ACCESS Brazil A Guide to doing business in Brazil - eiLearn
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TABLE OF CONTENTS
1. INTRODUCTION .................................................................... 3
PURPOSE OF THE REPORT ......................................................................................................... 3
HOW IT WAS COMPILED .......................................................................................................... 4
2. CRITICAL SUCCESS FACTORS ................................................ 5
INTRODUCTION...................................................................................................................... 5
WHY THIS MARKET IS IMPORTANT .............................................................................................. 5
BUSINESS CULTURE................................................................................................................. 6
ADVICE FROM SUCCESSFUL EXPORTERS ....................................................................................... 7
3. STARTING IN THE MARKET ................................................. 13
INTRODUCTION.................................................................................................................... 13
GEOGRAPHY ....................................................................................................................... 13
WHERE TO LOCATE IN BRAZIL ................................................................................................. 14
GETTING THERE ................................................................................................................... 14
CLARIFYING YOUR VALUE PROPOSITION ..................................................................................... 15
KNOWING YOUR COMPETITION ............................................................................................... 15
KNOWING YOUR CUSTOMERS ................................................................................................. 16
MAXIMISING YOUR RESOURCES ............................................................................................... 16
FINANCIAL RESOURCES ......................................................................................................... 16
HUMAN RESOURCES............................................................................................................. 16
COMMUNICATING YOUR BUSINESS PROPOSITION ......................................................................... 18
PRESENTATIONS .................................................................................................................. 18
4. ROUTES TO MARKET .......................................................... 19
INTRODUCTION.................................................................................................................... 19
DIRECT EXPORT FROM IRELAND .............................................................................................. 19
WORKING WITH PARTNERS ..................................................................................................... 20
SALES REPRESENTATIVE ......................................................................................................... 21
THIRD-PARTY DISTRIBUTION ................................................................................................... 22
ESTABLISHING A LOCAL SALES OFFICE........................................................................................ 23
JOINT VENTURES/MERGERS ..................................................................................................... 23
5. LEGAL ISSUES IN BRAZIL .................................................... 24
INTRODUCTION.................................................................................................................... 24
BUSINESS FORMS ................................................................................................................. 24
TAX .................................................................................................................................. 25
IMPORT TAX ....................................................................................................................... 26
DOUBLE TAX TREATY............................................................................................................. 27
EXCHANGE CONTROLS .......................................................................................................... 27
LEGAL SYSTEM .................................................................................................................... 28
EMPLOYMENT ..................................................................................................................... 29
IMMIGRATION/VISA .............................................................................................................. 29
6. GROWTH SECTORS ............................................................. 31
INTRODUCTION.................................................................................................................... 31
ENGINEERING AND INFRASTRUCTURE ........................................................................................ 31
BUILT ENVIRONMENT ............................................................................................................ 32
CLEAN TECHNOLOGY ............................................................................................................ 33
INFORMATION TECHNOLOGY................................................................................................... 33
1HEALTHCARE AND LIFE SCIENCES ............................................................................................. 34
MEDICAL DEVICES................................................................................................................ 35
PHARMACEUTICALS .............................................................................................................. 35
EDUCATION ........................................................................................................................ 36
7. SELLING TO THE GOVERNMENT IN BRAZIL ......................... 37
INTRODUCTION.................................................................................................................... 37
FRAMEWORK ...................................................................................................................... 37
PROCUREMENT.................................................................................................................... 37
8. HOW ENTERPRISE IRELAND CAN HELP YOU SUCCEED IN
BRAZIL ................................................................................... 39
PRE-VISIT SUPPORT ............................................................................................................... 39
IN-MARKET SUPPORT ............................................................................................................ 39
ACCESS TO EXTERNAL EXPERTISE AND ADVICE ............................................................................. 40
MINISTERIAL EVENTS ............................................................................................................ 40
FINANCIAL ASSISTANCE ......................................................................................................... 40
DISCLAIMER .................................................................................................................... 41
CONTACTS IN IRELAND .......................................................................................................... 42
CONTACTS IN BRAZIL ............................................................................................................ 42
DIPLOMATIC AND CONSULAR INFORMATION FOR BRAZIL ............................................................... 42
ACKNOWLEDGEMENTS .......................................................................................................... 43
21. Introduction
“ During a decade in which the established global trading blocs have
struggled to stay out of recession, Brazil has boomed… Its largest trading
partner is the combined member states of the European Union, and one
of the EU member states, Germany, does more business with Brazil than
with China or India. Irish businesses will likely not find Brazil the easiest
market to penetrate but a determined business will find it a rewarding
”
one.
Frank Sheridan, Irish Ambassador to Brazil
A rising global economic power, Brazil forms part of the emerging and high growth BRIC
group of countries along with Russia, India and China. The economic powerhouse of Latin
America, Brazil’s boom is there for all to see: steady growth of 5 per cent in recent years,
peaking in 2010 when GDP rose by 7.5 per cent. Even though this fell back in 2011 to 2.7
per cent, Brazil nevertheless overtook the UK to become the world’s sixth largest economy
thanks to record exports of €204 billion and a trade surplus of €23.6 billion.
