APPENDIX B. Data on Best Prospect for Agriculture and Industry Sector Exports A. Rank: 1 B. Name of Sector: COMPUTER SOFTWARE C. ITA Code: CSF 1993 1994* 1995* D. Total Market Size 321.0 418.0 552.0 E. Total Local Production 206.0 247.0 297.0 F. Total Exports ns ns ns G. Total Imports 115.0 171.0 255.0 H. Total Imports from U.S. 111.0 167.0 250.0 I. Exchange Rate: US$1.00 **CR$242.38 ***R$0.93 * Estimated ** December 1993 *** July 1994 Comments: One of the areas offering the greatest potential for U.S. investors in software distribution. For every one hundred software packages, there is only one distributor in Brazil. The greatest obstacle to profitability in this market is pirating. Some figures suggest that up to 80% of the software used in Brazil has been pirated. Software companies, and private software associations are combating this problem through the use of raids, advertising, and by offering fringe benefits to legal users, such as technical assistance. Software offering best sales prospects for U.S. exporters include PC, LAN and Graphics Software. Market share of local and third country competitors include Brazil with 30% and the U.S. with 70%. The third country and local competitors are playing an increasingly marginal role in the market for this sector in Brazil. U.S. software manufacturers account for about 70% of the country's software sales. Major U.S. players are Microsoft, Lotus, Borland, Wordperfect, Netware, Corel. Local competitors are comprised principally of wordprocessing software producers, accounting for approximately 30% of the market. According to local industry specialists, the major Brazilian software manufacturers (Itautech, Facil, and Carta Certa) offer a significantly inferior product than their U.S. competitors. However, with government incentives still favoring locally-assembled goods, these companies have managed to remain in the market. AG Software, a German-based firm, is the only third country software manufacturer in the Brazilian market. In relation to its U.S, and Brazilian competitors, the AG software products are targeted to a more peripheral and concentrated clientele, and account for less than 0.5% of the market. A. Rank: 2 B. Name of Sector: COMPUTER AND PERIPHERALS C. ITA Code: CPT 1993 1994* 1995* D. Total Market Size 4,626.0 5,650.0 6,920.0 E. Total Local Production 4,200.0 5,040.0 6,048.0 F. Total Exports 274.0 370.0 500.0 G. Total Imports 700.0 980.0 1,372.0 H. Total Imports from U.S. 455.0 592.0 770.0 I. Exchange Rate: US$1.00 **CR$242.38 ***R$0.93 * Estimated ** December 1993 *** July 1994 Comments: The Brazilian market reserve policy, which restricted foreign participation in the computer industry, ended on October 29, 1992. However, the Brazilian government still offers incentives to the Brazilian computer industry. Market access is also limited by tariffs and import duties for computers. Most promising products include: notebooks, subnotebooks, handhelds and palmtops, high- end micro computer, disk drives, monitors and printers. Market share of local and third country competitors include: Brazil 75%, US 15%, Taiwan 7%, and Japan 3%. The computer hardware and peripherals market shows profound growth potential for the coming years. Although the U.S. dominates this market, several Asian firms are showing an interest in expanding their operations in Brazil. A. Rank: 3 B. Name of Sector: PLASTIC MATERIALS AND RESINS C. ITA Code: PMR 1993 1994* 1995* D. Total Market Size 3,674 4,182 4,807 E. Total Local Production 4,530 5,119 5,570 F. Total Exports 1,180 1,368 1,420 G. Total Imports 324 431 657 H. Total Imports from U.S. 165 170 178 I. Exchange Rate: US$1.00 **CR$242.38 ***R$0.93 * Estimated ** December 1993 *** July 1994 Comments: The liberalization of imports into the market since 1990 has had a positive impact on production costs in the Brazilian plastics industry. While it has pushed production towards international standards, the industry has increased the interest of the processing and compounding industries in more advanced auxiliary products. Through the privatization process, Brazil is seeking to improve the competitiveness of its resins, not only in terms of quality (compliance with ISO 9000 international rules), but also through controlling production, capital and freight costs. Total imports of plastic materials and resins jumped from a real growth rate of 2% between 1991 and 1992 to 74.19% between 1992 and 1993. An increase in total market demand of 56% for polystyrene (PS) caused a concomitant increase in imports for the same product by 257%. The same happened with high-density polyethylene (HDPE), with the total market increasing 27% while imports increased 162%. Polyvinyl chloride (PVC) had a total market increase of 16% while imports increased by 89%. Plastic materials and resins are used in a wide array of industries in Brazil. The packaging industry, which leads the national consumption of raw materials, absorbs some 60% of domestic resin supply. Market share of local & third country competitors include: Brazil 91%, US 4%, and Germany 2%.:Over 90% of the production of plastic materials and resins in Brazil is provided by local manufacturers. Multinational companies are provided with technology supplied by their parent companies, while Brazilian companies use know-how licensed by foreign corporations. A. Rank: 4 B. Name of Sector: SECURITY AND SAFETY EQUIPMENT C. ITA Code: SEC 1993 1994* 1995* D. Total Market Size: 605.0 665.0 731.0 E. Total Local Production: 483.0 525.0 570.0 F. Total Exports: - - - G. Total Imports: 122.0 140.0 161.0 H. Total Imports from the U.S.: 97.0 115.0 137.0 I. Exchange Rate: US$1.00 **CR$242.38 ***R$0.93 * Estimated ** December 1993 *** July 1994 Comments: Growth in sales of security and safety equipment has demonstrated only limited growth in Brazil despite the