Interview to Graziano Messana, founder of GM Venture operating in São Paulo.
Never as in this period Italian companies, even SMEs, are looking with great interest to the Brazilian market. Political uncertainty does not seem to affect the growth that the economy of the South American country is experiencing. They know this well in GM Venture, a management and consulting company founded in 2006 by Graziano Messana, based in São Paulo. Thanks to the innovative business model, it manages the financial, administrative and accounting aspects of branches in Brazil, offering a single point of contact for Italian parent companies, thus facilitating total control of local operations.
What kind of market is there in Brazil for accounting and tax advice?
Brazil is a particular market, quite different from the Italian one. To carry out these activities inside your company or branch you have to be big, otherwise all the small and medium companies delegate these activities outside. However, it should be noted that there are no chartered accountants and consequently there are no accounting firms. There are the so called “contadores”, who are figures closer to the accountants, most of whom have little international experience or there are large companies that absorb accounting processes, but often this is not always an efficient solution and, above, easy to choose from. To explain the complexity, just consider that within the so-called “big 4”, KPMG and PWC have decided to get out of this activity because Brazil spends 10 times the world average time to manage its administrative-accounting complexity.
What is GM Venture’s business model?
We started in 2006. Initially we were thinking of helping Italian companies to enter Brazil. Instead, the first projects made us understand that our role was crucial to guaranteeing a correct future management aimed at creating value and minimizing hidden risks and liabilities. So the business model has quickly turned into what is now our usual job, that is doing the CFO in outsourcing: we manage all the activities not considered “core business” of the international companies that invest in Brazil. We assume the position of legal representative that in Brazil must necessarily be assumed by a resident. Almost always then, when companies grow, we add dedicated human resources within the companies we follow. In this sense, we keep the investors safe in Brazil because all financial flows are governed by us and then reported with easy-to-read tools for the management at the parent company.
So how do you manage the issue of accounting advice?
We work and continue to work with three BPO companies that we have selected over time. They have different DNA and different sizes. However, we have intensified over the years the work with a company called Premium, the result of a manager’s spin off, the 50-year old Jose Brito, who was responsible for PWC for years, and last month we decided to acquire a significant share of the company to integrate our activities even more. It is a great synergy and the subject of accounting is an weak spot for companies investing in Brazil, so we believe we have made an interesting choice to better integrate our activities with those of Premium.
How many people work in São Paulo for GM Venture?
Together we total around 30 people and each obviously maintains its own offices, albeit with the usual weekly staff meetings. However, GM Venture’s business model provides for the existence of a more or less consistent staff within the client companies. If we count these heads too, the number of people doubles easily.
How many Italian companies have partnerships with Brazil?
There are about a thousand direct operations, of which the majority are concentrated in the state of São Paulo, which still accounts for about 40% of the GDP of the entire country and includes about 6 million Italian descendants. A culture in some ways very close to the Italian one.
Which particular growth prospects exist for Italian companies in Brazil?
In Italy we have the “product” and here is the “market”. If those who approach Brazil understand that it should not be a hit and run strategy but a strategy focused on the medium to long term, that translates into the right choice that yields good results. There are many companies or entrepreneurs who arm themselves when they go to China as if they were going to war, partly out of fear of very different languages and customs, partly because they are terrified of taking a scam or doing a bad negotiation or even being copied. On the other hand, when these same people face Latin America and Brazil, they are often unprepared and can make serious mistakes: we need to read up well before and not on the way.
Apart from potential problems, for what concerns opportunities, there are several interesting sectors. The internet of things that embraces many sectors transversely as pharmaceuticals, agribusiness and home automation. Traditional sectors like cosmetics, worth 40 billion dollars, and furniture in which there are many spaces, but also within the home appliance sector where Brazil alone accounts for 50% of all South America. E-commerce has staggering figures with 140 million internet users and 50 million of them making online purchases. Even on digital marketing you can do good business, since Brazil is in third place, after USA and China, as number of users Facebook, Instragram and Youtube. And finally on renewable energy where the market is growing in double digits.
And what about consultancy?
I think there is a lot of space also for consultancy. The Italian know-how is rewarded adequately if well directed. We are managing a new start up on behalf of TEMSI, a Bologna engineering company with a 40-year track record. They are applying all the processes implemented in Italy to the Brazilian realities. The result is very satisfying because they manage to dialogue in a very profitable way, that is to say, to the company as their advice reduces the costs of logistics and management in general, and gaining proportionally on the savings obtained in the company. We have just started, and this too will be a start-up that we will carry out in record time, partly because TEMSI BRASIL already has several million reais of turnover in consultancy to be consolidated in the new Brazilian company. But we have also followed other cases in the past on specific advice in pharmaceutical certification or IT consulting in the measurement of waves emanating from mobile devices, recalling that Brazil has 200 million people and 210 million telephone lines.
Full article (in italian):