Angola Replaces Brazil as the Priority Destination for Portuguese Business

Angola é o mercado prioritário para 70% das empresas portuguesas, substituindo o Brasil como o país preferido para a internacionalização em 2013. Esta é uma das conclusões do estudo apresentado nesta sexta-feira na assembleia geral da Aese Business School que decorre no Estoril.

Angola is the priority market for 70% of Portuguese companies, replacing Brazil as the preferred country for the internalization in 2013. This is the first of many conclusions drawn from the study presented this past Friday at the Aese Business School general assembly that took place in Estoril.

This article was originally translated from Portuguese.  Click here to read more from Observador

In the previous study, released in 2011, Brazil was leading, but had become the second priority market, mentioned by 53% of interviewed companies. Non-Portuguese-speaking countries in Sub-Saharan Africa are indicated as a highly interesting market by 65% of businesses, still registering as a fall in priority. Interest in Central and South America grew 54%, becoming the region at the forefront of the priorities of Portuguese companies, surpassing central and northern Europe.

Spain remained one of the important destinations for 51% of businesses. In all of Asia, China interests Portuguese managers because of its growth in the last three years. The relative loss of Brazil as a priority is not exclusive to national companies, also having been verified by surveys with international managers.

What are Portuguese businesses looking for as they choose a destination? For the majority, 67%, what they look for the most is the macroeconomic situation of the market, following the dimensions and existence of an opportunity. Competitiveness and stability are less valued.

The preferred strategy of approaching a new market is through exports, but in African countries partnerships with local businesses are important. The study notes the small attention paid to partnerships between Portuguese companies in the internalization strategy.

What are the biggest difficulties? In Europe and North Africa, companies refer to competition as the number one, following the relatively weak perception of the Portuguese brand, a factor that is an asset in Africa. The scale of investment and the size of operation costs are also obstacles.

In the study led by Professor Adrián Caldart, foreign investment is part of the internationalization of one of the fundamental factors of growth.

Data from the Bank of Portugal shows that between 2007 and 2011, foreign direct investment in Portugal fell to liquid levels in 2005. After a slight recovery in 2012, investment fell again in 2013.

Despite the constant appeal to investments in tradable goods, foreigners like the Portuguese prefer to invest in the services sector. Telecommunications, real estate, energy and financial services are areas that have been strong bets for foreign capital, with emphasis on recent growth in investment in banking and insurance, although some of this could be explained by the transfer of large national companies to countries like the Netherlands and Luxembourg for fiscal reasons.

Angolan investment reaches peak in 2012

Who are the largest investors in Portugal? The study shows that the largest flows in investment come, in general, from countries that are also priorities in the internalization of national companies. Brazil, Spain, Angola and China unsurprisingly draw the biggest investors in Portugal. Brazil lost some prominence in 2013 to China and Angola, but regained strength in 2014. While the European Union continues to dominate flows in international investment for Portugal, Germany was one of two countries who divested in this period.

Already, Angolan investment showed a very strong growth in ten years, multiplying its value by 35, but the peak was reached in 2012 and has since stalled. Angola is entering into the energy, banking and telecommunications sectors, and their operations extend to several strategic sectors of the economy, such as the media.

China entered the top ten of the largest investors in Portugal with major operations in energy and the financial sector. But Chinese investment continues to grow along with other areas, such as health and housing which are the main customers of golden visas.

More than attracted to the domestic market, what the Chinese seek in Portugal is a gateway to African markets and Portuguese-speaking Brazil.

This article was translated by Layne Vandenberg, Staff Intern with the Brazil Institute at the Wilson Center. 

Photo courtesy of Wikipedia Commons.