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Posted 2022-02-21

Following a recent rapid increase in its GDP, Brazil is now the 8th largest economy in the world. Such growth is expected to continue to reach 5th place by 2035. Such figures bode well for investors, even if the global crisis and recession have caused some caution to set in. 

In 2022, you may be planning to open a subsidiary in the heart of the world’s 8th largest economy. But perhaps you are wondering where your future entity will be located? In this article, we will draw up a portrait of 3 major cities in the country, each of which has its own distinct appeal : São Paulo, Rio de Janeiro, and Belo Horizonte.

Brazil : an emerging economic power

As a growing economic power, Brazil remains a coveted destination for investors from all over the world. Over the last 20 years, millions of Brazilians have been lifted out of poverty and today they are very big consumers. Many entrepreneurs have already chosen Brazil to expand their business abroad. Others are considering setting up shop there, but are still hesitating between several locations. This article will allow you to identify the specific poles of attractiveness of each of the major cities studied.

Brazil is therefore an emerging power, and one of the largest producers of agricultural products. Its influence in the economy is supported by various Brazilian multinationals such as Embraer, the world’s third largest producer of civil aircraft, and Vale, one of the biggest mining companies in the world. 

Culturally, Brazil is the leader in the Portuguese speaking world and in the CPLP (Comunidade dos Países de Língua Portuguesa), which includes Angola, Cape Verde, Guinea-Bissau Mozambique, Portugal, and São Tomé and Príncipe.

In South America, the most important integration movements are Mercosur and UNASUL and Brazil has worked toward a better integration of the LATAM economies. Putting a foot in Brazil is also putting a foot in other countries in South America. Despite its key role as a geopolitical influencer, its size and population, the weight of Brazil is also due to the Amazon. Indeed, most of the Amazon territory (70%) is in Brazil, in other words, the country concentrates the natural resources of the largest tropical rainforest in the world. 

 

In addition, Brazil has hosted many sporting events in recent years, such as the Pan American Games in 2017, the Confederations Cup in 2013, the World Cup in 2014 World Cup in 2014 and the Olympic Games in 2016. These events, as the rise of foreign investments, have generated a higher quality of airport services and public transportation in general. 

Where to invest in Brazil ?

 

São Paulo

With a population of over 46 million, the state of São Paulo is the 21st largest economy in the world and the third largest in South America. largest economy in the world and the third largest in South America. São Paulo is also home to most of the country’s labor and consumer market, generating nearly one third of the wealth produced in Brazil.

The state of São Paulo covers more than 248,000 km² (similar size to the United Kingdom), representing 3% of the country’s surface. Its industry is responsible for 31% of the Brazilian market, and its services, 33%. Paulista agriculture is responsible for more than responsible for more than 9% of Brazilian crops.

Companies that set up in the state of São Paulo can count on a qualified workforce, developed infrastructures, a diversified chain of suppliers and advanced environmental legislation. These are the elements that, together with a multicultural wealth, give São Paulo a great advantage in terms of competitiveness. 

With 46 million inhabitants, São Paulo is the most populous and wealthiest state in Brazil, concentrating the fourth largest consumer market in the country. The greatest strength of the Brazilian consumer market is in the interior of São Paulo.

Economic development and quality of life

Recognized as the largest economic and industrial hub in the Southern Hemisphere, São Paulo accounts for 31% of the National Gross Domestic Product, a volume greater than that of entire countries such as Argentina, Belgium and Switzerland.

In addition, São Paulo has one of the best national performances regarding the living conditions of the population. 90% of its 645 municipalities have a high Human Development development index (HDI). Of this total, 24 cities have a very high HDI.

Main producing and consuming state and consumer state in Latin America, São Paulo has the largest and the largest and best infrastructure in Brazil.

The infrastructure of the state of São Paulo has:

  • – 18 of the 20 best roads in Brazil
  • – 5,697km of railroads
  • – 2 international airports
  • – 25 regional airports
  • – The largest port in Latin America – Port of Santos
  • – 800 km of waterways
  • – Gas pipelines on industrial sites

Human capital, science and technology

The state has 25% of all higher education institutions in Brazil.

São Paulo’s three public universities are among the best in the country, with international recognition. São Paulo is also home to the largest network of technical and professional schools in the country.

A boost for potential investors 

When an entrepreneur chooses the State of São Paulo, he has the advantage of benefiting from the support of an entity created by the government of the State of São Paulo to support from an entity created by the São Paulo State Government to encourage, support and facilitate investments: the Agência Paulista de Promoção de Investimentos e Competitividade, Investe São Paulo.

The Agency provides free strategic information that helps investors find the best locations for their businesses, and also provides advice on environmental advice on environmental, tax and infrastructure issues and facilitates companies’ relations with government institutions and public services. The region also concentrates the most part of the international chambers of commerce that are helping foreign investors to settle and connect with local networks.

