help foster a new model in Anglo-Brazilian relations
Brazil, an Olympic task for Cable.
As Vince Cable's week-long visit to Brazil concluded on Friday, the Government's intentions towards Latin America's economic giant could not be clearer.
By Doug Gray in Rio De Janeiro
Published: 8:30PM BST 04 Sep 2010
Rio de Janeiro
Vince Cable
UK business is to be encouraged to take the reins and help foster a new model in Anglo-Brazilian relations, with the comforting and potentially highly lucrative backdrop of an Olympic handover – Brazil hosts the 2016 summer Games – to help pave the way.
The delegation of 35 UK business leaders will now help promote the new style of co-operation. "In the past it was government official to government official with businesses sitting in the background, but now the chief executives will lead the process," Mr Cable, the Business Secretary, said.
Relations between the two countries have, Mr Cable admitted, been "at a low level". With little shared history, insignificant bilateral trade and little in the way of key diplomatic relations during the years, the handover of Olympic know-how has proved to be the perfect re-introduction. March's Host2Host knowledge-sharing accord was augmented last week with the signing of a CEO Forum agreement, enabling more open discussion between chief executives of both countries.
The indications are positive. In the midst of an economic downturn, UK exports to Brazil have more than doubled in the past five years to a total of £1.7 bn. Meanwhile, UK Trade & Investment has reported a 500pc increase in British business interest and approaches towards Brazil. "How much of that actually produces real products crossing borders we can't guess," said Mr Cable. "But there is a big upsurge in interest."
High on the delegation leader's agenda was addressing the tariffs that continue to make business with Brazil prohibitively expensive. "I had fairly substantial talks with several ministers about trade liberalisation," Mr Cable said. "I think there is now a real possibility of us making some headway in terms of Mercosur [South America's leading trading block] and the European Union, and the British are very much in favour of that happening as quickly as possible.
"The British are driving it on the European side, and if it happens it will be the biggest bi-lateral trade agreement in the European Union. Bigger than the South Korean agreement, bigger than the Indian agreement, and it will have a significant effect on the way we do business here."
Current success stories may not yet abound, and the major impact of British companies on Brazilian shores has yet to be felt too far beyond the likes of BP, which committed £25 bn to offshore investment, and Shell's £3 bn deal with Brazil's Cosan ethanol giant. Signs are, however, "optimistic" for future defence and naval co-operation, while another oil-related company, Newcastle's Wellstream, has shown the way forward with its flexible piping business designed to carry oil from deep sea well-heads to the rig or ship.
Winning Company of the Year from the Brazilian Chamber of Commerce in 2007, Wellstream's approach to working in the country has been anything but formulaic, a policy which has been at the root of its success. Setting up training and operations in Niteroi, the industrial city across Guanabara Bay from Rio, the factory now operates with close to 100pc local staff and the rewards have been plentiful. "Four years ago we decided to set up in Brazil and it was a turning point for the company," says executive vice president, Luis Antonio Araujo, who worked in Scotland before joining the Newcastle operation. "Investing in Brazil was the key. We acted like a Brazilian company, which both Petrobras and the government liked, but we have a good mix. We also implemented the British business culture here, and you wouldn't recognize much difference between the plant in Newcastle and the plant in Niteroi."
Mr Cable was also adamant about how UK companies should approach Brazil. "What is most important is accepting they have got to build long-term relationships. The point being stressed is not to come here on a fly-by-night basis. It's long term relationship building with Brazilian partners, and that's the only way to operate."
As for the outdated image of Latin American business practices, nothing on his visit made Mr Cable wary of any cultural differences that could raise hurdles. "The Brazilians I have met are very business-like, highly competent people and all the old stereotypes don't apply," he said. Certainly the willingness to learn in Brazilian business today is impressive, but while English schools have become a huge growth industry, the language barrier still remains, and it would be unwise (and seen as insulting) to think that anyone could set up successfully without a solid command of Portuguese.
The clear areas of opportunity remain closely tied to the 2014 World Cup and 2016 Olympic, and the huge funds that the Brazilian Development Bank, is making available with nearly $890bn assigned to investment within the country in December to help build improvements, such as a high speed rail link between Sao Paulo and Rio de Janeiro in which the UK infrastructure consultants, Halcrow, are involved. The architecture firm, Foster, have also begun discussing designs for World Cup 2014 stadiums. All 12 of the host cities require extensive rebuilding and many contracts remain open.
Brazil's current growth may not be as dramatic that of China or India, but the time is right for Britain to make inroads into what some economists are predicting will be the world's fourth largest economy by 2040, comfortably leap-frogging that of the UK.
"There are fewer people than in India and China and it is not as vast, but Brazil has a more diversified economy, strong agriculture and strong raw materials, as well as manufacturing and services, so in that way it is more interestingly diverse than both of those," Mr Cable said.
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