You are currently browsing the tag archive for the ‘Business’ tag.
One colleague called me a misanthrope the other day. Another often refers to me as Mr Angry. A Scottish pal in Rio calls me Begbie (after the notoriously angry character in Trainspotting).
They all mean it in jest (I hope!) and I usually take it with a pinch of salt and a laugh.
But there’s a lot to be angry about these days and I don’t just mean big banks destroying the livelihoods of millions just to make a few more pennies, or the spinelessness of politicians who have allowed them to get away with it.
Case in point today in Brazil, where Bradley Brooks from the Associated Press just published this sensational story about how big car makers in Brazil are routinely churning out vehicles that fail the same safety tests they wouldn’t dare fail in the developed world.
Unsafe cars, coupled with the South American nation’s often dangerous driving conditions, have resulted in a Brazilian death rate from passenger car accidents that is nearly four times that of the United States.
The culprits are the cars themselves, produced with weaker welds, scant safety features and inferior materials compared to similar models manufactured for U.S. and European consumers, say experts and engineers inside the industry. Four of Brazil’s five bestselling cars failed their independent crash tests.
Manufacturers earn a 10 percent profit on Brazilian-made cars, compared with 3 percent in the U.S. and a global average of 5 percent, according to IHS Automotive, an industry consulting firm.
Only next year will laws require frontal air bags and antilock braking systems on all cars, safety features that have been standard in industrial countries for years. The country will also have new impact regulations on paper, at least; Brazilian regulators don’t have their own crash-test facility to verify automakers’ claims about vehicle performance, nor are there independent labs in the country.
In short, Brazil’s car makers are cutting corners and costing countless lives because it is cheaper to make poor quality cars than it is to spend more and make the cars as safe as they would in the US or Europe. And the government is quite happy to let them.
This in a nation where cars cost three times what they cost elsewhere.
Seriously, the question isn’t why am I angry. The question is: Why isn’t everyone?
When I first came to Brazil I was shocked at how many people wore football shirts. Everybody wore them, young and old, male and female, and they wore them everywhere.
It wasn’t unusual to see people in nightclubs or restaurants wearing the colours of Flamengo, Corinthians, Palmeiras and dozens of others. I thought it was weird (and still do).
If one thing has changed over the last decade it is that you no longer see people wearing just local shirts. Nowadays, for every Botafogo shirt there’s a Chelsea one, for every Cruzeiro a Barcelona, and for every Gremio a Liverpool.
Turned off by the corruption and mismanagement endemic in their domestic game and with the exotic attractions of Europe available on demand via TV, the internet and video games, many Brazilians – especially youngsters – are taking a greater interest in foreign football.
“Little by little, the big European clubs are silently ‘invading’ the hearts and minds of Brazilian football lovers, especially the young, who are seduced by competitions that are much more attractive than those we are used to seeing in Brazil,” said Fernando Ferreira, the director of Pluri, a sports consultancy firm. “The phenomenon of Brazilians supporting one team in Brazil and another abroad is more and more common.”
One is that Brazilian football is expensive and still a bit of a mess (even though it is slowly getting better). Another is that more Brazilians have more money to spend, as I’ve written about a thousand times. And third, the world is smaller and more people have more access to European football, via TV, the internet, social media and video games.
Brazilian clubs are trying to internationalise. But the truth is their fans have already taken that step.
I’d feel a lot more supportive of Dilma if there seemed to be any real action behind those rousing and sensible words.
Brazilians still pay more taxes than anyone in the developing world and the government hasn’t made any real attempt to cut them. Dilma has at least tried to encourage the private sector to get involved in building infrastructure. It’s still way too little, but it’s something.
And as for cutting bureaucracy, nothing meaningful has been done. Chile, for example, announced this week it would allow people to open a business in one working day. In Brazil it takes 119 days, according to this World Bank report.
Talk is cheap and action speaks louder than words. Brazil needs more of the former and more of the latter.
I almost went to a balada this weekend but instead arrived home early having went through one of those small but telling experiences that reinforce my belief Brazil is still a long way from ever fulfilling its true potential.
I arrived at the door to the Trackers club around 1 am with half a dozen friends, both foreign and Brazilian. Voodoo Hop, an otherwise admirable group that seeks to rejuvenate the city centre by running clubs and cultural events in abandoned buildings, were organising another of their successful club nights.
After waiting half an hour to edge up the queue and get in the door, we discovered that there was another queue inside the building to get into the actual club.
My friends – most of whom were a good deal younger than me – took it in their stride. I was outraged. After another 10 minutes waiting in the second queue that snaked up two flights of stairs, I left.
Brazil has problems with lots of things that won’t change overnight. Corruption, antiquated infrastructure, a putrid political system, and the obscene amount of power leveraged by multinationals and construction companies are all ingrained in the culture and will only improve with government intervention or massive pressure from society, neither of which looks like happening any time soon.
But the stupid invention of bureaucracy for simple tasks like getting in a night club is easy to resolve. One queue, fine. Two queues, pointless and self-defeating.
The big worry I have here – and this is the part that reinforce my belief Brazil is still a long way from fulfilling its potential – is that I was the only one who saw anything wrong with this.
