Webinar Transcription Felipe Cusnir (CITC): Hello everyone, Felipe Cusnir here with the California International Trade Center (www.cainternationaltrade.org.) Thank you so much for joining us this morning or this afternoon or this evening regardless of where you are in the world. We’re very happy to have you here with us. This is “Conversations from the Field” the first of its kind for the CITC in terms of assessing and analyzing the changes on the supply chain and the consumer behavior and trade in general with a focus on ecommerce and digital platforms of doing business in Brazil or with Brazil. We have kind of a compact program today with about 60 minutes. I am delighted to have so many people online joining us, and even more delighted to have two really amazing experts from the field that are doing a tremendous job in international trade, ecommerce and supply chain between the U.S. and Brazil, and more globally as well. We have with us and I’m going to speak in the order of the agenda here today. We have with us Ticiana Martyres. She is the founder and CEO of Qi.com, a commercial intelligence consulting firm focused on digital platform leveraging digital and omni-channel for market access, intelligent market and development strategies. And we have Maricar Masakayan who is the VP for International Development and Business Development and Operations for Boa Logistics (www.boalogistics.com), a very well-known company here based in Culver City here in Los Angeles, but also with a good presence in Brazil and I would say throughout the world because I’ve seen a lot of their work also throughout the world. So, the focus of the conversation today is again to give an update on what is happening with Brazil and I’m happy that Ticiana has so much expertise to share with us. You’re going to see her presentation in a minute. We’re going to talk a little bit about the economic development and economic situation of Brazil, especially when it is concerning the impacts of COVID-19 pandemic and then a little bit more on how the transition from brick-and-mortar to ecommerce and how the consumer behavior is also adjusting to that. And Maricar is also going to give her insights about what is happening with the supply chain, how trade is behaving as well in terms of doing business with Brazil. So, thank you again so much everyone for coming. We do have a Q&A feature on the dashboard here if you want to access us, but either I should say in advance is that we will be enabling people to then connect with us and with the speakers afterwards for an offline conversation, so, let’s focus just on the presentations today. I’m sure they will have a very fruitful and productive conversation. I look forward to engaging with which of you that is already connected right now. So, with that I’m going to turn it over to Ticiana. She’s in Sao Paulo, Brazil, and she will give us her insights on everything that we’re going to discuss about doing business with Brazil. So, thank you so much everyone. Thank you Ticiana, thank you Maricar and let’s get going Ticiana. The floor is yours. Ticiana Martyres (www.Qi.com): Hi everyone. Thank you CITC (www.cainternationaltrade.org), Swell Capital (www.swell.capital) and Felipe for the invitation. And well, Brazil as all the countries in the world is acting actually in the daily basis for whatever happens the last days and the next days with other countries and then actions are being taken importing masks, importing alcohol, gel. So anyway, but we indeed have some peculiarities here that I am going to share with you today. Well, I’m Ticiana. I’m a retail executive, a former Commercial Director for a Chilean home improvement chain, Sodimac, that was opening doors here in Brazil together with the team. I was a former Senior Vendor Manager for Amazon. So, Amazon was here first only for books and then Marketplace. We’ve structured directed so many expansions set up in Brazil. And then now in November, I just opened doors for my consultancy firm because while digital transformation is definitely a challenge especially for industries and importers that had to set up all these things. So, now with COVID-19 everybody was just thrown to digitalization I would say. So, here I’ll go for a quick overview and scenario about Brazil because we’re in a certain way an expert in crisis. We always been through them and surviving and then going again. So, the ends first month impact concerning COVID-19 and some quick forecast for 2020 and 2021. Well, I think there will be some slides but we’ll go here and afterwards and we can have some questions. So, recent years, these three The Economist front pages were really for Brazilians at least but they are really warning us concerning what was going here since 2009. Brazil by the end of 90’s beginning 2000, did a lot of structural economic successive actions that strengthened us. We’ve been from the 80’s with inflation more than 3,000 a month. So, 2009 when the big international economic financial crisis came in, it was a tsunami for many countries and due to our structural economic reforms, we tackled it. So, we fast moved on from the crisis. In 2010 was already a peak of growth but this peak came through public spending, a lot of actions that were really important, but the public spending should have stopped and it didn’t. It just kept on growing and so five years later with that same formula that took us out from the crisis, got us in. Again, we being through intense deceleration and a lot of political issues came in and so we’ve been through an impeachment and then federal funds rate at exploding of 14.25%, huge contraction, unemployment rates exploding also, we’ve been through crisis. During 2017 and 2018 we started to recover with the president impeachment Dilma came, the Vice President to replace of course for was democratic situation. He’d start aligning congressman, some structural reforms start to be aligned I would say. So, 2019, after 15 years, there was a shift power and this power shift was blown important because then a new management team could take place and so to really start implementing really