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Is BRIC investment worth it? – Metro US

Is BRIC investment worth it?

One of the hottest business acronyms this year is BRIC. It stands for Brazil, Russia, India and China, four of the largest and fastest growing economies in the world, and it represents a huge set of opportunities and challenges for Canadian companies.

The U.S., consumer of three-quarters of Canada’s exports, is stumbling towards economic recovery, a process that could take years. Meanwhile, the member countries of BRIC are surging ahead. The U.S. will be lucky to break three per cent in real GDP growth this year, but Brazil is on track for 4.8 per cent, Russia for 4.9 per cent, India for 7.3 per cent and China, now the world’s third largest economy after the U.S. and Japan, for a breathtaking 10 per cent.

With the exception of China, which has become Canada’s second largest trading partner (a seriously uneven relationship since the Chinese sell us about $5 of merchandise for every dollar’s worth we sell them) we’ve hardly begun to exploit the opportunities afforded by BRIC.

Our dealings with Brazil, for example, are comparatively trifling: Two-way trade with the world’s eighth largest economy is little more than $5 billion a year. Our overall investment there is just over $9 billion.

So here’s the conundrum for Canadian corporations that export and invest around the world.

Do you continue to rely on the good old U.S. market — so friendly, so unforeign and so near — in the realization that it’s likely to remain Canada’s primary export market indefinitely? Or do you diversify and follow the yellow (as in golden) BRIC road, where there are perils aplenty, but chances of huge growth?

It’s a tough choice. For all their promise, the BRIC countries pose barriers of language, time, distance, unfamiliar business practices, baffling regulations, and complex markets.

China, a nation of 1.3 billion people spread over 3.7 million square miles, has more than 50 minorities living in everything from deserts to rainforests, from mud huts to skyscrapers.

Our federal government, which considers all BRIC nations to be priority markets, says companies heading to China can run into everything from import barriers and intricate finance and tax rules to weak intellectual property protection and opaque contracting practices. And don’t forget the frosty relations Canada and China have had under the Harper government. Only now is that chill subsiding.

Other BRIC countries have similar challenges, and they are sufficient to scare many into sticking with the same old thing. Then again, with great risk comes the prospect of great profitability.