Small and medium-sized enterprises in the BRICS

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By JOSÉ VERÍSSIMO TEIXEIRA DA MATA*

Nothing should divert Brazil from seeking niches that ensure the improvement of Brazilian exports

The signs we see announce that the growth of the Brazilian economy in 2023 will be modest for reasons such as high interest rates or the limitations imposed by decisions taken by the previous government. The oxymoron applies here, what has passed somehow continues, as if to say that a government that passes does not pass, just because it passed. The horizon seems to say that the positive indicators of last year will not be reached. The 2,9% in figures then achieved in absolute terms, that is, without detailing its impact on the population's life, perhaps still hide the possibility that we will achieve a little more, even with a lower growth.

Let us remember, in this regard, the case of Russia, a country where a slight recovery is expected in 2023, and where the shrinkage of the economy, of 2,1% in 2022, was accompanied by a small improvement in the general standard of living of workers . The war allowed the pie to be divided a little more while it decreased, not least because unemployment reached its lowest historical level.1

China, whose economy took a big leap with its opening to the outside world, has been combining its exports with more emphasis on its own internal market, consistently exploring the improvement of life of its population as the most important driver of its economy, thus pointing to the rise of wages and other components that act in favor of general well-being, including the elimination of absolute poverty.

China lent considerable impetus to the Brazilian export basket, which, as is known, includes items such as ores, agricultural products or meat. The end of COVID restrictions, eagerly awaited, was received with relief above all by a multitude of small and medium-sized companies on the verge of despair.2 China is expected to grow by five percent this year, and of course, with the emergence of domestic consumption, our small and medium-sized companies may have their chance there.

The coming India, having grown by seven percent in the past year, should, according to the latest projections, repeat the seven percent increase in its GDP in 2023.3  South Africa will have growth that, in principle, will not reach two percent this year.

Small and medium-sized Brazilian companies have now and in the future in these countries, members of the BRICS, and in the African countries of the Portuguese-speaking community, a large field of possibility for expansion, and the same can be said of their possibilities in Latin America. However, this requires preliminary conditions offered by the State, conditions that demand investment and time.

Faced with the short breath of the internal market, we must both seek to vitalize it and bet on exports, despite all the difficulties inherent to our structural and conjunctural horizon. Nothing can divert us from looking for niches that ensure an improvement in the Brazilian export basket. And we must, contrary to what has been done, bet on both an industrial agenda and services in exports.

The objective of this article is to show that, even in the crisis, there is reasonable room for the advancement of Brazilian exports (and, I would point out, what is forgotten by the obsession with commodities of our authorities) of industrial and service exports, with, above all, enormous space in countries such as South Africa, China, India and Russia, which together with Brazil form the BRICS political cooperation group. Destinations for which the agenda mentioned here is forgotten.

For this, the Brazilian State must make an inflection towards our small and medium-sized companies in the export basket, and stop just doing the LOBBY of large corporations. With this objective in mind, small and medium-sized companies must be provided with sufficient support to face markets in clear diversification and upward mobility of social strata. Here, the country's enormous historical inequalities, an enormous disgrace, may eventually mean strategic advantages from the point of view of accumulated commercial knowledge.

It is time to make use of the credit lines of the BRICS Bank and the National Bank for Economic and Social Development (BNDES) as a priority in favor of small and medium-sized industries in an organic export project, in fact creating a support network and insertion of Brazilian industries. When I refer here to small companies, I am talking about those considered as such in the proper sense, and not those that are mere appendages of large companies and which would be integrated into them, as already noted by Rudolf Hilfeding.

By supporting these companies – small and medium-sized – we will not be exploring a new planet in a pioneering way, as Germany and Italy already place thousands of small and medium-sized companies in spaces such as Russia and China, alongside their thriving corporations. . Just to make the nature of this export basket more palpable, it can be said that there is space both for the clothes iron (an old electric iron), for the clothes themselves, and for construction materials, ranging from the crafted toilet to the bathtub, or to differentiated lines of napkins, or to the cinema, also passing through the curtains and their installation, among other things.

However, in order to achieve this goal in exports, the Brazilian State needs to offer much broader support than that offered by the Brazilian Agency for the Promotion of Exports and Investments (Apex-Brasil).

Leveraging exports goes through the old litany of the national political agenda: education. Education and technology.

This objective assumes, in addition to providing small and medium-sized companies with logistical support and credit for exports, integrated programs within Brazilian universities that scan, with multidisciplinary and specific knowledge, the targeted territories of the aforementioned markets, in certain regions of India, Russia, China, or South Africa, South America itself or Portuguese Africa. These programs must target such spaces, from the point of view of several perspectives: geography, language, legal institutes, market, etc. A line of research in that direction and with that rubric should be instituted.

Without such support, without this in-depth knowledge, small and medium-sized Brazilian companies will never enter where they should already be, be it offering products and services, or even in joint ventures. Large companies can get there with some courage and support, but small and medium-sized companies effectively need a state rearguard that does not exist in the country.

Just to illustrate, I quote a small example of how our commercial possibilities are sacrificed by the absence of authentic State policies in the country. Hindi, India's first language, and one of the most spoken in the world, is practically not taught in Brazil. How could an average Brazilian food company place products for diabetics in a regional market niche given this lack of cultural resources?

