source: Paraná Cooperativo
Since this Monday (260/6) the public can already have access to an unprecedented study carried out by the Foreign Trade Secretariat (Secex) of the Ministry of Development, Industry, Commerce and Services (MDIC) that made an X-ray of Brazilian foreign trade. The objective of the study “Profile of Brazilian Exporting Firms – A Panorama” was to map the challenges to be faced in the work of promoting foreign trade by companies in our country, in order to advance Brazil’s competitiveness agenda.
Information for public and private agents – The study presents a comprehensive picture of companies that export in Brazil, detailing where they are located, which are their preferred destination markets, and how they differ from other companies that do not export. The work also identifies how these firms enter and remain in international trade.
Challenge – Information that will help the reader to better understand the challenge imposed on companies seeking international insertion. The survey serves as a subsidy for public and private agents responsible for designing business policies and strategies aimed at inducing the internationalization of Brazilian companies.
Identification – In the evaluation of the Foreign Trade secretary at the MDIC, Tatiana Prazeres, the diagnosis identifies challenges to be faced so that more companies export. According to Tatiana, the tax reform, for example, could make a huge contribution, not only for making national production more competitive, but also for the country to stop exporting taxes, which, unfortunately, is still a reality.
Growing demand – According to Secex’s Director of Planning and Commercial Intelligence, Herlon Brandão, there is a growing demand for knowing the profile of international trade by company characteristics. “Still few countries have initiatives to produce this data and Brazil is one of the first to make this information available”, he said. In addition to this study, this year Secex released statistics on Exports and Imports by Corporate Tax Size. “The ability to produce this information made Brazil join the group of specialists from the United Nations that is building an international manual with recommendations for the systematic production of trade data by characteristics of companies, says the director.
Importance of regional integration and large markets – The survey identified that only 1% of Brazilian companies sell abroad. In absolute numbers, there are approximately 25 thousand firms that have already conquered their place in the foreign market. At the same time, they account for about 15% of formal jobs in the country.
Latin America – “Our attention was drawn to the fact that the vast majority (61%) of these companies do business in Latin America, which reinforces the importance of regional integration”, says the secretary. According to her, in addition to the advantages of geographic and cultural proximity, Brazilian products find lower tariffs in the region, as a result of trade agreements.
Average tariffs – In fact, according to Secex’s unprecedented diagnosis, the average tariffs imposed by Brazil’s trading partners figure as a relevant factor for exporting companies to define the destination of their goods.
Market size – On the other hand, the study identifies that the size of the consumer market becomes, more and more, an important element in defining the target country of exporting companies. From 2018 to 2020, the number of companies exporting to China increased by 24%. For the US, growth was 21%. For the European Union, 16%. On the other hand, the number of firms exporting to Mercosur grew by only 2%.
Salaries up to 124% higher – The study also found that exporting companies, on average, pay higher wages, hire more and employ a higher proportion of workers with higher education compared to non-exporting companies. The wage premium paid by exporting companies in relation to non-exporting ones varies from 36% to 124%, depending on the company’s sector of activity.
65% chance of continuing exporting after the first year – Among the firms that manage to sell to other countries, the chance of continuing exporting after the first year of foreign sales is approximately 65%. The study also revealed that most companies export sporadically. Periods of uninterrupted exports have a median duration of 3 years. Keeping companies in the foreign market is an important challenge.
Regional concentration – The Secex study shows that companies operating in foreign trade are concentrated in specific regions of Brazil. 54% of Brazilian firms that sold abroad in 2020 were located in the states of São Paulo and Rio Grande do Sul. The study also found that the percentage of firms that exported to Mercosur countries was almost 2.5 times higher in the South and Southeast regions than in the North, Northeast and Midwest regions. It was also found that exporters located in the North, Northeast and Midwest regions have a larger scale (size) on average, with 30% more employees than exporting firms established in the South and Southeast.
Vector of economic development – According to Secex, understanding the dynamics of exporting firms is essential for us to encourage our participation in foreign trade. The insertion of a country’s companies in international trade is traditionally seen as an important vector of economic development. Companies that access international markets are positively impacted in their growth, demand more qualified labor and need to continuously increase their productivity to remain competitive.
Competition – Despite these beneficial effects, competing in foreign markets is not considered an easy task. Companies that want to follow this path need to face, in addition to competition at a global level, the most diverse types of tariff and regulatory obstacles imposed by foreign governments to accept that imported products are sold in their territory.
Difficulties – Therefore, these difficulties mean that only a portion of companies with export potential effectively participate in international trade, despite the potential benefits they could acquire by doing so. Precisely for this reason, it is necessary to study the characteristics of exporting companies and, above all, understand how the dynamics of export work and the main difficulties faced in the export process.
Opportunities to expand Brazil’s export base – To make more companies benefit from the foreign market, Secex has among its priorities the facilitation of trade, the promotion of an export culture and trade promotion, with a focus on MSMEs. In addition, Secex also works to open markets for Brazilian products, both through the negotiation of new trade agreements and the deepening of existing ones, and by overcoming barriers that affect Brazilian exports. Furthermore, the federal government is working to complete the Single Foreign Trade Portal by 2026, improving processes, integrating systems and reducing bureaucracy, costs and deadlines for foreign trade operators. “Expanding the export base will generate concrete gains for Brazil”, highlighted Tatiana Prazeres. (Ministry of Development, Industry, Commerce and Services)