important reforms that would get us out of that huge public spending. If there weren’t done in 2019 in a delicate situation concerning being able to pay debts and well to keep on going with the country. And tax, fiscal, administrative and pension reforms were done in order to drop unemployment rate, the federal funds rate were lowest rate in history. So, all this really brought courage and businessmen, politics take all of us, was kind of okay, 2020 will be the year. So, companies got prepared, started hiring and preparing to invest. Actually, this is how the scenario by the end of 2019 ended for commerce. So, all that I’ve spoken by now it’s like to give context, now about ecommerce which is why it actually this is all about. Brazil Ecommerce History When ecommerce started, brick & mortar’s aggressive and pulverized players merged or successfully did their own ecommerce by that scenario. So, it started in 1996, some of the players started in 1996- 1998 and there’s two years. So, Lojas Americanas (www.americanas.com.br) or American store. They bought Blockbuster and used the store points to pulverized it. So, almost 2,000 stores and they migrated. They still are really strong for a physical store, but they are very aggressive, very good punch on ecommerce. With Bahia (www.bahia.com) which is a mixture of Best Buy and would be kind of Ikea but really for furniture. So almost 1,000 stores, same for Magazine Luiza (www.magazineluiza.com.br) also almost a thousand stores. So, this is how ecommerce, the huge ones really started. We were saying about brick & mortars Brazil strong players. Pure online players. There is Mercado Libre which has 48% of Internet flux in Brazil, a lot. They started a certain way as eBay but not really, it’s a Marketplace. And so, these are the guys that since the beginning concentrated that long tail part. They were those teenagers that have an idea and this idea become a t-shirt and so, maybe these guys start to earn like 2 million guys in a month. And these were the guys that enable it to be in NASDAQ. Also for fashion and for shoes and for home and decor, they are successful guys here, like: Dafiti (www.dafiti.com.br), Netshoes (www.netshoes.com.br), Amaro (www.amaro.com) and Westwing (www.westwing.com.br). Dafiti was for a German group and was the first one that opened for one piece or equipment, for shoes being really aggressive also. And then, Amazon started here in 2012 only for books, and then 2018, it started Marketplace with a lot of categories and 2019, opening like its full ecommerce model. So, ecommerce in Brazil just a little glimpse. In year 2000, 9.8 million people at Internet and 50% at least tried once online shopping in the early adoption. Ten years later in 2010, 100 million people were at Internet, 23 million online shoppers, 62% of the population already had mobile phones. Not all of them with smartphones, but with mobile phones and mobile shopping starts. And Brazil has always been a top 5 country in social media usage or adoption or change side of the orchid and then migrating to Facebook and Instagram and all things that the whole world has. Shoes were definitely a success for an approach and a pair of references for online shopping being fast, easy to exchange, easy to deliver, of course with challenge because Brazil is a challenging country in logistic and we depend on national postal service. Its long tail happened through Marketplaces and basically Mercado Livre. By that time, Internet ecommerce was about war and it started something about omni-channel by retailers. Still didn’t give that importance and they didn’t have the know how actually of really integrate things. So was price-war, low profit (or none), poor delivery promises and experience concerning big retailers until 2017. Walmart decided to get away from ecommerce. So, this was a mark that gave the vendor markets the thought that Internet maybe shall not be that thing or I have to be careful, even Walmart left it, so maybe will not be that thing. But then, in the same year 2017 in October, Large Appliances and TVs for the first-time, their share was bigger in Internet than on physical stores, and even with those with 2,000 stores or 1000 stores. Then companies said, well, maybe ecommerce has a certain profile. And the last thing for 2017 was the news about Amazon’s expansion opening the full of them. Yes, it was like a change in the mindset. You had to prepare. In 2018, 138 million Internet users, almost 60 million online shoppers, growing a lot (+87% in 5 years), Marketplace consolidation and Brazilians daily Internet use (9.25 hours) about 50% more than the world average (6.5 hours). So, Brazil is about connectivity. It’s about behavior to be in touch with people. In 2019, Amazon opened so this is a big park from the office and Amazon do not allow to disclose some figures, but you can see how the 1P team was just opened. So, there are a lot of people in there. Amazon opened doors in January and keeping on opening categories and on September it did he best World Prime launch. So, Americans know what prime does to market in sales, base for the flywheel to turn. In 2019, Black Friday consolidation because Black Friday campaign has always been an effort of will if it gets something American consumer will not anticipate Christmas purchase. Yes, it did. So, here was definitely the consolidation of Black Friday. Vendors, finally understood what to do, retailers understood how to set up things and really leverage sales so we’re really increasing and not anticipated them. So, 3.2 billion in two days, so it’s a growth of more than 20% in sales and more than a half of the purchases were made through mobiles. Don’t know your sales for ecommerce. Almost 62 billion. Yeah, I switch by that time with the exchange rate of 4 (US$15.4 billion) and I start now to highlight dollar exchange rate because it’s something important to Brazil since we import a lot and affects how people really is up to buying or not something that gets expensive or not. Ecommerce in Brazil 2019, it’s a consolidation of consumer behavior changes. Installments, Brazil has always