Marcos Antonio Mandacaru
CEO
TSX Invest
mandacaru.marcos@gmail.com
LATAM FDI: Hello. Today, we have Marcos Antonio Mandacaru with us. I hope I got that pronunciation right. Marcos Antonio, please correct me. We’re going to talk about foreign direct investment in Brazil. I’ll let Marcos Antonio introduce himself and tell us a little bit about the organization that he represents.
Marcos Antonio Mandacaru: Thank you very much for the invitation to be here. I have been dedicated to foreign direct investment attraction to Brazil since 2007. Currently, I am in Bello Horizonte which is the capital of Minas Gerais State. I am an associate professor at Fundação Dom Cabral which is a business school that is very well known worldwide and CEO of TSX Invest, a company dedicated to helping companies and cities to attract investment. So, I’m here with you to discuss to talk about foreign direct investment in Brazil.
LATAM FDI: That’s great. That’s a very interesting topic because Brazil is the foreign direct investment leader in Latin America. That being the case, what are the main sectors that companies are coming to do business in Brazil?
Marcos Antonio Mandacaru: Brazil, in 2022 was number five in terms of foreign direct investment attraction in the world. Several sectors are attractive for Brazil, especially renewable energy, infrastructure, agribusiness, and automotive. Considering the size of the market and the growing middle class, we can consider health and retail as a very strong as very strong sectors for investments, especially health, as well. You can consider services, biotechnology, industry and pharma. Just to give an example about this sector in our region, Minas Gerais, we have one of the best federal universities in the country, the Federal University of Minas Gerais. The university is a leader in patents, and 70% of the patents are related to the health sector. We have here in our city, Belo Horizonte, several companies in biotechnology and health. It’s a good opportunity for foreign companies to establish cooperation, joint ventures, and other regions in Brazil. You can explore biotech too, for example, in the Amazon region and Sao Paulo State and the south of Brazil.
LATAM FDI: You mentioned a lot of sectors for foreign direct investment in Brazil a moment ago, but there’s one sector that I’m particularly interested in. It’s led by Embraer. Can you tell us a little bit about aerospace in Brazil? Because I know that it’s highly developed.
Marcos Antonio Mandacaru: The aerospace sector in Brazil is a strong opportunity for foreign companies, especially for helicopter suppliers and aircraft manufacturers and suppliers. Embraer was established in Brazil in 1969 in the countryside of Sao Paulo State, the biggest state in Brazil in terms of GDP and population. But what I can explore with you is the opportunity of Itajubá, a city located between Sao Paulo and Belo Horizonte, in the south of the state. of Itajubá is a very sophisticated city in terms of education. It is home to a very good university. There, they have the subsidiary of Helibras Helicopters there. Helibras is the only helicopter manufacturer plant in Brazil. They manufacture big helicopters there. The city has five laboratories dedicated to aerospace. Inside the university, there are several startups, and a very strong industrial park surrounding the Airbus helicopter plant. This is an opportunity to be explored for foreign direct investment in Brazil considering the fact that this sector is a very good source of investment for Arizona and the United States. I’d like to help you and your companies in the United States explore and understand better the business and the investment environment in this region.
LATAM FDI: Well, you mentioned the state of Sao Paulo and also you mentioned Minas Gerais. Besides those two states, are there other states that have been successful in attracting foreign direct investment in Brazil?
Marcos Antonio Mandacaru: Absolutely, yes. In the south of Brazil, there are three states with good track records in foreign direct investment attraction Rio Grande do Sul, Santa Catarina, and Paraná. They are well-developed states in terms of economy and industry, especially. Santa Catarina in recent years has developed a good innovative ecosystem attracting foreign companies for partnerships with local companies. They have two strong indigenous companies prepared to internationalize with a good profile for establishing partnerships for investment in Brazil in the northeast of Brazil. An example is the state of Bahia, which has just announced the BYD investment in electric car plant manufacturing there.
LATAM FDI: That’s a Chinese company, isn’t it?
Marcos Antonio Mandacaru: It is a Chinese company, yes. Ceará, another state, is a hotspot for foreign direct investment in Brazil. Additionally, Pernambuco, as well as other regions, has been successful in attracting foreign direct investment too. In other states, for example, Goiás is very strong in agribusiness. Mato Grosso do Sul is as well. So, Brazil has plenty of opportunities in several areas, in several regions, in several industries. I consider Brazil the best opportunity for foreign investment in Latin America, considering the country has 50% of the South American GDP, and is the largest consumer market in South America. It is the same time zone as the United States and has some cultural similarities. It’s easier to do business in Brazil if you compare it to India China or Malaysia, for example. Obviously, we are a Latin country. We have some differences in terms of the culture, but there are a lot of similarities in terms of compliance and how to do business. Making a foreign direct investment in Brazil is easier if you compare it to other emerging markets.
LATAM FDI: Please, give somebody who may be listening and may not have a full picture of what Brazil is like, a lot of people may not know, but Brazil is the same size as the lower 48 states in the US. Just to give our listeners an idea of the size of Brazil.
Marcos Antonio Mandacaru: The size of Brazil is impressive. It’s interesting because sometimes you can’t imagine how big Brazil is in the world. The state of Minas Gerais is the size of Spain. The state of Sao Paulo is the size of the United Kingdom. The state of Bahia is the size of France. So only three states that I mentioned, France, Spain, and the UK can easily fit inside Brazil. The state of Pará is the size of Angola. So, it’s a continent, it’s a big country to be exploring in different areas, in different industries, and opportunities that are attractive for foreign direct investment in Brazil.