Not only were the organizers of this young and hip nightclub happy to carry on with the same old bureaucratic and non-sensical rules imposed on them by an older generation. (If there’s a good reason from this, I’d be happy to hear it, VoodooHop…)
What was worse was that the young kids waiting in line accepted it as normal. There was no outrage at being made to stand passively in two different queues, much less being made to stand passively in two different queues for the right to hand over a 30 real entry fee.
Instead, anyone who complained was “uptight”, “stressed out” or “whining.”
I voted with my feet. Unless more people do the same, the bureaucracy and BS is never going away.
In December I spent a week in Sao Paulo and Rio de Janeiro interviewing players, directors, economists, marketing experts and media personalities for a Time magazine article.
The piece, written by my colleague Bobby Ghosh, came out yesterday to much consternation, thanks largely to a misleading headline that declared Neymar The Next Pele. (See more on that controversy here.)
Here’s five interesting things that never made it into the piece:
- Botafogo have someone standing at the same of the pitch with team shirts to give to players who are going to be interviewed. At the end of the game or at half time the players have either swapped their shirts or taken them off because they are sweating and club officials realized sponsors logos weren’t appearing when they were being grilled on TV. The officials now make sure the players are suitably attired.
- Brazilian clubs exaggerate the number of fans they have, or at least what constitutes a fan. Flamengo and Corinthians claim they have more than 30 million fans each and yet neither averages a crowd above 30,000. Only around 350,000 Brazilian fans are registered with their club’s socio-torcedor scheme, the closest thing Brazilians clubs have to season tickets. Clubs and sponsors have started a push to get more adherents through a deal that gives them discounts with major retailers such as SKY TV, Pepsi, Netshoes and Brahma. The target is to get 3.5 million fans signed as socio-torcedores.
- Corinthians increased their revenue from 55 million reais in 2003 to 290 million reais in 2011 but marketing director Luis Paulo Rosenberg still believes the club has only scratched the surface of what is possible. “I am not saying we do everything right,” he told us. “But we stopped doing everything wrong and that was enough to multiply revenues by five or six.”
- Santos have more fans in Sao Paulo than in Santos, according to Stochos, a sports consultancy. Their numbers show that 19.5 % of Santos fans live in the Baixada Santista, while 37.6 % live in the state capital. The number of young people who support Santos has increased greatly over the last few years, thanks largely, Stochos believes, due to the influence of Neymar.
- Deco was lucky that he was late for his scheduled interview at the foundation for disadvantaged kids he set up in his home town of Indaiatuba. By turning up half an hour late he didn’t have to face me in the under 12-s four-a-side match. (Each team was allowed one over-age player). The former Barcelona and Chelsea midfielder would doubtlessly have struggled to contain my box-to-box running and overall stranglehold on midfield.
Great blog post on The Economist website today about Brazil’s planned $17 billion bullet train.
Brazil has been talking about this for years but plans have yet to get off the drawing board. No one wants to take on the challenge because they don’t think it’s an economically viable project.
The Economist piece takes a while to get to the point, which is this. And I quote:
“Most of Brazil’s roads are unpaved. Some important routes—including some interstate highways—are single-lane and extremely dangerous. Half the population is not connected to the sewage system. There are few (ordinary) commuter or freight rail lines, and they are mostly in very poor condition. Urban mass transport is grossly deficient: São Paulo, a metropolis of nearly 20m souls, has a mere 71km (44 miles) of metro, plus a few overland urban rail lines, which at peak hours are all terrifyingly overcrowded. It is so easy to think of a long list of more worthwhile infrastructure projects in Brazil that it is hard to understand why this one is not dismissed out of hand.”
I’d put it more succinctly:
The plan to spend at least 34 billion reais (and probably much more) on the bullet train is a classic example of Brazil’s delusions of grandeur. Brazil has hardly any rail system and yet wants to build a high speed train link. It has hardly any submarines and yet plans to build a nuclear sub. It has just published plans for its 4G network when its 3G doesn’t work properly.
Brazil should be concentrating on walking before it can run. It has taken laudable steps to reduce inequality but there is so much more to be done to make life liveable for the poorest sectors of society and those should take precedence over Pharaonic projects like a bullet train.
Why is it doing this? Who knows. It wants to be first world. It wants to show off. It wants to show it can. It’s not because it needs it.
So why do it? Not for consumers or passengers. As The Economist suggests, the number of passengers is likely to be half the government’s estimate and prices are likely to be double.
Who benefits? That one’s easier to answer. The same corrupt kleptocrats in the political class and their bosom buddies who run the construction companies.
Just when you thought Brazilian laws couldn’t get any more backwards, another bit of needless bureaucracy leaves you not knowing whether to laugh or cry.
I bought a bottle of wine at the weekend in Pao de Acucar, my local supermarket. Over the years I’ve bought hundreds of bottle of wine, vodka, beer and rum at the same supermarket.
This time, though, I had to register.
REGISTER. Not just show ID – but register.
Like you have to do in the US to buy the kinds of fertilizer used to make bombs. Like you have to do in Scotland to buy certain kinds of hard drugs.