been placed under that you enable a growth of purchase through dividing the same purchase installments. In 2000, ecommerce installments work almost half in 10 times, so you buy something from a country and you pay ten times ten. Almost 20 years later, more than 50% is paid at once and something that’s called boleto. So, you buy and you receive a paper and then you go to and then you enter online banking and pay. So, this shift came through a lot of crisis and especially the last raised in 2015, which a lot of people got unemployed and so they have to plan a little bit and not just keep on dividing things and then you have that and you don’t know what to do. So, this is it, really huge change. Decision factors, price which 10 years before, 5 years before, it was the only thing that matter well promise, experience and reputation counts now. So to have a promise and to have an experience you definitely need a lot of enhancement also and technology and an understanding that if a consumer buys from some brand, well that experience belongs to the brand and not to the distributor or to the guy that just knocked on your door two days later than the promise. Stablish journey starts with tickets air fares and restaurant delivery and then consumer goods, last target of that but the fast-moving consumer goods, fresh food fast. COVID-19 Effects in Brazil Well, then COVID-19 helps us that last mile and then comes 2020. January great retail months. Ecommerce grew up to one-third selling, 1.87 more than in December, you have Christmas. Well, 27% in sales business work speeding many sectors, fairs with high business volume and attendance, companies speeding up new hires, especially those involved in technology and ecommerce, and it reached 5% share in total retail. Total retail except vehicles, Business, Industrial, and Scientific Supplies (BISS) and construction. So, except for that, it had 5% of growth of sales share. And dollar exchange that was one month before 4.28. Then February, the disease risk and the petroleum prices start to really impact and companies that import started to take seriously the convening packed especially on companies affected a lot in China, those that produce components. So, still here no actions by our government nor companies and our exchange rate was 4.48. So, this started to gain on prices and on planning. And even with COVID-19 the Carnival still happened. It’s a great agglomeration of people all over the country. And well COVID-19 was happening but not yet in Brazil, but last day of carnivals, Tuesday, and then on Wednesday, February 26th, the first COVID-19 case was confirmed. Our luck was actually that it was confirmed in the best hospital in Brazil (Albert Einstein’s hospital), so they followed all the protocols. They are just less than a kilometer or less than a mile away from the governor. So, it has an intense study around that, intense communication with the government. Sao Paulo response for 43% of GDP, Brazilian GDP and respond for 66% of ecommerce sales. It happened on the heart, on the economical heart of Brazil, but still it was something Sao Paulo city happening. Brazil didn’t really wake up for that although all the authorities were already known what to do. On March 8th, when Italy lock down, incidents influenced Sao Paulo behavior, then they say, maybe this is really serious, and what we will do, so it was Sunday. On Monday, March 9th, it was our first circuit breaker, but basically due to petroleum prices, not yet COVID-19 and dollar, two months later was 4.78. This is our President and now some players that we start to see in a daily basis, which is Sao Paulo Governor, Joao Doria, and also the Health Minister, Luiz Mandetta, who by the way in the following days, this guy really being someone that communicates very well, that everybody starts to believe in him, and he did a lot of technical successes and important actions concerning what to do in health, what to do with the country and the population itself. By that time, all of the three were online. This is a succession of happenings, of effects. I would say March 12, pandemia was declared, March 13th the governor’s speech declaring that high school student had to close and it would give one week. So, elementary schools to be closed in order to kids don’t go to elderly and then content. They have their contention of the elderly. Started to think in a holistic way. Then on March 15th, unfortunately, the President goes against his own words and went public and he had a guy in his team confirmed with COVID-19. So, he should be isolated, but he didn’t, he went to public and started touching people and taking pictures. It started highly like a media crisis. And started a political issue. First COVID-19 death two days later, then next day, team together with the President, a lot of Ministers, all online, saying stay home, isolation is important. We are still evaluating what to do economically speaking, so we will come to with the package to help those that don’t have a formal job or those who might get without money to spend. We will have public spending; give us some days and we will communicate it to you. Shut down, first lock down day in Sao Paulo on March 24th and then on March 25th, there is a public discussion between the President and SP Governor, because the President said, people must go back to work. It’s against what the whole world is doing. It started a political issue, a little bit more intense between the two, but Sao Paulo is the richest state and that’s where the epicenter of all the issues is happening. Sao Paulo state is the only state that has an office in China, so it’s the state that’s really focused on business, really focus on relationship because the Governor used to be from the private initiative, he is a very wealthy guy with a lot of business. So, he had that vision, let’s have a good relationship with countries and among states. Well, he has been doing a daily one-hour public speech, giving each day what was happening, what is the next concern, what imports concerning vaccines or masks, what is being done by the Governor. And the