The
previously depicted 'Welcome to Britain' sign at UK airports is an
obvious metaphor of the 'doors open for business' mantra that the
country wishes to convey to the world.
Whilst the European economy, though slowly
improving, still struggles with geo-economic fractures between north
and south, Britain invariably looks to a resurgent USA for near term
'easy-reach' prospects and the BRICs, MINTS, and CIVETS countries for
mid and long-term opportunities.
Over
the course of the last 4-5 years the EM nations have been variously
affected by a mix of their own slowed export markets to the West, a
commodities slump, the shock of real and technical growth
contraction, deflation, currency weakness and its problematic 'spread' affect
upon short-term over-indebtedness of national and business borrowing
raised in US$.
All
of this before the spectre of trade wars arrived, and the
consequential volatility created by political rhetoric to both appease and
ferment 'New Populism'.
China has managed its slowdown well, by looking inwards, slowly
reforming sectors, shrinking all forms of credit and continually deflating its stock market (previously in 'bubble-pop' territory). Within today's shrunken world, India has had to try to rebalance its innate dynamic, between slowed foreign earnings in IT outsourcing and basic export goods, whilst and kick-starting internal growth across its newer and older industries. This assisted of
course by its efforts to integrate and formalise what has historically been a large
black-market economy by enacting currency regulation so as to make
that once invisible money materialise in local banks. So providing new and
better regulated lending to businesses and consumers. As per Russia,
the Putin-Trump talks in Helsinki saw the hot-topic of Syria put to
one side to promote a mutuality that could over time range from
American importation of cheap CNG, timber-products and agricultural basics; in return the USA assisting Russian expansion
of its internal Capital markets.
Yet
it is arguably Brazil that has seen the greatest economic 'turnaround' - even if recent data is again lacklustre - and
thus investment-auto-motives returns to its focus, as per
the World Economic Forum talks of six months ago.
The
last few Brazilian weblogs looked at Infrastructure and Corruption,
before entering the World Cup with Pele as national ambassador.
Though
the very much needed, the Economic Reforms Brazil have still not been
enacted and would not have been until a change in government. Those changes vehemently opposed in various quarters, ranging from the
civil service to independent trucking, respectively regards pension pots and loss
of fuel subsidies. The country has been seen to successfully extract itself from a previous heavy technical recession; as a
new faith in entreprenerialism is boosted by the digital age (the on-line growth of Mercadolibre creating thousands of micro-retailers, just as ebay did in the West). So driving a new era of possibilities for self-made small business people, even if the delivery network can prove often problematic.
Such new possibilities have set a new tone, with people increasingly adopting and adapting to the digital age, and seeking their niche place within it; often both on the street and on-line; so encouraged by the notion of greater commercial possibilities, and listening to those political candidates at Federal and State levels who offer incentives for business; inevitably the situated on the Right.
The political Left has weakened – seemingly significantly so - given the Lavo Jato
corruption scandel (amongst others) in which senior government
officials were complicit, the impeachment of Dilma Rousseff (herself
the poster-child of the yesteryear ideals of Brazilian Socialism),
and the jailing of Inacio Lula da Silva.
With
46% of the first-round vote recently, Bolsonara appears comfortably
positioned. He follows in a Trumpian manner, loud and periodically
immaturely crass about Liberal issues. Such words appear overtly
sensationalist to obtain favour with the Catholic and Evangelic
masses. But given his admiration for the country's previous
military-led strength, and history of structured patriacian society -
good per stability / bad per opportunism, Brazil might 'under the radar' see a backward shift. Not against women (who make up increasing numbers the
workforce within the tertiary sectors) or the 'less-abled' (given the Paralympics), but regards social assistance to the marginalised ethnic minorities (esp Latino-black and the Indigeneous Tribes) who gained most under
the Left, with new voices and social programmes.
Whether Bolsonaro's 'loud-mouthing' is populist 'election talk' or not remains to
be seen; but likely he will be be more prosaic in Office. He seems to be deliberately mimicking Trump, the difference being that the
international friction Trump created from blundering bravado is countered by both Diplomatic real politik and importantly the US's massive international economic strength. Brazil does not have the
same economic sway on the world stage, and as a country that posits
itself as seeking only international friends and no enemies. So any such
continued political blustering would mold him more as political philistine rather
than a 'philosopher king'.
That
said, sometimes 'loud words' are required to deter the now near ubiquitous 'passive-aggressive'
behaviour that has come to be a near norm in hyper-liberalised societies (Brazil long so); where 'social game-playing' means meaningful truth and trust are swamped by personal aims cloaked via ideological agendas.
But
positively for Bolsonaro he set those words against his own son, who in the public limelight had the temerity to relay a closet threat to
the very heart of the Court system.
Thus
presently the expected Premier appears a contradictory figure, yet
also in the idiom of the yesteryear 'Patron' to ensure stability. To
that end Bolsonaro ought to in Office act with 'quiet words and a
big-stick', created by a cohesive, visionary and dynamic Cabinet and
Government and a Military that subtly leads society by example not by
might.