reality that there remains urgent concern for the protection of one's person and property. Although a new economic plan has been introduced, an economic recession lingers thus combined with limited incomes, sales opportunities are limited. Imports account for approximately 25% of the total market and U.S. suppliers enjoy a competitive edge due the quality image associated with U.S. product. However, with growing market liberalization and increased awareness of the importance of security especially within the corporate environment, opportunities exist. An aggressive local sales force is highly recommended. Most promising subsectors are expected to be: - Safety equipment: 90.0 - Vehicles theft deterrent systems:160.0 - Alarm devices: 60.0 - Industrial security systems: 30.0 Market share of local & third country competitors include: Brazil 78%, USA 18.7 %, and Israel 2%. There are over 50 local manufacturers of safety and security equipment. A. Rank: 5 B. Name of Sector: SPORTING GOODS & RECREATIONAL EQUIPMENT C. ITA Code: SPG 1993 1994* 1995* D. Total Market Size: 775.0 824.0 910.0 E. Total Local Production: 600.0 630.0 695.0 F. Total Exports: 25.0 26.0 35.0 G. Total Imports: 200.0 220.0 250.0 H. Total Imports from the U.S.: 80.0 88.0 112.0 I. Exchange Rate: US$1.00 **CR$ 242.38 ***R$0.93 * Estimated ** December 1993 *** July 1994 Comments: The Brazilian market for Sporting Goods & Recreational Equipment is supplied primarily by small to medium- size national manufacturers. Imports however increased moderately after 1990 when very restrictive import barriers were lifted and are expected to do so particularly if the newly-introduced economic plan works and more disposable income is realized. If this is the case, Brazilian consumers will become more aware of the superior quality of most imported products including those originating from the U.S., Europe, and Japan. Newly developed Asian nations can also expect to expand slowly into the Brazilian market, especially in view of their competitive pricing structure. Most promising subsectors are expected to be: - Bicycles and Accessories: 200.0 - Sport Balls: 135.0 Market share of local & third country competitors include: Brazil 74%, USA 12%, Europe (Germany, France and England) 8%, Japan 5%, and various East Asian nations (1%). Multiple small to medium-size local manufacturers supply the Brazilian market competing with foreign sources. A. Rank: 6 B. Name of Sector: ELECTRICAL POWER SYSTEMS C. ITA Code: ELP 1993 1994* 1995* D. Total Market Size: 1,600.0 1,645.0 1,765.0 E. Total Local Production: 1,520.0 1,565.0 1,690.0 F. Total Exports: 115.0 150.0 195.0 G. Total Imports: 195.0 230.0 270.0 H. Total Imports from the U.S.: 29.O 34.5 40.5 I. Exchange Rate: US$1.00 **CR$242.38 ***R$0.93 * Estimated ** December 1993 *** July 1994 Comments: The Brazilian market for electrical power systems is predominantly supplied by the Europeans many with manufacturing facilities located in Brazil. Exports prospects for American companies however do hold promise in the power transmission and distribution fields. Recent government legislation aimed at a major restructuring of the Brazilian electric energy sector (including privatization and new regulations on independent power production) offers excellent short to mid-term business opportunities for U.S. industry, both as operators or as suppliers. Most promising subsectors are expected to be: - Electrical Power Transmission and Distribution Equipment: 700.0 - Thermal Power Equipment: 100.0 Market share of local & third country competitors include: Brazil 88%, USA 2%, Europe (Germany, Sweden,Italy, and France) 8%, and Japan 2%. Only a few selected local manufacturers, comprising major multinationals, are responsible for a large share of the Brazilian market for Electrical Power Systems. A. Rank: 7 B. Name of Sector: AIRCRAFT & PARTS C. ITA Code: AIR 1993 1994* 1995* D. Total Market Size 681.0 680.3 725.9 E. Total Local Production 480.7 490.0 500.5 F. Total Exports 320.0 350.5 375.2 G. Total Imports 520.3 540.8 600.6 H. Total Imports from U.S. 290.6 311.4 393.4 I. Exchange Rate: US$1.00 **CR$242.38 ***R$0.93 * Estimated ** December 1993 *** July 1994 Comments: In the past two years the Brazilian market for aircraft and parts was affected by the economic recession. The major airline carriers are going through a critical time, as they are trying to stabilize their financial situations. Brazil depends a lot on air transportation to link the sparsely inhabited areas with the country's major economic centers. The local market has also been hurt by the recession, and in August 1994 the Brazilian Government plans to privatize Embraer (the largest parastatal aircraft manufacturer). The United States is the largest exporter to Brazil of aircraft and parts, followed by France and United Kingdom. Foreign aircraft and parts company manufacturers have good medium-term market prospects in such sub-sectors as Executive General Aviation Aircraft, with an estimated market of US$320.1; and Civilian Helicopters US$265.2. Market share of local & third country competitors include: USA 58%, Brazil 19%, France 13%, and Canada 10%. Brazil imports approximately 50 percent of all aircraft parts, the majority of which are sourced from the United States. Competition from third- country suppliers is limited, particularly since the United States is the main aviation supplier for Brazil. Sources: SECEX and aircraft companies representatives Note: The above stated figures from the U.S. do not show the values of aircraft and parts leasing. A. Rank: 8 B. Name of Sector: TELECOMMUNICATIONS C. ITA Code: TEL/TES 1993 1994* 1995* D. Total Market Size 3,000.0 3,200.0 3,800.0 E. Total Local Production 1,900.0 2,000.0 2,350.0 F. Total Exports 8.5 10.2 12.2 G. Total Imports 720.2 790.5 810.0 H. Total Imports from U.S. 482.1 