« Back To Vision & Imaging Industry Insights
AIA Logo

Member Since 1984


AIA - Advancing Vision + Imaging has transformed into the Association for Advancing Automation, the leading global automation trade association of the vision + imaging, robotics, motion control, and industrial AI industries.

Content Filed Under:


Visual Inspection & Testing Visual Inspection & Testing

A Market Bonanza in Brazil?

POSTED 07/07/2008  | By: Paul Kellett, AIA Director of Market Analysis

There’s much to suggest Brazil as an attractive market for machine vision (MV) products. In addition to spanning a broad swath of South America, its gross domestic product (GDP) reached $1.8 billion (USD) in 2007, making it the eighth largest economy in the world.  Thanks to a government policy encouraging foreign investment and the development of domestic industry, the country has become an economic powerhouse.  That, and the world’s fifth largest population, reveal Brazil as a market of large dimensions, suggesting opportunities for MV companies serving this country’s expanding manufacturing base.  But does Brazil in fact represent a large market opportunity for machine vision companies?

To answer this question, let’s imagine flying to São Paulo to begin our investigation. (We’ve all been working quite hard; so it’s time for a field trip to more exotic climes.)

Touring São Paulo and other metropolitan centers, which are located primarily in the South and Southeast, one of the things we notice is the heavy concentration of industry.  Companies specializing in food processing, metal working, automobiles, chemicals and textiles are strongly in evidence.  In the case of automobiles, each of the major automobile firms has assembly plants including Volkswagen, GM, Fiat, Daimler and Ford.  Other well known firms are represented: Cargill and Nestle in the food and drink sector, Unilever in pharmaceuticals, Noika in Electronics and BASF in chemicals.  Large fuel companies are also found: Shell, Esso and Texaco. Additionally, many large firms are strictly indigenous and thus not well known outside of Brazil, such as Petrobras, an oil company, which had annual sales of $38.4 billion (USD) in 2003.

All in all, manufacturing in Brazil accounts for approximately 25 percent of Brazil’s $1.8 trillion gross domestic product (GDP) or around $450 billion (USD).  It doesn’t take a lot of imagination to realize that helping to modernize an industry sector of that magnitude could signify a financial bonanza to machine vision companies.

“But it’s not that easy”, you say and of course you’re right.  In fact, a machine vision company seeking to export to Brazil faces a daunting import regime with cumbersome customs procedures and the imposition of import taxes that combined with the value-added ICMS tax and other taxes and fees can easily add another 100 percent to the price of imported goods.  According to Alessandro L. Koerich, CEO of InviSys SVC Ltda,
“there is a cascade of taxes that are applied to imported goods (at least five). Furthermore, when selling the products in the internal market, there are another five different sales taxes that are applied on the goods. This cascade of importation and sales taxes raise the sales price at least to twice of the FOB value.”

To avoid running the customs gauntlet, non-Brazilian MV companies typically elect to sell into the Brazilian market through a distributor or authorized agent, such as Attiva, Pollux, InviSys and Omni International.  For example, according to J. Rizzo Hahn, CEO and President of Pollux Industrial Vision Systems , “Pollux has played a significant role in helping Cognex develop a strong presence in Brazil.”

But while working through an intermediary makes it easier to negotiate Brazil’s difficult customs landscape, it of course does not eliminate the high taxes and fees that are imposed on imported MV products and inflate their prices. High prices of course can cut into supplier margins and limit customer demand.  Both factors thus constrict market opportunity.

The way around this problem for foreign MV manufacturers might be to set up production facilities in country, but this is an expensive strategy that requires deep pockets.  According to Pollux, “building a significant local capacity could cost you US$10 to US$15 MM and two to three years without clarity on the outcome.”  Finding a Brazilian partner with sufficient capital might be the solution, or, alternatively, outsourcing production to a non-MV, domestic, facilities-based manufacturer.  However, business relationships in Brazil cannot be rapidly cultivated.

Of course, Brazilian MV distributors are not prevented from building their production facilities, thus vertically integrating in order to replace expensive foreign MV products with lower cost, domestically produced MV equipment and software.

However the obstacles to greater adoption of MV technology are surmounted, one thing is clear. If Brazil is to become a world class exporter of manufactured goods, it will have to achieve greater cost efficiencies, productivity and quality control in manufacturing. And that bodes well for machine vision in the long-run.

Some progress has in fact already been made since the 90’s according to Pedro Bocchini, CEO of Attiva and Altec .  To remain competitive, Brazilian companies have “had to invest in R&D, improve production methods, reduce costs, increase productivity and assure the quality of their products to stay in the market. Government and customers (have) started to require and define quality standards for certain industries.  That (has) led to the introduction in the production lines of modern quality control methods; in other words, Machine Vision products started to appear in the factories (automotive industries, pharmaceutical industries, personal hygiene and cosmetics, etc.).”

On the plane headed home, an important question to ponder is: “Will the Government of Brazil continue to modify its commercial model to foster even greater economic growth by encouraging increased adoption of enabling technologies, such as machine vision?”  Stay tuned…

Vision in Life Sciences This content is part of the Vision in Life Sciences curated collection. To learn more about Vision in Life Sciences, click here.