What doesn’t kill me only strengthens me”. (Friedrich Nietzsche)
We all got a shock, a sudden fall, with the arrival of the pande- mic and the measures of social iso-lation, immediate interruption of many businesses. Personal and or-ganizational plans went down the drain. Postponed trips, disregarded purchases, even canceled wedding parties. Where are the consumers? Not even Yuval Harari in the book “21 Challenges of the 21st Century” sensed the international crisis resulting from a pandemic. What was discussed at the Davos Forum in January maybe is no longer rele-vant, like the next day’s newspaper, stale bread.
Speaking as an entrepreneur for entrepreneurs, I want to call on to come together to react and reverse the situation, leading the recovery.
We complain too much. We, who have been gloriously going through the many economic crises that happen from time to time in Brazil, know that this will pass as well. Surely a vaccine will be discovered, an antidote for COVID19. Scientific researchers around the world are in a race to see who gets there first. It is a matter of time but the result will be victorious for humanity, as it was with other epidemics.
In China, Taiwan, New Zealand, Slovenia, South Korea and other countries the Lawpandemic is history. How long will the strongest threat of the pandemic in Brazil persist? Until August at the most, we will reactivate part of the business again and will be fully active from September on.
pay attention to what is happening: thousands of companies are doing very well as a result of the pandemic. Here are some examples. Those with strong e-commerce have taken the lead such as Mercado Livre and Magalu. The ones that have delivery and transport applications. In the health sector, those that manufacture, sell, distribute, import health protection disposables such as masks, gloves, disinfectants.
The disinfection equipment industries. Manufacturers of infirmary beds, respirators, hospital equipment. The entire distribution chain that include agents, representatives, distributors and foreign trade. Many companies use the opportunity to make spectacular donations: who doesn’t know that Itaú donated R$ 1 billion? In a national survey carried out by the company Demanda, we found that 35% of Brazilians who access the internet know that Itaú donated R $ 1 billion to fight the epidemic.
What is the value of this knowledge in benefit of the bank’s image? Santander took the initiative to finance 400 thousand newsstands from all over Brazil to reinvent their business by expanding the provision of services, such as cell phone repairs, sewing and other activities. What is the result of this in business for Santander? There certainly are marketing mentors at Itaú and Santander. There is nowadays a competition for those who make more donations of food, beer, clothes, medicine, as long as the donations are disclosed by the press, preferably on open TV. Everyone wants to show that they are involved, they care.
Under the political aspect there is an issue of crisis management. In Brazil there are many decision-making authorities and we are not certain on whose orders to adopt. Some state governors are taking on a relevant role in favor of lives as opposed to the president who, wishing for a quick resumption of economy pace conveys the idea that does not seem to care for lives. The option is not to save lives or activate businesses but save lives while activating businesses. An airplane needs both wings to stay in flight.
Economic measures of mas-sive transfer of resources to private initiative directly in the hands of citizens keeps the basic economy functioning. We were all amazed at the high number of over 50 million Brazilians in an informal situation. A good part of that money will be spent on food, rental, transporta-tion, energy. As the same release of free money is taking place in many countries, maybe there may be sur-plus money and a lack of goods and services to spend on.
Which sectors suffer the most in recessions: real estate, automotive, tourism, among many others. When will the econo-my recover? It will probably start in Brazil in the last quarter of 2020 and will slowly expand in 2021. In Europe, the recovery will be in the se- cond quarter of 2021. Only in 2022 will there be recovery worldwide. By previous recession experiences, recovery will rise first on retail, food, hospitality, air transport.
So let’s think about opportu-nities. How the market is defined: “people with money, willing to spend”. When there is a need, there is an opportunity to satisfy. Where people don’t wear shoes, there is an opportunity to sell shoes. In Brazil, there is an immense need for water, sanitation, education, health. The large-scale job recovery involves projects such as Pro Brasil, which foresees high investments in these sectors.
The lack of piped water and sewage treatment kills more each year than Covid19. In Brazil, only 53% of households have a sewage treatment system and only 83% have access to piped water. Almost all other countries in Latin Ameri-ca are better served. That said, the investments in the trade of goods and services that are linked to the expansion of the water and sewage systems will certainly have guar-anteed demand over the next few years. These are the two sectors that can most quickly absorb the 13 million unemployed in Brazil.
