It is unfortunate to see such a critical situation affecting Italy. The effects that are pouring on the Italian economy will provoke in the coming years an uncertain scenario and a greater sensitivity on the issues of internationalization, a fundamental and vital pivot for Italian SMEs but also for large companies.For companies that have understandably focused heavily on China, it is time to reconsider their strategies, integrating them with a greater focus on the Brazilian market.The United Nations Conference on Trade and Development recently released a study showing as early as 2019 that China has experienced a significant decline in investment attractiveness. In contrast, in the same study, the BRICS showed modest growth in India, which was countered by Brazil, which attracted 75 billion dollars of foreign direct investment, an increase of 26% compared to 2018. While China and Brazil are different economies, perhaps a viable solution can be found in the integration of the international portfolio to deal with the effects of the crisis from COVID-19.Brazil has always had wide freedom of the press, unlike other South American countries, and in recent years popular demonstrations have also sprung up that peacefully filling the streets of major cities in an unprecedented way, allowing people to show their misgivings about political choices regardless of governments.Brazil is going in the opposite direction of China. The policy followed by current Economy Minister Paulo Guedes has focused on market liberalization, privatization and has been a strong supporter of the EU Mercosur agreement which will gradually eliminate and reduce much of import duties.These factors, together with a new apparatus of anti-corruption and compliance rules, have encouraged foreign investors and this has led Brazil to second place in the FDI ranking, Foreign Direct Investment, in 2019.Two examples of Italian companies are concrete. The investments supported by FCA that chose Brazil by allocating as much as 4 billion euros in the coming years (China, as you will remember, was the other market on which FCA was considering such an investment) boosting its investments; and Enel that has become the first distributor and operator of renewable energy in Brazil.Multinationals are reconsidering their strategies for relocating production activities in China. Only a few days ago there were signs of a recovery in production, an encouraging but time-consuming sign to bring China's domestic production indices back to pre-COVID-19 levels.In this context, companies that have aimed to export to China have also not done good business; In fact, in 2019 there has been a drop of more than 10% and all this is more than a wake-up call.Lastly, it is clear that what is happening on stock exchanges around the world or in foreign investment flows in recent weeks is completely anomalous and the situation will stabilize as soon as the emerging situation is over.In this scenario, what role can Brazil take? I think you can make some assessments. Brazil, which certainly has obvious limitations within it (I think first of all the cost of labour certainly not competitive with the Chinese one), is a very interesting location at the moment to diversify. The exchange rate is favourable for foreign investment and there are many sectors where opportunities are seen, whether from greenfield projects or by buying existing assets.In support of this interest in attracting investment, the Government has highlighted the importance of a fiscal instrument, which is also well-proven legislation known as a drawback. It is a regulatory incentive that allows a Brazilian company or a subsidiary of a foreign company in Brazil to import half-finished products, which perhaps strategically is not interesting to produce in Brazil for lack of adequate technology, without paying taxes on imports. This allows the Brazilian system to bypass an effective non-competitive element of the system but, by ending production locally, allows on-site companies to re-export to Europe or other countries around the world under the subsidized tax regime.Confirmation of this different attractiveness of the Brazilian market is finally reflected in the data for 2019, a year that ended with a boom in M&A operations (which reached a record figure of 1,231 transactions of which 750 made in the State of Sao Paulo alone and 374 acquisitions made by foreign players). The sectors that moved the most were energy, aeronautics, cosmetics, computer science followed by hospitals and clinical analysis laboratories, real estate and food products.A promising sector for the current year is also agrobusiness and liquid treatment as well as Waste to Energy. These are areas in which foreign companies have the know-how that should give a competitive advantage over local players.Who knows that Brazil – in a context where we are looking with concern at how to overcome COVID-19 without further slowing down the economy – cannot be for foreign companies that internationalize a kind of antivirus for the next few years that are expected, at the level of the domestic economic situation, a bit complex.*Managing Partner GM VentureOriginal article in Italian.