Send Rio 2016: Lessons for Business Owners and LA’s Bid for 2024 Olympics

by

Luiz Guilherme Osório

Additional research conducted by Natalie Hatour

In the past months, news coming from Brazil has been less than optimistic. The economy is in a recession, and the political environment continues to be in crisis since the last general election. While the economic and political climate seems less than ideal, there is a large range of untapped business opportunities in the country. As many Brazilian and non-Brazilian companies are involved in its planning and execution, this year’s Rio Summer Olympic Games give businesses an introduction to the Brazilian market (Latin America’s biggest economy), as well as to the opportunities available for them within a mega-event.

Companies such as Nike, Airbnb, ManpowerGroup, Microsoft, among others, are official suppliers of the Brazilian Olympic Committee. P&G, Visa and Bridgestone are also sponsors, and have their brands associated with the Games. After reading the names of these large corporations, you might be thinking to yourself that you need to be a big multinational company to take advantage in the opportunities associated with a mega-event like the Olympics. That is not necessarily the case though. In reality, most of these large companies outsource their work to smaller providers. That is where opportunities for small and medium-sized businesses, as subcontractors providing whatever those big companies need, surge.

To put together an event, such as the Olympics, a host city has to invest billions of dollars in infrastructure, transportation, accommodations, marketing, etc. Back in 2009, the state government of Rio de Janeiro estimated that “investments in the State between 2010 and 2016 [would] reach US$ 50 billion, in sectors including infrastructure, construction, transportation and others.” Of those investments, most would be through public-private partnerships, generating “numerous business opportunities for U.S. companies.” In an interview with the LA Times, the Mayor of Rio, Eduardo Paes, also emphasized that, because it would be very difficult to get federal money to build stadiums for the Olympics, they “went to lots of partners, private partnerships.” The Rio 2016 Games have also opened many opportunities for exports and investment in the areas of tourism, IT, financial services, education, environmental technology, retail, sporting goods and equipment, etc.

LA’s Bid for 2024

Los Angeles is in the race to host the 2024 Summer Olympic Games, and has already submitted its official bid. With 97% of venues needed to host the Games in existence or already planned, such as the construction of the over US$ 2 billion football stadium in Inglewood, “organizers of Los Angeles’ bid…are promising a prudent and responsible approach to running the games that would be entirely privately financed.” As with the upcoming Rio Games, the prospect of hosting the Olympics in 2024 opens numerous opportunities to the broader business community. When Los Angeles hosted the 1984 Olympics, the Los Angeles Olympic Organizing Committee (LAOOC) raised $651 million, creating 37,500 jobs and augmenting 37,500 other existing jobs.

This time around, with the objective to host the first energy positive and sustainable Olympic Games, the LAOOC has already begun to engage “organizations in the business community, particularly in high-tech and start-up industries.” For instance, they have already started discussions with Solar City to help “engage the public in a solar-powered vision for the Games.” Therefore, the LAOOC, the city of Los Angeles, and the state of California are looking to work with innovators and companies in the areas of energy and environmental sustainability.

When Should You Start Actively Looking for Opportunities for Your Company?

In preparation for the Rio Games, “the U.S. Commercial Service [encouraged] U.S. companies to pre-register to alert the Committee as to their interest in becoming an official supplier…[as] the majority of requests for proposals [occurred] between 2014 and 2015.” By pre-registering, companies received information as short and long-term procurement and bid announcements were posted. With that said, if you are interested in providing your company’s goods and/or services to Los Angeles if it wins the 2024 Olympic Games bid, then keep your eyes open for the LAOOC’s procurement announcements for contract opportunities for small and medium-sized companies (see resources listed below to follow Los Angeles’ 2024 bid and to look over its proposal/strategic plan).

 Games, Players and Opportunities

As shown with the preparation for the upcoming Rio Summer Olympic Games, Brazil offers opportunities for U.S. exports and investment in almost every economic area, from agriculture to technology, including infrastructure and services. Whatever good or service your business provides, you might find consumers among the more than 200 million people that live in Brazil. While you need to keep in mind that competition is strong and that the current political and economic environment is a bit unstable, it is also important to remember that this is just one phase of a cycle that will pass by. Not only that, but even in uncertainty, you can find opportunities. So whether you are looking to expand your business to Brazil or to become an official sponsor of a future mega-event, like the 2024 Summer Olympic Games, make sure you: 1) start early; 2) do your research; and 3) keep your eyes open for opportunities along the way. The difference between success and failure is being able to foresee the future when everyone is blind.

