Canada is a stable, predictable country where “some of the rules are tough, but you know what they are,” and Brazilian companies will find it astoundingly easy to set up shop here, an audience of business leaders heard in Rio de Janeiro this week.
That ringing endorsement came from no less an authority than Luciano Siani, chief financial officer of Vale SA, which has the highest-profile Brazilian investment in Canada.
Mr. Siani described his company’s move to set up potash operations in Saskatchewan in 2009: “We were promptly welcomed by a central agency of the government that provided us in a few months with a contract for gas, water, energy – there was no difficulty whatsoever to get all of the logistics for the project. And these are things that would have taken several years here in Brazil … it would be a nightmare.”
Mr. Siani made this unexpected plug for Canada at an event organized by the Canadian consulate in Rio, which brought BMO Financial Group vice-chairperson Kevin Lynch to town to talk up Canada as its “investment champion.” Canada’s trade with Brazil is currently $6-billion a year. That’s up 25 per cent from where it was five years ago, but it is still only the equivalent of four days of Canada-U.S. trade, Mr. Lynch noted.
His presentation was affably low-key (“Canada: at the intersection of stability and growth”), but could have been alternatively titled “Why Canada is better than the United States.” He presented a blizzard of pie charts showing Canada’s lower corporate taxes, stronger banking system, lower debt, better-educated work force and an array of other favourables compared to the United States – intended to persuade the Brazilians to look past the country that dominates their thinking about North America.
Mr. Lynch met business leaders in Sao Paulo earlier in the week, where, he said, he realized how much more promotion Canada must do here. “It’s not that they don’t think much of Canada – it’s that they don’t think about it at all,” he said.
His observation was echoed by one of the men who came to hear him speak: Cesar Prata runs a large marine pump business in Sao Paulo, serving the offshore oil and gas industry; he also chairs the 6,000-member Brazilian machinery association.
Just before he came to hear Mr. Lynch, Mr. Prata attended a meeting with the heads of 40 other businesses serving Brazil’s oil and gas industry. “I asked, ‘Have you thought about Canada?’ And no one had. We get delegations all the time – huge delegations from tiny countries like Sweden and Denmark – and from Korea, places like that. But never from Canada.” Yet Canada, he said, strikes him as a natural partner for Brazil, a commodity-based economy with “nice people” and a need to diversify.
“Brazil should try to approach countries that are more similar to us – we are not very comfortable doing business with Americans,” he said. “Ninety per cent of the members of the machine association are small and medium-sized businesses, most are family-run and this is very similar to what we have in Canada. When we are doing business with big corporations we are always afraid of being swallowed by the bigger bird – it’s a lot better and easier when you have other things in common.”
Vale’s Mr. Siani was invited by Canada’s consul-general in Rio, Sanjeev Chowdhury, to say a few words about his company’s Canadian experience, and began to rattle off pleasant surprises about Canada. “As you know, we had a dispute with a local trade union in 2009-10 … the courts were extremely fair and not subject to political interference.” He also noted that Canada’s “quality of labour is amazing” – not just top managers in Canada have graduate degrees, as is typical in Brazil, but “even in frontline positions.” And yet, Mr. Siani said to visible surprise in his audience, the cost of labour is “not much more expensive than in Brazil.”
Mr. Lynch highlighted Brazil’s immense infrastructure expansion as an area of potential opportunity for partnerships, noting that Canada has considerable expertise building power grids, for example, over the kind of areas Brazil is trying to serve. And, he said, the two countries could be working together to go into third markets such as China, in areas such as agriculture and food industries. “You have more capacity, and we have more people links,” he said.
In an interview after his presentation, Mr. Lynch noted that Brazil’s bureaucracy and taxation system would present challenges for any Canadians coming into the country, and that the pace of opening in the Brazilian economy is not, to date, swift. Having a “critical mass” of Canadian companies come in will help, he said – “it’s going to be easier to get 100 than one.”