Chinese technology giants target Brazil

10 January 2013
BEIJING: Lenovo, Baidu and Tencent are among the major Chinese technology companies targeting Brazil, indicating the increasingly strong links between leading emerging markets.

The Latin American country is already Lenovo's second largest outlet globally, behind its home market of China, ranking ahead of its operations in both India and Russia.

Lenovo has 4,000 staff in Brazil at present, and recently purchased CCE, a local electronics group trading at the lower end of the mass market, for $147m.

It is also constructing a $30m plant, which will allow it to tailor products for Brazilian buyers and increase its price competitiveness, as well as offering tax benefits.

According to Lenovo, Brazil will account for 100m of the next 500m people set to buy a PC worldwide, but still remains similar to a "blank slate", Dan Stone, head of Lenovo's domestic operations, argued.

"[Rival companies] may not see the Brazil opportunity as big enough to go through the trouble of such fundamental changes," he told the Wall Street Journal. "We are making more investments in Brazil than in any country outside of China."

For its part, Tencent, one of China's premier internet firms, has rolled out a Portuguese version of its Weixin private messaging app, known as WeChat overseas, in Brazil.

WeChat currently has around 300m users worldwide, but trails market leader WhatsApp in Brazil, in a sector where competition is likely to rise as smartphone ownership increases.

Data released by the Brazilian government late last year stated that 52% of the country's population of some 197m people are now middle class – earning between R$291 to R$1,019 per month – with 36m people having joined this group in the last decade.

"This population has more consumption power," said Silvia Quintanilha, vice president, client services at Millward Brown, the insights provider. "All of the brands are looking at us now. All of them are arriving in Brazil."

Baidu, China's biggest search engine, is conforming to this description, and regards Brazil as "the most important" overseas market, according to Jonathan Dillon, head of the company's international business.

"[Brazil is] a high-growth economy in general, has a high-growth internet, and we think that some of the big global players haven't given as much localised attention to the market," he said. "There's a good opportunity for us to come in.

Egypt and Thailand are also expanding targets for Baidu, but the firm previously struggled to gain any traction with a search platform in Japan.

Data sourced from Wall Street Journal; additional content by Warc staff
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