Politically and economically stable, yet not overly reliant on any single sector for growth,
Brazil’s rising star is creating many opportunities across a wide spectrum of industries. The
country prefers to create wealth from within, and looks to fill the inevitable gaps that
emerge with products, services and expertise supplied from outside. The current
Government has taken a clearly protectionist stance, as several recent policies have shown.
Purpose of the report
The objective of Access: Brazil is to give Irish companies practical and up-to-date
information on the Brazilian market. In this guide, you will find useful, easy-to-digest advice
on the key aspects of doing business in Brazil for companies at all levels in their business
development within the country. This guide covers:
• how to get started in the market
• the business culture and how it significantly differs from Ireland
• routes to market
• key legal issues, tax and visa considerations
• how to sell to Government
3How it was compiled
This report is based on the practical experience and knowledge of people familiar with the
market, including specialists in areas such as taxation and business culture. It also includes a
distillation of lessons learned by the many Irish business people who have succeeded in the
Brazilian market. This report includes direct commentary from a number of these people.
4CRI
TICALSUCCESSF
ACTORS2. Critical Success Factors
“ When you’re trying to sell products in Brazil, people tend to get
caught up in it being a very difficult market to enter and very
paperwork-heavy. That may all be true but the whole point is, in a few
years’ time they’ll have 200 million people there and a vast amount of
demand in that country. Because market entry is not really stacked in
favour of outsiders looking to invest, there’s significant value in going to
the trouble of setting up in the market so that you can carry out your
”
trade freely.
Mick McCarthy, CEO, Electronic Product Services
Introduction
For the country associated by many people with Carnival and party time, Brazil has had
much to celebrate in recent years: a growing economy that peaked at 7.2 per cent GDP in
2010 and solid foundations that have seen it escape the grip of the 2008 financial crisis
faster than many other developed markets.
The ranks of Brazil’s middle class have swelled by more than 20 million in the past decade
to more than 100 million people, boosting consumer demand for a wide range of products
and services. The country is currently engaged in extensive infrastructural development to
support its back-to-back hosting of the 2014 World Cup and the 2016 Olympics, to be held
in Rio. The Government is optimistically forecasting growth of 4 per cent for 2013.
For all the many opportunities Brazil presents, it’s best approached by the kind of company
that can afford the time and cost to build a sustainable business in the country. Many Irish
firms that have succeeded in Brazil did so by using well established strategies that have
worked in other markets. All of which involves a level of careful planning and taking a view
that doesn’t hinge purely on short-term goals.
Why this market is important
There are close to 145 Irish companies actively selling to Brazil. Enterprise Ireland has
identified several sectors where prospects appear especially good for Irish firms.
Engineering is a wide-ranging category that covers oil and gas – unsurprising given the
natural resources at Brazil’s disposal.
Government investment in education is creating opportunities in areas such as e-learning.
Software is another market where Irish companies can meet a need, notably in financial,
travel and security sectors. Life sciences and veterinary chemicals are also growth areas. The
built environment sector, encompassing clean technologies, is a further one to watch.
5Business culture
• English is spoken in some business circles but it is good practice to bring an
interpreter to meetings, particularly if you’ll be dealing with senior executives who
may only speak Portuguese. It is important to note that there are some differences
between the Portuguese language in Portugal and in Brazil
• Face-to-face meetings are an essential part of commerce in Brazil, as people there
are more comfortable doing business with those they know – initial meetings are all
about establishing relationships and building trust
• Conference calls are usually not appropriate at the introductory stage of business:
in Brazil, the preference is to meet someone in person first, and to strengthen the
relationship with regular return visits
• Brazilians are naturally sociable and warm people – expect to spend time making
small talk early in meetings as an initial rapport is established
• They are also naturally inquisitive – expect to be asked a lot of questions about
yourself
• For the same reason, you can expect interruptions when speaking or making a
presentation – this is normal and not considered rude in Brazil
• Brazilians are tactile people, and will stand physically close to you or put an arm
around your shoulder even if you are not well acquainted
• Brazilians put a lot of thought into their appearance at work; dress smartly and
elegantly for meetings
• Schedule meetings at least two weeks in advance and confirm the appointment by
email some days before you arrive
• Arrive on time for meetings, but be aware you may be kept waiting
• Print double-sided business cards, with Portuguese on one side and English details
on the other, presenting the Portuguese side of your card to your host when you
greet them
• In advance of a trip, have the marketing materials you plan to distribute translated
into Brazilian Portuguese – this will be appreciated as a sign you’re committed to
the market
• Make sure any translated materials have been proofread by a Brazilian Portuguese
speaker beforehand
• When making a presentation, it’s a good idea at the outset to include some general
information about Ireland to put your product and your company into context
• Use positive language when describing Ireland – it’s a good idea to show areas of
knowledge and expertise, as this is highly valued in Brazil
• Brazilians tend to be polite and won’t necessarily say ‘no’ outright – try to gauge
from body language as to whether your prospect is genuinely interested
6• You may be extended an invitation to eat with your counterpart’s family, but this is
a friendly gesture and not necessarily a sign that you will do business
• Expect delays in reaching decisions – business can be a slow process in Brazil
• The period from January to the end of February is best avoided for business trips;
traditionally, very little business decisions are made before Mardi Gras and Carnival
NEED TO KNOW
As with many developing countries, crime can be a problem in Brazil. The country has high rates
of violent crimes such as homicides and robberies. While its murder rate has fallen recently,
there are still more than 20 homicides per 100,000 inhabitants. Here is some useful advice to
avoid becoming a victim of crime.
