Jun 15, 2017 · by Richard Farkas
Interview with Victor Batista and Ana Carolina Jacinto
“It’s like a test. It’s like one, big test” cries Charlize Theron’s character in the 1997 film Devil’s Advocate. It’s a movie that CultureConnector’s Cultural Correspondent for Brazil, Victor Batista, has thought about a lot. “The Keanu Reeves character is forced to confront his principles as he chases riches in a new land of hidden deals, power-brokers and compromised principles. Sometimes in Brazil, it’s like the film. You get opportunities for short-term advantage by breaking the rules. It’s frustrating to walk away from that and see others take those opportunities.”
But now Victor is celebrating 20 years since he founded Forvm, a company which exists to build a trading bridge between Brazil and Europe. “We are doing the right thing,” says Victor. “We have kept our principles and built a sustainable business in Brazil without breaking our ethical code. It’s one of the myths about Brazil, that to do business here, you must pay bribes.”
Few people have more experience of the ocean of cultural difference and the need for a bridge than Victor Batista. Although culture and intercultural competence is often not on the radar at first for Forvm’s customers, a big part of the long-term value of the company’s service is bringing together very different mindsets.
“We give hands-on support with very practical tasks for companies setting up here, or trading. But we are also here to give insight, encouragement and to help them navigate each other’s culture,” adds Victor. Foreign companies often start out with misconceptions about Brazil. “There are myths we must bust,” insists Victor.
From Victor’s team, Ana Carolina Jacinto has a professional interest in the cultural dimension of international trade. “People around the world are getting to know Brazil. They witnessed the 2016 Olympics, they know carnival, they may drink Brazilian coffee and even have Brazilian colleagues or Facebook connections. However, some myths have real staying-power and still influence how people outside think about Brazil,” she says. We asked Ana Carolina to describe some of the big ones.
- Brazil is a big country. “That’s true, and yes, there is one flag and one national language. But this is not just a bigger version of most countries on earth. At 200 million people Brazil has such diversity that a one-size-fits-all approach cannot succeed. A Brazilian from the south may feel closer in working style to Europeans than to other Brazilians from the north, who themselves may identify more closely with Spanish-speaking Mexicans than with fellow Brazilians further south. Any ‘strategy for Brazil’ is likely to need variations for different markets and regions within the country.”
- Brazil just produces the basics. “In fact, there are small, medium and large Brazil-based organisations producing world-class, high-tech products and services. Against all the evidence, many European organisations still don’t believe in Brazilian tech. The situation is made worse by Brazilian companies holding the same mistaken view. They need to believe in themselves too.”
- Business models that work elsewhere will work in Brazil too. “Sometimes a tried-and-tested formula that has worked in other countries simply doesn’t work in Brazil. We were helping to set up a subsidiary in Brazil for a foreign company one time. To succeed here we needed to introduce a major adjustment to their organisation structure, adding people just to deal with tax calculation and international communication. The roles did not exist anywhere else in the 50 countries where the company operated, but were essential here.”
World champions in bureaucracy
Victor is Swiss-Brazilian and has worked on both sides of the Atlantic. “I sometimes hear Europeans complain that the only certainties in life are taxes and death. Let’s bring a Brazilian perspective to this. Running a business in Switzerland I had to pay three taxes per year: a relatively simple tax return for the city, canton (region) and to the national government. In Brazil my company Forvm often pays forty taxes per month, each with its own calculation and paperwork.”
“Brazil is the World Champion in tax bureaucracy” Victor adds. “It’s been estimated that a typical company is required to spend 2600 hours per year just to calculate taxes, before any payments, queries and other tax administration.”
Impact of politics on working life in Brazil
Politics matters in Brazil. For people working in Brazilian organisations, the priorities of the government can have far-reaching consequences on everyday life. “The change from Fernando Henrique Cardoso to Lula in 2004 was a big one,” says Victor. “The earlier government had built levers to manage the economy, steering Brazilian organisations softly towards development and growth, so when Lula came in with a harder, more interventionist approach, Brazilian organisations faced a big increase in regulation.”
“Things can change dramatically, and they did again in 2016 when we got a new president. Some organisations took advantage of the liberalising agenda of the new government. But many large organisations continued with old habits – even those which were privatised and moved from the public sector to become private enterprises.”
Change and no change in Brazil
Victor strongly believes in getting to know the operating environment of your Brazilian partner or subsidiary. “Based on nearly 30 years of conducting market research for inward investors, I can tell you that when you deal with a Brazilian organisation, you could find yourself in a modern working environment with innovative management practices, low hierarchies, transparency and businesslike mindset. After all, Brazil has a strong and growing tech sector. But there are also many traditional organisations who have not changed and seemingly will not change.”
Victor goes on to explain that sometimes these traditional organisations are protected from change because the normal pressures of global business do not apply. Corrupt deals in the past may mean that innovation was not required: competitors were not given a fair chance. This had some distorting effects, right through the organisation. Without the heat of competition, there was less need for innovation, efficiency or logical problem-solving. The distorting effect could repeat through the whole supply chain.
“When starting to work with a Brazilian organisation, you need to know the full context of how it operates. The desire of a Brazilian organisation to innovate, change and play by international standards depends on how much money the company is currently making. We’ve seen some large family businesses simply repeating mistakes until they run out of money.”
Change is also slowed in Brazil by what Victor calls its colony mindset. “We have a culture of passively waiting for colonists to come and show us new techniques. Oftentimes, Brazilians do not reach out to explore technologies and approaches which are already established elsewhere. They might expect the world to come to Brazil. They want to be taught.”
Resources and resourcefulness
“At Forvm we’re helping Brazilian and foreign organisations overcome these challenges every day. But let’s remember the enormous opportunities of crossing the bridge between Brazil and the rest of the world. We have amazing resources of workers and consumers in Brazil, tens of millions of whom have spending power equal to citizens of the world’s richest nations. We also have a large population of the poor, and a lot of activities for development agencies working to improve the lives of lower-income and excluded people.”
“…And that’s to say nothing of Brazil’s fabulous natural resources, protected by strict laws environmental laws (weakly enforced) which add to the richness of the country.”
In the movie Devil’s Advocate, Al Pacino stands in the way of a perfect Hollywood ending, but “the results are good for our customers” says Ana Carolina. “Crossing the cultural bridge is an adventure, but in my work I get the privilege of seeing the rewards flowing back to the investors, to the adventurous personnel who make it happen and to the communities around them.”
Victor and Ana Carolina have recently updated the content of CultureConnector on Brazil.