And
much can be learned from history.
The
history of Brazil, with swings between an internally closed market
(ie Import Substitution), an open market (Export and Import
Promotion) and the oft reality of a 'merged market' economy (in
transition between closed and open) has meant that industrial
strategy has followed the bias of the concurrent political climate.
That
meant long oscillations between pro-globalist Capitalism (ie inputs
of 'profiteering Americanism' vs 'conscientious Europeanism' ) and
the anti-globalist Socialist slant (ie 'self-sufficiency') tho'
ironically deploying foreign IPR, management and plant.
Thus
by examples in automotive we see the major impacts of GM, Ford, VW
and FIAT per investment scale in factories, high product volumes and
high-quality technical standardisation, strong marketing and enticing dealerships. (In the 1960s the auto-sector was the 'sine qua non' of national modernity and influenced the face of retail enormously). This compared to the home-grown; the likes of
domestically created Gurgel with far lesser funding and expertise, ;limited investment
scale, low vehicle volumes, low-quality technical resolution of innovative vehicles, and ironically still with MNC VM reliance for
essential components.
Thus
unsurprisingly given the historical dependence upon FDI and its technical transfers: from basic air-cooled boxer engines to second generation 1980s
semi-conductors to 21st century IT software; successive
Federal governments have been slow to form an effective proactive industrial
strategy beyond agriculture and primary industries. And have instead been reactive and opportunistic to any and all foreign overtures regards 'near to far horizon' technologies. By maintaining a very loose (almost non-policy) remit across its sectors, so as not to
discount or negate new possibilities.
Thus
it has been left to domestic and in-situ foreign companies within
sectors to form their own progressive research, development and
implementation efforts, assisted by either state-level public
spending (eg Rio's smart city evolution) or within more prosperous periods, their own exploration into B2B and B2C possibilities.
Little
appears to have changed in recent years, this informal reactive
policy stance seemingly deepened further by the contraction ripples of the recent recession.
Yet Brazil at both Federal and State levels should and must alter its stance across all industrial and commercial sectors. More proactiveness and so progress seen in a few examples, such as the large NE city of Recife in Pernambuco,
where its own evolved 'Silicon Valley' has off-set under-scaled and under-invested industries that too soon have become seen to be 'yesteryear' and 'twilight', given contrast to the digital
age.
And even though other efforts have been made, such as the rise of
the Culture Industry in Sao Paulo, the drive behind the Recife
ambition has not bee replicated elsewhere to the same effect.
An Industrial and Services Strategy must be more than mere words upon a copy+ document that spouts the archetypical norms of Business and Trade Planning. From what little has been guaged, it needs far better direction, across
everything from not only IT and the 'Knowledge Economy', but Agriculture to Zoology, via Pharmaceuticals, Health Sciences, Advanced Materials, Defence Systems, Aerospace, Truck and Bus, City-Tourism and Eco-Tourism, aswell furthering efforts toward ever-more connected Smart City Infrastructures.
Brazil requires New Visionaries to create a new highly integrated eco-socio-economic national template; one that takes many steps forward into the future. To reflect upon the origins of Brasilia and the Costa-Neimeyer achievements is an obvious start, but Brasilia was far easier as clean-sheet approach based upon simply architecture and infrastructure.
The new societal 'starchitects' would require a greater span of knowledge and insight, to fit all the pieces of a futuristic, yet practical, socio-techno-economic jigsaw together.
A jigsaw in which different commercial sectors are able to properly inter-connect and cross-inspire.
Whilst the very lassaiz-faire attitude toward FDI and new sector
development has in the past captured new possibilities, it appears as if done so since the 1950s/60s on an almost ad-hoc basis. Much dependent upon the inclusion of Brazil into the long-term business plans of Multi National Corporations. And whilst Brazil has undoubtedly 'set up its stall' to attract inward investment at different times, it has not seemingly properly guided, led and enticed. FDI outcomes more attuned to the worldwide geographical expansion plans of companies with either surplus cash, their own national state-backing or reactive to the perceived success of a direct competitor in the country.
Brazil
needs far better national business planning beyond the provision of basic
infrastructure and the new government initiative to use an e-based Business Portal as simplistic assessment mechanism of high potential future businesses. That is if it truly wants to fulfill its Olympic pledge of becoming a true leader amongst the EM nations.
The
likely incoming President Bolsonaro would do well to question the
industrial planning policies of the recent past (such as the historically binary
'on-off' policy-switching of a semi-conductor sector), and could (arguably
should) use the State as an innovation generator, the Military an obvious primary innovation channel, with the possibility of quasi-commercial start-ups, off-shoots and divestments. And so replicating
the likes of Britain's QineteQ plc, to bolster the bottom and mid-level areas of the BOVESPA.