• Don’t carry large sums of money on your person
• Keep your money in an inside pocket of your clothes and never count it in public.
Always make sure your wallet or handbag is closed
• If walking alone at night, look for a well-lit area and keep away from the kerb. Keep
your handbag or briefcase under your arm
• Keep your property in a sealed location. It is recommended to install a house and or car
alarm system
• If you will be staying in Brazil for some time, keep valuables in a safe, or preferably, at a
bank
• Make a detailed list of all valuables, describing them and photographing them. This
measure will make it simple to identify them after a possible robbery or theft, especially
when it comes to jewellery
• Take house or car keys with you all the time. Don’t attach them to a keychain.
Advice from successful exporters
There are many Irish companies who are successfully selling into Brazil and that number is
growing. Here are some of their stories.
Electronic Product Services, Mick McCarthy, CEO
Electronic Product Services [EPS] distributes and configures electronic components and
semiconductors as well as providing integrated circuit programming services. Its sales
network operates from 28 locations globally – some are sales offices, some are processing
centres. The company was founded in 1999 and has 210 employees worldwide.
“ We’re present in all of the BRIC countries now; we did that as a strategy. We knew that the
volumes we needed to grow were available in these territories. We had our experienced
salespeople in Ireland talking to potential customers in Brazil, doing market research on
that basis and contacting customers there remotely from Ireland. We wanted to discover if
7trading conditions in Brazil were similar to trading conditions that we’d seen in the rest of
the world and guess what? They are.
When you’re trying to sell products in Brazil, people tend to get caught up in it being a very
difficult market to enter and very paperwork-heavy. That may all be true but the whole
point is, in a few years’ time they’ll have 200 million people there and a vast amount of
demand in that country. Because market entry is not really stacked in favour of outsiders
looking to invest, there’s significant value in going to the trouble of setting up in the
market so that you can carry out your trade freely.
We met Enterprise Ireland who suggested ways of getting into the market. They were very
helpful and facilitated meeting so many professionals; without them we wouldn’t have got
set up as quickly as we did.
If you were to add up all the steps to incorporate in Brazil, it would take a year, but some
of the processes can run concurrently. Our requirements initially were to set up a trading
operation, with all of the necessary tax registrations and licences, based out of São Paulo
where we could buy and sell our electronic components. As a result of a trip I made up to
Manaus, we found there was a lot of demand for the services side of our business in that
area. For that, we needed to create a secondary company to our company in São Paulo so
we had to go through the setup process twice.
If there’s one thing we learned to do over the years, it’s how to start up subsidiaries. As the
various requirements came up, we signed individual fixed-price contracts with our lawyers
that enabled them to carry out the scope of work that we agreed. That’s a very useful
mechanism if you’re entering a new market.
For banking, we have an international relationship with HSBC, but for Irish companies that
could be any bank. We found it works best if you leverage your Irish relationship with the
international bank through the Relationship Manager working in Ireland. Then, you comply
with whatever laws are in that individual country.
There are two popular types of business entity and the ’limitada’ was the most relevant for
a company like ours, where our head office in Ireland would be the sole shareholder. There
are mechanisms for doing all that.
You need to worry about how you’re going to get money in, how you’re going to invest in
the country. It can be done by inter-company loans but I think the law is changing in
relation to that. You need to register foreign capital. So far we’ve spent about half a million
euros getting into Brazil, so from our point of view – we’re a relatively small Irish company
– it’s a big investment. We needed to be very careful about how we fed that in, and we had
to be careful about how we repatriated our profits. The most important point is that you
cannot incorporate, or do a ‘limitada’, without the general manager being Brazilian, or
resident in Brazil.
Labour laws are quite complex. The laws always stand in favour of the employee and there
is an obligation to pay a thirteenth month. And there are some issues in relation to
obligatory guaranteed overtime. When you’re taking employee costs into consideration,
you need to speak to somebody who knows labour law.
Our subsidiary in Manaus started trading just at the end of February 2012. I thought it
would be up and running by December. In Ireland, once you set up your company, you can
usually carry out some processes and carry out your trade within that country without
specific licences. In Brazil, you need to get to the end of that list of documents before you
can start to trade.
8Average selling prices are very good in Brazil. There are decent margins available because
the demand is strong in Brazil, so you can usually get your price. They’re not skinning you
to the bone like in China where half a cent counts. Customer encouragement is very strong.
They’re actively encouraging us to do what we do and to set up quicker. You don’t
experience that in all sectors.
I think the Irish way of doing business is welcomed within Brazil. Whereas a lot of the
company setup stuff took a bit longer than we expected it to do, you get a lot of
”
encouragement once you’re in.
Mantis Cranes, Seamus McMenamin, Owner and CEO
Headquartered in Donegal, Mantis Cranes is a leading manufacturer of self-erecting cranes
for construction projects. Having initially focused on the Irish and UK markets, the company
began broadening its focus from 2008 to include the Middle East, Eastern Europe and other
developing markets. The company made its first shipment to Brazil in late 2010.
