International -- Intl' Business: BRAZIL
BRAZILIANS ARE CATCHING HIGH-TECH FEVER (int'l edition)
At GDS Informtica, a computer shop in So Paulo, business is so brisk that salesman Elcio Galioni finds himself still chatting with customers an hour after the store's official closing. "It's beyond control," he says, shaking his head. Trend-conscious Brazilians are snapping up $3,800 multimedia units and portable notebooks, whose chic look appeals to the affluent. To handle the traffic, the store plans to expand its hours and open on Sunday. But there's another problem: GDS can't keep enough computers in stock to satisfy demand.
The surge in high-tech buying by companies as well as consumers is remarkable. Until October, 1992, when Brazil lowered protectionist barriers on computers, demand was pinched by both the high prices and poor quality of homegrown goods. Now, imports are driving down prices as global tech giants ramp up Brazilian production. Compaq Computer Corp. opened its first Latin American plant near So Paulo last month, after tripling its Brazilian sales, to 45,000 units, last year. Computer stores are sprouting in So Paulo and other cities, while Brazilians soak up the latest information in computer magazines lining newsstands and almost-daily newspaper articles about the Internet.
QUICK SNACK. With the economy rebounding, businesses of all sizes are taking advantage of the lower prices and wider selection of gear. One new info adept is Jair Martin Paschoaletti, the owner of a So Paulo lanchonete, or snack bar. He recently bought two Acer Inc. PCs, one for his lanchonete and one for home, at $2,775 apiece. PC power will "definitely" boost snack-bar profits, Paschoaletti predicts, by letting him keep track of business more efficiently and spend more time serving customers.
At the other end of the spectrum is General Motors do Brasil. Corporate Affairs Director Jose Carlos Pinheiro Neto says the multibillion-dollar investments recently launched by auto makers in Brazil "would not have been possible" under the import curbs that used to hobble business. Now, carmakers and others are able to equip their plants with the latest computer technology.
Global computer makers are rushing in. Compaq's $30 million plant will be able to turn out 400,000 desktops a year. Eventually, it will export 60% of its output to other Latin markets. "We have seen as rapid growth in Latin America as we saw in Europe in our early years" in the mid 1980s, says Compaq CEO Eckhard Pfeiffer, "and faster than the evolution of our Asian business."
Hewlett-Packard Co., whose Brazilian sales shot up 53% in 1994, will begin manufacturing personal computers locally this year. Flavio Sehn, HP general manager in Brazil, says he expects 1995 sales to rise by more than 20%. IBM Brasil, the country's biggest computer maker, is also getting a lift. Last year, it sold 69,400 PCs, up from 30,000 in 1993.
Brazil now ranks as one of the world's fastest growing computer markets, accounting for 40% of all sales in Latin America. For 1995, analysts forecast total Brazilian computer and peripheral sales of $6.9 billion, up from $5.7 billion last year. Software sales are projected to reach $550 million, up from $418 million in 1994.
"GROUND ZERO." Much of the increased demand results from managers buying their first computers or upgrading old ones to meet competition in the wake of Brazil's extensive market openings. "Many companies, especially in the manufacturing industry, are using hardware and software from 20 years ago," says Pablo Kipersmit, executive vice-president of Consist, the country's leading seller of software to big companies. "Those are the ones we want to target," he adds.
So does American Zeke Wimert, who resigned as head of Oracle Corp.'s Brazil operations recently to open his own business-software company, Unitools do Brasil. Wimert sees a sure thing for the next couple of years because Brazilian companies "are starting from ground zero," he observes. "There's a dearth of products and high demand."
The next generation of customers is being trained in classrooms such as those run by Futurekids, an American chain of computer schools for children. It started in Brazil in November, 1992, and already has 145 branches, including 106 in the So Paulo area, charging annual fees up to $1,000 for students from 3 to 15 years old. "Business is increasing at a great velocity," says Heloisa Bernardes de O. Caiuby, director of a So Paulo branch of Futurekids.
Eventually, of course, Brazil's computer bonanza is likely to level off, as competition heats up and prices fall. But for now, it's boom time. And that means big gains for the Brazilian economy and big bucks for the purveyors of computer power.By Ian Katz in So Paulo