of the state of Sao Paulo. Hyundai has consistently been producing the local HB20 model in Brazil since October 2012, with a total of 2,600 employees and 30,000 jobs. Hyundai Motor is investing in various projects in Brazil. Hyundai Mobis supplies car parts to Hyundai Motor's HB20, hiring more than 1,000 local staff, and invests more than $ 100 million.
In addition, not only Hyundai affiliates - Hyundai Motors, Hyundai Steel, Hyundai Glovis, Hyundai Auto Ever, Hyundai Capital, Hyundai Motor, Hyundai Engineering, Hyundai Rotem, but also THN, Dongwon Group, Doowon, Hwashin, Hanil, MS have plants in Piracicaba region and they find Brazilian market very attractive, but Hyundai already has very strong positions in the market.
Hyundai Elevator is present in Brazilian market and small and medium-sized companies producing Hyundai auto parts are also entering the local market.
Samsung is producing mainly mobile phone parts at their Brazilian plant. In Pecém, the Northeastern port of Brazil, we have a steel mill CSP (Companhia Siderúrgica do Pecém) - a joint venture between POSCO, Dongkuk Steel and Brazilian mining giant Vale.
AB InBev, the Belgian-Brazilian joint venture, world's largest beer company, that recently entered Korean market, acquired Korean OB Beer. SK Group is currently working on investment projects in Brazil. In addition, there is a Korean company specialized in semiconductor packaging called 'Hana Micron' located in southern Brazil.
Q: Korean companies are seeking new countries for investment following difficulties suffered by them in China. What are the chances of the Korean companies to expand their business to Brazil?
A: Brazil has a good environment for Korean companies to enter. First of all, it is very rich in energy and natural resources, combined with the population of more than 200 million people and a larger South American common market Mercosur, it has a vast domestic market. Another possibility will open for Korean companies after Brazil signs an FTA with the European Union that is underway in 2018. Western Europe is just 6 hours away from Brazilian Northeastern ports and it is a great opportunity for Korean companies to access European market.
In the near future we are expecting more than 500,000 jobs to be created, as the offshore oil production reaches US $ 150 million, and of course, we will be hiring more people. Korea Airport Corporation is also pursuing joint projects with Brazilian counterparts and we expect many more opportunities to open. In terms of foreign investments, with the exception of China, Brazil is one of the leading countries and it attracts $ 65 million of foreign investments a year.
We expect this number to steadily grow.
In addition, inflation is relatively stable among Central and South American countries, and Brazil reached certain level of financial stability having $ 350 million of foreign exchange reserves.
In Brazil the cost of labor is relatively low and also people are very hardworking. This helps Brazil, unlike China, to keep surplus while trading in the international market.
From January through October 2017, we observed a steady trade surplus and after November, this surplus grew even more.
Brazil’s number one trading partner is China. Trade between Brazil and China accounts for $ 19 billion, with 23 to 24 percent of Brazilian raw materials going to China.
Brazil is somewhat unrelated to China's political interests and therefore has no other trade-related influence.
We hope to see more Korean companies to enter Brazilian market and successfully fulfill their investment projects.
Q: There are many Korean companies already in Brazil, but are there any special plans to help businessmen who wish to enter the market and provide them with detailed information?
A: The Embassy of Brazil is planning to organize a forum (seminar) ‘Doing Business in Brazil’ in March 2018 at the Walkerhill Hotel. The date is yet to be confirmed. This initiative is aimed to provide interested Korean entrepreneurs and investors with detailed information on the legalities, taxes, advantages and systems of entering Brazilian market.
We are planning to expand the Embassy in 2018 and set up a convenient seminar room there. Apart from the yearly business forum mentioned above, we are preparing various seminars and events in cooperation with the Korea Brazil Society (KOBRAS). We are looking forward to more co-sponsorship. At the moment we are preparing luncheons, networking and one-on-one meetings during the forum.