“
I had an opportunity to visit Brazil in May 2009 with fellow members of the E&Y
Entrepreneur of the Year alumni, travelling with the finalists to both São Paulo and Rio de
Janeiro. Before travelling, I contacted Enterprise Ireland in São Paulo who put together an
itinerary for me. I had 10 meetings over a three-day period, with the primary objective of
learning about the potential market opportunity for Mantis Cranes and how business is
conducted in Brazil.
We identified a number of obstacles, including the high cost of importation taxes,
unfamiliarity of the product within the market, training and language difficulties. Despite
these, there appeared to be an opportunity. Apart from the expectations of what the
Olympics would bring, construction was very much on the increase. Minha Casa Minha Vida
– ‘my home, my life’, was a recently launched government programme to build one million
housing units in phase one and an additional two million in phase two to address the
chronic housing shortage among the poor in Brazil. A high percentage of these buildings
would be constructed in blocks up to five floors high, which suited our cranes perfectly.
Construction companies would therefore need to look at ways to deliver a large number of
units at a very competitive price and we saw an opportunity to help them achieve this
through mechanisation of materials handling.
For the first 18 months, I visited Brazil every three months for seven to ten days at a time.
The first four trips were purely market research, talking to mobile crane companies, tower
crane rental companies and construction companies. We set about trying to find a way in.
We were introduced to a company called Saur that was already working with another Irish
company who made the introduction. Saur manufacture forklift attachments and supplied
their equipment to the industrial sector. While they had a good market share for material
handling equipment within this sector they were new to the construction sector and Mantis
products were to be one of the products they would represent to the construction sector.
Brazilian people are friendly and business can be conducted in a more informal way than
we are used to. Suits, shirts and ties while worn are not common practice within most
companies. When meeting someone for the first time they can be very relaxed in your
company and may even invite you to join them for dinner with their family. This however
does not mean that they will do business with you. The culture is very different and can be
difficult to understand at times. On occasion you may leave a meeting with what you
perceive to be an order however it never materialises. It would appear that they don’t want
to say no to you or to turn you down, which can make it difficult to know where you stand.
9In Brazil, I have found that it’s very much about who you know. Getting introductions at
the right level is extremely important especially if you are trying to introduce a new
product. We were fortunate that we got to know someone through Enterprise Ireland who
introduced us to the CEO of a construction company called Rossi Residential. Rossi is within
the top five construction companies in Brazil and is a billion-dollar corporation. The CEO
pointed us in a particular direction and remained a key point of contact through the sales
cycle. Another key learning is that I made the effort to meet the decision makers and
influencers regularly, demonstrating my commitment and reducing any concerns they had
dealing with a small Irish company.
Following a pilot programme, Mantis received an order for 11 units worth in excess of €1
million. This order got us in the door with one of the most respected construction
companies in Brazil and was an important first step. Apart from the financial benefits it
gave us a presence in the market and more importantly a premium reference site with a
recognisable company. This was very important to us as we were an unknown brand in
Brazil and some of our better known competitors were already operating within the
market.
With all of the units mobilised, we now have Rossi’s approval to demonstrate the cranes on
site to other potential buyers and recently received the company’s official endorsement as
part of a PR campaign to publicise the deal.
The approach we are using in Brazil is similar to what we used in Ireland when we first
introduced the concept in 1998, where we entered a construction market that was not
familiar with the product. Having identified construction projects in prominent locations,
”
we tried to make it easy for potential customers to say yes.
Suretank, Dermot Beirne, Finance Director
“
Established in 1995, Suretank manufactures tanks and containers for the offshore oil
industry, including chemical and acid transport tanks, Helifuel tanks, offshore containers,
baskets, mudskips and cryogenic tanks. Originally aimed at the North Sea oil sector, the
company has since expanded globally. It now has design and manufacturing facilities in
Ireland, UK, Poland, Thailand and China, in addition to sales offices in USA, Norway and
Brazil.
Our market research started around three and a half years ago. Our managing director
visited on a number of occasions, three or four times a year, and then we made the
decision to put someone on the ground. Initially his brief was to carry out market research
on customers, competitors, opportunities for selling from Ireland, joint ventures, setting up
factories – to try and identify the best way to enter the market. He issued a report after six
months, which was the term of his contract, and we took him on after that. He is our
liaison with our local customers in Brazil, and he has been employed for more than two
years. We took on our person as a consultant. He’s not employed by our company.
Even though we have a local national representing us, everyone needs to be aware of the
culture. It’s very bureaucratic, there’s a lot of paperwork: everything has to be 100%
correct. It helps that we have someone there, and that also helps with understanding the
legal and tax systems.
From the report, we saw the potential the Brazil market has for our business. Obviously
there are opportunities to establish a business there but there are pros and cons, the same
as selling from here. Taxes and other duties act as a barrier to entry for customers trying to
import into the market.
10We have the expertise, the knowledge and the product base that people in Brazil are
looking for. We only target certain companies providing services that will use our
equipment. It would be a small group and it’s about reaching people who can decide to
buy. It helps to be able to react to a customer’s need in a professional, efficient manner.
Our approach is to keep in touch with customers: If something does come up, they’ll think
of you. It’s about knowing that there are contracts coming up. That might not be for 12
months, but it’s about keeping that in mind and making the right impact with a customer
at the right time.
