February 20, 2013
Interviewed by: David Snow
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Evolving Business Culture in Brazil

Profits used to be something to hide from the tax man in Brazil, according to Andre Viola Ferreira of EY Terco. But now the business and entrepreneurial culture in Brazil have greatly changed, and business builders want to show success in order to stand a better chance of partnering with private capital.

Profits used to be something to hide from the tax man in Brazil, according to Andre Viola Ferreira of EY Terco. But now the business and entrepreneurial culture in Brazil have greatly changed, and business builders want to show success in order to stand a better chance of partnering with private capital.

David Snow, Privcap: Today we are joined by Andre Vioa Ferreira from Ernst and Young Terco in Brazil. Andre, welcome to Privcap today. How are you?

We are going to talk all about the Brazilian entrepreneurial ecosystem. You spend a lot of time with Brazilian entrepreneurs, and so I’m fascinated to hear your insider’s account of the changes that are happening in your country.

First of all, why don’t we talk about what is unique about Brazil’s entrepreneurial culture that, again, might be different from many other places, both in Latin America and in the Western countries?

Andre Viola Ferreira, Ernst & Young: Yes, Brazil is a large country. We have some different countries inside this country. We are talking about almost 200 million people. We are talking a large country, and we have a culture that’s not so impacted by other countries. They have been developing inside.

So this creates a way to do the business very particular. And this has been changing a lot in the past years. Now those kinds of people, they are much more prepared, they are much more prepared to be more transparent and to access the capital, and develop those businesses.

Snow: When you say they are now more prepared to access capital, what have been some of the bigger changes in the Brazilian, I guess business culture over the past 10 years. Why do they think they need capital? What are they going to do with the capital?

Ferreira: We used to say that, for instance, financial statements, accountants, it was made just to pay taxes. So this was up to 2000. After 2001, 2002, it became to realize that should be great to show profit, and not avoid–

Snow: Not to hide it, right?

Ferreira: Not hide profit, so this is a huge change. Because now every firm would like to show how they are doing well, how much money they have. And so this creates a nice environment to access capital, to show the potentiality, to show the numbers. And this has changed a lot.

Snow: Can you talk about the activities in different parts of Brazil. You mentioned Brazil, it’s like there are many countries within the country of Brazil. But economically and from an industry point of view, what are some hot spots?

Ferreira: The economy in Brazil is very concentrated between some Sao Paolo and Rio de Janeiro. But nowadays we have a lot of opportunities in Sao Paulo and Rio de Janeiro, but more focused on services. And we have great opportunities in other places due to the infrastructure issues that we have that should be developed. And the government is investing a lot to make this happen.

And due to the booming consumer, we have a lot of change in the middle classes. We have more than 40 million people that came out from the poor to the middle classes in the last five, six years. So this became a dramatic change on the day by day activities in Brazil, and creates nice opportunities all over the country.

This year we are going to face a growth in our GDP around 2%, a little bit less. But we have a great regions. For instance, the Northeast has reached 7% of growth. So those are the areas, only regarding to sector, we would say infrastructure and consumer. And in regarding to regions, there are those new countries, new parts of countries that has been developing a lot.

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