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  • Chilean Investment in Brazil

    2010 - 05.20

    Confirming Chile’s interest in Brazil, three Chilean companies, Cencosud, Sonda and Paz announced new investments in Latin America’s bellwether country.

    “Brazil is a huge market with enormous growth potential,” president of Copec, Roberto Angelini, said. “It is one of the economies that will stand out in 15 or 20 years.”

    In the last 20 years Chilean capital investment around the world reached US$52 billion, with Argentina accounting for 30% and Brazil 20%.

    According to Natalia Aranguiz, head of research at WAC Research, Brazil’s important domestic demand makes it the engine of Latin America.
    “Brazil is also a country rich in commodities and possesses all the factors necessary for a business to be successful,” she said.

    In Brazil the main area of Chilean investment is the energy sector, especially electricity generation and distribution. After the energy sector is agriculture, in particular investments in forestry and pulp assets. Coming in third is the services sector with Lan Airlines, Censosud and Andina Bottling.

    While there have been some successes, not all Chilean investments in Brazil have worked out. The pharmacy chain Farmacias Ahumada left Brazil after seven years because it couldn’t cope with the confusing market conditions.

    The Brazilian market is tricky for various reasons, the key one being that the tax structure varies from state to state. In order to learn and understand the country some companies form partnerships with local entrepreneurs.

    “Traditionally, it has been difficult to carry out entrepreneurial activities in Brazil, because it is easier to buy a business already established by Brazilian businessmen,” president of the National Chamber of Commerce, Carlos Eugenio Jorquiera said.  “Because of idiosyncrasy, language and culture, it’s a tough market to crack,” he added.

    Earlier this year Chile made its first investments in the Brazilian real estate market with two housing projects that could serve as a pilot for possible future investment. Currently Paz Corp’s stake in construction of the Sao Paula projects is US$15 million.

    BCI Corredores de Bolsa, a local brokerage said on Monday that Chilean IT company Sonda recently acquired Brazilian IT firm Telsinc for US$38 million. This will provide the company with access to new geographic areas in Brazil, such as Brasilia.

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    One Response to “Chilean Investment in Brazil”

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