A four-year investigation conducted by the US government has concluded that Brazil has made sufficient concessions to its policy of reserving sectors of the industry – particularly personal computers and software – for indigenous entrepreneurs. When, in late 1987, the US announced its intention to impose trade sanctions, Brazil reversed its bar on the import of Microsoft Corp’s MS-DOS – originally barred on the grounds that a (slow) Brazilian copy was available; since then, the repatriation of import revenues has been allowed – the likes of Ashton-Tate and Lotus Development have been among the firms to benefit – and according to US Trade Representative Carla Hills, Brazil is now more ready to support of investment by foreign computer companies, as the experienceS of Nixdorf Computer AG and Ing Olivetti C Olivetti & Co SpA indicates. According to Com puterwoche, the two Europeans have found that newcomers may be able to count on an unexpected number of friends in high places. But entry into Brazil is still fraught with difficulties: Nixdorf’s progress has been slow, despite going by the book; and the early promise showed by Olivetti’s more daring venture remains unfulfilled. Olivetti had been doing well in the Brazilian market with its traditional typewriting and telex machines, but re-investment of profits into the information technology sector was not allowed: in 1987, after turning down an offer to be naturalised as a Brazilian citizen – his Italian identity obviously meant more to him than Australian citizenship did to Rupert Murdoch – Olivetti chief Carlo de Benedetti came up with the idea of forming a completely new company, to be called Tenpo, and be owned – technically, at least – by Olivetti’s Brazilian subsidiary, to manufacture its personal computers in Brazil. Things looked to be going well: although the Brazilian Department of Information Technology and the more xenophobic members of the computer industry association were against the idea, Olivetti found support in the shape of Industry & Trade Minister Roberto Cardoso Alves, who was unconcerned about the objections raised by the two trade lobbies; but then a series of political scandals hit Alves, with the result that the voice of the protectionists reasserted its dominance, and the Olivetti venture was blackened by association. All this finally led to the head of Brazilian operations, Enrico Misasi, recommending to de Benedetti, in February of this year, that the project be abandoned. So much for derring-do: over a decade earlier, Nixdorf was trying to get into Brazil the official way. In 1978, along with firms such as Ferranti, Data General, Fujitsu and Logabax, Nixdorf took advantage of an authorisation to allow a know-how transfer with Brazilian firms: true, Nixdorf’s partner, Labo, was no big fish, but it received financial support from various significant Brazilian organisations, such as petrochemical firm Petroquisa and the investment group Brazilpar. The problem was that the overwhelming majority of new business was still going to Labo and its own in-house microcomputer. Little appeal It seems that the Nixdorf 8870 has little appeal in Brazil, because it is no longer a leading edge system and fails to meet the needs of Brazilian users that can afford a computer, while the 8890 IBMulator has to compete with a virtually endless supply of used IBM 4331s and 4341s – partly as a result, only 60 8890s have been sold since 1986. Part of Nixdorf’s problem is the fact that the Brazilian market is significantly different from the German one towards which Nixdorf’s products are slanted. And while Uncle Sam is now prepared to give the Brazilians the benefit of the doubt, the American Electronics Association is more sceptical, still labelling Brazil highly protectionist. Nonetheless, it is clear that in-roads can be made into what is potentially one of the largest third-world markets: but whether the extent of these in-roads justify the effort is still open to question.
