Potential risks of the hottest investment in Brazi

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Potential risks of investing in Brazilian plastics industry

Brazil, the largest market in South America, has been a temptation for foreign investors for many years. In the past decade, Brazil has benefited from good economic growth. However, should companies in the plastics industry be more cautious about the future of Brazil

development of bekum subsidiary in Brazil

VDMA held a national forum at its annual general meeting in June this year. During this period, as the activity coordinator, Wolfgang Schwarz from bekum do Brasil provided users at all levels with the best economic experimental equipment. Dr. Schwarz told how bekum, a blow molding machine manufacturer, decided to establish a subsidiary in Brazil in 1975

at that time, a group of packaging manufacturers in Brazil urged bekum to do so. They hoped that Brazil could produce blow molding machines. This proposal was very attractive to bekum, because the efficient machinery market was developing rapidly at that time, and Brazil implemented a high degree of protection on the domestic market from the competition of imported machinery

potential risks of investment in Brazilian plastics industry

by 1994, the market had become much more open, and domestic machinery was less competitive than imported machinery. This is mainly because the US dollar/real (Brazilian monetary unit) exchange rate is very unrealistic, leading to high domestic production costs in Brazil. Bekum also faces some challenges: it needs to adjust its machines produced in Brazil to meet international standards, and it also has to face increasingly fierce competition from Brazilian machinery competitors. At that time, Schwarz noticed that "a lot of employees left and set up their own companies - which hurt us."

schwarz said that despite the "ups and downs" of industry opportunities in Brazil, bekum do Brasil has successfully supplied more than 1600 machines to customers in Brazil and other parts of Latin America since 1975

the political and economic development of Brazil faces uncertainty

at present, Brazil is in a period of political and economic uncertainty. In 2013, the trade surplus of the country decreased by 34.7%, and the currency was also depreciating. 3 reais could be exchanged for 1 euro. The collet 2 can separate at a constant rate and exert a pulling force. In 2014, the overall economic growth rate remained low, dropping from 2.28% in 2013 to 1.82%, while the inflation rate rose to 6% (3.64% in 2007)

the short-term interest rate remained at 11% - although it was as high as 45% around 2000. The federal agency finame provided the company with funds to purchase Brazilian machinery and equipment, and the interest rate increased from 3.5% to 5.5%

despite the hype about the 2014 World Cup and the 2016 Olympic Games, Schwarz said that the confidence of companies and consumers is declining every month. They believe that the world cup has brought more disadvantages than benefits to Brazil, because Brazil has been suffering from mass social unrest for 20 years, although the Bolsa Familia social project (family grant project) has brought some positive effects

please consider your own resources when investing in Brazil

the price of blow molding machines imported from China in Brazil is relatively low, but the quantity has overtaken that imported from Germany. Although the machines made in Germany enjoy a high reputation for reliability and quality, Schwarz said that "no one is willing to buy them. Moreover, local retailers and logistics enterprises are difficult to promote the low quality of parts in the reduction, reuse and recycling of express packaging, which is also a problem". Nevertheless, in terms of injection molding machines, Schwarz pointed out that Engel is the leader in this field, although its equipment price is relatively high. Large volume; Digital display temperature value

in Brazil, investors in the plastic industry face a difficult problem. Schwarz said that although the background "seems terrible", Brazil can provide "excellent market opportunities". However, local subsidiaries need more attention, partly because of the different attitudes of the company's management

schwarz said that the management of the company should consider whether the company has the necessary resources for investment. If not, it should abandon its investment plan in Brazil

he pointed out that Krones Group, a stretch blow molding machine manufacturer, has stopped its localized production in Brazil

according to VDMA data, in 2013, the export value of German plastic and rubber machinery manufacturers to Brazil was about 170million euros, accounting for 27.3% of the Brazilian market. In contrast, China's export value accounted for 22.7%, Italy for 12.4%, the United States for 9.0%, and France for 8.9%. In 2013, Brazil consumed 6.8 million tons of plastic, of which 48.9% was used for packaging, 20.6% for construction and 5.4% for automobile

the development of the Brazilian plastic industry needs more attention from the government, and public policies are formulated to help the development of the industry, such as tax reduction, more realistic exchange rate, low interest loans, etc. However, the general election to be held at the end of 2014 also means that there will be no industrial policies required by the plastic industry. Investment in Brazil involves both risks and opportunities. The decision to invest or cancel the investment depends on the company's in-depth understanding of the Brazilian market and correct assessment of its own resources. It is forbidden to take rash actions

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