530.0 620.1 I. Exchange Rate CR$ 21,000 R$ 0.91 Comments: The telecommunications market includes equipment, training and services. The Brazilian Government has several ongoing projects for the next six years for promising sub-sectors such as cellular, broadcasting, and public telephone network. The government has made limited progress in opening the sector for the private sector participation. Purchases of telecommunications equipment and parts by GOB- owned entities have traditionally been ruled by an entrenched "Buy National" policy. These policies were recently formalized with the March 2, 1994 passage of Decree #1070, a technology and price preference for Brazilian products purchased by government- controlled (i.e., 51 percent or more GOB-owned) entities. A more than 90 percent of the total Brazilian market. The March 2, 1994 decree #1070 requires all GOB agencies and parastatals to give priorities for Brazilian-developed technology and local value-added for informatics and automation goods and services. In addition to GOB procurement preferences, qualifies domestic products are exempted from a 15 percent Industrial Products (VAT) tax and other taxes and duties. This decree #1070 was ostensibly designed to attract new investment in high-technology areas, but also protects a politically powerful cartel of European and Japanese subsidiaries that manufacture telecom products in Brazil, as well as a fledgling GOB research & development efforts in telecom switching technology. By giving priority to Brazilian technology, investment and R&D in all GOB purchases, these measures effectively close much of Brazil's $2 billion equipment market to U.S. telecom providers. GOB agencies, including Telebras, the national telephone company and its subsidiaries, account for well over 95 percent of total Brazilian telecommunications equipment purchases. Many opportunities for U.S. companies exist to increase their market share to compete with Japanese, and European companies, in sectors such as Cellular with an estimated market of USdols 520.0; telephone switching equipment USdols 630.0; Satellite USdols 240.1; Broadcasting equipment USdols 610.3; VAS with total market revenue of USdols 210.0. Market share of local & third country competitors include: Brazil 35%, USA 28%, Japan 19%, Sweden 10%, and Germany 8%. The Brazilian telecommunications market is supplied by local manufacturers, and by four major foreign companies NEC, Ericsson, Alcatel, and Siemens. Note: The total market also includes service not shown on the local production, imports, and exports statistical data above. A. Rank: 9 B. Name of Sector: POLLUTION CONTROL EQUIPMENT C. ITA Code: POL 1993 1994* 1995* D. Total Market Size: 283.5 298.5 320.3 E. Local Production: 270.0 283.5 303.3 F. Total Exports: 27.0 28.3 30.2 G. Total Imports: 40.5 43.3 47.2 H. Total Import from U.S.: 10.1 10.8 11.8 I. Exchange Rate: US$1.00 **CR$242.38 ***R$0.93 * Estimated ** December 1993 *** July 1994 Comments: Despite of the three large sanitation projects (Tiete River Cleanup, Guaiba River Cleanup and Guanabara River Cleanup) in phase of implementation, local companies reported that sector is not growing at the formerly expected rates (between 10 and 15 percent). The two largest pollution equipment manufacturers, Filsan and Degremont, reduced their personnel by about 60% during the last three years. Pollution control equipment, reported trade sources, represent only 20-30 percent of the investment made in a sanitation project. However, the trade potential of this sector remains high and cannot be overlooked by U.S. companies in view of total investments needed in the next few years. The Brazilian Association of Pollution Control Equipment Manufacturers reported that the amount of yearly investment needed in this sector is approximately one billion dollars during the next 20 years, including services, equipment and civil construction. Market share of local and third country competitors include: Brazil 85%, US 4%, France 3%, Germany 2%, and U.S. 1%. The Brazilian pollution control equipment market sector reached 283.5 million dollars in 1993 and is expected to grow in an average yearly rate of 6% during the next 2 years. Imports accounted for 40.5 million dollars, of which approximately 25% originated from States. About 120 companies operate in the Brazilian environmental market sector . Those include large and medium-sized manufacturers and environmental consulting companies. However, according to the Brazilian Pollution Control Equipment Manufacturers Association - DESAM - only the ten largest pollution control equipment manufacturers supply approx A. Rank: 10 B. Name of Sector: FOOD PROCESSING EQUIPMENT C. ITA Code: FPP 1993 1994* 1995* D. Total Market Size 561.2 573.1 597.3 E. Total Local Production 576.1 587.6 611.1 F. Total Exports 61.4 63.8 67.0 G. Total Imports 46.5 49.3 53.2 H. Total Imports from U.S. 6.9 8.4 9.5 I. Exchange Rate: US$1.00 **CR$242.38 ***R$0.93 * Estimated ** December 1993 *** July 1994 Comments: During more than two decades the Brazilian food processing industry made few investments in high-tech equipment. This tendency was due to the import substitution policy that prevailed since the mid-sixties. With the opening of the market in 1990 food processors realized the need of investing in new processes. However, the unstable economic scenario did not provide for the appropriate environment for larger investments. With the implementation of a new economic plan and the introduction of a new currency, the "Real", it is expected that new investments will be made. Best prospects for U.S. exporters include bakery, brewery, meat processing, dairy, vegetable and eggs selecting and cleaning equipment. Market share of local & third country competitors include: Brazil 92%, USA 2.1%, Italy 2.3%, Germany 1.7%, and Argentina 