What does the X-ray of exporting companies say – 06/23/2023 – Market

Understanding the dynamics of exporting firms is essential for us to encourage our participation in foreign trade.

What are the Brazilian companies that export? What countries do they sell to? What determines the choice of markets to be explored? After starting to export, are they able to stay in the foreign market? To obtain answers to these and other questions, the MDIC (Ministry of Development, Industry, Commerce and Services) carried out an unprecedented X-ray on Brazilian exporting companies.

The survey identified that only 1% of Brazilian firms sell abroad — that is, there are only around 25,000 firms that have access to the foreign market.

It was noteworthy that 61% of these companies do business in Latin America, which reinforces the importance of regional integration. In addition to the advantages of geographical and cultural proximity, Brazilian products find lower tariffs in the region, as a result of trade agreements.

In fact, the average tariffs imposed by Brazil’s trading partners are a relevant factor for exporting companies to define the destination of their goods. That is, the data confirm that markets that apply high import tariffs are less likely to be explored.

On the other hand, we identified that, when defining their target countries, exporting companies have started to pay more attention to the size of the consumer market. From 2018 to 2020, the number of companies exporting to China increased by 24%. For the US, growth was 21%. For the European Union, 16%. On the other hand, the number of firms exporting to Mercosur grew by only 2%.

With some honorable exceptions, the external performance of Brazilian companies is still timid.

The average probability of a firm starting to export from its opening up to ten years of operation is only 1%. For the manufacturing industry, the chance increases to 4%. Larger companies, with more than 250 employees, have a 22% probability of conquering the foreign market in their first decade of existence.

Among companies that manage to sell to other countries, the chance of continuing to export after the first year of foreign sales is approximately 65%. The study also revealed that most companies export sporadically. Periods of uninterrupted exports have a median duration of three years. Keeping companies in the foreign market is an important challenge.

Our survey further found that exporting firms, on average, pay higher wages, hire more and employ a higher proportion of workers with higher education compared to non-exporting firms.

The wage premium paid by exporting companies in relation to non-exporting ones varies from 36% to 124%, depending on the company’s sector of activity.

The mapping we carried out confirmed that companies operating in foreign trade are concentrated regionally. In 2020, the states of São Paulo and Rio Grande do Sul concentrated 54% of Brazilian exporting firms. Around 90% of those that sold to other countries that year were concentrated in the Southeast and South regions.

Furthermore, the percentage of firms that exported to Mercosur countries was almost 2.5 times higher in the South and Southeast regions than in the North, Northeast and Midwest regions. We found that exporters located in the North, Northeast and Midwest regions had a larger scale on average, with 30% more employees than those established in the South and Southeast.

The unprecedented study carried out by the MDIC allows us to map challenges to promote our foreign trade. The objective now is to advance the competitiveness agenda for the country – and the tax reform, for example, will make a huge contribution not only to making production here more competitive, but also for the country to stop exporting taxes, which today it is still a reality.

Brazil’s competitive insertion in the world economy promotes income expansion, improves economic productivity and stimulates technological development in the country.

Simplifying, reducing bureaucracy, overcoming barriers, concluding new agreements, improving financing, promoting an export culture and strengthening trade promotion are measures that will contribute to expanding Brazil’s export base, allowing a greater number of companies to generate jobs and income in the country. .