Companies looking to diversify LCC sourcing are strongly considering Latin America, and Brazil more specifically. Over the years, Brazil sourcing has become more popular and the country has expanded its position as a competitive sourcing destination the rising interest can be attributed to a number of key country dimensions including a long period of political stability and economic growth, lower labor costs when compared to US or EU, economies of scale generated by the size of its large domestic market, shorter lead times and transportation costs to the US which are much cheaper when compared to Asian countries.
After a period of decline in Chinese exports caused by the financial crisis of 2008 and the global slowdown experienced in the western world in 2009, the rate of export growth from China to the Western world once again reached unprecedented speed in 2011. The tension this has created in bilateral relations between the EU and China and the US and China has incited the Chinese government to modify its exchange rate policy. The government shifted from a hard peg to the US$ to a link to a basket of international currencies. It has gradually removed tax incentives to several Chinese export-driven industries (such as textiles) that it had reintroduced in 2008 and 2009. These were introduced as a means to support the struggling Chinese exporters. This renewed growth in exports from China is not only putting a strain on international relationships, it is also creating cost pressures internally in China, evidenced by:
- Renewed labor wage inflation not only on the eastern coast of China but in other remote regions as well
- Labor unrest in several factories has made headlines including Foxconn, Toyota, etc.
- Significant increases in container transportation costs
- Imposition of new anti-dumping taxes on several products for which Europe and the US are trying to protect themselves against Chinese imports
Strategic Services for Brazil Sourcing Needs
The main drivers for a company to source from Latin America are the localization of spend here to support the operations in the region, cost reduction, and alternative sources to rising costs in other low-cost sourcing countries. In such circumstances, specialized procurement Brazil service providers can help you find and select suppliers in Brazil and procure products from the country at lower costs.
As a strategic sourcing or import company, they can help find the best partner in Brazil to manufacture the product of your choice and conduct inspections for quality assurance before it is delivered to you. They understand that succeeding with sourcing from Brazil requires overcoming significant internal barriers to change. Many companies are wary of the re-evaluation risks of the national currency, delivery lead times, reliability, product quality, intellectual property, etc when they are thinking of procuring Brazilian options.
Brazil Business Opportunities – Take Advantage Today
Surprisingly, the major driver to sourcing from Brazil is not the search for cost reduction but the need to localize the spending in Latin America to support manufacturing facilities that have been set up in Latin America for the domestic markets. The protective nature of the Latin American economies which still impose significant duties on most imports from outside the region thereby forcing the companies to find local sources of supply to remain competitive in their domestic markets is an important factor as well.
How do you go about selecting suppliers to source the product from, the quantity to order, and even if you should choose to source at all? Decisions regarding Brazil sourcing are crucial to determine the success of your business based on goods sourced from the country. Hiring a third-party sourcing company will help you find out more about industry-specific market trends. They can help you develop contacts at factories and establishments in Brazil. They will also provide your company with the best options by engaging your enterprise in the initiative. Their program will include from the very beginning, key internal customers, and members of your engineering, manufacturing, quality, or marketing teams.
- They deploy dedicated buyers – They are focused exclusively on sourcing for the export market
- They implement structured, objective, and disciplined procurement processes – Buying processes that suit Latin American countries perfectly
Procurement is an integral part of any global business’s ability to operate for profit with low-cost investment. Services that will help you find, evaluate, and engage suppliers of goods and services are vital to operate in an increasingly competitive environment. That is precisely the focus of Brazil sourcing companies. The flexible and tailored solutions will help add value to your current strategy or develop a new one according to your requirements. Reduce manufacturing costs, improve your quality over other suppliers, and stay ahead of the competition with the choice of procurement sourcing.