LATAM FDI: One industry that you haven’t mentioned yet, and it has been there for a long time, maybe you could give our listeners an overview of it. Is the automotive industry important in Brazil, isn’t that correct?
Marcos Antonio Mandacaru: The automotive sector in Brazil is very well developed in terms of engineering research and development design. We have almost all Western brands with manufacturing plants here, from Mercedes Benz to Audi, Volkswagen, Ford, Stellantis, GM, Fiat, and Chrysler.
I mentioned before the foreign direct investment in Brazil announced by BYD to manufacture electric cars in Bahia. But what I consider a good opportunity is the energy transition in the automotive industry. Talking about my state again, but it’s not because it’s my state, because Minas Gerais has 70% of lithium reserves in Brazil. Additionally, we have much more including cobalt, nickel, and niobium. Minas Gerais is the largest niobium producer in the world. We have the condition together here in this region, the hotspot for the energy transition in the automotive industry in Brazil because we have engineering too. The largest Stellantis plant in the world is located here in our region, close to Belo Horizonte. It produces 3000 cars per day. I don’t know how many they are producing nowadays, but the capacity is 3000 cars per day. Sometimes they have to adapt to the production, to the demand. But the capacity is 3000 cars per day in this manufacturing plant with an engineering center with 2000 engineers and 200 designers. It is the only design center of Stellantis outside Europe and the US.
So, we have engineering, we have strategic minerals, and we have a strategic location for foreign direct investment in Brazil. In an hour’s flight from Belo Horizonte, you can cover 70% of the Brazilian GDP. We have a strategic location, engineering, strategic minerals, and production of ethanol that can be used in hybrid cars as a very good option for combined electric and, how can I say, traditional fuel, but with zero emissions.
LATAM FDI: Okay, you just got through explaining a bit to us about a very established industry, the automotive industry. But can you tell us what the main startup ecosystems are in Brazil?
Marcos Antonio Mandacaru: As regards the startup ecosystem for foreign direct investment in Brazil, I can talk about several ecosystems that have developed from the south to the north. I would like to start by mentioning the state of in the northeast of Brazil, Pernambuco. The capital is Recife. There is Porto Digital. There is an ecosystem of startups in technology with good capacity to develop international partnerships to attract foreign direct investment in Brazil. In Sao Paulo, the largest city in South America, a financial center and industrial center, you have a strong startup community dedicated to several sectors, especially fintech, construction, and health. Rio de Janeiro as well, has a strong ecosystem. The city, of my hometown, Belo Horizonte, the third metropolitan region in Brazil, has a strong startup community. It is sometimes considered one of the two or three best startup communities in the country.
The best startup community in Brazil nowadays is Florianopolis in the south of Brazil. The city has a good serendipity, a strong connection to industry, and a diversity of startups, able to establish international cooperation and develop partnerships for different industries and technologies. This is an overview. Obviously, we can mention other ecosystems in different regions. For agritech, for instance. Agritech is a strong area for startups in Brazil. Construction tech as well. Brazil has a good environment for innovation in terms of startups, universities, and talent. These industries and start-up ecosystems are ready to attract more foreign direct investment in Brazil.
LATAM FDI: Well, in terms of setting up facilities in Brazil and one of the areas that you’ve pointed out to us, what do you recommend for a company to have a soft landing in Brazil?
Marcos Antonio Mandacaru: Although Brazil has a big market with a diversified industry, we have a difficult business environment. Yet, for establishing a company in Brazil, I recommend talking first with Apex Brazil. Apex Brazil is the investment promotion agency at the federal level, and after the state in which the company will invest.
It’s important to understand the government structure and if the state has an investment promotion agency, for example, Invest Sao Paulo or Invest Minas, I recommend talking with them. It’s important to identify local companies in the same sector to talk about their experience in Brazil. Depending on the size of the company that is investing in Brazil, the most recommended way to enter the market is the joint venture or by acquisition of an existing company. Here, for greenfield investment, it’s important to have the support of the National Development Bank, the BNDS. I don’t know, Steven, if you have heard about the National Development Bank, it’s a very strong bank that can support and finance investment in Brazil in different areas. Some states, like Minas Gerais, have a state development bank. It’s important to talk with them. So, we have a very strong framework to facilitate foreign direct investment in Brazil considering the complexity of the market and the business environment.
And when you go deeper into the private sector, for example, the company I’m now working for, TSX Invest, we can help foreign companies connect with other companies and governments too, like TSX. There are several companies with this mission to connect foreign companies to local companies.
LATAM FDI: Okay, well, we’ve covered a lot of ground in not so many minutes here. Our experience has been that after listeners receive the information that our speakers provide to them, they often have questions come up as a result of what they’ve heard. If somebody wants to contact you with questions that have to do with what you’ve expressed today, how could they get in touch?
Jose Antonio Mandacaru: By LinkedIn. My profile is Marco Antonio Macandaru or by email: mandacaru.marcos@gmail.com. Okay.
LATAM FDI: What we’ll do is we will include, if it’s okay with you, include a link to your profile on LinkedIn in the transcript section of the podcast, as well as a copy of your email address that people can click on so that they can get into contact with you easily. Would that be okay?
Marcos Antonio Mandacaru: I appreciate it.
LATAM FDI: Well, thank you for joining me today. I was fortunate enough when I was a younger man to spend quite a bit of time in Brazil, and I think it’s a great country. And thanks again for being with us.
Marcos Antonio Mandacaru: Thank you very much for the opportunity.
