Category: Business Culture

Foreigners who came to Brazil in boom times flee the bust

RIO DE JANEIRO (AP) — When Frenchman Gwenel Lecourieux was gearing up to move to Brazil, the country with its swelling upper class and world-renowned hunger for luxury goods seemed like the perfect place to set up his…

Source: Foreigners who came to Brazil in boom times flee the bust

ThyssenKrupp writes off US$ 4bn over Steel Americas operation in Brazil

The plant in Sepetiba Bay, Brazil: It should produce more cheaply than Germany - it produced more expensive

The plant in Sepetiba Bay, Brazil: It should produce more cheaply than Germany – it produced more expensive

Mismanagement and corruption

The crisis of ThyssenKrupp has much to do with the new steel mill in Sepetiba, Brazil: It should produce steel slabs at a significant lower cost compared to the slabs produced in Germany. In fact, the slab was $ 170 more expensive.

The loss was caused primarily by a 3.6 billion euro write down on its steel mills in the United States and Brazil, which Thyssen is trying to sell. The book value of the mills, bundled in the Steel Americas business, is now 3.9 billion euros, well below the 12 billion euros Thyssen invested in the unit over the years. The division had been meant to give ThyssenKrupp a foothold in the Americas, but costs for the mills ran far over budget while demand for the steel they made subsided.

Thyssen said management at the time based its decisions on overly optimistic projections and took too long to tell the supervisory board of problems with the project, which eventually forced Hiesinger’s predecessor Ekkehard Schulz to step down.

The story of a gigantic bad investment.

It should have been the really big coup. What came out is a disaster, likely to shake this company to its foundations. The titan ThyssenKrupp staggers. The largest German steel and technology company in Brazil literally built the steel mill in the slumps  in the bay of Sepetiba. The construction of the steel plant, which would produce steel slabs far cheaper than German plants, without all kinds of cumbersome environmental regulations, fell into a multi-billion dollar disaster. On top of that, fishermen and residents complain against the steel  work due to massive environmental violations.

“At first we had no luck, then came bad luck,” humorously said by Gerhard Cromme, Chairman of the Supervisory Board ThyssenKrupp, almost a year ago to appease the shareholders at the Annual General Meeting in Bochum’s Ruhr Congress. Already there was clear how much of this entrepreneurial venture would come to stand the Group: Instead of the originally planned 1.9 billion euros it cost – until then – a quadruple it.

Not tricked, only optimistic

Cromme, who had recently commissioned a legal investigation into the case, tried to defend the executive management and Board of ThyssenKrupp. They had cheated nor deceived, they had reported only too optimistic.

The shareholders are now more than worried, especially since ThyssenKrupp on Wednesday night fired half board. “Shows this radical solution us how serious the situation is,” says Thomas Hecht Fischer, CEO of the managing director of the German association for securities (DSW), and: “We must now assume that it is about a completely different dimension.

Market value well below book value

The book value of the plants in Brazil and in the U.S. is seven billion euros, but the market value is rather under four billion euros. Therefore ThyssenKrupp has written down around €3 billion. Furthermore, ThyssenKrupp is accused of bribery and violating antitrust regulations. . Now even the has to be feared that the full German steel industry stands on trial.

70 kilometers from Rio de Janeiro can be seen what ThyssenKrupp did stumble: the blast furnaces, the coke plant, the power plant, which is situated between the sea and the favelas of Rio de Janeiro steel work. In September 2006, as Ekkehard Schulz, the former chief executive of Thyssen-Krupp, the first sod was done here, the future seemed glorious. And the numbers that make up the consulting firm McKinsey worked in their feasibility study promised great things.

Cheap energy, low costs labour and “easy” environmental regulations


With cheaper energy, lower wages, fewer environmental regulations, each Brazilian steel slab should be $ 55 cheaper per ton of steel produced than in Germany. Million tons of steel were to be transported by ship, refined in Germany or in the United States. A supposedly lucrative large investment.

The reality however was different. The steel mill site turned out to be so muddy and slumpy that an extra million dollar investment had to be made to make sure the mill was not sinking in the slumps. But above all, it was decided in the Thyssen-Krupp’s boardroom, that a Chinese company was given the order to commission the work, rather than the fully owned German subsidiary Uhde.  A decision that was to proved to be fatal. From year to year became the mill became more expensive to build. Up to today the plant due still does not run at full capacity due to technical problems. The steel slab is already $ 170 more expensive than from German production.

The coking plant: build, demolished, rebuild

And the coking plant, which was also built by the Chinese, has been demolished. Uhde, which was rejected at the first time because of their higher priced  is now building at the same place a new one.Of course this will not be free of charge.

