The challenge of exporting Chinese hardware and building materials to Brazil is worth pondering

As the largest country in South America, Brazil is the central market for South American countries, with only São Paulo having a population of 22 million. Brazil has strong radiation capabilities and industrial leadership in neighboring countries and regions. The Brazilian construction market accounts for nearly half of the Latin American market, and in the past few years the Brazilian construction industry has grown at a rate of 20% per year.

Brazilians' desire for decoration is much higher than that of Chinese people. Almost every three years, the interior is re-decorated. It is also the demand for such urban cosmetic and living habits that has formed a special supply and demand relationship in the Brazilian building materials market. The price of Brazilian building materials is several times higher than that of Chinese products, and the quality of products is not as good as that of Chinese building materials. Therefore, sanitary wares and stone products exported from China to Brazil are welcomed by local consumers.

As an important emerging country, the Brazilian building materials market is huge and growing rapidly. Brazil's construction industry has an annual production value of more than 490 billion baht, equivalent to US$165 billion, and employs 11 million people. Brazil's construction materials sales total 178 billion baht, equivalent to US$50 billion, of which construction equipment sales account for 11.1%. HK$19.8 billion, construction materials accounted for 88.9%, construction materials made 85%, and imports accounted for 15%.

In 2015, Brazil imported nearly 7 billion US dollars of building materials and construction equipment, mainly related to categories including cement, paint, building ceramics, cables, pipes, hardware and so on. In 2016, building materials in Brazil's building materials industry increased by 10%, sanitary equipment increased by 4%, and hardware ceramic tiles continued to grow steadily. According to the Brazilian Association of Building Materials Merchants (anamaco), the retail sales of building materials in the Brazilian market will increase by 5% in 2016 compared to last year. In 2017, 15% of companies hope to hire more employees, and 38% want to increase investment.

More than 2/3 of building materials dealers in Brazil sell imported products, 66% of imported construction hardware tools, 60% of imported lighting equipment and construction cables, 22% of imported coatings, 21% of imported construction pipes, and sales. Imported doors and windows accounted for 4%, sales of sanitary ware accounted for 9%, and other basic building materials accounted for 10%. It can be found that construction hardware and tools are the most imported products in Brazil.

China's hardware and building materials export challenges

1. Increased manufacturing costs

The biggest advantage of China's hardware and building materials is the relatively low manufacturing cost. However, as the international iron ore prices continue to rise, the prices of raw materials such as steel, copper and zinc are striving for new highs, and the prices of oil and coal are rising all the time. The cost pressure of enterprises is increasing. At the same time, the domestic labor costs continue to rise, further weakening the manufacturing cost advantage of the hardware and building materials industry.

2. Brazil's domestic investment increases import restrictions

Based on the strong market demand forecast of the Brazilian hardware and building materials market, many manufacturers have invested in Brazil to build factories and utilize the abundant raw material resources in Brazil, which will, to a certain extent, constitute a certain substitution effect on Brazil's imports. On the other hand, China is far away from Brazil. Due to the characteristics of hardware and building materials, some products are easy to get wet and easily damaged. At the same time, the cost of international trade shipping is high, which also poses a big challenge to the export to Brazil.

According to the survey data of Brazilian building materials buyers, it is believed that 50% of the construction hardware tools (construction hardware, decorative hardware, wrought iron, handles, various construction tools, etc.) should be imported, and architectural lighting and equipment (led lights, energy-saving lighting, etc.) 31% of lamps, lighting, cables, piping distribution, switches, etc., to import building pipes (kitchen pipes, faucets, conduits, various pipe link fittings, pvc (6210, 185.00, 3.07%)) 13%, imported basic building materials accounted for 13%, imported ceramic sanitary ware and decorative ceramics accounted for 6%, in addition to locks, doors and windows and architectural coatings have about 4% of import demand.

South America is a key export area for China's products. China's building ceramics, construction hardware, lighting and other products have achieved high popularity and market share in the international market with reliable quality and low price. In the past, China's exports of hardware, building materials and lighting products were mainly concentrated in Europe and North America. In the case of relatively saturated and competitive markets in Europe and the United States, choosing a South American market that has not been fully developed and has great potential is the market development strategy for today's Chinese companies. .

China's hardware and building materials export opportunities:

1. Brazil's hardware and building materials market has great potential; Brazil, as a representative of emerging economies and one of the BRIC countries, has developed rapidly, and its per capita disposable income has gradually increased, and the housing conditions affecting the quality of life are increasingly demanding. Brazil's domestic real estate industry is booming, and Brazil is a young country. Newly bought houses and decoration make Brazil's hardware and building materials market have great potential for future growth.

2. The World Cup and the Olympic Games have been held one after another; the hosting of the 2016 World Cup and the Olympic Games in Brazil has greatly driven the expansion of the city. The Brazilian government has greatly increased investment in infrastructure construction and port construction, especially in the hardware and building materials industry. Will benefit a lot from this opportunity.

3. The application of energy-saving and environmentally-friendly building materials will create new growth space; with the popularization of the concept of green energy-saving and environmentally-friendly materials, the awareness of consumers has gradually increased, and relevant marketing efforts have achieved certain results. For this emerging market growth point, countries are focusing on relevant research, in order to obtain first-mover advantage and take the lead, which adds another huge growth point for China's exports in related fields.

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