Tuesday, May 13, 2014

Emerging in an Emerging Economy: Brazil’s Gone Shopping


The Brazilian upper crust regards itself as more socially conscious than race conscious. This statement carries a measure of hypocrisy: less affluent people usually have darker skin notably in the urban environment which is shared by both group.

Unlike other Latin American countries, Brazil was a slave-based economy and a monarchy after independence. In the 19th century the two emperors, father and son produced a sizeable landed gentry by dishing out nobility titles like candy. The descendants of the royal family still live in Brazil, but titles are no longer paraded. Politicians and their offspring regard themselves as the new aristocracy. What these dynasties lack in polish, they make up in assets, too often illicitly acquired. In the posh suburbs of Rio de Janeiro, Brasilia and Sâo Paulo, class distinction continues to be nurtured, a tropical version of Jane Austin’s novel Pride and Prejudice.

Although several soya and cattle farmers live like absolute kings in their remote region, land has largely lost its status symbol. The entitlements of the urban elite, are shopping trips to the United States (895.000 Brazilians visited New York City in 2013; still counting in Florida!), condos in Miami, British SUVs and a new trend of electric bikes. SUVs are driven like Humvees and double parking in busy streets is a birthright of their drivers. Electric bikes are becoming a nuisance too as they increasingly invade sidewalks competing with hapless pedestrians.

In 2014, the over-the-top and unrestrained consumerism of the AAA class (notably the political class, often at tax payer expense!) is being outpaced by that of the emerging new middle class. This class now makes up over half the population of Brazil which is estimated at 200 million. The emerging group, known in Brazil by the popular name of clase C (the privileged class is referred by letters A & B) is urban, albeit suburban. Its monthly income is estimated below US$ 1,200.00. The A&B classes make more than US$ 4,000.00 monthly; this being an indicative figure, this blogger saves you the details.



First and foremost, the C class is regarded as a market to be tapped. In 2013, it spent R$ 1 trillion! (US$ 0.5 trillion) Thanks to easy credit, installment payments, Internet shopping and promotional sales, 80 million Brazilians have become enthusiastic borrowers; sadly but predictably this shopping stampede led many to bankruptcy. These eager shoppers still do not carry passports, otherwise they would also travel to Miami to buy the same goods at 50% of the Brazilian prices.

Because goods are purchased in installments, retail stores double as financial houses by lending money with interest. Consumer financing is probably the most profitable operation for these stores. The emerging urban middle class does not yet travel abroad, but it flies within Brazil to visit relatives still living in the rural regions.

The C Class has leap frogged from talking in street corner phone booths to emailing on smart phones, many purchased from dubious sources. They are increasingly connected to the Internet. For the younger generation, flaunting IT gadgets has reached a cult dimension with Facebook the new gospel, and air-conditioned shopping malls the new churches. Everything goes on Facebook, which maximizes the herd behavior with often out-of-control outcomes.

The Facebook-shopping mall mix has created a unique Brazilian feature known as rolezinho. It is the gathering of tens, hundreds and even thousands of teenagers in upper class shopping malls. Invitations are sent through social networks. The invasion of AAA class playgrounds by suburban kids has irked many. Muggings and minor depredations have been reported but are exceptions. Finally these “flash mobs” are more entertainment than social protests. Youngsters are born shoppers and traders, and since the coveted fashionable items have a very short shelf life they are quickly sold to poorer less fashion-conscious acquaintances. The C class has its own underclass.



                                     Rolezinho Selfie

Class divide is also evidenced in the movies. Many multiplexes have been built in the suburbs to exhibit American blockbusters and cartoons as well as domestic comedies. Foreign films are always dubbed; on the other hand they have subtitles in the upper class neighborhoods. The commercial push into the emerging class exacerbates class stereotypes and widens the existing cultural divide. Ditto television. The British television soap opera Downton Abbey is a case in point.

Downtown Abbey is a British “upstairs downstairs” period drama which depicts the lives of the aristocratic Crawley family and its servants. The show is hugely popular with the privileged class. To further increase its audience, the distributers wanted to promote it to the emerging middle class. Therefore to make it more accessible, they planned to release a dubbed version instead of the original subtitled one. The AAA class was so outraged that it threatened to switch it off. On cable TV, Downton Abbey has remained with subtitles, the staple entertainment of the well-heeled.  At the opposite of the spectrum, Fox News’ programs are all dubbed.