Whenever we’ve needed a local partner or had to consult with professionals in Brazil,
anyone we use has been recommended, either by Enterprise Ireland or other Irish
companies. You need a customs agent and we’ve also spoken to some solicitors but they
weren’t big-name firms.
We have found the business environment to be quite friendly it can take a bit of time to get
through it all, but it’s definitely friendly and they do want to get it done but it can take a
bit of time.
We haven’t had any issues with repatriation of profits. Any of our sales have been directly
from Ireland. It’s just a normal sale and because we haven’t been paid in Brazil there’s no
repatriation issue.
Like any market you’re going to get into, it takes an investment. We take a medium-term
view. We’re not expecting to be in and out of there in 12 months. It’s potentially a huge
market for us and we would like to be heavily involved in it. Brazil probably won’t account
for any significant percentage of sales in a year. It’s a slow burner, there’s no instant
impact. I can’t see any short cuts in it. You have to take your time to get set up and do
things right. It’s a big market in our area so it’s going to take some time to establish itself
and for us to get established into it. It’s going to be a viable market for the next 10-15
”
years at least and we’re very positive about it.
Morrigan Partners, Trevor McDermott, Director
“
Morrigan Partners, based in Dublin, develops security software for smartphones and mobile
devices. Its patented Morrigan Secure Application (MSA) secures mobile communications
including voice, voicemail, text messages and even photos. Currently active in several
international markets, its customers include Government and National Security Agencies,
high-level financial institutions, telecoms networks and the corporate sector.
Like any market, you need to have local expertise. We understand the global client needs
but there are always local nuances. For example, we have somebody on the ground in the
Middle East on an agency basis. With Brazil, we have had some good feedback from clients
in manufacturing, in petroleum and in aircraft production.
We looked at Brazil’s economy, the growth rate and the population. The police are using
smartphones in day-to-day operations and it’s fair to say the population in general have a
security-conscious mind-set. Brazil is early for us but so far so good. We work with
Enterprise Ireland consultants and our own people and we are seeing a strong demand for
mobile security. What we need to figure out is how to meet that demand in a potentially
very exciting market.
11We felt we needed somebody who was close to the local market. After obtaining a
consultation report, we felt our best option was to hire someone with local knowledge and
market intelligence. Jumping on a plane and getting sales isn’t the way our market works.
São Paulo is the business centre for the Brazilian market, and our business development
executive divides his time between there and Dublin.
We didn’t have an issue with recruitment. The people there are usually multilingual, highly
educated and highly mobile – what more could you ask for? We had a very good
experience.
What’s encouraging from our point of view is that there seems to be security spend in
Brazil. Security is an issue that our target market is aware of, and prepared to put money
into. However it’s a long sales cycle: we have test customers but not active clients yet, and
it’s taken six months just to get to that point.
We deal with customers in their own language when necessary. When you’re discussing
technical requirements and capabilities, it’s important that your client is comfortable with
the level of detail and that there is no issue over interpretation. The product has to be in
the local language. We are in the process of having our materials translated into Portuguese
for the Brazilian market.
Generally we found that Brazilian people like to meet face to face and it’s a very personal
type of business culture. We found it to be quite a relaxed environment and quick to get to
decisions. It’s important to make sure you’re looking for the right person and you have to
be careful not to knock on the wrong doors.
We have looked at all the options regarding legal setup. If that happens, it will depend on
client demand. Brazil is somewhere you can’t ignore for export markets. It’s quite an
”
interesting one for us; it’s early days but showing promise.
12ST
ARTI
NGI
NTHEMARKET3. Starting in the market
“ It’s a slow burner, there’s no instant impact and I can’t see any
short cuts in it. You have to take your time to get set up and do things
right... Our market is going to be around for the next 10-15 years at
”
least and we’re very positive about it.
Dermot Beirne, Finance Director, Suretank
Introduction
In common with other BRIC countries, Brazil occupies a vast area. The opportunity
presented by such an emerging market has to be measured against the resources you have
at your disposal to serve it appropriately.
Geography
To put Brazil’s scale into perspective, at more than 8.5 million sq km it is the fifth largest
country in the world. It occupies a larger landmass than the continental United States.
Brazil has a population of 196 million people, and it’s estimated that more than 87 per cent
live in urban areas.
13Where to locate in Brazil
Rio de Janeiro may be the default destination for tourists, and Brasília is the State capital,
but São Paulo is the undisputed choice for businesses. More than 60 per cent of companies
doing business in Brazil choose the city as their base. It is the largest urban area in Brazil
and the fifth biggest on the entire continent. According to PricewaterhouseCoopers, São
Paulo ranks tenth in global cities measured by GDP. It is a significant hub for multinational
investment within Brazil. As a side note, foreign direct investment (FDI) is a growing feature
of the Brazilian business landscape and the country’s levels of FDI recently overtook those
of Ireland. Another reason to make Irish companies feel at home there may lie in its local
nickname ‘the city of drizzle’. São Paulo is two to four hours behind Ireland depending on
the time of year, which can make communication with HQ tricky but not insurmountable.
Although São Paulo is considered the best business location, particularly for companies in
the services sector, this is not an absolute rule. You need to consider carefully where you
will locate, bearing in mind where your customers have their operations: the oil and gas
sector is mostly based in the South East of the country, although there are pockets of
activity in the North East as well as some natural gas production in the Amazon.
