Carnival of Commerce *
Brazil is embracing U.S. manufacturers—but will we return the love?
Jen Renzi -- Interior Design, 7/1/2004 12:00:00 AM
Exorbitant taxes and a paltry domestic market have inspired high-end manufacturers in Brazil to look outside its borders, and the U.S. has proved an exceptionally receptive audience. Recently, however, there's been momentum in the reverse direction as well, with public and private sectors courting North Americans to shift production south of the equator.
The Brazilian government has unveiled tax incentives for foreign manufacturers and coordinated its efforts to champion the country's design tradition. "We're increasing our support of the furniture industry—bringing Americans to trade shows in Brazil and educating our own population about the U.S. market," says Antonio Cesar da Silva, trade-promotion officer at the Brazilian embassy.
Heeding these calls, Miami's Terra do Brazil is an entrepreneurial venture linking designers, manufacturers, and contractors to Brazilian production capabilities. "It's an ideal place to get high-end design made," says president Robson Oliveira. "You've got an amazing modern tradition, a strong manufacturing base, and inexpensive raw materials, from leather to aluminum, wood, and granite."
Unfortunately, the country also has a bad rap on environmental issues. Both the Rainforest Alliance and Rainforest Relief list Brazil among the worst offenders of irresponsible forestry practices. Couple Amazon logging with a language barrier and the crime rate, and Brazil might not look like an easy place for outsiders to do business.
Try telling that to Reeta Gyamlani. Speaking not a word of Portuguese, she recently traveled the country solo to vet 80 potential manufacturers for her furniture line, Farrago Design. "I began producing in India, which is inexpensive compared to the U.S., but India lacks an infrastructure for furniture, a strong contemporary sensibility, and a top level of craftsmanship," she explains. "For a slightly greater cost, I got all that in Brazil."
Furniture company Atmosphere's experience was similar. Until early 2004, the eight-year-old concern made its streamlined yet high-touch pieces in its own Los Angeles factory. All that changed when president Shelley Badauy visited São Paulo and Uberlandia last summer—and was blown away by the sophisticated design she encountered. She's since shuttered the L.A. plant. "Once we saw the engineering and detail executed in Brazil, the shift made sense," explains marketing director Stacy Haddock.
Repositioning was not without sacrifices, Haddock admits: "Our staff was accustomed to an accessible factory. Having our sales force see firsthand how the furniture gets made gave us an edge." To bridge the divide, the company set up video cameras at the factories and established an office in Goiania.
A subsidiary location also helped Espasso. Based in Long Island City, New York, the showroom carries Brazilian furniture, both new and vintage. "We founded our own trade company in São Paulo to oversee all the paperwork," says president Carlos Junqueira. "Even though I speak the language and understand the culture, it can be daunting to navigate the bureaucracy. Plus, strikes are always holding up containers on the way out, and customs delays are inevitable here."
Shipping in the company's own containers rather than consolidated ones has streamlined transportation, too, so delivery can be guaranteed in 14 weeks. "You need perfect logistics in this business," Junqueira adds. "If you don't deliver on time, bingo—it's over."
For those lacking the wherewithal to go it alone, consultants such as Terra do Brazil can act as intermediaries. In its impassioned efforts to champion Brazil's commitment to sustainability, the company has gone so far as to launch its own furniture collection, Amazon for Life, using recycled materials and wood from responsibly managed forests.
Espasso proves an equally admirable role model: Most pieces in the showroom bear a Forest Stewardship Council seal. Adds Gyamlani, "Among the people I met, I encountered a very strong pull to environmental friendliness."
So is Brazil poised to be the next China, given the relative affordability, or the next Italy, courtesy of a celebrated artisanal tradition? Probably neither—which is a good thing. For mass-market products, the cost of manufacturing in Brazil can't compete with India or Indonesia and certainly not with China, which remains a dominant force. Still, Brazil's furniture exports grew by 55 percent in 2002, for a $232 million total in 2003, according to Cesar da Silva's reckoning.
Brazil seems most viable as an alternative for small to midsize companies that insist on quality and, because of low volume, can't reap the cost benefits of Asia. "If you're an independent manufacturer who wants high craftsmanship, there's no incentive for U.S. companies to make it affordable," laments Gyamlani. "It's much easier to work with countries that are hungry for your business."