08/01 Brazil’s raw materials and the Chinese bikini problem

By Justin Rowlatt
BBC, Rio de Janeiro

Copacabana beach

China’s presence in Brazil is due to become widespread

China is one of Brazil’s most important trading partners but the relationship poses dangers as well as offering huge money-making opportunities.

“Do you want to see Jesus?” the helicopter pilot asked us. It would be an unusual offer from anyone, but from a pilot it would normally be a cause for serious concern. Not today, though.

We were in the private helicopter of Eike Batista, Brazil’s richest man.

We had just flown past Sugarloaf mountain and over Copacabana beach, so the statue of Christ the Redeemer that overlooks the city was the obvious next stop on what was becoming the ultimate sightseeing tour of Rio de Janeiro.

Eike, as the minerals magnate is known in Brazil, could easily afford to give us this joyride. Forbes magazine ranks him the eighth richest man in the world, with a fortune of $27bn (£17bn).

He has made most of it surprisingly quickly, racking up the bulk of his billions in just the past three years, thanks in large part to one key customer.

Brazil's superport

Brazil’s new superport has been dubbed “highway to China”

Highway to China

Indeed, the real purpose of our helicopter trip was to view Mr Batista’s latest project, a vast superport north of Rio, built with this customer in mind.

The centrepiece of the complex is a two-mile-long pier jutting straight out into the South Atlantic, which has been dubbed “the highway to China”.

Mr Batista’s companies control enormous reserves of iron ore and oil – commodities the Chinese economy desperately needs.

In fact, Chinese demand for the raw materials Brazil has in abundance has pushed prices to record highs and, as a result, Mr Batista’s business – and the Brazilian economy – is booming.

Eike is confident the boom will continue and that Chinese demand will help power him yet further up the world wealth rankings.

“I told Carlos Slim,” he recalled with a grin – referring to the world’s richest man, the Mexican telecommunications tycoon – “clean your rear-view mirror on the right hand side and clean your rear-view mirror on your left hand side because I don’t know which side I will be overtaking you.”

Julian Rowlatt and Eike Batista

Eike Batista says he will soon become the world’s richest man

“It’s a perfect fit,” Eike told me as we sat in his grand offices overlooking Rio bay. “We’ve got what China needs.”

But, down on the beaches below Mr Batista’s office, the fit doesn’t seem quite so perfect.

There are few products as emblematic of Brazil as the bikini but Brazil’s bikini industry is in trouble, fighting off stiff competition from – you guessed it – China.

Maria Helena Victer still remembers the first time she wore a bikini.

She and a group of friends saw pictures of Brigitte Bardot sporting this strange new garment in Cannes in the 1950s.

Justin Rowlatt is on an international filming trip to explore the effects of China’s policy of “going out” into the world to secure the energy and raw materials its rapidly growing economy needs.
A two-part documentary series will air on BBC Two in early 2011.
He will also be reporting regularly for the BBC News website.

They made up copies at home and then – all together for safety – wore them down to the beach at Copacabana.

They made headlines in Brazilian papers and Maria Helena’s been designing bikinis ever since.

Slowly and steadily the business grew until Maria Helena and her daughter Ieura were employing a dozen seamstresses full time.

Then, three years ago, the Chinese entered the market. Within 12 months the export business that Ieura had been building up had disappeared completely.

“My biggest competitors used to be other Brazilian companies,” Ieura said ruefully, “now it is the Chinese.”

And it is not just the bikini industry that is suffering.

A recent study found that more than 80% of Brazil’s manufactured exports are being adversely affected by competition from China.

Bikinis on the beach

Rio’s citizens have Copacobana beach practically on their doorsteps

That is a real danger to the Brazilian economy because mining and commodities are not very labour intensive. The bulk of the Brazilian workforce is employed in manufacturing industries.

The problem is that, natural resources aside, Brazil has a similar competitive advantage to China – cheap unskilled labour.

As a result, the two countries tend to compete in similar sectors and, just as in most other economies around the world, China tends to win.

Mr Batista’s pilot ensured we made a startlingly close acquaintance with the Son of God.

To the surprise of the tourists in the balcony at the foot of the statue, our helicopter circled Christ’s head three times, giving us an unusually privileged perspective of one of the greatest cities on earth.

Take a similarly elevated perspective on Brazil’s current boom and it begins to look as precarious as some of the bikinis way down on Copacabana beach.


About Uy Do

Banking System Analyst, former NTT data Global Marketing Dept Senior Analyst, Banking System Risk Specialist, HR Specialist
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