dollar exchange rate on April 3rd reached its historical peak of 5.326. It’s 1/3 increasing for month. That really gets into Brazilian economy. I received a question from Doug. Will the Brazilian government be strong like they need to be with COVID-19? Yes, despite the political issue, all of them, either the SP Governor and the President, all want to get through, all want to have the least impact on economy and it will do. So, despite this, the strength being know, kind of a fight. Yes, economical efforts have been done, hospital campaign, hospital are being constructed in days, like 15 days, 20 days, not nine days. Like China, but they were done, a lot of cities did that, so we will get through in the best way. Economy packages already are done. First scenario, since in Brazil 41% of all workers are informal, so not a formal connection or formal economical relation and 63% of the country’s GDP come from service, a lock down, of course, leads to significant impacts. Sales in total retail concerning having a 100 base, Sunday, February 2nd, already lost like 26%, almost 27% of sales concern services or consumer goods when it comes to stock markets. All the big retailers went down comparing a month from COVID-19 confirmation and now, so then either a lot of money or a large percentage points afterwards you can see but basically those that I could talk is about retailers, either electronic or fashion big guys. Ecommerce Consumer Behavior Behavior, digitalization, the elderly and young push to find ways of connecting with family, working at home, purchasing online, online banking. Some concern was that we’re already the winners. Concerning toys, food, personal care, cleaning supplies same that happened in the whole world, but since Brazilian have more than 200 million mobile phones, it started Live. We see Live everywhere, Instagram live, LinkedIn live, just marked it Live on Facebook and concerning live, immediate change to super important. Our biggest media (TV Channel Globo) that sells soap opera programs around the world, they just said we’re not producing, we’re just repeating because we need to protect actors and people. And Beyonce’s historical record that was 458,000 simultaneous views when she did it in 2018 shows, was beaten three times in a row by three Brazilian players. This girl, Marilla Mendonca, reached 3.5 million viewers when she was doing a live from her home. So, we see live of area just digital right now, it doesn’t matter the age. Infographics, despite the crisis, the first quarter concerning ecommerce was very good. It was about 50 million orders, 1/3 growth from last year, sales 20 billion R$. So, 26% growth you need shoppers, you just grow. You see ecommerce and you see growth; you see intensity. In categories, there are winners as I mentioned and beauty is by far. Beauty and personal health care that Brazilians are full alive for beauty services. We take care of it, if we cannot go somewhere, we need to do it in our house. Sports, we enhance sports in-house, yoga thing and push up things at shop. We are the second biggest market for pet, so you see increase, and fresh food, delivery groceries, of course, it was a hit. You see a movement (#dontlayoff), only retailers don’t lay off. So more than 4,000 companies got together and said, we will hold a little, trust, stay home and their promise is not to lay off until May 31st. So, June starts a whole new scenario, but in a daily basis some follow Governor and said this is a well-known, so whenever this stop, you will need people, so do not lay off and they’re complimenting whatever the government said, the federal government is giving us an economic package and Sao Paulo state is like doubling it. Brazil Economy Forecast Forecast, can we do some forecasts for this crisis? Well, I just printed the Deloitte for the forecast they did. Actually and of course, food and grocery have the peak and then it will come back concerning June-July. You come back to normal, but of course with different challenges as well as all the rest. It will have a recovery and shall be by December by the way. Shall be getting back to its original pace some of the sectors. Brazil, well, the World Bank has forecast that will lose 5% in the economy, their previous forecast was to grow by 1.3 or 1.9, I’m sorry, I don’t remember, but now we will lose it. So, let’s see. And as a last slide, there is a force to digitalization “5 years in 30 days” here. CEOs for global companies say that Mexico, Colombia and Brazil are the ones that shall be the winners on that, due to the speed that companies are doing the way they can to their digitalization. And in Mexico, by the way, might be elevated as a second option to China when putting industrial bases. Banks, media and colleges are doing webinars all the time. So, giving content, giving what we are doing to stretch ourselves concerning the scenario, 46% of consumers saying that well, I got in touch with brands that I have never been before during my physical shopping. It’s a change and Mariano Gomide (VTEX CEO) from London, he says that definitely Brazil is spinning up on answers and he’s one of the leading voices pushing industry, saying, digitalize yourself, whatever the way, we can put your online shop in hours. Contact us and sell, then whatever you do in this period, when things get back you will be faster and in a faster pace for recovery. And Ricardo Amorim, who is economist, LinkedIn Top Voice, he said “this will be the greater crisis of our generation, but it doesn’t mean that everybody shall go bad – crisis generate business change, those who fast adapt and perceive new consumer needs shall win” and uses Uber, Airbnb as examples of 2008 crisis and Supermarket winners in these crises, they were born by 1929 depression.. In Brazil, imports get a lot of time to get to Brazil because we have a lot of certification issues. There are restrains concerning some categories get a little bit more complex. So, cross-border market is an opportunity to Brazil? Yes, it represented R$6.1 billion or US$1.22 billion, considering out 5 exchange rates, with almost 60 million