Prudent approach to Brazil gets results


UK-based Brown McFarlane is 120 years old, and by its own admission takes a "conservative" approach to entering new markets

steel manufacturing in brazil

It is one of Europe's leading providers of specialist steel products, and now it has the Brazilian oil and mining industries in its sights. But with a 120-year history behind it, Brown McFarlane is in no hurry. "We like to spend plenty of time to get it right," says CEO Barry Morse.

UK-based Brown McFarlane is 120 years old, and by its own admission takes a "conservative" approach to entering new markets. But that doesn’t mean it's not dynamic – and it certainly hasn't hampered the firm's success: 50% of its sales come from exports.

Speak the language

The specialist steel supplier has acquired a key strategic weapon for its advance on the Brazilian market: a Brazilian employee who speaks Portuguese.

The group's CEO, Barry Morse, explains: "If I speak to some of our clients in Brazil at director level, there’s a fairly good chance of finding an English speaker. But the people who are actually doing the engineering and procurement tend to speak Portuguese."

"It's amazing what a difference it makes to have someone who can phone Brazil from here and open a call in Portuguese just by asking what the weather's like, or whether they saw the football at the weekend, rather than try to launch into a sales call in English straight away."

It's essential to be there

Specialising in the distribution, processing and trading of highly specified steel plate products, Brown McFarlane serves the energy, mining, oil and gas sectors. Brazil's discovery of vast new oil reserves makes it a natural target for the company.

The group has been exploring the market for around 18 months. Today, all its Brazilian business is still coordinated from the UK, but it plans to establish a permanent base around the key areas of São Paulo or Rio. "Our experience to date is that even though we're in quite a niche product, we really need to be based in a market to make it work," says Morse.

We really need to be based in a market to make it work

"But it's one of the scarier places in the world to put down roots, we feel, because of the complexities of the legal and financial systems. We are being very cautious about it and looking for all the help we can get." For this reason, Morse was pleased to have the chance to gain insight by attending HSBC's International Exchange to Brazil.

Take your time

Caution has been a watchword since the group set up its dedicated export department a decade ago. Morse has overseen the opening of operations in South Africa, Dubai and Singapore.

"In each case it's been a really conservative approach – having a good look at the market, canvassing from home, then visiting to start to generate business," he says. "We like to spend plenty of time to get it right.

"In both Dubai and Singapore, we found a local partner and opened a representative office, which later became a subsidiary company.

Explore different types of partnership

Ultimately, Brown McFarlane will be seeking to forge a formal partnership in Brazil. Meantime it is looking for other alliances.

"We're dealing with the big boys at the moment who tend to have their own import departments and can deal with part of the logistics themselves," says Morse.

"We're now working closely with a company in Antwerp. They have recently opened a base in Santos, Sao Paolo, and we're thinking of taking some space in their warehouse – so we’d have the benefit of a trusted partner to look after imports and begin distributing around Brazil."


References

Strategies:

Key points

  • Speaking the local language has been key to communicating with all decision makers in client organisations
  • Careful research and patience are key factors to establishing a base in a new market
  • It's important to explore all options before choosing a partner you can trust
Best Global Trade Finance Bank, GTR Leaders in Trade 2014

More from HSBC

Back to top