Tag Archives: sao paulo

Danger Doing Business in Brazil? Pfft!

Embarrassingly, I’d never heard of São Paulo before carsales started to talk to Santander about its Webmotors business just a few years back.

Not many people in Australia know anything about São Paulo as I think when most people in Australia think of Brazil they think of Carnival in Rio, the Amazon jungle and lots of danger.

The danger part is what I get asked about the most each time I visit our Webmotors business.
This is especially so when articles like naming world’s most dangerous cities in a news.com.au article on 28 January 2016 in which Brazil had 21 of the top 50 named and Latin America 41 of the 50 (http://www.news.com.au/world/the-worlds-most-dangerous-cities-have-been-named/news-story/094d3710262f823329bbea27f9eb3744).

São Paulo wasn’t on the list but when you have a city like São Paulo with 23m people (in the greater area) of which a great percentage are poor, there is going to be a lot of crime and this makes it dangerous; everyone I deal with in the city tell me this. It is not uncommon for people to be robbed at gun point or kidnapped.
I will say straight up that in over fifteen business visits there over the past three plus years, I am yet to feel threatened (touch wood). In saying this, I make a point of not putting myself in possible positions with the bulk of my time split between the hotel, office and with local work colleagues.

From a business visitor aspect, here’s two examples of differences between São Paulo and Australia’s largest cities:

1 Road Rage
Whilst the most common after market accessory for cars is bullet proof glass and any medium to high end car is fully bullet proof, combined with horrendous and chaotic traffic with weaving drivers (especially motorbikes), in all my visits to São Paulo road rage just isn’t part of the scene. Merging is just part of what they have to do to get around. Try merging into Punt Rd on any given weekday and you’ll probably see some road rage and almost without exception, just plain ignorance and arrogance that can certainly turn dangerous!
2 Celebration Time
I often visit the bar and restaurant neighborhood of Vila Madelena in São Paulo with the Webmotors team which can see thousands of people in the dozens of establishments drinking in the streets from early afternoon through to late at night and I am yet to witness one bit of aggression despite drinking allowed in public, bottled beverages are common on the street and the usual bumping into randoms in large crowds that you see everywhere. Imagine in Australia if alcohol could be purchased from street vendors in bottles and you couldn’t help but run into crowds? There’s a reason alcohol is barred in public and bottles are barred in most bars here – we are a nation of cashed up bogans (generalisation I know but a somewhat harsh reality).
The poor usually have nothing to lose so for this reason the danger is somewhat harsher than drunk, cashed up bogans king hitting someone during a big night out or getting upset because you had the nerve to merge into “their” lane.

We Australians could certainly learn a thing or two on these things from São Paulo and Brazil in general.

6 Latin America Factors for carsales.com

carsales.com has investments in online automotive businesses in the two largest economies in Latin America – Webmotors.com.br and Soloautos.mx. They both represent good value for future long term growth for carsales.com yet they are very diverse in a number of ways.

I’m not trying to find a winner here…….it is just interesting to look at the dynamics of each business in comparison to the other in terms of country, city of origin, language, carsales involvement, partners and the positions they occupy in their respective markets.
1. Brazil vs Mexico – The key difference is the maturity of online automotive classifieds where Brazil is some way ahead of Mexico. Webmotors in Brazil, is now a relatively clear number 1 in the online automotive space with more traffic and over twice the number of vehicles online than it’s next auto vertical competitor. There is no real clear leader in Mexico with our business Soloautos on the road to staking a claim.

2. Sao Paulo vs Guadalaraja – Both businesses have strong positions in the cities they are based in and this goes someway to explaining why one is number 1 on a country basis and the other isn’t (just yet). Webmotors is based in Sao Paulo, Brazil’s biggest city with 11m people in the city region and over 21m people in the metropolitan region. Soloautos is based in Guaralajara which is Mexico’s second largest metropolitan area with ~4m people. It’s interesting how regionalised the online market can be in Latin America compared to Australia.
Sao Paulo, Brazil

3. Spanish vs Portuguese – I don’t speak either language (unfortunately); the real difference for carsales is that only Brazil speak Portuguese whereas all other countries in Latin America speak Spanish. This isn’t an issue technology wise as we are working with consumable API’s to give us economies of scale and we can get synergies at the product end where what we do in Mexico can be used in any other country in Latin America (i.e. Chile where we have just entered).

4. Control vs Minority – We have a 65% controlling stake in Soloautos and a 30% minority stake in Webmotors. This hasn’t altered the way we have worked with either business as a strategic partner. We don’t mind being a minority stakeholder as a starting point and as we put more IP in to drive the growth we’d like to see that change.
Guadalajara, Mexico

5. Large partner vs Individual partner – This is really the difference in governance. Our partner in Webmotors is Banco Santander who by virtue of being a bank, can bring some governance an online company wouldn’t normally see at Webmotors size. We have an individual partner in Soloautos which is quite the opposite. It is fair to say there are pros and cons both ways.

6. Market Leader vs Number 2/3 – We are a clear leader in Australia and South Korea whilst Webmotors has been able to gain a nice lead over the competition since we’ve been involved. It is a whole new game doing the chasing with Soloautos and it is a task that our team is really enjoying. The basics remain the same for both though so I will say we don’t mind where we are to start with as long as we know where we need to be.

One thing is for certain, we are loving working with the people from Webmotors and Soloautos!