Once again this year, the U.S. Commercial Service —through its locations in American Embassies and consulates abroad—has recruited several foreign buyer delegations under its International Buyer Program to attend POWER-GEN International 2010. Leading one of these delegations is Regina Cunha, Commercial Specialist at the U.S. Embassy in Brazil, who recently discussed power sector opportunities in this growing market.
Q: Could you describe the delegation that you are bringing to the POWER-GEN International 2010 Show?
A: We will have at least 24 Brazilians from 16 companies who have signed up to join the U.S. Commercial Service Brazil delegation. The participants include engineering and consulting companies, power project sponsors, equipment representatives and manufacturers, one government official from Brazil’s oil and gas regulatory agency and one representative from Rio’s metro (public transportation).
Q: What is attractive about the Brazilian industry for U.S. suppliers of energy equipment?
A: Brazil ranks tenth among the largest world power operators. Brazil has 2,185 operational power projects with 106,832 MW of installed capacity (excluding power imports). Hydroelectricity, including power imports, accounts for 76.31 percent of the total. The 2010 estimate for Brazil’s power generation, transmission and distribution (GTD) equipment market is $5.5 billion of which $460 million is imported globally with about US$ 70 million coming from the U.S. These market estimates do not include operational and maintenance expenses, which would add about 50 percent to the market potential.
The 2009-2017 Power Expansion Plan, published by government-owned Brazil’s Power Research Co. (EPE), calls for about $70 billion investment during this period to bring an additional 51,000 MW to Brazil’s power generation capacity. This will include additional hydro, natural gas, biomass, wind power and nuclear power plants.
Q: What are some of the challenges that U.S. firms face in doing business in Brazil?
A: The main challenges for U.S. exporters are to offer competitive financing and the lowest prices to compete mostly with locally established suppliers who do not have to factor in import duties. As in many other countries, the Brazilian market is price driven. Local content requirements can also be a challenge. Hence, association with locally established manufacturers should be considered in some cases.
Q: Do U.S. firms have any competitive advantages when entering the Brazilian market?
A: Despite the import duty applied to products imported into Brazil (not only from the U.S.), the competitive edge from U.S. products arises mainly from the perception that U.S. products enjoy a superior quality. However, government-owned power project sponsors tend to follow a buy-national policy in line with Brazil’s local equipment content drive.
Q: Can you give any advice or tips to firms that are trying to enter the market?
A: Renewable energy (e.g. wind, biomass, and, to some extent, solar), and energy efficiency (e.g. smart grid, green technologies, etc.) are new areas of interest in Brazil, although hydropower generation will continue to account for the largest equipment and service demand in Brazil. Note that it is key to secure a commissioned agent representative or a distributor given Brazil’s size and complexity. Also, advertising in specialized magazines and exhibiting at trade shows are good marketing tools.
Q: Why is it an advantage to have your delegation at the 2010 POWER-GEN International Show?
A: The benefit for U.S. business is that they can have multiple exposures to potential buyers or representatives. They will also be able to learn updated information on power projects, market conditions, etc., especially if they participate in the Business-to-Business matchmaking program that the U.S. Department of Commerce is organizing for the first time during PGI. For additional information on the B2B program, click here.
Q: What other services does the U.S. Commercial Service offer American companies and foreign buyers?
A: With offices across the United States and in more than 80 countries, the U.S. Commercial Service utilizes its global presence and international marketing expertise to help match U.S. sellers with international buyers. The U.S. Commercial Service in Brazil offers export counseling, customized market research, pre-arranged business appointments with international partners, catalog shows, and much more. To get started, visit any of our 109 U.S. Commercial Service offices in the United States at www.trade.gov/cs or visit the embassy website. All our export promotion services (e.g. partner search, due diligence reports, business appointments, etc.) can be viewed by clicking here.
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