orders made by 14 million shoppers and so resiliency, variety, selection, seek better prices. In Asian proverb, it’s better to see something once than to hear about it a thousand times. It’s time to instruct yourself to come to Brazil or in 2021, or maybe already by the end of the year, because cross-border is an alternative. Remember that. This was the Redemption of Christ in Easter. There was a projection they did in Disney Princess Castle, Cinderella Castle. They projected things in Redemption of Christ in Rio de Janeiro. And in Easter they said, stay home, we’re all together putting doctors and health workers and while for that I say, thank you. Felipe Cusnir (CITC): Very good Ticiana. Thank you very much. This is great. I love the way that you’ve wrap this up. This is great. A lot of positive feedback from the audience, but I want to say thank you so much because this is great, because it shows more of an overview of what’s happening just beyond. Just the trade itself. It’s more about what is happening with politics. What is happening on the consumer side and all of that, but I think to add thank you for that. This is a great presentation. I want to turn it over to Maricar because she’s going to talk a lot about the actual trade, what is being sent to Brazil, what is being shipped from Brazil and what is the forecasts or what we expect to happen in the coming months. Maricar, I am going to upload your presentation here. U.S. – Brazil trade and Main Products Maricar Masakayan (Boa Logistics): Hi, very good morning to everyone. Very insightful background Tici. For me, I’m going to cover more on the what’s really happening in the market right now when it comes to trading, shipping and what’s affecting the market. My background is more on supply chain back-to-back, domestic and international. Right now, with numbers, I wanted to give you a background on the next slide, please. The trading background of USA and Brazil and when the impact was really happening back in 2018, these are the numbers that we were seeing and back then, there were like really high hopes and having to get a good kick off on the 2019 economy, between U.S. and Brazil. The estimated total of exported goods to Brazil last 2018 was about US$39.6 billion, which is a really good size and Brazil is one of the largest importer-exporter all over the world. And the estimated total of imported goods from Brazil’s to U.S. is US$31.1 billion. We’re talking about billions there. As I mentioned before, one of the largest trading partners of U.S. is Brazil, it’s the 13th, and we’re talking about US$70.7 billion imports and exports in combination during 2018. So, a lot of like products are a lot of common commodities right there, but most of the ones that stands out in the industry when it comes to what we’re seeing is the wheat product, prepared good, chocolate, and cocoa products, most specially feeds, eggs and its derivatives. So, the imported commodities from Brazil to U.S. are mostly coffee, beverages, food and all those parts. I’ve seen a lot of come, we chose those, they are like the famous things that our people were seeing a lot coming in the market, even if there’s a COVID-19 happening. Can you please turn over to the next slide? I’m just going to show you like these are the Brazil imports from the United States. If you can see here the value, these are the top products that we are importing. Mineral, fuels, machineries and all those things that I said to you like the most famous now coming in right now during COVID-19, or mostly perishable goods. I’m going to give you an overview and what I’m just giving you is an overview and what’s happening right now about Brazil and U.S. Back in 2018, here you will see the exports from Brazil, right 29.7 billion dollars back then machinery and all those things and I think it’s the same. Can you turn over to the next slide please? This is the most interesting part. So right now, Los Angeles is the biggest Port in the U.S. and this is a monthly projection. It’s actually the actual loading containers for March if you can see on the column 2020, look at the loaded imports 220,000. They’re coming in TEUs. In 2019 you can see, it’s just very slight downturn or downside on the import and export is you can see the difference in there. What’s happening here is that we’re not seeing the worst of it yet. We’re going to it in March. It didn’t happen yet. Like what’s the impact? We’re not seeing. It’s basically the closure of the U.S. Is like what started March, April it’s very late. We’re not seeing the worst of it. We’re bracing for it, what’s going to happen in the market. Can you turn over to the next slide please? These are the real issues now that I wanted to really focus on. We’re still projecting some uphill hopefully when the crisis is over, we’re very hopeful that the market is going to turn around but it’s not going to be as fast as we’re going to be anticipating. Slow down on demand due to the pandemic. China, Europe and the U.S. are Brazil’s largest export markets and we know that. And back 2019, I think it was kind of like before the pandemic happened, what was happening in the market is that a lot of the supply shifted from China, a lot has been shifting and a lot of imports from the U.S., they’re trying to source out all from other countries, like Vietnam. Brazil was one of the countries that we’ve seen that our clients are like saying, can you try to source out the goods from Brazil? Do you know anyone from there? It’s a lot of shifting, it’s a lot of promise. Now, the power was changing and then, I’m like, this is good because it’s not going to be like a monopolist economy, just bringing in from China which is giving other countries chance, but then there came this pandemic. December it shifted a lot of problems and we’re seeing like back in December, like what’s going on? And then, January, February, that’s it. So, what’s odd is that because we are anticipating a lot of changes, now China is coming back and we’re all paralyzed. And this is what’s going on in the market. They are saying like, all it’s a conspiracy if you’re in something