1%. Local manufacturers of Food Processing Equipment are responsible for 92% of the total market, which is supplied by subsidiaries of foreign equipment manufacturers, and some strong local manufacturers as well. A few of the local manufacturers also maintain licensing agreements for local manufacture. Imports are supplied by the U.S., Italy, Germany and Argentina, which keep a tight competition in the market. A. Rank: 11 B. Name of Sector: HOTEL AND RESTAURANT EQUIPMENT C. ITA Code: HTL 1993 1994* 1995* D. Total Market Size 130.7 133.6 138.7 E. Total Local Production 149.1 153.0 163.7 F. Total Exports 44.2 47.3 50.0 G. Total Imports 25.8 27.9 30.7 H. Total Imports from U.S. 7.4 8.5 10.0 I. Exchange Rate: US$1.00 **CR$242.38 ***R$0.93 * Estimated ** December 1993 *** July 1994 Comments: Before the Brazilian import liberalization of 1990, hotel and restaurant equipment was not allowed to be imported. Since then the market changed significantly. The restaurant, catering and institutional kitchen segments are now becoming more competitive and quality conscious. The fastest growing segment is fast food. Equipment that has good market potential include combined ovens (gas or electric); electric baking ovens; food warmers and heaters; electrical fryers; pasta cooking machines; counter-top fast food equipment; food racks; ice-cream machines; and utensils in general. Market share of local & third country competitors include: Brazil 80%, USA 5%, Italy 2%, Japan 1.2%, Germany 1.2%. Local manufacturers of hotel and restaurant equipment account for 80% of the total market. About 10 to 12 companies are responsible for more than 50% of the total local production. A. Rank: 12 B. Name of Sector: PROCESS CONTROLS INDUSTRIAL C. ITA Code: PCI 1993 1994* 1995* D. Total Market Size: 264.0 280.0 297.0 E. Total Local Production: 219.0 230.0 244.0 F. Total Exports: 20.0 22.0 26.0 G. Total Imports: 65.0 72.0 79.0 H. Total Imports from the U.S.:30.0 34.0 40.0 I. Exchange Rate: US$1.00 **CR$242.38 ***R$0.93 * Estimated ** December 1993 *** July 1994 Comments: Cautious investment continues in this sector due to the persistent recession. But the local market for process controls equipment is expected to swing up with moderate growth close to the end of 1994 and well into 1995. The need to replace obsolete control instrumentation will become greater as market liberalization continues. U.S. products can expect to enjoy an excellent reputation in the sector. Most promising subsectors are expected to be: - DCDS's: 150.0 - PLC'S: 65.0 - Field bus controllers: 45.0 - Process computers: 35.0 Market share of local & third country competitors include: Brazil 73.4%, USA 13.5%, Germany 6.1%, and Japan 5%. Local PCI suppliers number more than 50, many having technology transfer agreements with foreign companies. A. Rank: 13 B. Name of Sector: HOUSEHOLD CONSUMER GOODS C. ITA Code: HCG 1993 1994* 1995* D. Total Market Size 4,044.1 4,592.8 5,226.4 E. Total Local Production 4,180.5 4,689.0 5,265.0 F. Total Exports 1,206.4 1,313.3 1,424.2 G. Total Imports 1,070.0 1,217.1 1,385.6 H. Total Imports from U.S. 219.2 248.9 283.0 I. Exchange Rate: US$1.00 **CR$242.38 ***R$0.93 * Estimated ** December 1993 *** July 1994 Comments: American consumer goods rose by 71.86% in 1993. The elimination of import restrictions in 1990 generated a growing number of imported product stores and sales-by-catalog. Brazilian consumers are generally pleased to find a broader selection of foreign-made products on the shelves. American products are generally well-known for excellent quality and competitive prices. Market share of local & third country competitors include: 74%, Hong Kong 8%, USA 6%, Argentina 4%, Switzerland 2%,a nd France 1%. Local manufacturers of household consumer goods account for 74% of the total market. There are a number of long- established multinational companies, mainly European, active in this sector. A. Rank: 14 B. Name of Sector: ELECTRONICS IND. PRODUCTION AND TEST EQUIP. C. ITA Code: EIP 1993 1994* 1995* D. Total Market Size: 60.0 66.0 73.0 E. Total Local Production: 6.0 7.0 8.0 F. Total Exports: - - - G. Total Imports: 54.0 59.0 65.0 H. Total Imports from the U.S.:33.0 37.0 42.0 I. Exchange Rate: US$1.00 **CR$242.38 ***R$0.93 * Estimated ** December 1993 *** July 1994 Comments: The Brazilian domestic market for electronics industry production and test equipment has suffered from the country's economic recession and lack of industrial incentives. Recently, the Brazilian Government issued legislation supporting local production of electronic production and test equipment. Steady growth can be expected as a result. Imports account for a over 80% of the market with U.S. suppliers holding approximately 60% of the total. Most promising subsectors are expected to be: - SMT assembly machines: 25.0 - Through-the-hole insertion machines: 10.0 - Automatic dispensers: 5.0 Market share of local & third country competitors include: Brazil 10.9%, USA 57.5%, Italy 18%, and Japan 9%. Local manufacturers of electronic production and test equipment are only a handful and account for little more than 10% of the market. A. Rank: 15 B. Name of Sector: MEDICAL EQUIPMENT AND SUPPLIES C. ITA Code: MED 1993 1994* 1995* D. Total Market Size: 955.0 990.0 1,100.0 E. Total Local Production: 650.0 665.0 750.0 F. Total Exports: 145.0 145.0 150.0 G. Total Imports: 450.0 470.0 500.0 H. Total Imports from the US: 180.0 190.0 225.0 I. Exchange Rate: US$1.00 **CR$ 242.38 ***R$0.93 * Estimated ** December 1993 *** July 1994 Comments: The Brazilian private health care system has experienced very limited growth over recent few years due to severely reduced Government spending in this sector. U.S. suppliers can expect to increase modestly their market shares in the Brazilian medical equipment and supplies sector. They are followed