Additionally in 2007, the protests of fishermen came for the pollution of their fish-rich coast. And as soon as the plant was turned into operation in June 2010, it was raining polluted dust all over the place. Residents protested and complained. The dust was found to be adversely affected by toxic heavy metals. The prosecutor of Rio de Janeiro rose soon after charges of massive environmental violations.

“Mr. Cromme, how often were you there?”

Despite all the delays, construction, technical and polluting defects, no one at the board of ThyssenKrupp seems to have recognized the problems and take proper measures. “Mr. Cromme how often were you even there?” Said one shareholder at the shareholders meeting in January 2011.

The day after the shareholders meeting on December the 11th, ThyssenKrupp Chief Executive Heinrich Hiesinger vowed to clean up Germany’s top steel-maker after recent losses and corruption allegations prompted him to axe half his management board.

“I’m not going to talk anything up here, because it is obvious that a great deal has gone wrong in the past,” he told journalists at a news conference on Tuesday, the day after Thyssen reported a 4.7 billion euro ($6.08 billion) annual loss.

Thyssen also decided not to pay shareholders a dividend for the first time in the company’s history,

To be continued…..



Public-sector pay in Brazil: Shaming the unshameable | The Economist


How the bureaucrats rob the taxpayers

How the bureaucrats rob the taxpayers

Public-sector pay in Brazil: Shaming the unshameable | The Economist

When his time as São Paulo’s mayor finishes at the end of the year, jokes Gilberto Kassab, he will look for work in the garages of the city’s municipal assembly. This month the city’s legislature published, for the first time, the salaries of some of its 2,000 employees. Half the 700 people named, paulistanos were surprised to learn, take home more each month than the assembly’s chairman, who earns 7,223 reais ($3,508) after tax.

Facebook Blasts into Top Position

Facebook Blasts into Top Position in Brazilian Social Networking Market Following Year of Tremendous Growth – comScore, Inc.

Facebook Brazil

Facebook Brazil

São Paulo, Brazil, January 17, 2012 – comScore, Inc. (NASDAQ: SCOR), a leader in measuring the digital world, today released data showing that Facebook assumed the top place in the Brazilian social networking market following a year of exceptional growth. In December 2011, attracted 36.1 million visitors – representing an increase of 192 percent in the past twelve months – to surpass Orkut as the leading social networking destination in the market.

“Facebook’s rapid ascent in the Brazilian market has certainly been one of the most interesting stories to develop during the course of 2011,” said Alex Banks, comScore managing director for Brazil. “Brazil has always been a particularly social market and now owns the fifth largest social networking population in the world. But despite the cultural affinity for social media, Facebook adoption had traditionally lagged in the market. That has all changed in the past year, during which the site has tripled in audience size as engagement has grown sevenfold to assume the leadership position in the market.”, Orkut and Windows Live Profile Lead Social Networking Rankings

Results from the recent comScore study It’s a Social World revealed that Brazil was one of just seven markets (including China, Japan, South Korea, Vietnam, Poland and Russia) where Facebook did not lead the local social networking class according to October 2011 data.

In December 2011, however, finally secured the top place in Brazil’s social networking ranking with 36.1 million visitors age 6 and older accessing the site from a home or work computer, nearly tripling in audience size in the past year. Orkut, which fell to the #2 place with 34.4 million visitors, still managed to grow its audience 5 percent in the past year despite Facebook’s growing prominence. Windows Live Profile ranked third with 13.3 million visitors (up 13 percent), while ranked fourth with 12.5 million visitors (up 40 percent).


“Brazilians are ruining FACEBOOK …”

"CNN says that Mark is saddened by the behavior of Brazilian Facebook"

“CNN says that Mark is saddened by the behavior of the Brazilian at Facebook”

The news channel CNN said that the behavior of the Brazilians on the social network site Facebook is saddening Mark Zuckerberg. “On the one hand, Brazilians are growing Facebook, however they ruin everything,” he said.

Facebook engineers were considering allowing the inclusion of images in the format animated GIF-pictures (moving images), but Mark refused the idea because he has seen the behaviour of Brazilians at the social network site Orkut, which is loaded wioth animated gif’s.

According to Mark, if Facebook make room for the gifs, sharing among users will be equal to the Brazilian Orkut, full of colorful moving letters, loaded with messages of affection and love.


Closing Facebook in Brazil

On the possibility of closing the Facebook in Brazil, Mark drops . “I will not blame the Brazilians use the network, but will create a manual of behavior.”