Manufacturing can be found in various parts of the country but there is a strong
concentration around the Amazon to the North thanks to a special tax designation and
convenient river access to the ports for onward shipping.
Almost one in twenty (11.3 million) Brazilians live in São Paulo. The next most populous city
is Rio de Janeiro with 6.3 million people. Salvador, the original capital and still a prominent
trade hub and port, has more than 2.6 million inhabitants, as does the State capital Brasília.
Fortaleza and Belo Horizonte have 2.4 and 2.3 million respectively. To the north, Manaus in
the Amazon rainforest is home to 1.8 million people as well as a burgeoning manufacturing
sector. Other large cities include Curitiba (1.7 million), Recife (1.5 million) and Porto Alegre
(1.4 million).
Consider the resources that will be available to you when choosing a location. For example,
broadband is widely available in São Paulo but far less so in the Amazonas region. If you
plan to use communications technology like Skype to keep in regular and cost-effective
contact with your Brazilian operations, it is worth bearing issues like this in mind.
Getting there
Business travellers are well served for regular access to Brazil. There are frequent flights
between Dublin and São Paulo or Rio, available on an almost daily basis from a variety of
carriers. However, these require a stopover in London, Paris, Amsterdam or Frankfurt which
can bring the total travel time to upwards of 14 hours.
Even at the early stage of market research and discussions with partners or customers, it’s
worthwhile to set a realistic budget that will allow you to achieve what you want in the
time you have allocated. Business visitors report that São Paulo in particular can be
expensive as a base: some Irish companies have opted to locate salespeople in Florida in the
USA and have them commute to Brazil because they consider this a more cost-effective
option than relocating that person in the country.
14Clarifying your value proposition
Brazil is a vast market, so rather than taking a scattergun approach, focus on a vertical
market or geographical area and identify possible opportunities in it based on where and to
whom you can offer value. See what your competitors are doing and assess your strengths
and weaknesses.
Understanding where you are positioned in the market and having a consistent message
about your company – whether it is aimed at existing or potential clients, employees,
investors or the general public – are critical in building recognition and credibility.
Why should a prospect in Brazil buy from you instead of the competition? What makes your
offering superior? What is your unique selling point (USP)? It’s essential that you can
communicate succinctly how you can create value for a customer. Pay particular attention
to framing your proposition in a way that makes sense for the Brazilian buyer.
• Can your USP be stated simply? This is especially important when meeting senior
decision makers, as Brazilian businesses are very hierarchical in structure
• Your proposition should be capable of being communicated verbally and visually
• USPs need not relate purely to products; subject matter expertise also counts
• Frame your proposition in terms that show you understand the customer’s
problem, as opposed to just selling them what you have
• Look to provide a solution to your clients’ pain point that they cannot get
elsewhere
• Your product must stand out – what will make a Brazilian partner or customer work
with you if he can get a better or cheaper product somewhere else?
• Look to differentiate on expertise, service, support and innovation
• Provide local customer support or technical assistance.
NEED TO KNOW
Keep in mind the Brazilian desire for self-sufficiency and the protectionist approach of its
Government, which means your product or service should ideally lean heavily on elements that
can’t easily be sourced or made locally. Another factor to consider is that subject matter expertise
is highly sought after in Brazil because of widespread skills shortages.
Knowing your competition
• Who are your rivals in the market and how do their offerings compare with and
differ from yours?
• Is the market dominated by a few strong players or fragmented with many small
competitors?
15Knowing your customers
• What is your target market?
• Who are the relevant decision-makers – their titles and responsibilities?
If there is an obvious gap in the market, find out why. There are hundreds of examples of
where companies act to fill such gaps only to discover that they existed in the first place for
good reason.
Maximising your resources
Researching the Brazilian market for your product or service will get you so far but a certain
amount of intuitive decision-making is necessary when formulating your business
development strategy in a new market. The level of resources (both human and financial)
you are prepared to invest clarifies your level of commitment to the market and also may
create a ceiling on your possible success. If you are under-resourced from the start, it will be
difficult to win deals.
A useful approach may be to learn from the experiences of other Irish businesses already
active in Brazil. More experienced individuals and companies are generally willing to share
their knowledge. Some case studies are included with this guide, and Enterprise Ireland can
make relevant introductions for you if you are interested in exploring this further. There are
several business networking groups on LinkedIn, specifically aimed at connecting people
with business interests in Brazil, such as the Irish Business Network – Latin America, the Irish
Brazilian Alliance, Brazilian Irish Development Group, along with the Ireland and Brazil
Business Community.
Financial Resources
If you start with a realistic sales forecast and work backwards, you should determine an
appropriate budget for your business development needs in Brazil for the short and long
term. Create a P&L for the Brazilian subsidiary business unit to monitor the resources used
against target sales achieved. You also need to think about where you will get these
resources if you don’t have a surplus in your current budget. Talk to other Irish companies
already selling there; their experience may guide you. Keep in mind São Paulo can be
expensive to visit and stay in; factor this into your calculations and make sure your trips are
well planned to make the most of your time there.