No matter that it was a bottle of wine, 13 % volume.
No matter that I am 45 years old.
No matter that it was a quiet Saturday lunchtime.
I still had to provide them with my personal data that they put on their central computer.
Sometimes Brazil beggars belief.
Sometimes the player takes a cut, and his agent will get a bit of that.
In Brazil, it’s a totally different story, as I describe in this Reuters piece on Oscar’s 25 million pound transfer from Internacional to Chelsea.
In this and many other cases:
“The fee…will instead be divided up between two Brazilian teams, the midfielder himself and the entrepreneurs who own what are called his “economic rights.”
In Brazil and some other South American nations, players have two parallel deals, one for their playing rights and another for their economic rights.
The first stipulates which team the player plays for, the second who gets what if the player is transferred.
In addition to their clubs, companies, investment funds, the players and their agents can all hold a stake in a player’s economic rights.
In doing so, they are investing in the player — usually when he is young — in the hope of making a profit if he is eventually sold for a big transfer fee.
“The easiest way to understand it is to think of football as you do the stock market, where the players are stocks,” said Fabio Buratta, a businessman who has shares in Brazilian players.
“If I think that a young player is promising, I pay the club, say, 50 percent of what they think he is worth and in the future I will get 50 percent of whatever fee he commands. The risk is that the player doesn’t make it and I lose my money.”
In Oscar’s case, 25 percent of his economic rights were held by himself and 25 percent by his agent, according to Internacional. The other 50 percent belonged to the club.
That means half of Chelsea’s transfer fee will go to Internacional, with the rest divided between the player and his agent.
That, though, is the thin end of the wedge. Some companies were created especially to sign young players in the hope of selling them for a big fee.
It’s questionable ethically, and not just because human beings are traded like commodities. What happens if a company wants to sell a player when a big offer comes in and the club doesn’t want to sell? What happens when a company wants to sell to a rival team? Or if the company has players on different teams?
FIFA have rules that govern third party ownership and they were tightened after the scandal surrounding Carlos Tevez and Javier Mascherano’s move from Corinthians to West Ham. But they’re still open to abuse. So much so that the English FA went even further than FIFA to try and restrict the practice.
It still happens and it may even be a necessary evil for Brazilian clubs who need all the investment they can get.
But I am sure we’ll hear more about such deals in the future.
However, I do like to think I give credit where it is due.
And Anatel, the regulatory agency for Brazil’s telecommunications industry, deserves a pat on the back today for slapping a sales ban on three of the top four cell phone companies.
Anatel told Oi, Tim and Claro that they can’t sell new lines to clients until they improve their current service.
Anyone who lives in Brazil and has a cell phone will be overjoyed at the news. The cell phone companies here are a disgrace. They treat Brazilian customers like fools.
Think I am exaggerating? Well, look at the difference with which Telefonica treats its clients in Brazil and the UK.
In the UK, Telefonica owns O2. Last week, many O2 consumers were without cell phone service for 24 hours because of technical problems.
What did Telefonica do? It offered those affected the “equivalent of three days back for the disruption as a gesture of goodwill and to say sorry,” according to this story in Yahoo. That’s three days free service.
And if that weren’t enough, it will send every one of its UK customers a £10 O2 voucher to spend in one of its stores.
In Brazil, meanwhile, Telefonica comes sixth on the list of most complained about companies (at least in Sao Paulo, the country’s biggest market and the only one I can find details for). Three of the top 10 most hated firms are cell phone companies. See the 2011 list here.
And what has Telefonica done to provide solace or reparations to those millions of long-suffering Brazilians? Nada.
The Financial Times in this piece, suggests that the blame for the poor service in Brazil lies, at least in part, with Anatel itself. That might be true.
But the bottom line is that the telephone companies have been abusing Brazilian consumers for years, providing a truly terrible service at inflated prices.
Congratulations to Anatel for finally recognising that something should be done. I hope it’s the first of many similar acts.
At least 28 of the 47 shopping centres in Sao Paulo are operating illegally because they do not have the proper permits to function, according to an investigation published on the front page of the Folha de S. Paulo newspaper today.
Some were built where or when they shouldn’t have been by construction companies, others did not get the proper documentation and permissions before opening and others don’t have the required number of parking spaces.
This news comes just days after it was revealed there are 45 obstacles along the flight path to Sao Paulo’s Congonhas airport, one of the busiest in Brazil. The obstacles range from buildings that are too high, to trees, to a hospital and – surprise, surprise – two shopping centres.
The point here is this: If we can’t rely on the state or the city to enforce laws designed to protect us – and in the case of the airport save lives – then who can we rely on? Why were these buildings allowed to be built?
And now that we know they are illegal why haven’t they been closed down?
I wrote this story in Time magazine in February about a building in Rio that collapsed, killing several people inside. It was reported that authorities had looked the other way while granting building or work permits on the building and I said this in my story, prompting Mayor Eduardo Paes to publicly criticize me (as I reported in this post).
There’s a clear connection between not following the proper building procedures and tragedies like the one in Rio.
Don’t people who pay bribes and the officials who take them or overlook the law get that?