The devaluation of the Real by more than 40% in 2020, until May, opened up immense opportunities for Brazilian exporters. Those who have investments in dollars are do-ing very well. It’s the right time to buy the dream car or the dream beach house. Or the bargain one-year airline tickets, roundtrip, São Paulo to Paris for $ 600 or Santia-go for $ 142! Nowadays everything is very cheap in Brazil, in dollars.
But that is not what interests the entrepreneur. If you have invest-ments in dollars you can import the profit from the devaluation of the Real and buy cheap goods, inclu- ding competing companies with an already installed structure. Choose favorable sectors that, after integra-tion and modernization, will turn a profit. Hire great professionals that are available on the market.
But there is a need to digitize processes, modernize companies, make man-agement of companies more agile. Shall we speed ahead with the digitization processes that were already underway? Banks transfer their customers from person-al service to virtual and it will represent savings and greater profitability for them. Online game com-panies are booming, the number of downloads has exploded. They increased in market value. There is a huge demand for soft-ware developers to im-prove e-commerce, e-edu- cation, e-gammes, e-fun.
In 2019, Brazilian domestic trade revenue was 290 billion dollars. Electronic commerce in Brazil repre-sented only 6% of the total. In Chi-na, e-commerce represented 40%, in the USA 12% and in Europe 11%. There is plenty of room for growth in e-commerce in Brazil. The market value of the Mercado Livre is the 5th. largest in Latin America, surpassing Itaú and Bradesco banks.
The largest companies in Latin America are Petrobrás, Vale, America Móvil and Walmart. Then comes Mercado Livre. This is explained by the online business tool set up in several coun-tries in Latin America. It is interesting to say that Magazine Luiza’s market value is much higher than that of GPA or Carrefour, although that turnover of these more traditional retailers is often higher.
During the quarantine the ef-ficiency of Justice in São Paulo has improved, more decisions are being made, more lawsuits are judged, there is less distraction, and oral support from home offices is work-ing well. In other words, there was a reduction in costs and travel time, audience, material expenses. The opportunity for law firms is that ju-dicial demands for breaches of con-tract, defaults should increase.
There will be more needs for agreements, reconciliations and arbitrations.The service sector that takes advantage of the compulsory home office is doing well. Demanda Pesquisas have done surveys online and over the phone. People in the home office respond with more time, pay more attention. Doctors, profes-sionals working outside the home, building material store managers are more available now. We did 2 national surveys online in March and April 2020 on the effects of confinement and expectations about the pandemic.
There was a lot of interest from the press in replicating the results that were published in major newspapers. With these initiatives, we obtained more visibility. We created an opportunistic project to review the company’s strategic planning through remote meeting sessions.
For two days, we gathered groups of almost 30 professionals who are working at home to review the company’s operation, product line and regions, reassessed the product portfolio by identifying niche markets in which the company does not operate and finally asked their help to understand the pros-pects after Covid 19. Since there were no travel, hotel accommodation, tickets and meals for the participants, the cost of the entire exercise was one fifth of what it would be if done in person.
And it could get more people, including employees from other countries. And it shows the concern and involvement of the company’s management with the entire corporation.Brazilians are eager to go back to restaurants, go shopping and movies, to be able to go to games, concerts and external events.
These sectors tend to recover more quickly. As we are cooking more at home, we increase the consultation of recipes on the internet. We also increased the purchase of semi-prepared foods in supermarkets. It is clear to everyone that it is no longer possible to depend so much on China’s industrial production. Brazilian manufacturing companies must receive government stimulus to produce here and reduce dependence on the Chinese goods; among the sectors to have the government support we mention the health protection equip-ment manufacturing.
Sectors that use a huge Bra-zilian market will always have good demand: food, cleaning, hygiene, organics. Vitamin manufac-turing labs like Cimmed are making a lot of money.Professional associations and councils are moving, too. The CRA-SP Regional Council of Adminis-tration created the EDUCA ADM service that facilitates free access to more than 1200 professional management courses at a distance, free for all those who wish. This was done through agreements with distinguished education institutions such as FGV, FIA, UNIP, SENAC, FE-CAP, FMU, UNINOVE, UNESP, FESP and others. SEBRAE, Bradesco and others will also enter.
The number of enrolled in these courses grows by the thousands every month. I realize with joy that the GCSM service group is creating a corporate univer-sity. This group keeps growing. Certainly before, as now, any investment must be preceded by research and careful planning. We are here to help…