When asked about Facebook is turning into a Orkut in Brazil, Mark said that there is no difference between social networks, the difference is Who uses. “Any service that has the Internet users in Brazil, in large proportions, it becomes a problem,” he said.




Note of the editor: This article has been published in Portuguese on the site So, please don’t take this serious. It has been republished by many serious news websites in Brazil. However, for those of you intending to do business and want to learn about the culture you might be interested to read the various comments been made by the readers.



Following Japan, Korea disputes IPI increase at WTO

As expected more and more countries are lining up to challenge the unreasonable protective measure by the Brazilian government to increase the Tax on Industrialised Products (IPI). Last month, Brazil raised the so-called IPI by 30 percentage points for imported cars that aren’t made with at least 65% local content. Excluded are those from companies that produce locally or in Mercosul partners. Established carmakers such as Volkswagen, Fiat,General Motors Co. and Ford, which together account for about three-fourths of car sales, had complained about the influx of cars as Brazil’s currency strengthened and demand jumped.

Japan may be the first country to challenge at the World Trade Organization the Brazilian this increase in the IPI tax. In addition to Japan, South Korea also objected to the increase for imported cars decided by the Brazilian government. The two countries that are producers of automobiles, said that Brazil violates the agreement of trade-related investments as well as an article of the World Trade Organization (WTO) on national treatment of companies.

Both Korea and Japan has decided to challenge the measure of the Brazilian government in the Market Access Committee , which periodically examines new barriers raised by the countries. The report itself noted that the Japanese action could pave the way for other governments complain of Brazil, as it did. Japan will ask judges at the WTO to examine the measure. Though most Japanese car makers produce locally, exempting them from the tax, the country’s government is concerned that a similar measure could be repeated by other countries. The issue was raised with Brazil during a meeting of the WTO’s market access committee on Friday, said Atsushi Saito, Japan’s representative at the Geneva-based organization. In addition to Japan, members from South Korea, Australia, Europe and the U.S. also voiced their concerns, Saito said. When asked if Japan planned to file a formal complain with the WTO, Saito replied in an email that “If you understand that ‘formal complaint’ is part of a dispute settlement process, we don’t have any plans at this stage.”

More than 20% of cars sold this year are imported, up from just 5% in 2005, according to automakers association Anfavea. But the tax hike was challenged by car companies who are building or plan to build factories in the country and who say that because they won’t be able to meet the full local content requirements during the first few years of operations, they would cancel plans to bring production onshore.

Government willing to negotiate?

The government has since said it would negotiate with those companies to reach a compromise. This is also confirmed by China’s JAC Motors. JAC Brazil says it has finalized a deal to build a $500 million car factory in Brazil. JAC Brazil says in an emailed release the factory will be built in the northeastern state of Bahia. The plant should be ready by 2014.The automaker said in August it wanted to build a factory in Brazil. But those plans were questioned after Brazil hiked the import taxes on foreign cars, threatening the Chinese-made vehicles JAC ships to Brazil. JAC says in its Friday statement it hopes the decision to invest will convince officials to scrap that tax hike.

BMW considers building a factory in the country, but..

BMW asked Brazil’s Trade and Development Minister Fernando Pimentel to reevaluate the increase in the IPI tax as it considers building a factory in the country, O Estado de S. Paulo reported, citing Henning Dornbusch, chief executive officer of BMW’s Brazil unit. The Brazilian government’s decision to raise the tax on cars with less than 65 percent of their parts produced in Brazil may lead BMW to build its plant in China, India or Russia instead, according to the newspaper. The company will announce its decision by November, O Estado said. The Ministry of Trade and Development’s press office said Pimentel hasn’t made any commitment relating to BMW’s request because the decision must be made in conjunction with Finance Minister Guido Mantega, O Estado said.


Driving American and European business people up the walls

What time is it anyway or why is everybody always late?



The perception of time and the concept of punctuality are very different in Brazil: it has nothing to do with Brazilians being lazy, just take a look at the crew working at around the clock at places like the National Synchrotron Light Laboratory in the state of São Paulo or the people who put together those spectacular carnival parades in Rio de Janeiro. It takes an enormous amount of effort, dedication, and extraordinary long hours to do that, and the logistics are frightening. That said…

  • In general, when scheduling meetings and such, allow for some degree of tardiness. In the Europe and U.S., people are accustomed to rigid schedules and appointments that must be kept on time, and usually things work better and faster. In Brazil, people often deal with several people and different problems at the same time, and face an incredible bureaucracy to boot. Add to that the fact that Brazilians, as a rule, ?waste time? on socializing wherever and whenever, and you?ll have a scenario made to drive American/European business people up the walls.
Source:UHY International Ltd