Resources:

The official site, Twitter, and Facebook page of the LA24 Exploratory Committee to bring the 2024 Olympic and Paralympic Games to Los Angeles:

https://la24.org/

https://twitter.com/la2024?lang=en

https://www.facebook.com/la2024/

Overview of Investment Opportunities in Brazil

Overview of the Brazilian Market

Brazil has a big population of 202 million people, and 58% of its GDP remain in services provided by domestic companies to the internal market, according to the World Bank Report over Brazilian Exports. With improvements in the income of the population in the past years, the economy has been able to grow. This growth was also helped by the commodities boom experienced before the financial crisis in 2008.

The point here is the fact that this model of domestic demand boosting growth is no longer possible due to saturation in the market. However, the focus in the last years, has been in one sector where the country has needed considerable development: infrastructure. The Olympic Games are bringing a huge amount of investment into Rio’s infrastructure. There are other massive projects in progress to eliminate the deficiencies the country has mainly in transportation. Water and energy supplies have also been addressed, with a big number of new projects that are becoming reality now.

Private Companies in Brazil

We can provide some examples such as Belo Monte, the 4th largest electric hydropower dam in the world. Belo Monte has started its first operations this year and will be in full power in 2018. This dam was contracted by Norte Energia S.A., and is being built by the 10 largest construction companies in the country.

The Norte-Sul Railway that reached São Paulo in the last months and is already transporting harvest from Centro-Oeste, the biggest agriculture belt in the country, is being built and operated by VALEC, a state-owned company responsible for the construction and operation of the terminal. This railway connects the very interior of the country to the ports in the North, closer to the consumer markets in Europe and US. The railway has its shares divided among Vale, through its subsidiary VLI being the majority, Mitsui (20%), a public pension fund - FGTS – (15,9%) and Brooksfield, the Canadian fund (26%). Most of the supply chain and outsourced contractors were domestic companies due to a policy boosting Brazil’s internal economy. However, international companies have also had a role in this project, participating through small subsidiaries.

We can also point out the Integração do Rio São Franciso, one of the most important projects in the Northeast region that provides water for families and producers in the semiarid, one of the driest regions in the country. This project was launched in 2007, during Luís Ignácio Lula da Silva government, and the companies working on in include, Mendes Júnior, Zavattaro Engenharia e Construções LTDA e Consórcio Construtor Águas do São Francisco.

Electric wind power production is growing rapidly and demands a substantial amount of investment that Brazilian national companies are not able to provide alone, due to its expansion speed. Events like the Conference Brazil Windpower 2016 are being launched in order to attract investors and partners to put in practice many project demands. Companies like MC-Bauchemie Müller GmbH & Co. from Germany, Roxtec from Sweden, Total Wind from Denmark, AWS Truepower from the U.S., have already started projects and will highlight their experiences, challenges and successes in this conference.

Regarding agriculture, this year’s harvest reached a record of 209.5 million tons in grain production only, showing that the agriculture sector has nothing to complain about, especially now with the Brazilian currency’s devaluation. According to the US International Trade Administration, “Brazilian growers are an ideal target market for U.S. exporters of sophisticated, high-technology self-propelled machinery; post-harvest machinery, including field refrigeration units/storage for tropical fruits; GPS and precision devices; poultry equipment; irrigation equipment; and fertilizers. “ It also states that “Brazil has world-class research and development labs and graduate-level studies, which signals the development of new enterprises that work to boost crop yields through increased efficiency. The United States and Brazil have a growing bilateral trade relationship in agribusiness.”

Thus, these investments in infrastructure, energy, and agriculture are already happening. However, there is still room for much more. Last year, the federal government of Brazil launched a huge concession program for roads, ports, railways, electric connections and production. Brazilian President Dilma Rousseff was invited to the United States in the end of 2015 for an official visit with Barack Obama, and also to announce and offer investment opportunities in this concession program. She had one meeting with banks and investors such as JP Morgan Chase, Blackrock and Citygoup to draw investment to her government’s infrastructure program.

The opinions expressed by guest bloggers do not automatically reflect the views of International Trade Examiner.

Creative Commons License This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Unported License.

Photo courtesy of By Source (WP:NFCC#4), Fair use, https://en.wikipedia.org/w/index.php?curid=49469137

About Dr. Sarita D. Jackson

is the President and CEO of the Global Research Institute of International Trade, a think-tank/consulting firm that examines trade policies and their impact on domestic businesses. Prior to heading GRIIT, Dr. Jackson was a tenured associate professor of political science in North Carolina and worked as a trade policy consultant for an Arlington-based consulting firm. She has participated in trade policy projects and conducted research on free trade negotiations in Botswana, Antigua and Barbuda, Dominica, Dominican Republic, Mexico and Panama. Dr. Jackson has also traveled to Chile and Argentina to study their political systems and economic integration policies.
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