like that, it’s a thing. It’s like we have to be hopeful that everyone’s going to be resilient and going to get back on their feet, like if you can see I put here a final financial deterioration, there’s still a forecast of 1.3% for 2020. So, we are hopeful that everything is going to go back to normal and Brazilians, Americans and nations around the globe will bounce back soon enough to recover a crashing market. So, right now, the problem at the Port, I don’t know if you’ve heard that already that there are a lot of backlogs and support to, but it’s not happening because a lot of closures happening all over the world, a lot of importers, they cannot pick up their products, their containers at the Port because their warehouses are closing down. There’s stuck and because the demand is so low right now, there’s not really much happening. There’s a slow movement in the port, even for air, for air the prices are really high right now. There’s like a demand of food, back and forth in the country, but not much like if we’re anticipating during peak season. So, we are going to be hopeful that this is going to end soon from our end is in the logistics industry. We’re seeing a lot for what’s getting hit this, the intermodal, the local trucking in the USA because of this low demand. We are there in this situation. When I was looking at your presentation Tici, it’s explaining a lot right now. Like what’s going on between the U.S. and Brazil, is not just about the U.S. and Brazil, it’s all over the world. With that, I’m going to give it back to you Felipe. Felipe Cusnir (CITC): Thank you, Maricar. This is great. And I think it really shows the picture of what we are experiencing. Maricar, just to add to what you said, you saw a lot of the challenges that the supply chain is facing now because the warehouses are closed, there was I think in anticipation of the economy shut down or because of the quarantine, there was a little bit of panic buying, so, tell us a little bit about what you saw. An increase of the shipments actually, it’s similar to what happened when the trade war started with the tariffs in China, that because a lot of the companies here needed their supplies, they started to actually buy way ahead of the actual tariff kick in. Did you see some of that because of the kind of panic shopping when people started to go to the supermarkets or buying everything in advance of the quarantines? Did you experience that here? And are you seeing some of that reflection also with the trade between the U.S. and Brazil? Maricar Masakayan (Boa Logistics): Yes. This is very interesting because we have a cold storage facility and during the storage of the closure, when they first announced, they said people just panic buying, nothing in the racks. And so what we’re doing is like there was a short on demand for trucking and we were just delivering as fast as we can like a early big round the clock to replenish whatever it’s in the market and here’s the bad thing though, because people hoarded so much, now, they’re replenished enough, people started producing a lot like the manufacturers before the closure. There is so much good and to be honest with you, there are so many stores that they had this policy no return, why, because the people who hoard, they were trying to return goods, but the thing is that they have expiration dates. Trader Joe’s is happening this because we’ve been delivering a lot for them when the closure was like looming it, but now we’re like halt. There was a time that we have to back the trucks in our docks because we were so worried. We closed all the gates because the people. We were just protecting we were really protecting that time, because people were like watching where the food is coming from. We have a farm like a fresh goods’ cold storage facility and these things we deliver to Costco with Trader Joe’s and all those stores and people were like tracking where the trucks are coming from. So, guess what? We have total closure for and we have a schedule that’s going on. But now, the market they have a slowdown. The only commodity that’s still very much in demand are toilet papers, this the key piece. That’s it. But otherwise, food, everything is in there and there’s not going to be any shortage. We’re in the industry and we can see where it’s coming from, is still producing the same but it’s just that because of the hoarding is kind of like back the demand up for short periods of time, but it doesn’t mean we’re going to have a shortage. It’s just the anticipation of the usage is much more emergency like, but when it’s not. Now we’re back and if you go to the source, the lines are just queued up because of the social distancing. It doesn’t mean that we don’t have the commodity to do that. And to answer your question between U.S. and Brazil, we’ve had clients that we’re supposed to have the Expo right in Anaheim, so we have a lot of participants because we have a presence in Brazil. So, we have clients that are actually joining the Expo, they have prepared for that. They spent money bringing their good sampling. They paid a lot of money and when you go to Expo you have to pay for the booth and they had the closure last minute. We didn’t go to do the Expo. So, what happened with that, we have to store their goods in the warehouse and this is an additional cost for them. And the anticipated launch of their product was halted. It’s not only just about the trading, it’s about your investment. These are companies that are from Brazil that are trying to penetrate the market in the United States. What I’ve done is to help alleviate this impact to them. There was like LinkedIn, this group of people, the owners, the manufacturers. The sellers put together a link at that day for the Expo. Like “let’s sell the goods here.” So, it’s an innovation, the market is very resilient. We’re going to find a way to survive, that’s what it is and we’re not even like so worried about it. That’s why logistics is one of the industries that need to survive because if we stop, that’s it, you’re going to see like no more. The front liners are not just the doctors