And the beginnings of a new era change is now being exemplified by metamorphic grass-roots commercial activity; the prime initiative being the national plane-maker Embraer as it reshapes itself
after creation of the 80%-20% Boeing Alliance on mid-size passenger and freight planes and global service.
Aside from its close involvement in that JV, it will likely seek to expand its military and specialist interests. So marking re-orientataion toward specialist led innovation in airframes and systems for and newly growing domestic and targeted international markets. Thus not simply relying on Boeing, even though it will add enormoulsy to its order book. (The very fact
that the UK's MoD appears to view Boeing as an immediate preferred
supplier (as opposed to Airbus) in heavy military aerospace, means
possible trickle-down project opportunities for Embraer and so enhanced learning for Brazil; as Boeing deploys Embraer Engineering as a lower-cost provider of small project and part-project engineering solutions) .
To
return to the WEF Forum....back in mid-March a central pillar of the
conference was the issue of developing New Directions for Industrial
and Services Strategy.
A
prime aspect of that being the spread of digital infrastructure,
networks and business and populace usage
The
previous WEF Debate on....“New National Strategy on Industry 4.0”:
[As
before, comment by investment-auto-motives is seen in the squared
parenthesis]
The
Attendees:
Chair
Luis
Augusto de Ferreira – President of Brazilian Industrial Development
Agency
Marcos
Jorge de Lima – Minister of Industry, Foreign Trade and Services
for Brazil
Poalo
Rebello de Castro – President of the Brazilian Development Bank
Ronaldo
Camargo – Vice-Pesident Finances d'Estudez d'Hibroto (FINEP -
Social Dev Bank)
The
Chair opens by asking the Minister to talk about the new strategy.
de
Lima -
“Thanks
to all, including those in and beyond Brazil, to Germany and the USA.
Throughout
2017 we've been shaping collaborative work so as to define the best
structure regards connectivity, industrialisation, modernisation etc.
Some of those elements are pivotal to allow companies themselves to
be transformed. The ABDI Initiative obviously relates, so we can
undertake some real tests for 4.0, and the importance of COMEX for
those items not produced in Brazil.
“We
also want to respect the RN12 national decree, with modernisation of
regulatory norms and the 'de-bureacratising' of government systems to
assist companies and aid productivity and so competitiveness.
Professor Schwabb has done much in this regard. Thanks also to the
government cabinet such as the Science and Technology ministry.
[Mention
of 'RN12' believed to be the NR12 decree regards workplace safety,
but also highlights the known cross-border and pan-continental
importance of the RN12 routeway across Argentina].
The
Chair asks the Brazilian Development Bank about the background to the
financing and the banks role:
de
Castro -
“Like
to thank BNDS (Brazilian National Development Bank) and the short and
mid-term loans regards innovation and technology. BNDS's has been
working for 66 years since 1952 on Brazilian modernisation, through
several phases (1.0 – 3.0) 3.0 being the banking system, and
Petrobras since 1974 with electrical, hydro and nuclear power, our
petro-chemical and steel industries now up to date and of course bus
manufacturing.
[Perhaps
of all the industrial sectors mentioned, it has been hydro-power and
bus manufacturing (pre-empted by cars and vans) that have been the
most obvious in demonstrating eco-consciousness and the need to set
human capacity to skilled work. Driving that mix of ecological energy
and creative human potential – far beyond the professional classes
- should be seen as a central policy platform.
Whilst
very important, in the Transport arena the nexus of
nuclear-electrical energy has been relatively self-contained as seen
with aborted EV vehicles projects of the 1970s, deferred to
bio-sourced ethanol 'eco-energy' instead. And ironically there is an
argument to say that petro-chemicals with expansive influence from
plastics production to animal feedstock, has been the complimentary
beneficiary of Hydro-sourced eco-energy. The plastics element highly
and increasingly influence regards high-value vehicle production that
has formed much of the backbone of modern Brazilian industry to date,
across Autos to Bus and Truck to Aerospace.
The
importance of making material things – ecologically sound products
– however appears over-shadowed by the trendy focus on all things
digital, ethereal and so 'de-materialised'].
“The
'de-materialisation' debate is the new theme, and spans the small
scale to large, with obvious relevance to start-ups and large
industry's research and development efforts”
[With
Returned paradoxical focus on semi-conductors (the very enabling
material of the 'de-materialised')]
“Semi-conductors
may be restarted in Bel Horizonte if and when given the final green
light. Innovation has been with us for years, but the new Strategic
plan goes out to 2035 with a challenging vision, and so a BNDS
priority to enhance investment with the capital of others”.
[As
the digital era continues into the IoT, the importance of advanced
electrical systems and componentry will grow exponentially; as seen
previously in personal electronics, now increasingly seen in the
morphing of the private and public realms via 'The Cloud' regards
part and whole infrastructure developments. Thus the previous focus
of 'semi-conductors and sensors' becomes ever more important.