Brazil is on the verge of recovery from the economic downturn and is expected to grow by 1% this year. There were 13 million unemployed people in 2017, and all of them are waiting for jobs and I think it is a good time to reduce the employment rate along with the raise of production rate through investments. In fact, in the current economic recovery situation saying that unemployment rate numbers 12 million people would be more accurate. In addition, Brazil has a high awareness of the good quality of Korean products.
Entering Brazilian market means expansion to a larger South American common market. Brazilian domestic market with 200 million consumers is five times that of the Korean consumer market. As I mentioned earlier, once the FTA with the European Union is concluded in 2018, there will be a passage to reach even bigger 500 million people market.
In many ways, opportunities in the Brazilian and Latin American markets are endless. Brazil has abundant natural resources such as hydro, solar, and wind energy, and affordable and diverse human resources. Our country has many investment and cooperation opportunities, such as infrastructure construction projects, e.g. airport construction.
In fact, Brazil is one of the most liberalized countries, it offers a good environment for foreign companies to enter and invest. Companies like Swiss Wrestlers and German Siemens in have a history of more than 110 years in Brazil, and the fact that these companies have been active and continue to grow in Brazil is the best proof of investment stability in Brazil.
For reference, Germany is the fourth trading partner of Brazil. I think it is a mutually beneficial situation where these multinational companies help Brazilian economy to grow as well as they achieve growth and strengthen their own influence. It is said that these companies have crossed the Atlantic Ocean by boat on their way to Brazil 110 years ago and never thought it was a long way away.
Volkswagen has a history of more than 60 years in Brazil, and GM or Ford has even a longer long history in our country. Hyundai Motor has been in Brazil for 10 years, and it has achieved a good performance, including the second-best sales of mini cars.
Again, I think it is a good time for the economic and cultural exchanges between Brazil and Korea. The Korean Consul General in Brazil, Sao Paulo, is fluent in Portuguese and his wife is Brazilian. His Excellency understands the current situation and fact that Brazil’s growth rate is fourth in the world and provides great assistance to Korean companies and investors.
Q: Would you please elaborate on Brazilian government’s impression and attitude towards Korean President Moon Jae-in.
A: Brazilian President Michel Temer supports and respects the choice of Korean people who elected President Moon Jae-in. President Temer, visited Korea about 2014 when he was a Vice-President, and he was impressed with Korea at that time.
During his visit Mr. President met the Chairman of the Korean Brazilian Society (KOBRAS), who became a great friend of Brazil by serving as top advisor to Vice President Michele Temer. President Temer and Chairman Choi Sin-won also met During Olympic Games in Rio de Janeiro.
When President Moon Jae-in was elected at 19th presidential elections in Korea, President Temer was nation’s most celebrated leader. Therefore, we hope that the two leaders will be meeting soon.
My personal opinion is that it would be very meaningful for the two leaders to meet at the ceremony for the 60th anniversary of establishment of Korea-Brazil diplomatic ties in 2019. Brazilian President Michel Temer has been interested in Asia for a long time, and he has a special interest for Korea. Three of the six biggest economic partners of Brazil are located in Asia and last year trading volumes between Brazil and Korea exceeded those of Japanese.
To put it concretely, China is number one trading partner, USA – second, Argentina – third, Germany – fourth, Korea – fifth, Japan – sixth. Coffee is one of the top Brazilian export products in Korea.
Q: Would you please give a brief introduction of Brazil and Brazilian Government?
A: Brazil is the 5th largest country in the world in terms of territory and population and seventh largest economy. In the future with the same growth we expect to become world’s fifth economy. Our country is engaged in export in various fields, mainly, agriculture.
Coffee is the number one export item, followed by sugar (raw sugar), orange juice, soybeans, and chicken. Brazil is also an industrial country, producing automobiles and ranking third in the world in aircraft exports.
According to historians, Brazil is the country that achieved the fastest growth and development in the world for about 80 years from 1890 to 1970. Brazil is on a recovery trend after the economic crisis of the 2000s and is the world's largest producer of offshore oil, with daily production of 2.4 million barrels.