and nurses, it’s also the drivers, is the people that work in the logistics industry are there, so we make sure that all the goods are going to be in the market. Downside is a sight, all those kombuchas that are coming in before and we’ve had clients that came to us and ask, can you give us leniency on things and we can do that but here’s the thing, no one’s buying like it used to be, like the frozen yogurt because their stores are closed. So, retailers that you see from malls, you will see that there are out. They used to order every single week. We have LPL trucks coming out of the market. Now, we have to store them, so added custom inventory for them to keep it and then no clients and they have expiration date. It’s a big loss in the market, but surprisingly because people are not spending much, they like the yogurt stuff. So, stores are still replenishing it. It’s not that bad because we can see, we can tell where the first beat industry that who’s going to see, what’s going on if there’s really a shortage. I told the warehouse if something happens, I know where I’m going to get my food, we have access. That’s kind of thing right now. It’s not the only downside is because there are so many small companies that closed down already because they’re not essential, they are non-essential companies, which is really bad and we feel for them. But the good thing is that the U.S. economy is very strong and they extended 15 safer at home closure order it’s probably going to affect a month more, but after that it’s back to business, so, let’s see. That’s kind of like what we’re seeing now. Felipe Cusnir (CITC): Yes. Good. Ticiana Martyres (www.Qi.com): I’d like to add that I mentioned VTEX. There are a lot of retailers that in days, they are turning their stores, I mean in Brazil, shopping malls are very strong, there is an important behavior to buy and to eat and to entertain yourself in shopping centers. So, we have restaurants and everything. A lot of retailers are starting to structure the stores inside the shopping malls as distribution centers. So, despite of uploading a website that it’s very strong and all the capabilities to support that, they went fast and articulated shopping malls to allow people to get in their workers, and in three days, there’s a chain here of toys that made more than 200 selling points out stores as distribution centers and they confirmed the order with the stock that they have in there and deliver or not. These kind of ways since Brazil way out, a lot of people depends on service and the services are closed. So, either retailers that depend a lot on shopping malls that are closed are people that depend on services that are not open. They’re finding ways in order to survive. For toilet papers, the first days were there also as all over the world but except for the days prior to the lockdown, March 16th, March 23rd, we haven’t seen any more shelves empty. Management is being done perfectly. And by the way, as a consumer behavior, it started a campaign that said “don’t go and stock up because elderly the ones that cannot go out, they’re not able to carry.” And another movement is saying “go to buy to small business because small businesses are the one that will not have oxygen enough to survive after crisis.” So, the movement is don’t stock up because we produce a lot of food and so we will not be out of food and out of supplies, don’t and try to survive. This is the mood that it’s going to Brazil. Although of course as I shown, I mean 27% reduction on total retail and we’re not worse part yet. It will have a shot. The financial degree of risk that you mentioned, yesterday was the glow of the World Bank from 1.3%, it got down to minus 5. This is it and I don’t know the ones that see the opportunity and respond fast might minimize impact and survive. Felipe Cusnir (CITC): Yes, so that’s great. And I love the comments and we could be here for hours. I know we are very passionate about this but I want to keep this short and we are a few minutes over already. I want to make just one final question. It goes to both of you. I’ll address all the questions later everyone. Thank you so much for all the questions. We have talk about the U.S. – Brazil trade relations, we’ve talked about how the impact of Brazil, of the U.S. – China relationship is actually trickling down to Brazil, but one thing that I wanted to kind of summarize our conversation here is how companies and governments and people are being innovative in the ways that they behave and they have access to products or they have access to information or anything that can make them a little bit more at ease with the crisis that we’re going through or knowing that, they will have access to the supplies that they need. And to that point, I’m going to start with you Ticiana. Everyone is being innovative or trying to be innovative like the shopping malls becoming distribution centers, but you mentioned on your presentation the nine-month lead time for something to get imported to Brazil. My question to you and it comes to some of the questions that popped up is, do you think that the government is going to use or benefit from this, I think you also had another slide that said, what used to take months to happen, now, it’s happening in 30 days in terms of companies uploading their contents to the web and trying to create an ecommerce platform, do you think the Brazilian government is going to go more towards a tech approach to enable faster shipments and arrival, why not with our good friend Fabio who has done a tremendous job with egov and say are we going to see more of an automation aspects of the trade so that the products are going to be able to be shipped and be cleared in Brazil quicker, and then you give your intake and then Americans can see their insides. Ticiana Martyres (www.Qi.com): When I mentioned nine months is considering a flux of retailers, also because you have an open to buy, you plan what you’re going to sell and from the time you decide that you will buy something, you will import something. If you don’t have certification issues or in metro or you