But
– as stated previously – Brazil's development progress in both
spheres has been problematic. The semi-conductor industrial strategy
stalled for over a decade, and without proper attention the same
could happen with sensor technology development, manufacture and
fitment. With the advent of intelligent infrastructure and
increasingly autonomous vehicles, Brazil must maintain full
commitment to this field via its publicly assisted and private
enterprises. Otherwise it will again loose-out to the strong
capabilities of SE Asia in cost and US/Europe in functionality and
quality].
“Innovation
is again being highlighted to 2035, whilst we continue in the
'Knowledge Era', where information is a prime factor, so leading to
the IoT, and Big Data in 'The Cloud'. It relies upon the
proliferation of sensors; spanning personal bio-tech to agriculture,
or the facial recognition scanning for the identification of people.
So we must investigate as to how such sensors can increase
productivity and safety with the BR80bn in state and federal security
matters.
“So
the bank is deeply involved in innovation, so establishing priorities
within the budget as done. But the bank's incentives go through
different lines not just one. As regards modernisation via robots, we
could evolve from BR1bn in 2018 to Br1.5-2bn next year, so 100%
growth, leaving us BR5bn, but the bank does not have a limit. If
Brazil leaps in that direction (PESTEL dependent) the bank will be
ready to face new budget challenges.
[Whilst
eBNDS obviously highlights financial provision, the vital matter is
that of spending such funds strategically well.
Brazil
must undertake an exhaustive analysis of the intelligent products and
intelligent infrastructure sphere, so as to ensure it backs the right
technical solutions and players at all levels, across indigenous
seed-funding and incubator-development to foreign transplant
manufacturing roll-out and scale-up, and through life-cycles, so as
to obtain as long a technical and enterprise lifespan as possible.
Thus ensuring not only return on initial investment, but a secure
commercialised income stream over many decades, so fulfilling the
reform measures of BNDS itself by the government].
The
Chair asks the the V-P of FINEP about what's expected from his agency
Carmago
-
“Thanks
to all. FINEP and BNDS work closely, and not just on future
innovation, but also that already underway with the first
semi-conductor company.
[First
efforts date back to the early 2000s when seeking Japanese FDI in the
sector, to replace and update previous 1980s derived technology
factories. The closure of those plants in the late 1990s and the
delayed introduction of newer semi-conductor capabilities effectively
left a technology capability chasm for the country.
Much
of today's policy mentality stems from the strategy conference 'SEMI'
per a pan-LatAm template regards production and design of this
significant sector, since before the last meeting of 2015. But Brazil
is well aware of its deficiencies in this arena compared to both AM
and other EM countries.
To
counter this disadvantage, the lure of tax deductions and abolitions
is an enticement by the likes of Sao Poalo and Rio de Janeiro, but to
date the start-up project costs of about BR4bn have undermined, given
that it is two-thirds of the annual import costs of BR6bn of
electrical components from abroad.
Furthermore,
sector experts highlight the need to properly build a support
structure for the sector across eduction and professional
development, so as to properly fuel such a newly rejuvenated
(effectively start-up) sector, though research centres are already in
situ.
Presently
4 companies exists from FDI, private local funding (partnered with
IBM) and state sources. The FDI being South Korea's HT Micron and
USA's Smart Modular Technologies, national private being Unitec and
from government Ceitec dedicated thus far to sensors].
“FINEP
is 50 years old - so been throughout the Tech Age – and wears two
shoes:
1.
Non-Refundable Financing: via The National Fund for Scientific Dev.
on 26 projects.
2.
Refundable Financing:
[At
this point the language translation is lost for ten minutes before
returning during de Castro]
de
Castro -
“Our
Industry 4.0 portal is already live, a tool for the test of 4.0
Industry, tests in virtual and physical environments, assessed on
their level of maturity, and the need of each company. This is a new
era, with the opportunity to foster with tax exemptions, financing
with attractive interest rates, Connection Start-Up that does what it
says between small and large companies.
“This
is about Brazil leaving behind a crisis and creating anew, with real
expectations of GDP growth, from -3.5% 20 months ago to this years
+3.0% growth.
The
Chair asks the Brazilian Industrial Development Agency to expand upon
those comments
Ferreira
-
“We've
been talking about 4.0 for a long time, and these people on the panel
are responsible for the execution. The good times are back, with new
recovery. This allows us to invest with more precision directed at
Tech and IoT sectors. There is talk of 'Re-Industrialisation' but in
essence it is just restructuring of Brazilian industries, adjusting
to new global trends, value chains, energy efficiency. Prof Scwabb
highlighting the importance of the latter.
“We
have an initiative called Productive Brazil, that includes alliances
with over 3000 companies around the world on the issue of energy
efficiency. Costs could be reduced by 20-30%.
Also
the matter of labour, this now based upon intelligently used data,
but it is the humans behind the machines which are key, so we must
prepare public managers as properly up-skilled professionals for 4.0.