closely by European and Japanese competitors. Asian suppliers can also expect to expand import share in selected segments, including disposables because of their attractive costs. Most promising subsectors are expected to be: - Medical Imaging Equipment: 200.0 - Laboratory Equipment: 135.0 - Cardiological/Cardiovascular Equipment: 150.0 Market share of local and third country suppliers include: Brazil 53%, USA 20%, Euope 14%, and Japan 10%. There are various local manufacturers supplying the Brazilian market, including multinationals such as Becton Dickinson, Johnson & Johnson, and G.E. A. Rank: 16 B. Name of Sector: OIL AND GAS FIELD MACHINERY AND SERVICES C. ITA Code: OGM 1993 1994* 1995* D. Total Market Size: 2,000.0 2,200.0 2,420.0 E. Total Local Production: 1,585.0 1,743.0 1,917.0 F. Total Exports: 80.0 88.0 97.0 G. Total Imports: 495.0 545.0 600.0 H. Total Imports from the US: 210.0 233.0 259.0 I. Exchange Rate: US$1.00 **CR$242.38 ***R$0.93 * Estimated ** December 1993 *** July 1994 Comments: The primary end-user in this sector is PETROBRAS, the Brazilian Government oil and gas monopoly which has been seriously impaired by a lack of funds to invest in expansion and modernization. Price negotiation is a critical factor here in accessing sales opportunities. Although it is a state monopoly, less than half of PETROBRAS procurement is through government tenders which required a well-established and usually politically connected Brazilian representative. Additionally, competitive financing is essential. Most promising subsectors are expected to be: - Offshore production equipment: 195.0 - Offshore exploration service: 150.0 - On-shore production: 75.0 Market share of local and third country competitors include: Brazil 75%, USA 10.7%, France 7%, and Japan 2%. There are more than 100 local suppliers of OGM equipment to PETROBR S, the Brazilian oil and gas monopoly. A. Rank: 17 B. Name of Sector: PRINTING AND GRAPHIC ARTS EQUIPMENT C. ITA Code: PGA 1993 1994* 1995* D. Total Market Size: 421.4 462.0 506.4 E. Local Production: 86.0 92.8 100.2 F. Total Exports: 8.6 9.2 10.0 G. Total Imports: 344.0 378.4 416.2 H. Total Import from U.S.: 113.0 124.3 136.7 I. Exchange Rate: US$1.00 **CR$242.38 ***R$0.93 * Estimated ** December 1993 *** July 1994 Comments: During the last two decades the Printing and Graphic Arts sector was protected from foreign competition by Brazil's import substitution policy. As a consequence, local companies did not invest in new technologies research and were therefore unable to compete with locally-sold foreign equipment after the market opening in 1990. Computerized pre-press equipment represents about 35% of the total market of printing and graphic arts. Market share of local and third country competitors for Computerized prepress equipment (35% of the total market) includeUSA 65%, Germany 19%, Israel 8%, and Japan 5%. Local and third country competitor market share for Printing and finishing machinery (65% of the total market) include: Germany 37%, USA 33%, and Brazil 30%. The total Brazil market for printing and graphic arts equipment amounted to 421 million dollars in 1993. About 80 percent of the market demand - 344 million dollars - is supplied by imports and is expected to grow at an average annual rate of 10% for the next two years. The computerized prepress equipment represents about 35% of the total market of printing and graphic art equipment and is totally supplied by imports. The printing and finishing machinery market demand is also supplied for the most part by imports (about 70%). A. Rank: 18 B. Name of Sector: FRANCHISING C. ITA Code: FRA 1993 1994* 1995* D. Total Market Size 4,900.0 5,433.0 6,066.0 E. Sales by Local Firms 4,361.0 4,840.0 5,420.0 F. Sales Foreign-Owned Firms 539.0 593.0 646.0 G. Sales by U.S.-Owned Firms 510.0 550.0 610.0 I. Exchange rate: US$1.00 **CR$242.38 ***R$0.93 * Estimated ** December 1993 *** July 1994 Comments: Franchising is one of the fastest growing sectors in Brazil, which is the largest and most industrialized in Latin America. Seventy percent of its population live in cities, and about 30 million of its 150 million inhabitants have above average income. These demographics makes Brazil one of the most promising markets for franchising. The food segment is the largest, with total revenues of US$1.2 billion in 1993. However, services have the highest potential of growth, with total l revenues of US$300 million in 1993. A. Rank: 19 B. Name of Sector: ELECTRONIC COMPONENTS C. ITA Code: ELC 1993 1994* 1995* D. Total Market Size: 1,500.0 1,600.0 1,900.0 E. Total Local Production: 825.0 857.0 1,045.0 F. Total Exports: 75.0 82.0 95.0 G. Total Imports: 750.0 825.0 950.0 H. Total Imports from the US: 322.0 355.0 380.0 I. Exchange Rate: US$1.00 **CR$242.38 ***R$0.93 * Estimated ** December 1993 *** July 1994 Comments: Imports account for half of the Brazilian market in this sector with U.S. product maintaining an approximate 40% share. The market is expected to experience gradual growth in response to Brazilian Government incentives provided to national producers of electronic products. Steady evolution in this market however will be largely dependent on the success of the recently implemented Brazilian economic package which could well result in an overall improvement of Brazil's economy. Most promising subsectors are expected to be: - Integrated Circuits: 200.0 - Printed Circuit Boards: 150.0 Market share of local and third country competitors inlcude: Brazil 50%, USA 27%, Japan 16%, Germany 4%, and East Asian countries 3%. A significant number of local manufacturers supply the passive component segment of the Brazilian market, whereas only a few supply semiconductors. A. Rank: 20 B. Name of Sector: PACKAGING MACHINERY C. ITA Code: PKG 1993 1994* 1995* D. Total Market Size: 428.0 450.4 540.5 E. Total