Brazil's Multinational Company Statistics: An Overview

Since the dawn of the 21st century, Chinese multinational corporations (MNCs) have significantly altered the commercial and investment landscapes of the Brazilian energy and telecommunications sectors. The domestic institutional environment of ongoing economic liberalization and institutional transition was identified as one of the most significant domestic incentives for internationalization. The government's role was also crucial in financing international initiatives, generating political incentives in business processes, and awarding and disciplining enterprises for their adherence to its policies. Foreign firms seeking to finance their projects at reduced costs perceived Chinese investments as appealing in the host country. The emergence of new business opportunities in the energy sector was attributed to factors such as the Brazilian abundance of energy resources, China's capacity to finance initiatives, and the ability of Brazilian and Chinese companies to expand their technological capabilities. A new cycle in the Brazilian electric sector was initiated by the Chinese participation in the IE Belo Monte Consortium, which was distinguished by the presence of Asian, rather than Western, developed countries.

The high capacity of the Chinese and Brazilian firms in the Consortium

To finance the business was attributed to their access to low-cost capital and their prior arrangements with suppliers and contractors, which allowed them to operate at reduced prices. On the other hand, the Consortium that emerged victorious in the auction for the license to conduct oil exploration in the Libra oil field was primarily the outcome of a business opportunity, as evidenced by the involvement of state-owned Chinese oil companies CNOOC and CNPC. At that time, the Brazilian market was not a priority for those corporations. Nevertheless, Chinese companies pursued participation in the Consortium, albeit on a minority basis, in order to reduce their reliance on other energy sources and participate in the exploitation of deposits that accounted for over 70% of their current reserves. Due to the Chinese government's decisive support, Huawei and ZTE were able to gain market share and circumvent the dominance of foreign multinational corporations (MNCs) in the telecommunications sector. This support facilitated the transfer of technology and financial resources to these companies and provided political backing to help them conquer markets in Brazil and other worldwide locations. The success of Huawei and ZTE in Brazil was also significantly influenced by the indirect support provided by global leading companies in specific technological segments, with which they have established strategic alliances. Lastly, Huawei and ZTE have implemented a highly effective marketing strategy that involves providing products that are comparable to those of foreign manufacturers at a significantly lower cost. The company's initial objective is to establish a presence in markets that are less demanding and have a lower power consumption, such as rural areas, in order to subsequently compete in major consumer centers. Globally, this approach was initially founded on the pursuit of markets in developing nations, such as Brazil, to establish production capacity and international experience, and subsequently on the entry into developed markets. Despite the fact that Huwaei and ZTE's telecom products were instrumental in achieving the objective of having 100% of Brazilian municipalities serviced by mobile phones in 2011, these imports transformed the stimuli generated by investments in the Brazilian telecommunications sector into benefits for the Chinese industry. An important portion of the potential impact of these investments on the development of the Brazilian manufacturing complex was sterilized by this conversion.

The implementation of these projects was primarily enabled by the import of equipment from Huawei factories in China, as the company did not possess a factory in Brazil

This had a significant impact on the commercial balance between the two countries. In the near future, the continuous absence of Brazilian companies from additional telecommunications business networks could result in a significant reduction in Brazilian technological independence, particularly in relation to China, as well as an increase in trade imbalances. On the one hand, Brazilian projects in the energy and telecom sectors were significantly influenced by the ability of Chinese multinational corporations (MNCs) to finance projects at low prices, provide technological capabilities, and leverage political and economic support from the Chinese government to prospect new business plans. Conversely, the expansion of Huawei and ZTE's operations in Brazil, despite its contribution to the Brazilian objective of mobile phone coverage in all municipalities, had a detrimental impact on the development of the Brazilian telecom productive chain. Global foreign direct investment (FDI) was historically characterized by two factors: 1) the high level of investment flows between developed countries and 2) the reality that developing countries were essentially hosts of FDI. These factors persisted throughout the 20th century. Since the dawn of the 21st century, this situation has undergone substantial transformation. One the one hand, the proportion of developing countries in total FDI inflows increased from 29.4 percent to 53.6 percent between 2007 and 2013, following the 2008 financial crisis. The crisis's severe reduction of FDI flows toward developed countries is a significant factor in the explanation of this evolution. In 2013, these fluxes accounted for only 43% of the total for 2007. In this context, the significance of developing countries is also derived from the absolute value development of the flows directed to those countries, which was 32% higher in 2013 than it was prior to the crisis (2007). Conversely, developing nations also served as the origin of FDI outflows. Compared to a mere 15% in 2005, developing countries accounted for nearly one-third of global FDI outflows in 2013. This expansion was facilitated by both private and public large corporate groups from developing countries.

The global investment environment is being transformed by Brazilian companies

Brazil has historically been a significant recipient of foreign direct investment (FDI); however, in recent years, it has received nearly US$60 billion annually. Brazil has played a significant role in the growing significance of developing countries as FDI destinations, as evidenced by the substantial level of FDI inflows. Nevertheless, the internationalization of a group of significant companies has resulted in a new phenomenon in Brazil: the increase in investment flows abroad (FDI outflows). In contrast to China, the leaders of this process are private groups that are firmly consolidated in the domestic market and have a long-standing export tradition, rather than state-run companies. This phenomenon should not be overstated, as evidenced by a comparison of outflows from Brazil with those from other emergent countries. Brazil remains a minor participant in the realm of FDI outflows, even among emerging economies. In comparison to China, India, and even lesser economies like Turkey, the nation occupies a marginal position. Brazil's net outflows of FDI from 2010 to 2013 were a mere US$4.2 billion, a significant decline from the US$38 billion, US$8.2 billion, US$10.9 billion, and US$59.3 billion of other emergent countries, including India, South Africa, Turkey, and Malaysia. During the same period, China's FDI outflows reached an impressive US$312 billion.