“Another
aspect is that Brazil is on a path of effective initiatives, with
self-diagnosis of our industries with test-beds and funding lines,
and the private sector must be convinced of the recovery. This
government has been doing reforms so as to create a leaner country
with better skilled people. Also, who will benefit from the machines?
Will it be an elite or all?
[It
appears here that in the age of supposed de-bureaucratisation that
the government – via its web-based 'test-bed' system – will be
the effective arbiter of the winners and losers within the commercial
world. The web-based submission and analysis criteria and outcome
that affects the destinies of many enterprises.
Needless
to say, this very system – the funnel - may be open to
manipulation, with subtle assistance to those firms it wishes to see
prosper into tomorrow and subtle denial of those it does not.
Furthermore, such a system may be far too simplistic, overly complex,
or possibly biased, so unable to properly assess the undoubted great
variability and respective SWOT of the many submission companies].
“Initially
this will be about large companies, but will trickle-down to SME's
such as farmers needing information, quality data and use to
retailers. This already seen elsewhere in the world. So its about
education, technology, and a new 4.0 mindset.
“This
will change society. Already 5% of industries have responded, and
within 20 years we want 15% to have evolved. We must be bold and talk
about jobs, and banish the idea of lost employment. Over the next 20
years we will create over 200m new jobs in some positions we don't
even know right now
[Such
statements demonstrate the illogical rhetoric often stated behind the
IoT transformation. It is plainly ridiculous to state “over 200m
new jobs”, then to highlight the ignorance of what many of those
new jobs might be. Managing the transition to avoid mass unemployment
and resentment is vital if Brazil and LatAm is not to experience
popularised anti-sentiment, C21 'Tolpuddle Martyrs'. Undoubtedly
Brazil will follow the lead of AM countries in its subtle
social-engineering, but with greater proportional ethnic diversity
than many AM nations (whose 'diverse' populace is actually relatively
small and very urban-centric), Brazil faces a greater challenge to
truly include those who feel themselves (intentionally) neglected or
under-assisted].
“The
question is how to prepare new generations? What will these new jobs
be? Our policy is based on diagnosis, financing of BR10bn and the
need for scale. We were given the freedom in the Ministry to work and
achieve much in a short period.
[A
properly planned and executed industrial employment policy is needed;
from proper and meaningful implementation of male and female military
conscription (to serve and learn specific capabilities) through to
the idea of a new approach regards through-life modular-based
university learning (e-based and campus-located), through to improved
overlap between academia and commerce in dedicated work placements
aswell as conventional high level research and development, This to
vitally reach many more young people and so help direct their own
futures toward growing industrial spheres.
And
the question remains as to exactly how much has realistically been
achieved by the Ministries, beyond the usual big schema of adapted
conceptional powerpoint presentations, originated by the likes of
PWC, KPMG etc.
Is
the policy setting just 'Brazilian branded' work of the management
consultancies, or has each sub-element been explored relative to true
national and regional Developmental Planning needs?].
The
Chair asks the audience :
One
audience member from AT Media asks:
“Going
back to the idea of company absorption of 4.0, it is said that in 20
years 15% is the target, but this seems low compared to elsewhere?”
Ferreira
-
“In
Germany for instance, they invest about Euro20bn per year in 4.0
industries, but this is not part of the Brazilian reality.
At
Media again -
“Connectivity
is key, this structure permeated by connectivity. The new policy was
set-up in the last one and a half years, but what can be done to
ensure this stays with any new government in office?
Ferreira
-
“I
come from Start-Ups, and these policies are state based, not federal.
Any new government will be able to use the 'diagnosis data' being
created right now, with Ministry technicians that have been there
throughout and hopefully will remain.
Business
News America asks...
“Thus
far the strategy has taken one and a half years with a delay. Why the
delay? And what exactly is the strategy about? We have financing via
BNDS and the 'test-beds', and tax exemption for robots, IoT, the plan
for digitisation....is that it? And how do we tie together all the
policies the government has?
[At
last somebody 'cuts to the quick' about the policy rhetoric heard
thus far, and the lack of true meaningful clarity].
Ferreira
-
“Industrial
Policy started to be debated in 2003, these policies undergo change,
such as that in the Chemical Sector with its research and research
takes several decades. So for those sectors we can debate policy but
it takes longer. In the Auto industry we had ten year cycles in
Brazil, now 5 years, whilst Germany has 3 years. Cars become a
software and service platform.
[This
is a poor answer. More perhaps to do with the need to feed Brazilian
bureaucracy and the comfortable positions of the country's elite,
than convincing enquiry, information and recommendations.
How
is it that Germany or Japan can set out an evolutional yet well
directed government policy via close talks with industry that reach
outwards for respectively 50 years and 100 years? And that even a
'de-industrialised' UK can create a new Industrial Strategy
effectively from scratch in 2 years: focused on specific sectors with
new development opportunities and its 'Catapult' initiatives to
propel high-potential activities from research into scaled
production?