Local Production: 395.0 415.0 498.0 F. Total Exports: 86.0 94.6 108.8 G. Total Imports: 119.0 130.0 150.0 H. Imports from the U.S: 20.4 21.4 23.5 I. Exchange Rate: US$1.00 **CR$242.38 ***R$0.93 * Estimated ** December 1993 *** July 1994 Comments: There is a large potential for packaging machinery in Brazil, since local companies will have to invest in packaging to face increased competition with imported products and to comply with more strict environmental protection requirements. Companies are also encouraged to invest in new packaging in order to reduce the final price of their product and become more competitive in the domestic market. Market share of local & third country competitors include: Brazil 72.2%, USA 4.6%, Italy 6.5%, and Germany 6.0%. The Brazilian packaging machinery industry is well established in Brazil and consists of Brazilian-owned companies and subsidiaries of multinational industries. The foreign ownership of several companies favors technology transfers. Therefore, packaging machinery made in Brazil is relatively advanced and state-of-the-art. A) Rank: 21 B) Name of Sector: MACHINE TOOLS AND METALWORKING EQUIPMENT C) ITA Code: MTL 1993 1994* 1995* D) Total Market Size: 424.0 530.9 633.7 E) Total Local Production: 325.5 345.0 380.0 F) Total Exports: 196.2 204.1 214.3 G) Total Imports: 294.7 390.0 468.0 H) Imports from the U.S: 35.7 37.1 40.8 I. Exchange Rate: US$1.00 **CR$242.38 ***R$0.93 * Estimated ** December 1993 *** July 1994 Domestic consumption of machine-tools is showing signs of recovery in 1994 because of the increased production of automobiles from US$1.4 million in 1993 to an estimated US$1.8 million in 1994. The Brazilian Association of Automobile Manufacturers (ANFAVEA) forecasts that domestic production of automobiles will double by the end of the nineties. General Motors plans to invest in the construction of two new plants in 1995. Renault too plans to build a new production factory in 1995. Local and third country competition includes: Brazil 30.5%, USA 3%, Germany 15%, and Italy 11%. There are significant numbers of machine-tool builders operating in Brazil, manufacturing a variety of equipment from conventional lathes to numerically controlled cutting machines, machining centers, lathes, milling machines, grinding machines, forming machines, transfer presses, etc. The Brazilian machine-tool industry consists of two privately-owned Brazilian firms, several German-owned firms and small Brazilian companies with annual sales of less than US$10 million per year. A. Rank: 22 B. Name of Sector: AUTOMOTIVE PARTS AND SERVICE EQUIPMENT C. ITA Code: APS 1993 1994* 1995* D. Total Market Size: 11,250.0 12,120.0 13,188.0 E. Local Production: 12,500.0 13,500.0 14,715.0 F. Total Exports: 2,250.0 2,430.0 2,650.0 G. Total Imports: 1,000.0 1,050.0 1,123.0 H. Total Import from U.S.: 270.0 283.5 303.3 I. Exchange Rate: US$1.00 **CR$242.38 ***R$0.93 * Estimated ** December 1993 *** July 1994 Comments: The sector has been deeply affected by the economic recession during the period 1990-1992, in which the number of employees in the autoparts industry decreased from 285,200 to 231,000. However, more efficient production technologies and tax reduction agreements with the government resulted in lower sales prices. The sector begun to recover in the second half of 1992. At the end of 1993, production rates were only comparable to numbers attained in the 1980s. Imports of automotive parts and service equipment still remain low (approx. 9%). However, the increase of imported automobiles should stimulate the demand of foreign autoparts and service equipment. Local and third country competitors include: Brazil 91%, Germany 2%, USA 2%, Argentina 1%, and Italy 1%. The total Brazilian Automotive Parts and Service Equipment market reached 11.2 billion dollars in 1993. It is expected to reach 12.1 billion dollars in 1994. The sector exported 2.2 billion dollars in 1993, mainly to the U.S. (60%). Imports were 1 billion dollars in 1993 and are expected to amount to 1.05 billion dollars in 1994. The import market of U.S. products should grow an average 6% per year during the period 1994-1995. The autoparts sector is composed of 3,000 companies and employs about 231,000 workers. Industries in this sector are classified into three groups. The first group consists of 1,500 companies each having less than 10 employees and a low technology base. The second represents about 1,000 companies each having 10 to 49 employees and a medium technology base. The last group consist of about 500 companies with 50 to 4,000 employees. These companies produce 90% of the Brazilian production and export of autoparts. A. Rank: 23 B. Name of Sector: PUMPS, VALVES AND COMPRESSORS C. ITA Code: PVC 1993 1994* 1995* D. Total Market Size 1,750.0 1,800.0 1,836.0 E. Total Local Production 1,155.0 2,020.0 2,061.0 F. Total Exports 360.0 380.0 390.0 G. Total Imports 155.0 160.0 164.8 H. Total Imports from U.S. 43.0 45.0 46.3 I. Exchange Rate: US$1.00 **CR$242.38 ***R$0.93 * Estimated ** December 1993 *** July 1994 Comments: The Brazilian market for pumps, valves and compressors is very competitive. More than 300 local manufacturers produce a wide variety of products in this sector, especially comressorsfor refrigeration equipment and all kinds of components. They also export Brazilian-made products to more than 80 countries. Many of these Brazilian manufacturers are subsidiaries of U.S. and foreign companies, such as Atlas Copco, Bitzer, Tecumseh, Sulzer, Sullair, Dresser/Wayne, Nippondenso, Aeroquip Vickers, Falk, Worthington, Theinhutte, Aro and Kloeckner. Best subsectors: - Hermetic compressors for refirgeration equipment: US$260 million, - Gasoline or alcohol pumps, for internal combustion piston engines, or for compression-ignition engines: US$80 million, - Components of pumps