don’t have a different plug which we have a unique plug on, the only country that has like this. So, a nine-month cycle is considering the retailer cycle, you can if you have like 30 days to be here, but only if you have a certain product that you prepare your label considering the mandatory needs here. You have a ticket or you have all the distributions that you need if you’re going forward to sell. If the government will benefit from this crisis to have more tech approach and faster, it might but Brazil is a country of bureaucracy. And if you have products that depend on certifications, these certifications will depend on offices that maybe will be shut down until June. So, it depends on a lot of things, not only the tech approach. It depends on certifying it but if your goal is hangers, if you are a hanger producer, you can be in 30 days here if you set up someone who buys you and you set up a product in a Marketplace which has international shipping. So, in 15 days you’re selling here. It depends on the product, depends on the chain and depends on the certification, but retailers right now because they have their stores shut or they are stocked up, at which point they will introduce products. Well, it will take a while, so you have to go for faster options. Felipe Cusnir (CITC): Okay. Great. Thank you. Maricar. Maricar Masakayan (Boa Logistics): Alright, so for my side technology it’s always been there. This pandemic happening is actually a smooth transition because we’ve been doing ecommerce, we’ve been developing ecommerce right now for the past years already, and with the technology, is a part as far as we are concerned it’s been going on already. We are in communication, people are already doing Zoom conference back then in the days, so there’s not much that we are panicking over things. We know where to get, we know how to connect with people like just like that. When the closure happened, it’s not such a big impact. It was I think, it’s media hype. I’m so sorry, but it is. People find ways to communicate with each other especially now in this, technology capable industry and we’ve been seeing with the clearances for example, import we’ve been seeing a lot of like faster responses like customs, especially with medical equipment and all those general-purpose masks and stuff like that. They’re just like clearing it like this, usually is very tight. But here’s the thing, I’m just going to go sidetracked on somewhat for example, Vietnam or China. Vietnam especially they’re trying to export masks here in the U.S. but Vietnam government is regulating their masks. They need to service their market first before they give it to someone else. So, when it comes to Brazil, it’s mostly food commodity. So, it’s not much of an impact, you know what I’m saying? It’s going to get back up. That’s why I’m trying to say to you earlier that there is a 1.3% of upscale on GDP still because is food products. Unless it’s the commodity coming from Italy, like purses, who’s going to buy purses right now, like seriously and the expensive ones? People barely go out, maybe when they’re back up again, they will be starting to get their salary back in the 100%, then they’ll start buying again purses, but food industry, which is the strong market between U.S. and Brazil is always going to stay and we’re not even worried about that. That’s my closing point. Felipe Cusnir (CITC): Thank you so much. I’m going to wrap up. This has been a few minutes over but I really loved the presentation. I really believe we’re going to be doing a few more of those. Now, we do have questions coming in. I want to give a little bit of inside as well. There is a very strong proximity between the president of Brazil and the president of the United States. President Bolzonaro in Brazil is a fan of President Donald Trump. He created and I’ve been to Brasília to talk to them, but he created the Department of United States within the Ministry of Foreign Affairs, just to strengthen that relationship with Brazil. This is happening. We should see more and more of the benefit of that relationship going forward. The challenge of that though is that the crisis is creating a big dispute or it’s polarizing and it’s making people politicize a health issue or an infrastructure issue. And once we start doing that then we start to see more of a focus on the discussion on politics rather than on addressing the issues with creative innovative reliable solutions. And that’s where we come in from the private sector and say or even me as my role with the Brazil – California Chamber of Commerce that we need to continue to advise government, but we should continue to support business and consumers having access to the products. We will take some of the questions offline. I took all the notes, quarantine in the state of Sao Paulo just extended to May 14th which is just this morning Governor Doria announced. By the way, Governor Doria was here in LA with us for a number of meetings early November or December last year, but we continue to strengthen that relationship. I do want to once again, thank you, Ticiana; thank you, Maricar for spending this morning with us or early afternoon for you in Brazil. We will make sure the presentations are available later, the recording of the presentation and the webinar will be available as well. But I really do want to on behalf of the California International Trade Center (www.cainternationaltrade.org) of the California Community Colleges, Chancellor’s Office, on behalf of all of us here in California and the U.S. and in Brazil, to thank you for putting yourself out there allowing us to understand more the issue, have access to accurate timely and reliable information to also advise us on our own business dealings and decision-making processes. I do again thank you Ticiana and Maricar. I wish you both a lot of luck. But clearly you are on top of your game in terms of addressing the crisis. And we will get back to everyone shortly. But again, thank you so much Ticiana and Maricar, thank you. I thank you a lot. Bye. We will be in touch with you shortly. Thank you so much. Goodbye.