As
per the Auto sector, the lifespan of a specific platform is not the
basis for a sector's planning of industrial policy; that may have
been the case in the 1950s and 1960s with VW and even regards FIAT in
the 1970s, but since the 1980s Brazilian made vehicles have been
closely associated to or directly based upon global platform
products, and so better better able to understand Brazil's role in
any one manufacturers' global production plans and its need to be a
convincing national market and internationally competitive, as seen
with production of Palio and Fox models.
The
fact is that it is Brazil's deficiency of a robust IT and Electronics
industrial base (far beyond sensors) that directly supplies modern
modular vehicle platforms (hardpoints-hardware-software) that is the
country's biggest global auto-sector disadvantage presently, even if
the Real is presently strong and stable to encourage reduced-cost
bought-in e-components from SE Asia.
Such
a simplistic answer makes Brazil's leadership appear under-informed,
haphazard, ad hoc or indeed driven by other agendas].
“The
delay was because the government was not acting as speedily as the
private companies it was dealing with. We could not rush so as to
have a sound policy, but could not delay to loose the momentum. The
delay connected to issues regards the urgency of innovation and the
'analogue' feature of the public realm.
[This
a more candid answer].
“We
did much in a year and a half, but we had a basis to work from, and
experts about 4.0 and Brazilian competitiveness.
“The
tax exemption for (internet) 'bots' is only one pillar amongst
others, but the use of 'bots' has a real impact in an e-world.
“To
talk about 4.0 in Brazil is different to that of say South Korea or
Isreal. Most of our country is still working with commodities, not
information technology, hence why we need a self-diagnosis.
“We
are inviting each industry to our website for that self-diagnosis,
from maybe 1.0 or 2.0 types of companies [low down the value chain in
Primary and Secondary sectors]. So it is a journey. We are taking
advantage of digitalisation to go from 1.0 to 2.0 and 3.0 to 4.0. And
in 15-20 years we want a completely different type of industry.
[This
appears to have an element of back-fitting technology to yesteryear
processes.
With
the possibility that Big Data companies of today get to understand
and measure every process and value-additive dimension of Primary and
Secondary industries. In short able to 'see inside' what have been
typically low transparency sectors to date, which in today's world
often rest under the control of large state or semi-state run
organisations].
And
the idea of an industry 'self-diagnosing' per the criteria and
remoteness of a government web-site rather than specifically set-up
sector specific senior-level working groups – who should know about
strategy and 'pure' and 'applied' strategic outcomes appears somewhat
myopic.
The
government's Industry 4.0 Strategy appears overtly focused upon the
aspect of digitalisation, perhaps at the expense of any one sector's
bigger picture and combined the bigger picture for Brazil].
“As
regards the challenges, I've learned to respect the structure of the
public realm, and in the Ministries of Industry and Foreign Trade we
have amazing technicians. We have people who think like private
companies, but we have boundaries around the structure and the
problems of communication. Having all the different bodies here is a
miracle.
[This
highlights the disfunctionality of Brazil's public realm, the endemic
silo-effect that existed for so long in the 1980s/1990s should have
been demolished many years ago, but plainly has not. It should not
take a WEF Forum to create such a rare meeting; this bureaucratic
problem an obvious obstacle to Brazilian development, and the danger
of a fragmented government without truly aligned thinking and action
leading what is likely as less than convinced and infact quite
'digitally dubious' private sector Brazilian companies; that have
long been in the hands of effective 'Nacionale Patron' families and
boards].
Another
audience member from a Soa Poalo newspaper -
“What
is the strategy about? What the difference that BNDS is already
doing/ What will happen differently in practical terms? Also grants
for professors and 20 start-ups, is that correct? And I don't
understand the financing numbers exactly?
[It
is concerning that the outcome of the handed-out presentation and
press conference literature has not been fully informative per the
basis of the strategy itself and the financing of such a seemingly
transformative endeavour].
Ferreira
continues -
“4.0
sees industrial disruption, so involves traditional research centres,
start-ups and scale-ups, with BR50m for Start-Ups to be connected to
Industry (eg Catapillar, Embraer , 3M etc), with also FINEP adding
more money for start-ups.
De
Castro -
“We
must consider what is effectively the fostering of new-tech. The
maturity dates for loans is no longer 5 or 10 years but 20 years, so
able to decrease the 'spread' (ie overall annual interest payable) of
the loan. So smaller instalments to assist. More important than that,
is that our greatest concern is with the anonymous companies; whereby
11m companies and 4-5m micro-companies.
“And
that's why we are restructuring our bank to eBNDS, a bank within a
bank, a FinTech Hub that collects informations between customers and
providers to facilitate transactional exchanges. As long as these
micro-entrepreneurs have access to credit, regardless of 4.0. It has
BR200m and is an efficient programme.