for liquids: US$300 million. A. Rank: 24 B. Name of Sector: INDUSTRIAL CHEMICALS C. ITA Code: ICH 1993 1994* 1995* D. Total Market Size: 11,000.0 11,300.0 11,600.0 E. Total Local Production: 10,210.0 10,700.0 11,000.0 F. Total Exports: 1,100.0 1,200.0 1,400.0 G. Total Imports: 1,890.0 1,800.0 1,900.0 H. Total Imports from the US: 567.0 584.0 600.0 I. Exchange Rate: US$1.00 **CR$242.38 ***R$0.93 * Estimated ** December 1993 *** July 1994 Comments: Brazil's chemical sector is the eighth largest in the world. Over the last years, the chemical industry has been undergoing streamlining and privatization. The pressure of international competition and a still liberalizing domestic market has forced the industry to upgrade the quality, efficiency and pricing of its production. With the expected gradual economic recovery, the chemical sector should continue to see steady improvements in performance over the next several years. The U.S. is the leading supplier of industrial chemicals, followed by Germany, Switzerland, and France. Local and third country competitors include: Brazil 83%, USA 5%, Germany 2%, and Switzerland 2%. Brazil's chemical sector is the eighth largest in the world. Major chemical companies in Brazil are Copene, Rhodia, Hoechst, Copesul, White Martins, Bayer, Ciba-Geigy, and DuPont. The Brazilian chemical sector comprises approximately 317 companies of which approximately 240 are private Brazilian owned. A. Rank: 25 B. Name of Sector: AGRICULTURAL CHEMICALS C. ITA Code: AGC 1993 1994* 1995* D. Total Market Size: 2,900.0 2,990.0 3,100.0 E. Total Local Production: 2,140.0 2,220.0 2,300.0 F. Total Exports: 190.0 190.0 200.0 G. Total Imports: 950.0 960.0 1,000.0 H. Total Imports from the US: 540.0 556.0 572.0 I. Exchange Rate: US$1.00 **CR$242.38 ***R$0.93 * Estimated ** December 1993 *** July 1994 Comments: The Brazilian market for this sector is expected to experience steady growth. Consumption of agricultural chemicals per hectare in Brazil is low, 1.2 kg. This index reaches 4.2 Kg in Germany, 5.92 in Italy, 5.5 kg in the U.S. and 10.0 kg in Japan. Brazil is the world's six largest consumer of fertilizers, after China, Russia, U.S. and France. Environmental concerns and the search for increasing agricultural productivity should lead to an increased demand for more efficient products. The U.S. is the leading supplier of agricultural chemicals, followed by Russia, Germany and Canada. Market share of local and third country competitors include: Brazil 79%, USA 16%, Russia 5%, and Germany 4%. Brazil is the world's six largest consumer of fertilizers. There are approximately 300 fertilizer companies in Brazil, but 20 companies alone are responsible for more than 80 percent of total production. Major local producers are Copebras, Ultrafertil, Adubos Trevo and Nitrofertil. A. Rank: 26 B. Name of Sector: PLASTICS PRODUCTION MACHINERY C. ITA Code: PME 1993 1994* 1995* D. Total Market Size 269.8 287.9 307.1 E. Total Local Production 233.4 249.7 267.1 F. Total Exports 10.8 11.3 11.9 G. Total Imports 47.2 49.5 51.9 H. Total Imports from U.S. 8.3 8.7 9.1 I. Exchange Rate: US$1.00 **CR$242.38 ***R$0.93 * Estimated ** December 1993 *** July 1994 Comments: Brazil is the leader in the production and sales of plastic production machinery in Latin America. According to industry estimates, the sector is composed of approximately 160 manufacturers with an annual production capacity of approximately 6,000 basic machines. The annual average growth rate of this sector has been around 4% in the past few years. In the beginning of the 90's the sector registered sales of around 2,600 units. The producers of injection, blowing, extrusion and peripheral equipment generally agree that the country has reached a level of self-sufficiency. The 1990 market liberalization in Brazil is provoking a modernization process in plastics machinery industry. This trend is reflected by an increasing number of recent technological agreements signed with foreign groups. Market share of local and third country competitors include: Brazil 82%, Germany 6%, Italy 6%, USA 3%, and France 1%. Brazil has an industrial complex comprising around 160 manufacturers of plastic production machinery, the majority owned by Brazilian capital. On a smaller scale, there are also subsidiaries of foreign groups, mainly German and Italian. A. Rank: 27 B. Name of Sector: MINING INDUSTRY EQUIPMENT C. ITA Code: MIN 1993 1994* 1995* D. Total Market Size 3,100.0 3,100.0 3,162.0 E. Total Local Production 3,000.0 2,990.0 3,052.0 F. Total Exports 210.0 210.0 220.0 G. Total Imports 310.0 320.0 330.0 H. Total Imports from U.S. 130.0 134.0 137.0 I. Exchange Rate: US$1.00 **CR$242.38 ***R$0.93 * Estimated ** December 1993 *** July 1994 Comments: Brazil is one of the leading producers of minerals, especially iron ore, gold and bauxite. The mineral potential of this country has not been fully assessed yet and, therefore, new projects in this sector may be developed in the long-run. Nevertheless, the current constitution, drafted by the Brazilian Congress in 1988, seriously restricts the participation of foreign firms in the mineral survey of Brazil. For this reason, investments in this sector have fallen significantly since 1988. Best subsectors: - Underground Mining Equipment: US$400 million, - Earth Moving Equipment: US$330 million, - Drilling Equipment: US$260 million. A. Rank: 28 B. Name of Sector: TRAVEL AND TOURISM SERVICES C. ITA Code: TRA 1993 1994* 1995* D. Total Market Size 4,500.0 4,950.0 5,200.0 E. U.S. Receipts 1,200.0 1,320.0 1,380.0 F. Exchange Rate: US$1.00 **CR$242.38 ***R$0.93 * Estimated ** December 1993 *** July 1994 Comments: 576,000 Brazilians visited the United States in 1993, showing a growth of 20% over the previous year. Brazil ranks 6th among the top twenty overseas countries generating visitors to the