Brazil: New Guide Answers Top Questions on Quality Management

In August 1998, a young, would-be businessman returned home to Ruritania from a year of language studies in Europe. "They've got everything they think they could ever want there," he told his doting parents. "But what they don't have is anything like our Ruritanian widgets. A huge market is ready and waiting. All we need to do is convert that little factory down the road to mass production for export and our fortune will be made!" His enthusiasm was infectious. They set up to expand the family firm, ordered state-of-the-art Ruritanian widget-making equipment and hired hundreds of workers. Within a year, more widgets came off the production line in a week than the old factory had turned out for the Ruritanian market in a year and the warehouse was full.

"Now we've got a stock, we start selling," declared the fledgling entrepreneur confidently. Hundreds of offers went out by e-mail and post to potential European importers. Within a week came the first shock. "Sounds interesting and might sell here," replied one, "but who is certifying that you conform to European Union quality standards? Can't place an order before I know that." A second was more specific. "What materials are you using? Hope you've no asbestos in there." "Have they undergone performance testing?" asked a third. "Are you sure they'll withstand heavy use?" Yet another was brimming with sarcasm: "I presume the sockets match international electrical safety standards? And not just Ruritanian ones?" The fifth came from one of the biggest European Union supermarket chains. "Your widgets would have to meet our specifications. Please find enclosed our 550-page German-language technical publication setting them out. Sorry, no translation available." A sixth demanded: "We presume you are acquainted with the WTO TBT agreement?"

The young entrepreneur was alarmed but not totally despondent. "I don't know what all these standards and agreements are that they're talking about and I've no idea how to find out," he told the firm's board. "But let's send my brother over there with some packaged samples. He'll take them round the importing firms and they'll see for themselves what a fine product we've got." Three days later, the family envoy telephoned in distress from a major European airport. "Customs won't even let me in with them," he said. "They say the packaging could present an environmental hazard and the labelling is unclear." "Come home," sighed the first brother. "We'll give up widgets and start a language school."

Small and medium-sized firms in developing and transition countries face all the dilemmas encountered by this notional young Ruritanian when they try to break into markets in industrialized countries or even into those of their more savvy neighbours. "Exporters from developing and transition economies face many problems when trying to obtain market access for their products," says Shyam K. Gujadhur, ITC's Senior Adviser on Standards and Quality Management. "First, they have to obtain information about voluntary and mandatory technical requirements in their export markets. Then they have to adapt their products to those requirements and meet them consistently. And finally, they have to be able to prove that they are conforming. It's not easy for a cash-strapped firm, however confident it is in its product."

Information is vital

Information on current and future technical standards - the technical barriers to trade (TBTs) covered in the 1994 agreements that set up the World Trade Organization (WTO) - is vital for manufacturing firms everywhere to get into the export business and stay there. Equally, produce exporters have to be up to date on importing countries' sanitary and phyto-sanitary (SPS) standards and rules, which can often change overnight if there is an outbreak anywhere in the world of disease in animals or plant life affecting either food supplies or humans or both. Some examples are foot-and-mouth disease in cattle and sheep, fire blight in fruit or the avian flu that hit parts of Asia twice in 2004. But that information is often extremely difficult to come by for firms in developing countries. Although all member countries of the WTO (some 150 nations at present) are obliged to set up information centres or "Enquiry Points" to act as a clearing house for that type of information, would-be exporters often do not know that the centres exist, says Mr Gujadhur, who headed the Mauritius Standards Bureau for more than 20 years before bringing his extensive expertise to ITC. "And even when they know where to go, the centres may not be able to give them prompt responses," he adds.

To tackle this problem, ITC produced a 238‑page volume in its Trade Secrets series to steer newcomers, and even older hands, through the maze. Export Quality Management: An Answer Book for SMEs came out in 2001 and was an immediate success. The volume sets out in clear terms answers to the 100 questions small and would-be exporters in developing countries ask most frequently and points them to where they can learn more if needed.

Help for first-time exporters

For Mayard Zolotar of the foreign relations division at Brazil's National Institute of Metrology, Standardization and Industrial Quality (Inmetro), the presentation of the book at an ITC meeting in São Paulo in January 2002 was a revelation. "We saw at once that it was just what we needed. Many of our smaller companies that want to get into the export business are wandering around in the dark on this issue," she says. "Over the last three years, we've been getting more enquiries on how international technical regulations and standards can be met. This is clearly the prime concern for our firms. With this guide, we had something precise, in simple, straightforward language, which couldhelp them understand what to do in terms of quality and standards to sell their products abroad. The question-and-answer format and the clear topic separation are ideal for SMEs in developing countries that are looking beyond national borders for the first time."

Inmetro, set up in 1973, helps Brazilian companies improve the quality of their goods and services. It cites the experience of Sirmary Beachware, a company in the small southern state of Espirito Santo, famous for its 400-kilometre coastline of golden sands, to tap the national demand for stylish leisure clothing. "Sirmary always focused on quality," says Ms Zolotar. "They did well, but the ups-and-downs of the Brazilian economy meant domestic sales were in constant flux. In 1997, they invested in an export business to provide more stable revenues. But when they began to try to break into the international market, problems started appearing. From their first contacts, they realized they were totally ignorant of some of the basics - for example, rules of origin, rules on labelling and even rules on production process."

A Portuguese version

Brazil is a fast-growing giant in world trade with an industrial and agricultural production base spread wide across the vast country. But outside the main population centres, knowledge of English, Spanish or French (the languages in which ITC publishes its Answer Book) was not enough. So Inmetro decided to translate the guide into Portuguese and customize it for Brazil.

In November 2003, the Brazilian edition was published. "The response was amazing," says Ms Zolotar. "People told us that they had had no idea before of what quality management was, and how important it was for them if they were going to move into export markets. The handbook is being used to provide the framework for quality management training courses and will also be used as a basic text for new undergraduate courses on quality management, which are being introduced at Brazilian universities." Ms Zolotar also believes the customized version could provide a model for Portuguese-speaking countries in Africa - Angola, Cape Verde, Guinea-Bissau, Mozambique and São Tomé and Principe.

Avoiding costly mistakes

In 2002, Sirmary Beachware, a small Brazilian firm producing stylish leisure clothing, discovered Inmetro's database on WTO rules and its question-and-answer service. It signed up to the agency's "Exporter Alert" service, which informs firms about proposed changes in import regulations notified to the WTO by the countries with which they want to do business. "That sort of information helps them avoid costly mistakes," says Mayard Zolotar, "They can anticipate changes and adjust business strategies and production accordingly. But it also allows them to provide their own feedback to the Brazilian government. If they think new rules are unfair, it can be raised formally in the WTO." Today, Sirmary exports to 18 countries, including many with their own beachwear industries, like Australia, France, Spain and the United States. Its success has been such that it is now diversifying into new export products. Ms Zolotar concludes, "It was access to information - the sort of information that the ITC book codifies and that we've used in our services - that made the difference."

Writer: Robert J. Evans

Contributors: Alison Clements-Hunt, Natalie Domeisen

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