“We
foster regional start-ups and regional development, that place
start-ups in incubators with amazing profitability that has future
scalability. EBNDS is an accessible platform for such small
entrepreneurs. We are over 60% in participation with companies.
“Finally
to highlight Planning. Its the Action Plan for IoT. This is reliant
on a well organised macro-economy that reforms tax and red-tape etc.
“One
interesting arena being that of Agribusiness, which has embraced
digitalisation”.
[The
shift of the role as a more private-enterprise led bank and its shift
in B2B persona of was explained some months ago by
investment-auto-motives, as it alters it innate remit and financial
products offering to B2B and B2C.
The
importance of eBNDS cannot be over stated since it wants to attract
the business of many self-starting small-time entrepreneurs in B2B
and B2C fields as e-retailing at trade and consumer levels become an
increasing trend.
Hence
in reality eBNDS is perhaps more aimed at the potential new millions
of online retailers who wish to sell via new internet platforms such
as the upcoming Mercadolibre and increasingly visible local presence
of Amazon Inc. eBNDS seeks to then replicate and substitute the likes
of PayPal, whilst no doubt using its high volume small unit margins
to fund higher risk-high reward tech start-ups in the Silicone Valley
style.
Summary
;
To
begin with Brazilian business culture, as seen with the Panels'
personal interactions, there is much inter-personal 'thanking', that
stems from the niceities of the yesteryear Portugese nobility and has
been retained as a business custom ever since. This is obviously far
better than being business-brash (and everything is of course
relative) but in such short sessions as this discussion forum, or in
time-pressured business meetings, the custom (beyond basic
“thankyou”) can distract and slow the pace and direction of
discussion. The platitudes may lead to to less than sharp attitudes.
The
discussion itself was overtly general; and took far too long to raise
the prime issues surrounding the funding of 'Industry 4.0' via eBNDS
and FINEP, with too little detail. Similarly discussion about the
lessons that should have been learned from the past, such as the SEMI
forums, so the pitfalls and enablers.
This
was a great pity.
Compare
what was said to even the [paranthesised] quick observations of
investment-auto-motives herein, and the requirement for the following
was very necessary:
-
broader historical perspective
-
far better clarity and details
-
expansion of prime and critical issues
-
exemplification
-
vision
Instead
of a structured debate that could have encompassed much in a short
timespan, it became little more than what appeared a rhetorical
government rebranding exercise of global Management Consultant's
zeitgeist-led recommendations for development of any modern economy,
let alone 'mid-tier' as Brazil is, and let alone specific to its
domestic needs and global position.
A
re-look at the panelists professional positions illustrates their
standing at the 'top of the tree':
Luis
Augusto de Ferreira – President of Brazilian Industrial Development
Agency
Marcos
Jorge de Lima – Minister of Industry, Foreign Trade and Services
for Brazil
Poalo
Rebello de Castro – President of the Brazilian Development Bank
Ronaldo
Camargo – Vice-Pesident Finances d'Estudez d'Hibroto (FINEP -
Social Dev Bank)
Thus
we had the 'head honchos' of domestic development, foreign
development and domestic funding; the players to move the country
forward. Yet, to requote the journalists during the questions period
“what does Industry 4.0 mean practically?”.
Various
broad issues touched upon, but little actually said about how the
basic funding process would will be satisfactorily directed into the
right channels, how it would be 'business-managed' from the banking
persepctive and how monitored for progress.
Instead
simply, BR80bn under one general scheme of 'safety and security'
(without true details), BR2bn under a 'robotics' (without details)
scheme and BR50m for start-ups (without details), etc.
And
the idea that 200m jobs would spring-up as the result of Brazil's
digitisation (without details).
No
discussion about broad national 'digi-templates' from foreign
learning from USA, Korea, Europe, China etc. And vitally there was no
proper discussion about the lessons learned from the past per
Brazil's poorly performing semi-conductor sector, whose failings
since the early 1990s means Brazil's past and current massive
reliance on imported electronics from Asia.
Those
lessons of failed technology transfer now directly relate to the
similar ambitions regards the creation of an IT Sensor design and
manufacturing national base; a fundamental aspect of the
value-creation chain within the new world of the hyper-connected in
Internet of Things via 'The Cloud'. (This ranging from the macro of
intelligent infrastructure, autonomoue vehicles etc, to the micro-aspect of
intelligent domestic systems).
The
irony being the periodic use of the term a 'de-materialised economy',
would suggest Brazil might in the future exist upon an 'hour-glass'
economy. One based upon the continued strength of commodities at the Primary
(bottom level) for export, static or declined Secondary industries (lower-mid),
static or declined Tertiary industries (upper-mid) and a massively
ballooned Knowledge-economy at the top.
Any
such notion is delusional, since Brazil
has built itself from bottom-up, and needs to first expand the
sophistication, breadth and reach of its Secondary processing sectors
for improved energy efficiency and quality materials output, and to
likewise expand its tertiary sectors to better compete in the
Services realm from 'gallery-malls' in retail to Specialist B2B
Consulting across various sectors.
