The saga of the Swedish industry in Brazil-
Interview with Erik Belfragen

TEXT: ANWAR KEMAL

“Brazil is still today a very important factor for the Swedish industry, even when Sweden is investing in other West European countries, in the US and increasingly in China. We could say that the relative importance has been reduced but it is still a very significant part of the activities of many of the flagships of the Swedish industry.”


The Swedish Bulletin recently interviewed Mr Erik Belfrage, Senior Vice-President and Senior Advisor to the Chairman of SEB and Investor AB, on the subject of economic relations between Sweden and Brazil. These links owe their origins to the special needs and complementarities of the two countries. Brazil, a country of continental size, ample natural resources and vast growth potential has acted as a magnet to overseas investors and immigrants. Sweden has the technology, the capital and the entrepreneurial skills to help meet a fairly large slice of Brazil’s vast needs.

According to Mr Belfrage, Swedes have always regarded Brazil as the promised land of the future, because of its size, its growing population and all the its abundant raw materials. He explains, “The move of Swedish companies toward Brazil started basically after World War II. We could say that this was an early effect of globalization”.

Yet the Swedish economic presence in Brazil dates back even earlier when Brazil’s second emperor Dom Pedro II visited Sweden at the end of the nineteenth century and met Lars Magnus Ericsson because he wanted to know more about telephones. Ericsson commenced its production in Brazil in 1895 and Volvo also moved to Brazil very early.

Mr Belfrage explains that in the past, markets were not as open as they are today. Brazil’s policy of economic autarchy and self- sufficiency through industrialisation encouraged “the move of the Swedish industry to Brazil”.

The Wallenberg family has played a key role in the Swedish economic success in Brazil. Marcus Sr., the grandfather of Jacobs and Marcus Wallenberg, was deeply committed to business enterprises in Brazil. He developed a financing company called ADELA, together with the SEB, to help finance investment projects in Latin America, particularly in Brazil.

The Wallenberg family’s holding company Investor AB has helped a number of Swedish companies to become world leaders by working with their managers as active investors. ABB, ASTRA ZENECA, SAAB, SAS, ATLAS COPCO, ELECTROLUX, SEB, SKF, ERICSSON, GAMBRO, STORA ENSO, WM DATA, OM GROUP and SCANIA make up the hard core of Investor AB.

The big infrastructure projects in Brazil in the field of energy have attracted major investments by ASEA, today ABB. Then Scania started production of buses and trucks to meet the needs of the energy projects, the big dams, and also the transport of goods for a developing industrial economy. When Swedish industry moved to Brazil it was a long term commitment with a long term perspective.

The companies listed above are the core of the Swedish industry in Brazil, based in Sao Paulo. From the mid-sixties onwards, Sao Paulo was the second largest Swedish industrial city in the world after Gothenburg in terms of number of people employed and amount of capital invested. In recent years Swedish investment has been diversified and is flowing into other parts of Brazil and also to other countries.

Mr Belfrage points out that Brazil today remains a very important factor for the Swedish industry, even when Sweden is investing in other West European countries, in the US and increasingly in China. We could say that the relative importance has been reduced but it is still a very significant part of the activities of many of the flagships of the Swedish industry. Swedish companies had to adjust to the cyclical nature of the Brazilian economy which depended on the coffee crop. If the coffee beans did not freeze during the winter and the crop was good, the prices were good and you could expect a good year. A lot of growers with money were prepared to buy trucks, cars, and other consumer goods. In lean years the country suffered from recession. Mr Belfrage believes that the Swedish industry was better equipped than others in coping with the cyclical character of Brazil’s economy because Swedish investments were made with a very long term perspective.

All those who went there realised that although Brazil was the Promised Land, it would take time before the economy would amount to something. And it is only in the1990s that the Brazilian economy and industry has really stood on its own feet.

Swedish industry in Brazil had also to learn how to cope with hyper-inflation. During the 1990s the inflation rate was almost 1000% per annum, with almost daily prices changes. And the only way to cope with such a volatile situation, according to Mr Belfrage, was to be master of your own liquidity.

Mr Belfrage reckons that Sweden industry is solidly implanted as a long term player in the Brazilian economy. In addition to the purely industrial ventures, the Swedish pulp and paper industry is moving to Brazil. Stora Enso is investing in eucalyptus forests in Brazil to produce pulp and paper because the forests in northern Sweden are much less productive. Paper manufacturers have learnt new methods to make paper with short fibres, like those of the eucalyptus tree. A key ingredient of the Swedish experience in Brazil has been that over all these years, Swedish investors in Brazil have behaved as good citizens. Swedish concerns have maintained excellent relations with the local government in Sao Paulo and with the federal government in Brasilia. This has greatly enhanced Sweden’s image in Brazil as a reliable and considerate investment partner.