U.S. The United States Travel and Tourism Administration (USTTA) estimates a growth around 10% for 1994, increasing the number of Brazilian visitors to the U.S. to 620,000. Brazil has passed Australia and competes in the same size of market with Italy. The Brazilian market to the United States is considered a booming one. There had been a number of ups and downs from the late 1980s through the early 1990s. Starting in 1991 there began a period of increases, carrying the Brazilian market to new positions in the world rank. It is expected promising numbers for a few destinations in the U.S., such as San Francisco and Los Angeles areas, after the excellent exposure to the consumer and media during the Soccer World Cup. A. Rank: B. Name of Sector: NUTS C. ITA or PS&D Code: 08.02 1993 1994* 1995* D. Total Market size 448.0 467.0 478.0 E. Total Local Production 432.0 450.0 460.0 F. Total Exports 180.0 190.0 200.0 G. Total Imports 16.0 17.0 18.0 H. Total Imports from U.S. 3.0 4.0 5.0 I. Exchange Rate: US$1.00 **CR$242.38 ***R$0.93 * Estimated ** December 1993 *** July 1994 Comments: Brazil is the world's leading producer of cashew nuts and Brazil nuts. The market potential for imported nuts is mostly for walnuts, almonds and hazelnuts. Imports of these nuts average US$10 million per year, and are known as "Christmas Products" due to the concentration of consumption during the Christmas season. The United States holds a market share of only 3 percent, but has a significant potential to grow despite the competition from Chile which is favored by lower tariffs and transportation costs. A. Rank: B. Name of Sector: PLYWOOD C. ITA or PS&D Code: 1993 1994* 1995* D. Total Market Size 605.0 630.0 661.0 E. Total Local Production 600.0 620.0 650.0 F. Total Exports 240.0 250.0 280.0 G. Total Imports 5.0 8.0 11.0 H. Total Imports from U.S. 1.0 2.0 3.0 I. Exchange Rate: US$1.00 **CR$242.38 ***R$0.93 * Estimated ** December 1993 *** July 1994 Comments: The reduction in the duty on imports from 10 to zero offers some opportunities for U.S. softwood plywood exports to Brazil, mostly to meet shortages in local production. A. Rank: B. Name of Sector: POULTRY (baby chicks) C. ITA or PS&D Code: 010511 1993 1994* 1995* D. Total Market Size 14.0 17.0 19.0 E. Total Local Production 3.0 4.0 5.0 F. Total Exports 0 1.0 1.0 G. Total Imports 11.0 12.0 13.0 H. Total Imports from U.S. 8.0 10.0 12.0 I. Exchange Rate: US$1.00 **CR$242.38 ***R$0.93 * Estimated ** December 1993 *** July 1994 Comments: The United States has the majority share of this sector. A. Rank: B. Name of Sector: VEGETABLE SEEDS C. ITA or PS&D Code: 120991 1993 1994* 1995* D. Total Market Size 23.0 26.0 27.0 E. Total Local Production 10.0 12.0 13.0 F. Total Exports 1.0 1.0 1.0 G. Total Imports 12.0 13.0 14.0 H. Total Imports from U.S. 5.0 6.0 7.0 I. Exchange Rate: US$1.00 **CR$242.38 ***R$0.93 * Estimated ** December 1993 *** July 1994 Comments: The Brazilian market for vegetable seed is split between national companies and international suppliers. Most of the seed produced in Brazil are from open pollinated varieties, such as onion, carrot, lettuce, tomato, sweet pepper and okra. The most important suppliers of vegetable seed are the United States, Japan, the Netherlands, France, Denmark, and Chile. Vegetable seeds offers the most opportunities because it is least regulated, comparison to the grain seed crops, and it is free market oriented of all the seed types. A. Rank: B. Name of Sector: RICE C. ITA or PS&D Code: 100610 1993 1994* 1995* D. Total Market Size 2,080.0 2,300.0 2,380.0 E. Total Local Production 1,800.0 2,000.0 2,100.0 F. Total Exports 1.0 2.0 2.0 G. Total Imports 270.0 300.0 280.0 H. Total Imports from U.S. 2.0 5.0 10.0 I. Exchange Rate: US$1.00 **CR$242.38 ***R$0.93 * Estimated ** December 1993 *** July 1994 Comments: Market opportunities for rice imports continue to exist in Brazil. Actual needs will depend greatly on domestic production, improved consumers' purchasing power, and changes in the country's economic condition. The outlook for sales of U.S. rice to Brazil will depend on import price, availability of low interest credit, and the Brazilian supply situation. Uruguay and Argentina are the traditional rice suppliers to Brazil and enjoy low freight costs, receive duty-free privileges under regional trade agreement can quickly fill urgent supply needs. Although the United States enjoys shipping advantages over Asian origin rice to Brazil, U.S. rice must, however, compete with traditionally lower priced Asian rice for a piece of the Brazilian market. A. Rank: B. Name of Sector: COTTON C. ITA or PS&D Code: 520100 1993 1994* 1995* D. Total Market Size 1,235.0 1,290.0 1,320.0 E. Total Local Production 590.0 520.0 665.0 F. Total Exports 30.0 6.0 6.0 G. Total Imports 645.0 770.0 655.0 H. Total Imports from U.S. 69.0 85.0 85.0 I. Exchange Rate: US$1.00 **CR$242.38 ***R$0.93 * Estimated ** December 1993 *** July 1994 Comments: Until recently, opportunities for expanding Brazilian consumption of U.S. cotton were limited by availability of ample supplies in neighboring Paraguay. Traditionally, most imports have been shipped from Paraguay due to proximity, favorable payment terms and availability of spot shipments of small quantities. However, given two consecutive short Brazilian crops and increased consumption, Brazil has turned to other import origins. With increased opportunities for U.S. exports in the near term, contacts between U.S. and Brazilian industry members have improved through targeted marketing activities. Although international financing is available, to many importers in Brazil, GSM 102 credit could also facilitate U.S. cotton exports. The United States enjoys a freight advantage in shipping cotton to the Northeast Region but cannot ship small volumes to a region mainly comprised of small mills.