It is the mid-level areas that are more immediately relevant and so promising; but they need nurturing.
The
ambition for creation of an IT Sensors' homeland by leveraging its
'Campinas Valley' (near Sao Paulo) capabilities is of course a sound
idea in principle, and is the antithesis of the 'de-materialised'. But given Brazil's reliance on so many foreign
companies in that area, it must also recognise the upsides and downsides
of deployed foreign-owned IPR, even when adapted.
(NB The auto sector
provides useful history lessons in this regards, ie FNM, Engesa,
Dardo etc).
A Sensors based sub-economy then, is obviously
inevitably positioned between the strong research and development
capabilities of Western firms and the enormous scale capabilities of
Chinese and SE Asian firms (typically sub-contractors such as Foxconn). Brazil cannot afford to be stuck in such a position again after recognition of this reality with the previous
semi-conductor debacle. Yet without insightful direction, looks to repeat that story once again.
Hence
the need for a well managed and exploited full-value-chain Brazilian
economy. One that does not by default scupper the very important
contributions of the Secondary and Tertiary levels. It is precisely
here that the skills-base and creative potential of the masses needs
to be deployed through far better – industry connected - education
and training for all, not just the summer secondments for the sons
and daughters of the country's elite.
Herein
Ferreira's words underplayed the necessary reality; to
repeat...
“We've
been talking about 4.0 for a long time, and these people on the panel
are responsible for the execution. The good times are back, with new
recovery. This allows us to invest with more precision directed at
Tech and IoT sectors. There is talk of 'Re-Industrialisation' but in
essence it is just restructuring of Brazilian industries, adjusting
to new global trends, value chains, energy efficiency. Prof Scwabb
highlighting the importance of the latter”.
It
demotes the very important aspect of 'Re-Industrialisation' and
suggests it as less economically important as the brighter newer
digital-based world; but it is not. The two are wholly complementary
and given Brazil's past failures to adapt to “new global trends,
value-chains etc”, the issue is far more serious than being
seemingly contemplated.
To
this end the new Bolsonaro government should properly deconstruct the
Brazilian economy to better appreciate the potential of conventional
sectors and the important impact they can have in raising and
maintaining the living standards of the less educated and less
fortunate; aswell as the newly destabilised middle-classes.
Apprentices
and ex civil servants alike need new forms of easily comprehended and interesting
employment in the real economy, not the glamorous facade of an often
hollow 'gig-economy'.
To
provide some positiveness regards the digi-realm, the Brazilian government
is trying to use IT to streamline administration and so reduce absorbed costs for the improved planning of 'Industry 4.0'.
However,
as stated its web-based system that effectively validates
new funding streams may be an overly simplistic and heavy-handed
approach to Business and Trade Planning. It appears hardly
lassaiz-faire and so an effective 'Big Brother' arbiter of the countries SME winners and losers.
It is a web-based submission, with less than transparent analysis criteria, that affects the future shape of swathes of future commerce, and so, the destinies of many companies. Something of which traditional MD's will be very nervous.
Moreover, there may be much latitude for 'slippery
players' to establish the apparent 'companies of tomorrow '(that tick
all the digi-based and IoT-based boxes) but whose business aim is
really simply extracting as much government funding as possible. Especially in the 'Start-up' sphere, where all too often people
justify their reasons for failure as their learning curve at
government's or other investors' expense.
(NB To quote the present much loved mantra of Silicon Valley "yes there are 99 ways to
fail", but whilst learning what does not work - in an oft blur between Applied and Pure research - ' the real-world cost of capital is enormous to the 'boot-strappers' and 'seed-funders'. All too often the start-up's image is that of a geeky 'garage laboratory' to make it seem homely and wholesome, whilst in reality founders enjoy an upscale lifestyle and obviously charge their costly networking and client entertainment activities, that promotes their brand and business model, to the company budget and so their backers' funding).
And so the question remains as to exactly how much has realistically been
achieved by the Brazilian Ministries, beyond the usual big schema of adapted
conceptional powerpoint presentations, originated by the likes of
PWC, KPMG etc.
Is
the current policy setting just 'Brazilian branded' work of the
management consultancies, or has each sub-element been explored
relative to true national and regional Developmental Planning needs.
So
far it appears the former.
Brazil
has its own brand of 'Order and Progress'; so must take the best of
'utopian' Industry 4.0 management speak and integrate it into the
vital practicalities of real Brazilian industry and commerce.
And done so in a meaningfully costed way, that can now make much of the depreciated Brazilian Real.
That
large currency shift should now be used to shift the economic base
and capabilities of the country, and strengthen and broaden the export-led products and services economy.
One that learns from past mistakes and triumphs, and is able to create a jigsaw-like commercial eco-system that can be replicated elsewhere in lower-standing EM countries for intelligent development, and may even be adopted by AM countries as part of their own effort for transformation.