U.S. Commercial Officer Discusses Business Climate in Brazil

Steve photo from Linked InSteve Knode is the deputy senior commercial officer with the United States Commercial Service in Brazil, where Duke Center for Latin American and Caribbean Studies professor Ambassador Patrick Duddy once served as consul general.

Reporting to the minister counselor for commercial affairs at the U.S. Embassy in Brasilia, Steve helps oversee a network of five offices and 60 professionals across the country, working principally to assist U.S. exporters with market access and insights, as well as to promote Brazilian investment in the U.S.

A member of the U.S. Foreign Service, Knode has been in his current assignment since September 2012. His other international postings include Malaysia, Japan, and Hungary. Knode met with a group of Fuqua students on a Global Academic Travel Experience trip with Ambassador Duddy in Sao Paulo earlier this year. Knode shares some insights on the U.S. Commercial service and doing business in Brazil in this Fuqua Q&A.

Q: How involved is the U.S. Commercial Service in Brazil?

We have 20 industry specialists across the country who cover sectors ranging from ag equipment, aviation, and oil-and-gas, to environmental, medical, and information technologies. They can serve as the point of contact and resource for U.S. companies looking to navigate this often challenging market. The U.S. Commercial Service is the trade promotion arm of the U.S. Department of Commerce’s International Trade Administration. U.S. Commercial Service trade professionals in over 100 U.S. cities and in more than 75 countries help U.S. companies get started in exporting or increase sales to new global markets. We provide trade counseling, market intelligence, business matchmaking, advocacy and commercial diplomacy, as well as other trade promotion programs. In addition, through our SelectUSA initiative, we promote foreign direct investment in the U.S.  We have a dedicated SelectUSA specialist, based in Sao Paulo, who can offer advice and insights on how to open a business – or expand existing operations – in the U.S.

Q: How have the deep recession and political uncertainty in Brazil affected the outlook for business?

By any measure, 2015 was a tough year for Brazil: GDP per capita decreased, unemployment hit a six-year high, inflation ended the year at a 12-year high, the Brazilian real shed a third of its value against the dollar, investment levels dropped, industrial output contracted, and the fiscal deficit ballooned to a record. The scandal connected to energy giant Petrobras poses another challenge to government and business, increasing uncertainty and creating a drag on growth – and indeed, contributed to the impeachment proceedings of President Dilma Rousseff.

But improvements in infrastructure and education, trade expansion, a broader presence of multinational business and the development of Brazil’s huge oil reserves will mitigate slower labor force growth and help to sustain labor productivity growth. If improvements in policy-making and the business environment were to exceed expectations, faster annual growth rates than those currently forecast would be achievable. Brazil’s large and diversified economy makes it attractive for investors, and the country will continue to attract the lion’s share of foreign direct investment (FDI) in Latin America. It’s important to take a long-term view in Brazil. From that perspective, it makes sense for companies to focus on the market now, with the expectation that it will return to growth.

Also, senior government officials from the interim Michel Temer administration have pledged to support the ongoing legal and investigative processes, and Petrobras has taken concrete steps to improve internal compliance mechanisms and restore confidence. While the economic and public relations consequences have been severe, Brazil may yet seize a silver lining: a comprehensive commitment to fight corruption could ultimately improve the business climate, benefiting local and international companies alike.

Q: What specific opportunities has the service been focused on?

The U.S. Commercial Service in Brazil has been very busy helping U.S. firms pursue contracts stemming from and related to the 2016 Olympic Games in Rio. Moving forward, our focus will include infrastructure development, franchising, health IT, and oil-and-gas – all areas with tremendous growth potential. Companies looking to take advantage should consider joining one of our upcoming trade missions. Also, we expect to coordinate in December a SelectUSA Roadshow that will provide an opportunity to get information from and meet with U.S. economic development organizations.

Q: You have worked all around the world. How has that experience shaped your approach to your work?

As anyone who has had the experience of learning a foreign language from scratch knows, it helps at first to have your conversation partner slow down a bit while talking so you can understand better. You are forced to listen intently, grasp the meaning of what is being conveyed, and do less speaking yourself. In a sense, that’s a good way to approach work in an international context, even if you become fluent in the native tongue. While I think by and large employees across the world desire very much the same things from a workplace, it is still hugely important to know as much about your surroundings as possible, and that means being open to and soliciting feedback – with a focus on the listening – as part of a two-way dialogue.

 

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