Germany and Italy have thousands of small and medium-sized companies in countries like Russia or China selling products and services, ranging from laundry to perfume. And we, why can't we, if not basically for the reasons exposed here? Not wanting to tire the reader, we can remember very expressive numbers: around five thousand German companies are in China, and around six thousand4 were in Russia until the war broke out in Ukraine. Of these numbers, it can be said that the large ones do not even reach ten percent. And, of course, Italy and Germany do not stop the small companies from continuing to operate in Russia, despite all the difficulties. And, let's face it, if large companies can leave Russia and continue to operate in other quadrants, with an eventual risk of irreparable damage, small and medium-sized companies, if they abandon their operations in Russia, would simply go bankrupt.

Lastly, it is necessary that the issue of small and medium-sized companies becomes part of the international agenda of the Executive Branch, and that, in this regard, both the Presidency of the Republic and the Ministry of Development, Industry and Commerce and Services start counting on with institutional advice in such areas. Incidentally, it is to be expected that, on trips by the head of the Executive Branch, not only the representatives of the big ones are present. This seems to be the most balanced position, when taking into account the profile of the Brazilian economy and what can be expected from it as an external projection.

Furthermore, considering the profile of our economic formation, the presence of small and medium-sized companies, in the current historical period, must be seen as an important factor for the stability of international relations. This is known in the other BRICS countries with their intelligence and experience of geopolitical spaces. If Brazil had managed to massively implant small and medium-sized companies in Venezuela, hardly any of our heads of state, no matter how destructive their impetus, would have managed to end commercial and institutional relations with our neighbor.

In this case, rather than blaming this or that person for their ideological or political limitations, it would be the case to ask about our inability to create well-tied and diffuse ties institutionally and economically, taking advantage of the low level of the organic composition of capital in the country, ties, whose nature would be inconceivable to someone living in Japan or South Korea.

*José Verissimo Teixeira da Mata, consultant for the Chamber of Deputies, holds a master's degree in philosophy from the University of São Paulo (USP).

Notes


1 https://rg.ru/2023/03/01/rosstat-bezrabotica-v-rossii-snizilas-do-istoricheskogo-minimuma-v-36.html

Moreover, there are those who maintain, like Putin, that the shrinkage by traditional statistics of 2,1% hides an enormous gain in sovereignty, where many undertakings are in the process of being resumed. Sovereignty, by the way, is a value dear to both Putin and his Chinese counterpart, Xi Jimping, the Chinese president, and Narendra Modi, the Indian prime minister. Now, with the improvement in average income, even if “a little more”, we can foresee a little more chances for our small companies there… now we have to guarantee mechanisms for transferring values ​​between Brazilian and Russian state banks, considering the Western sanctions.

2 It should be noted that the different conditions produced in a given economic formation lead to contradictory positions and evaluations: while countless people took to the streets asking for the end of restrictions, workers in conglomerates demanded the opposite, such as more masks and tests, identification and removal potentially contagious. In the end, the total lifting of restrictions prevailed and, perhaps, it was time. In any case, the States were surprised, and the Global Times then stated that local leaders were not correctly interpreting the general guidelines of the restrictions imposed during the pandemic. See: https://www.globaltimes.cn/page/202211/1280574.shtml

https://www.lemonde.fr/international/article/2022/11/28/en-chine-le-silence-du-pouvoir-face-aux-manifestations-de-plus-en-plus-politiques-contre-la-strategie-zero-covid_6151930_3210.html

https://www.lemonde.fr/planete/article/2022/11/16/covid-19-en-chine-la-confusion-et-la-colere-contre-le-confinement-total-d-un-district-de-canton_6150124_3244.html

https://www.france24.com/fr/%C3%A9co-tech/20221124-chine-la-politique-z%C3%A9ro-covid-grain-de-sable-dans-les-rouages-de-la-m%C3%A9ga-usine-de-foxconn

3 https://economictimes.indiatimes.com/news/newsblogs/economic-survey-2023-live-news-and-latest-updates/liveblog/97469145.cms

4 The war in Ukraine did not change this picture much, as only a small part of companies left Russia, and of course this concerns, especially, a part of the big companies”. It is still possible to compute the number of small ones that leave because they are linked to the projects of the big ones. However, these (mostly), to use Hilferding's concept, would not even be autonomous companies in the proper sense, but mere appendages of corporations. On the permanence of Western companies in Russia, the Welt gazette of 20/01/2023 wrote:“Es herrscht die Annahme, dass die meisten westlichen Firmen ihre Aktivitäten in Russland eingestellt haben. Eine neue Untersuchung zeigt: nur ein kleiner Teil der in Russland investierten Unternehmen hat dort komplett aufgehört. Besonders deutsche Unternehmen machen weiter Geschäfte”. In turn, read Store Manager, dated 23/01/2023: “only nine percent of western companies have left Russia, and more than ninety one percent remain, most of which are headquartered in Germany.(“Nach Beginn des Ukraine-Krieges haben westliche Unternehmen ihren Rückzug aus Russland angekündigt. Doch mehr als 91 Prozent sind letztlich geblieben – und die meisten davon haben ihren Hauptsitz in Deutschland.”). And, of course, these judgments concern large companies and corporations.

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