Why so many Brazilians in U.S.

Fiz esse texto como uma pesquisa que a UC pede aos estudantes que estao estagiando e me dei conta que o estilo ficou parecendo o dos meus posts (socorro, acho que so sei escrever desse jeito agora!). Entao, ja que o blog anda meio parado, resolvi publicar mesmo estando em ingles:

When I decided to live abroad and improve my English, one of the concerns I had was to choose a place that would not be full of Brazilians. I went to a travel agency, asked about extension courses all over the world and did a great research on internet before picking the Global Business in UC Berkeley, where the agent assured I would meet very few Brazilians. The statement turned out to be a lie while I was still in the airport, where I ran into a guy and a girl, both from Sao Paulo, that were also traveling to take the IDP program.  And the lie was confirmed in the first day of classes, when I realized that Brazilians were, at least, 30% of the enrolled students in Fall 2011 term. Fortunately, in my class we were the smallest group: 6 out of 28.

I had a reason to imagine that it was going to happen: on the past few years, more and more Brazilians are visiting the US, both to study and tourism. I could tell that just by spending a day in any outlet of this country, where I would find lots of people speaking Portuguese and carrying as much bags as they could. And the numbers corroborate the feeling:

• In 2010, over 1,2 million Brazilians came to the U.S. and spent 5,9 billion dollars in this country.

• Ten years ago, only 45% of the applicants for the American visa were approved and, nowadays, this index is of 95%.

• In the end of 2011, the amount of interviewers working on the American consulates in Brazil was doubled, in order to attend the demand, reduce the waiting list, and make sure that the trips programmed for the vacations could actually happen. And, even after this, people still had to wait around one month to schedule their appointments.

• In Sao Paulo, 2300 American visa documents are issued a day, the biggest amount in world.

• From 2010 to 2011, the amount of visas issued for Brazilians grew 57%. This number is expected to grow other 30% in 2012.

But…. Why is it changing so much? And why United States?

If we analyze the macroeconomic scenario, we can find the answers. During the past 10 years, the Brazilian economy showed a sustainable growth pushed by many different factors, such as the inflation control and stability of prices, which generated a better financing capacity for the consumer; the adoption of a floating exchange rate policy; the increasing offer of foreign credit; some structural reforms; the cycle of rising prices on the commodities exported by the country, etc. It all warmed the internal economy, creating new job positions, increasing the income average and the purchase power of the consumer.

The United States, on the other hand, is still recovering from the deep financial crisis started in 2007, and has watched the enhancement of the unemployment rates and of the loan levels among the families,  what, as consequence diminished the internal consumption.

Obviously, for a country in this situation, Brazilian tourists willing to shop turn out to be very welcome. And to bring them in, print guides in Portuguese and teach sellers how to say “obrigado” would not be enough, and that is why more visas have been approved year after year.

For Brazilians it is also a good deal to come to US. The Real, our currency, got stronger on the last years, what made clothes, shoes, electronics, perfumes, cosmetics, jewelry and wedding dresses even cheaper to be bought here. Each Brazilian tourist spends, on average, US$ 5.918 when in U.S. — a growth of 250% between 2003 and 2011 — what put them as the third biggest foreign buyers in the U.S., only behind the Japanese and the British.

The Brazilian government launched some measures in order to retain the consumption outside the country and stimulate the internal market, such as increase taxes for international credit card transactions —from 2,38% to 6,38% — and discourage the entrance of U.S. dollars in the country, but analysts say it is not enough for the long term, since the country’s economy is doing well and the risk evaluations are grading it better for external  investments (what the government obviously will not try to stop).

In fact, the high tributary charge applied for products sold in Brazil are more likely to be the reason for this movement. Besides that, there is a policy of taxes that charges more the consumer for products considered unnecessary / luxury, what makes them even pricier. Last year, a consulting company compared the prices of a basket with 30 products in 5 countries and noticed that Brazil was, by far, paying more for almost everything, even more then consumers from other developing countries.

Bellow, some examples:

Xbox 360 4GB + Kinect                                   iPhone4 32GB                  

United States – US$ 299                                  United States – US$ 299                                               
France - US$ 373 dólares                                 Average - US$ 589
Australia - US$ 375 dólares                             United Kingdom  - US$ 993
United Kingdom - US$ 397 dólares                  Australia - US$ 941
Average - US$ 405 dólares                              South Africa - US$ 1.016
South Africa - US$ 515 dólares                        France - US$ 1.064
Brazil - US$ 1.196                                             Brazil - US$ 1.323

Blu-ray X-men Origens                                    Nike Air Max Courtballistec 3.3

United States – US$ 11                                     United States – US$ 125
Average - US$ 15                                              United Kingdom  - US$ 146
United Kingdom  - US$ 15                                 Average - US$ 153
Australia - US$ 19                                             Australia - US$ 170
France - US$ 22                                                 South Africa - US$ 175   
South Africa - US$ 25                                        France - US$ 180                                              
Brazil - US$ 35                                                   Brazil - US$ 315

Aware of this opportunity, the travel agencies are offering special packages for those tourists who want to come to U.S. focused on shopping. It includes flight ticket (usually to Miami), 5 nights in the hotel and transportation to outlets and cost around US$ 1.500. But while the scenario is good for this area and to create jobs in U.S., economists point a concern on the effects it may cause to the Brazilian industry profile, which could diminish the investments in high value products to benefit the primary sector, such as petroleum, soybeans and mining.                                                                                                                                                                     

However, to change this trail, the government would have to give up the income provided by some of these taxes. In a few sectors, such as autos and white line of electronics, they already gave the first shot, but that was not enough to push the demand too far, since it lasted a few months and was not very significant for the final price cut.

I believe that a deep and long tributary reform would have to be done in order to change internal consumption market and make the Brazilians come to the U.S. without thinking about buying all the 140 pounds they are allowed to squeeze inside theirs luggage. But I would bet it is easier to see the tourist visa waived.