Poland and Brazil stand chance of increasing mutual tradePublished: 29.07.2015
Brazil has for years been Poland's biggest trading partner in Latin America. Last year the value of economic exchange between the two countries reached a record: trade rose by over 12% or USD 200 mln to almost USD 1.7 bln.
In 2014, Polish exports to Brazil reached USD 531 mln, while imports from that country stood at USD 1.1 bln.
Poland's exports to Brazil primarily comprise of machinery and electric devices, chemicals, as well as plastics, mainly synthetic rubber.
Imports, in turn, consist of mineral resources, machinery and electric devices, foodstuffs, chemicals and plastics.
The best-known Brazilian product in Poland are Embraer airplanes. Poland's flagship airline LOT owns 24 such aircraft, including two chartered to Poland's Ministry of Defense for servicing official state delegations.
Last year Brazil's GDP growth reached 0.1% and industrial output fell by over 5% compared to 2013. Such a weakening of the Brazilian economy resulted from high tax burdens, the complexity of the tax and legal system as well as high labor costs, experts say.
Poland exports mainly highly processed goods to Brazil
Brazil remains Poland's most important partner in South America not only thanks to its rich natural and resources and agriculture. It is also a market for Polish goods, especially highly-processed products, which Brazil has been importing for many years.
Industries which should be prioritized in further development of mutual economic cooperation include: the shipyard and offshore industry, railways and transport infrastructure, fertilizers, chemicals, machinery and telecom devices, as well as the automotive segment, the Economy Ministry believes.
Source: Ministry of Economy
Brazil is set to become the sixth largest producer of oil in the world by 2035 thanks to newly discovered deposits of oil and gas off the coast of the Atlantic Ocean. In order for this scenario to materialize, the country needs investments and technological development. This is the reason for elevated interest in the offshore business expressed by Polish companies: builders Vistal, Elektromontaz-Polnoc, Stocznia Remontowa Shipyard, Gdynia Offshore and Towimor, desiner and producer of marine deck machinery.
Additionally, Brazil has been trying to dynamically develop its infrastructure for over ten years. In 2013, the government announced a new plan according to which spending on infrastructure investments in 2014-2017 will reach some EUR 170 bln. This opens big opportunities for Polish firms, especially those from the railway sector.
The chemicals segment is another industry with good prospects for increasing mutual trade. This is especially true for the segment of mineral fertilizers: the Brazilian chemical industry covers only 40% of domestic demand, and the remaining 60% is imported. This proportion will be maintained in the coming years, experts claim.
Synthos, Selena and Boryszew are already active in Brazil
Chemicals group Synthos is one of the Polish firms which has been active on the Brazilian market for many years. Synthos is exporting synthetic rubber to Brazil. High demand for rubber is linked to the dynamically developing Brazilian automotive industry.
Brazil is the fourth-largest automotive market in the world, which provides good prospects for growth on that market for Polish firms.
Polish investments in Brazil, especially those conducted by industrials group Boryszew, fully display the technological potential of Polish firms as well as their capabilities for developing the Brazilian automotive market.
Boryszew entered the Brazilian market in 2010 via the acquisition of Maflow do Brasil Ltda. This firm is a provider of cables for air conditioning and power steering systems for global carmakers, with factories in Brazil and Argentina. Its clients include Volkwagen, Fiat, General Motors, Nissan, PSA Peugeot Citroen and Volvo.
Another Polish firm operating on the Brazilian market is Selena, the producer of chemicals for the construction sector.
A chance for IT firms and cosmetics producers
Also cosmetics producers have a chance to make it on the Brazilian market, as Brazil is the third-largest market globally in terms of consumption of cosmetics.
Polish producers have increased sales of cosmetics to Brazil over the last three years. In 2012, sales stood at just several thousand US dollars, and increased to USD 340k in 2013 and almost USD 1 mln in 2014.
Brazil is also one of the biggest consumers of IT sector products. While the domestic market is saturated with the offer from domestic IT firms and international IT groups, Polish firms may cater for market niches which have not yet been filled due to technological or logistic obstacles.
IT firm MassPay from Czestochowa exemplifies a most efficient use of such a niche. MassPay is cooperating with Cielo, Brazil's biggest payment card terminal operator, through providing and implementing an IT system which allows to make contactless payments with credit cards and mobile phones.
The analysis of trade data for 2014 indicates that products traditionally exported to Brazil such as fertilizers, automotive components, carbon electrodes, machinery and rubbers maintain stable volumes, confirming their well-established position on that market.
In order to increase sales of Polish goods, the country needs to promote them. This is done by the Economy Ministry with the support of the Trade and Investment Promotion Section of the Polish embassy as well as Polish firms interested in entering the vast Brazilian market.
Source - Polish Press Agency, Economic Service