The long-term aim will be to establish a successful operation in one or more of the markets
there. Deals struck over the short term tend to be the exception, and you should temper
your expectations. It could be up to two years before you start to generate revenue in the
market. Making a plan from the outset dividing your short-term (1 year), medium-term (1-3
years) and longer-term (5 years +) targets will enable you to plan for a fluctuating revenue
cycle.
Human Resources
At the initial stage of business development, it’s not necessary to create a permanent base
in Brazil, but frequent travel is advised in order to build relationships and get a feel for the
market. In the longer term, keep in mind that if you choose to base a member of your team
on the ground in Brazil, this carries an additional cost. Moreover, it is expensive to employ a
Brazilian national – although many Irish companies feel it’s worth the cost in order to keep
close to customers and build a sales pipeline more quickly.
16NEED TO KNOW
An important point to consider when formulating your marketing strategy for Brazil is the effect
of tariffs and local taxes, as these can have a very significant impact in your margins and
competitiveness. The best course of action is to get advice from a tax expert specifically about
your product/service and choice of route to market before you get into any commercial details
with your prospective clients. More information on the Brazilian tax system can be found on
chapter 5, ‘Legal Issues in Brazil’.
Enterprise Ireland can work with you on researching the most efficient and cost-effective sales
channels for your product or service. These options are dealt with in more detail in the Routes to
Market chapter of this guide.
Good ways for Irish companies to market themselves in Brazil are to:
• Attend or exhibit at trade shows
• Avail of guest speaking spots
• Get an elevator pitch slot at a sector-specific networking event
• Sponsor events
• Use business-focused social media such as LinkedIn
• Use traditional media and the web, with localised content
• Undertake traditional PR activities
• Go on trade missions
• Get involved with local business networks.
NEED TO KNOW
Irish companies say trade missions are particularly useful in Brazil, as the backing of the Irish
Government can open doors with customers. The presence of a Minister can help with securing
an initial meeting and ensuring that senior members of staff at your prospect’s business will
attend your presentation.
17Communicating your business proposition
As soon as you decide you want to enter the Brazilian market, you will need to adapt your
communications policy. Success in this new market will only happen if you can put across
to prospects what you can provide in any and all circumstances.
Presentations
The following may help you to prepare a presentation that will work in Brazil:
• Always customise the presentation for each prospect
• Consider including the prospect’s company logo in your demo to show the fit
between your company and your client’s business
• Use short case studies to show where you have solved similar issues for other clients
• Translate any collateral you plan to hand out at the presentation
• Use the services of a reliable translator to adapt your presentation for a Brazilian
audience (keeping in mind that Brazilian Portuguese is different from European
Portuguese)
• Make your presentation as visual as possible
• Keep the formal part of the presentation brief, backed up with points and graphics
• Emphasise the business case.
NEED TO KNOW
In Brazil, where language is likely to be a barrier on many occasions, why subject your audience to
a long PowerPoint presentation? Where the circumstances allow, consider adapting your
presentation so it can be displayed on a touch-screen tablet computer such as an iPad. It makes
your pitch more interactive, helping to break the ice with your counterpart in the meeting. This
approach will require you to think about your presentation in a more visual way, rather than
relying heavily on words that will need to be translated.
Be aware that in meetings of more than six people, tablets are less practical and therefore you
should also have prepared a more traditional presentation that can be displayed via projector. The
seniority of people in the room should also dictate the length of your pitch. As a rule, the higher
up in an organisation you go, the shorter the time you have to make your case.
18ROUTESTOMARKET
4. Routes to Market
“ We felt we needed somebody who was close to the local market.
After obtaining a consultation report, we felt our best option was to
hire someone with local knowledge and market intelligence. Jumping
”
on a plane and getting sales isn’t the way our market works.
Trevor McDermott, Director, Morrigan Partners
Introduction
In this section, we look at the options for serving the Brazilian market. Although distance
and logistics must be taken into consideration, the overriding factor to bear in mind when
considering a market like Brazil is time – particularly for an Irish small or medium-sized
company. Becoming known and trusted in Brazil is not a short-term undertaking, and you
also need to take into account the slower pace of business and decision-making process
that pertains there. Plan accordingly and allocate sufficient resources to make your time in
Brazil work.
NEED TO KNOW
Selling to Brazil will involve a significant commitment of both financial and human resources.
You should be aware of the ‘custo Brazil’ – the additional, often hidden, amount that it costs
foreign companies to trade in the country. Based on the experience of Irish companies and
other market commentators, this figure can be between 40 and 60 per cent extra. The cost
varies by industry sector and the nature of how you do business, but it applies whether you sell
through a trading company, or operate directly within Brazil and incur taxes.
What’s more, the need to build up business relationships at the outset will mean either sending
senior staff members very regularly to meet customers and prospects, or recruiting a locally
based representative – with all of the expense that brings.
Direct export from Ireland
This is the lowest risk and least capital-intensive approach, but the nature of business
culture in Brazil means that serving the market remotely is best suited for the initial stages
only. For services-based companies, a direct presence will quickly become a necessity, as it’s
very difficult to sell services from the outside. While English is spoken in some business
circles, Brazilian Portuguese is the language of choice. This, along with the cultural
preference for trusted personal relationships, makes it essential to work with a partner or to
hire a locally based business development executive before long.
