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Small Brazilian industries seek trade finance to grow in the international market, overcoming difficulties in accessing competitive instruments, says João Costa Pereira, from Ouribank.
Small companies in Brazil seek trade finance as a strategy to expand in international trade. According to João Costa Pereira, product specialist at Ouribank, the trend towards market diversification is growing, but many companies still face challenges in accessing instruments that can make their businesses more competitive abroad.
With an increasingly globalized production scenario and the lessons learned during the pandemic, the need for trade finance solutions becomes crucial. International trade financing is one of the key mechanisms that can help these companies overcome financial barriers. João Costa Pereira states that the use of trade finance can allow a more robust entry into foreign markets, facilitating the development and sustainability of your business.
Faced with recent problems of shortages in relevant supply chains, Brazilian medium and small industries have redoubled their attention to opportunities in the international market. This situation is noticeable both for those who seek to sell their products abroad and for those who need to import critical inputs for their production lines.
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Increasing Competitiveness in International Trade
Most of these companies, however, especially those that are starting on this path, do not know which tools can make them more competitive and sustainable in international trade, according to João Costa Pereira, Product Specialist at Ouribank, a bank that has been operating for around five years. in the trade finance sector.
According to the executive, the demand for trade finance has increased substantially year after year since the bank began operations in this segment. 'There is a growing tendency for smaller Brazilian industries to diversify markets. However, these companies are still shy compared to other countries, which delays expansion abroad', he notes.
Challenges and Potential of Trade Finance
In Pereira's view, the lack of experience in international business also justifies this gap. 'In the case of exports, for example, Brazil is a large exporter of agricultural commodities and minerals, sectors where companies are quite experienced. Around 70% of Brazilian foreign sales are concentrated in commodities. But the country doesn't have much of a tradition in selling industrialized products abroad.' Brazil rose two positions in the World Trade Organization (WTO) global export ranking, reaching 24th place in 2023. However, it already occupied 21st place in 2011.
Still, the country is far from nations that invest more in industrialized products, such as Italy, France and the Netherlands, which are among the world's ten largest exporters. 'In the main export markets, such as the United States and Europe, small companies have been selling all over the world for a long time, while in Brazil this movement is much more recent.'
Necessary Stimuli for Small Industry
Brazilian small and medium-sized companies also receive less incentives for international trade when compared to the incentives in the main manufactured export markets. 'We need to 'democratize' access to the global market for these Brazilian industries, which lack the necessary instruments for this important step of growth', analyzes Pereira. 'To export, many companies want to receive payments in advance, which limits their export capacity and the conquest of new markets', he says.
Importers, on the other hand, are afraid to advance payments because they do not know whether they will actually receive the products, thus impacting the development and diversification of supply chains, explains the executive. These uncertainties can be easily resolved by various financial products and services available to provide security to international trade, going beyond Letter of credit, which serves both exporters and importers, and Finimp (Import Financing).
Modern Financial Instruments
'These are the best-known products in Brazil, but they are more expensive and bureaucratic, losing space to more agile and effective instruments. The letter of credit, for example, has been stagnant for around 20 years. Medium and small industries can ensure more effective external purchases and sales with the help of financial institutions experienced in financing international trade', highlights the executive.
Companies understand their products, and banks know the mechanisms that facilitate these exchanges between companies, enabling them to focus solely on their businesses. Among the instruments for exporters, in addition to ACC (Advance on Foreign Exchange Contract) and ACE (Advance on Foreign Exchange Delivered), which are fundamental for accessing the international market safely and quickly, he mentions the market risk analysis and customers abroad, the coverage of risks with the assignment
Benefits of Market Risk Analysis
credit (receivables) for the bank and support in international collection services. Importers have Supply Chain Finance (SCF) at their disposal, which allows the buyer to guarantee payments to the supplier and benefit from the deadlines necessary for their business cycle. 'The importer needs to guarantee stable and diversified supply chains, negotiating better payment terms and providing credit comfort to suppliers.' According to Pereira, globally, the SCF has already surpassed the US$2 trillion mark in financed volume, showing an average annual growth of 20%.
'To be competitive in the international market, it is necessary to have a good product, a good price and a good sales condition.' The executive also highlights that financial institutions with greater expertise in this market design tailor-made instruments, according to the needs of customers and each transaction, with integrated solutions to monitor operations step by step.
About Ouribank: History and Commitment
With over 40 years in the market, Ouribank is a reference in specialized foreign exchange services. Committed to transparency, seriousness and innovation, Ouribank has served more than 500 thousand customers and carried out more than 1 million foreign exchange transactions, transacting more than 30 billion dollars in 2023. Ouribank's history stands out for its excellence in personalized service , reflecting its commitment to innovate, bring efficiency and exceed customer expectations.
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