Rio de Janeiro 

Capital of the State of Rio de Janeiro since 1975, the city of RJ is located on the western shore of the Guanabara Bay and on the Atlantic Ocean. Its inhabitants, the Cariocas, are very proud of it. Capital of the country from 1763 to 1960, when it had to give up its status in favor of Brasilia, Rio is today the second industrial, commercial and port center of Brazil (behind São Paulo) and the first cultural and tourist center of the country.

A major seaport located on a commercial axis that connects the coastal cities of the Northeast with the southeastern regions, Rio is also the center of a network of highways, railroads and airlines, and has two international airports: Galeão and Santos Dumont.

Producing about one tenth of the goods manufactured in Brazil, the city is home to a wide range of manufacturing industries: food, chemicals and pharmaceuticals, metal parts, shipbuilding, textiles, clothing, furniture, etc. Industrial activities are also oriented towards the exploitation of oil and the development of recent nuclear power plants.

However, it is the service sector that constitutes the backbone of the economy of the agglomeration, Rio being a banking and financial center of primary importance. The tourism and leisure industry also plays a significant role in the city’s economic life, supported by the presence of large hotels that stretch along the bay and offer a quality of service of excellent reputation. The city is home to many official buildings housing the administrative services of the region and the country.

Although the region’s economy has long been focused on the oil industry (85% of Brazilian production), about ten years ago the authorities launched a new dynamic to attract investors in the innovation and sustainable development sectors/

Belo Horizonte

Minas Gerais: an environment of innovation and entrepreneurship

The state of Mina Gerais is the second largest Brazilian consumer market, with a market share of 10.4%, just behind the state of São Paulo. Given its privileged geographical position, Minas Gerais companies have easy access to 49% of the Brazilian consumer market, with an estimated consumption potential of R$1,826 billion in 2016.

Among gas pedals, research and innovation centers, startup communities, innovation promotion agencies, incubators, open labs and technology parks, the Minas Gerais region stands out in the national R&D, innovation and enterprise scenario.

This area is home to Google’s only R&D center in Latin America, the Coordination of Technological Transfer and Innovation – CTIT, is the R&D center of Embraer, Helibras, among others.

Minas Gerais currently has 1083 startups, behind the state of São Paulo. In addition to the famous San Pedro Valley, Minas has important startup communities throughout the state: Zero40 (Juiz de Fora), ZebuValley (Uberaba), Uberhub (Uberlandia), Electronic Valley (Santa Rita do Sapucaí), Knowledge Valley (Itabira). Santa Helena Valley (Sete Lagoas), Libertas Valley (Itaúna) and Inconfidentes Valley (OuroPreto).

Belo Horizonte Innovation Ecosystem

Belo Horizonte is the capital of the state of Minas Gerais in Brazil and was founded in 1894. With a population of only 13,972 in 1900, the city had an estimated population of 2,375,000 in 2005 (4.5 million for the agglomeration). It is therefore the very type of city that is growing extremely fast, reflecting the economic development of the region of which it is the capital. Belo Horizonte was placed in the heart of the iron ore mining area of the Brazilian plateau, which allowed for a very rapid expansion of its industrial activities and its role as a regional center. Minas Gerais experienced a first phase of growth with the discovery of gold in the 18th century; its capital was the city of Ouro Prêto, which became too small and too old and was replaced by Belo Horizonte, which soon became the main center of tertiary activities in the state. Being relatively focused on the mining economy in the past, the recent governors had strong policies in favor of the opening of Minas Gerais to foreign investors and international markets. The concrete effects being administrative procedures that are facilitated and digitized, but also foreign investment that led to the impressive development of the BH Airport in Confins. In fact, the Confins airport, already recognized as an industrial hub and a strategic asset by its geographic positioning in Brazil, was elected best airport in Brazil last year.

The city has diversified its industries; in addition to its own mining resources, it has important sources of energy (hydroelectricity), an oil refinery and a wide range of industrial production: iron and steel, metallurgy, mechanical engineering, petrochemicals, plastics and food industries. The automobile industry is present in the neighboring city of Betim. Belo Horizonte continues to be organized in a very geometric way: from its creation, it had indeed been conceived according to a checkerboard plan, with large rectilinear and parallel avenues cut by streets at right angles. The center was reorganized, with a set of avenues and streets arranged like the spokes of a huge wheel. The growth of the urban space, beyond the planned city, was done by large subdivisions: the current organization of the city is characterized by a juxtaposition of urban units. An important industrial and tertiary center, Belo Horizonte is a sprawling city where the favelas spread out to the periphery.

In the capital of Minas Gerais, one of the most important innovation ecosystems in the country has flourished. The city of Belo Horizonte has more than 600 startups from different industries, one of the leaders in life sciences (more than 310 companies) and biotech clusters, various coworking spaces, research centers and universities. Not surprisingly, three startups among the top 100 Open Startups 2017 ranked in the top 10 are from Belo Horizonte.

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Author's post: Europartner Accounting

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