• Prior to contact with importers, it is recommended that you make a detailed survey
of potential buyers
19• In Brazil, direct contact with suppliers is the preferred way to do business –
requiring regular trips from senior executives or employing a locally based
representative
• Keep in mind Brazil’s scale: this affects everything from travel plans for meeting
customers, to the distribution strategy for ensuring product delivery.
NEED TO KNOW
For business-to-business sales, it’s a good idea to focus on importers showing demand for your
product, irrespective of where they are located in the country. A good place to start is the
Brazilian Importers Directory, compiled by the Ministry of External Relations. It is available online
at www.brasilglobalnet.gov.br, and the site has an English language option. As well as being a
useful source for leads in Brazil, it also has a diary listing of trade fairs, categorised by state and
sector.
Working with partners
With so much of Brazilian culture based on personal relationships, it’s not surprising that
partners play an important role in doing business in the country, from facilitating meetings
and securing access to key customers to guiding you through the bureaucratic maze in
areas like importing goods. In Brazil, there is a certain type of facilitator known as a
‘despachante’ which translates roughly as a customs agent. They typically provide their
services for a small fee or a percentage of a deal.
You may have to deal with different people for different aspects of work such as obtaining
certain permits, or import licences. It is advised that you should conduct thorough
background checks on any individual or organisation you plan to deal with in this capacity,
and state clearly the scope of any work you intend to do together. Irish companies have
found it useful to ask their peers whom they recommend or have worked with before.
Enterprise Ireland can help with sourcing and identifying partners, from local development
agencies for setting up in Brazil to third-party professional service providers such as legal
firms, marketing or PR agencies and recruitment consultants.
When appointing an agent or partner:
• Don’t rely on your impressions from one meeting
• Do your due diligence properly; know the people you’re doing business with
• Conduct checks such as tax status and trading history if possible
• Find out whether the partner can provide the levels of access to customers that
they claim
• Seek the advice of multinationals, locally-based professional services firms, or
Enterprise Ireland who may identify a partner or facilitator for you
• Don’t sign any legal agreements, even if your initial feeling is good, until all checks
have been carried out
• Suggest a short-term engagement so you can more closely gauge the partner’s
effectiveness
20• Be extremely clear when defining roles and responsibilities of each party
• Beware of using terms like ‘exclusive’ in contracts.
Sales representative
There are many advantages to working with a local entity; you immediately remove the
language barrier and you potentially tap into an established network of contacts that could
help to drive sales faster than if you were to go it alone. These representatives can be either
companies or individual freelancers, usually working on commission. This arrangement
doesn’t involve importing goods and is usually just about creating a sales pipeline or
conducting market research on your behalf.
• Brazil has many professionals with experience in trade and imports, willing to
represent foreign companies in the country
• Be careful when choosing a representative that isn’t specialised in your area, as this
could lead to sub-optimal sales leads
• Sales representatives are best selected on a specific regional, state or city basis.
There are three methods for paying commissions in Brazil:
• Conta Gráfica: in this, a Brazilian bank retains the value of the agent’s commission
and the exporter’s fee separately, and the agent is paid after the exporter has been
paid
• Remittal: the Brazilian bank pays the exporter the entire sum of the invoice and the
exporter then pays the sales rep directly.
• Deductible from the invoice: where the importer retains the commission value and
arranges payment to the representative: this also requires a relationship of trust
between the parties.
NEED TO KNOW
For the value of the commissions, the parties can agree on a percentage to be calculated. You
must state the chosen form of payment and percentage of the commission when the Import
Declaration is registered in Siscomex, (Sistema Integrado de Comércio Exterior – Brazil’s
integrated foreign trade system).
21Third-party distribution
The advantage of distribution is that it reduces your costs, but your control of the sales
process is also diminished. If you sell physical products, you will almost certainly need a
distributor – and possibly more than one – because the Brazilian market is so geographically
vast.
If possible, you should find a distributor that doesn’t sell competing products, as it can be
very hard to control sales situations where your offer may not be the most attractive.
• In Brazil, intermediaries typically take one of two forms: trading companies and
commercial companies
• Trading companies require special license from SECEX and from the Federal
Revenue and Customs Administration
• Trading companies must be constituted as a stock company and they possess a
minimum capital set by the National Monetary Council
• By their nature, trading companies typically focus on large-volume orders
• Commercial companies are plentiful in Brazil and simpler in structure
• They typically act as intermediaries between the supplier and end consumer
• Although they are classed as importers, strictly speaking these companies perform
resale of products within Brazil.
The main elements of a distribution agreement should have:
• A defined term
• A defined territory – this is especially important in a country as large as Brazil
• A performance-related component (such as sales targets)
• Right of termination
• A ‘no competitor’ clause
• A right of continuity option (an agent or distributor may seek to include this type of
clause, subject to meeting certain targets)
• Exclusivity agreements are usually triggered when sales volumes have reached a
certain level
• Agreements on maintaining levels of stock
• A clause concerning marketing collateral and/or promotion.
NEED TO KNOW
Arguably as important as tariffs is the time involved in physically moving goods into the market.
Almost 80% of goods shipped into Brazil are sourced through the ports. Delays are common and,
strikes during summer 2012 by customs officers at the country’s major ports were causing further
setbacks. You should factor these delays into your planning.
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