Doing business in São Paulo: an insight from within the government of the largest city in the Western Hemisphere

Texto originalmente publicado em 20 de janeiro de 2020

Is São Paulo the right place for businesses eager to invest in emerging economies? To what extent does the City government drive or hinder such endeavors? What can I say about that after working for the Administration of the largest city in the Western Hemisphere?

It is a given that, for companies wanting to become or stay competitive, engaging in emerging markets is a must. But where? And how? With so many market variables, there is no “one strategy fits all” approach to doing business in the developing world. After my experience working at São Paulo City Hall, I got to know the depths of Brazilian bureaucracy challenges. But in the process, I also ended up with meaningful insights about the overwhelming challenges and opportunities the city offers to citizens and investors. This is my take on it.

But first, a little theory. In a seminal 2005 paper for Harvard Business Review, Khanna, Palepu and Sinha laid out five fundamental dimensions stakeholders ought to look into in order to choose an emerging economy to invest in: (1) Political and social systems, (2) Openness, (3) Product markets, (4) Labor markets and (5) Capital markets. Long story short, they provided readers with dozens of sample questions for each category to which answers would picture a more accurate assessment of business prospects in a given country than the one produced by Composite indexes like World Bank Reports.

The first point that should be made is that, of all the sample questions suggested in their paper, Brazil does have positive answers to most of them. That we all know. As a matter of fact, if we pay close attention, we’ll note that São Paulo is the main driver of most of Brazil’s good answers.

But that’s not all there is to it. Truth is that for several topics that are critical for the success of businesses, São Paulo is way above the average compared to Brazilian, Latin American and even emerging markets standards overall. In the (1) political and social system front, for instance, the authors propose asking about the effectiveness of “the quasi-judicial regulatory institutions that set and enforce rules for business activities”. Permits, environmental licenses, taxes and blueprints might be difficult for newcomers to figure out, but adequate consultancy from experts can help break the idleness wall from the City’s Departments with relative ease: Brazilians are used to doing so for their every-day domestic businesses.

Bottom line is that no significant business challenges in São Paulo are unique to international players and in no other in Latin American context do businesses thrive with less bureaucratic obstacles. Naturally, huge efficiency leaps must still be made. Yet, say, for a given construction permit, it is easier for businesses to find their way through an electronic administrative procedure in SP City’s website than to do it by diving into physical diligence of dusty, heavy files that mobilize more time, people and energy in other cities or countries.

A final point must be made about strategy and public policy. Unlike the average of political leadership in developing economies, São Paulo City Hall has a long withstanding record of public policy focused on making the city as business-friendly as possible. Specialized government agencies are traditional in City, State and Federal levels and institutional voids are a constant matter of concern for elected officials, as local elites are aware of what bolstering business means for government tax revenue.

The institutional voids of São Paulo brazilianness are less hollow. Our city is the best the developing World has to offer.

More info on doing business in São Paulo:

São Paulo Negócios: São Paulo City Hall agency for trade and investment promotion.

Brazilian Trade and Investment Promotion Agency (APEX): Brazilian Government agency for trade and investment promotion.

Investe São Paulo: São Paulo State Government agency for trade and investment promotion.