ISSUE 1: 25 NOVEMBER 2015
BUSINESS GUIDEBOOK
2015-09 BS: M Contemporary Issues in the Global Business Environment MBA 15/16
DOING BUSINESS IN BRAZIL by Universal Consulting Bournemouth University
CONTENT
PAGE NUMBER
1.0: BACKGROUND
01 - 09
2.0: BUSINESS CULTURE
10 - 15
3.0: BUSINESS OPPORTUNITIES
16 - 31
4.0: BUSINESS CHALLENGES
32 - 39
5.0: TOP RECOMMENDATIONS
35 - 41
6.0: REFERENCES
42 - 45
HARRY BJARNASON
1.0: BACKGROUND 1.1: 1.2: 1.3: 1.4:
POPULATION POPULATION BY AGE GROSS DOMESTIC PRODUCT (GDP) GDP PER CAPITAL BY STATE
PAGE 01
FULL NAME
Federative Republic of Brazil
5th largest country in the world.
Capital City: Brasilia
1.1: POPULATION 0.59% 1.22%
Brazil is 3.75% of the total world population. (World Population: 7,376,065 as at 2015 - Reference date)
Yearly Growth Rate higher than China & United States. 0.79%
1
1.4 bil
2
1.2 bil
3
326 mil
1.18%
4
257 mil
0.83% 5
204 mil
PAGE 03 . SOURCE 1: WORLDOMETERS POPULATION
Brazilian fans during the opening match of the World Cup between Brazil and Croatia. IMAGE SOURCE 1: MARCIOKENOBI.WORDPRESS.COM
1.2: POPULATION BY AGE
58.8% 47.9%
CHINA INDIA
UNITED STATES INDONESIA
52.3%
0-14
15-24 25-64
65+
BRAZIL 49.7%
23.1% 16.5% 52.4% 8.0%
Majority of the population in Brazil (52.4%) are matured adults aged 25-64. PAGE 05 . SOURCE 1: WORLDOMETERS POPULATION
1.3: GROSS DOMESTIC PRODUCT (GDP)
In 2014 (million, US$)
1
United States
17,419,000
2
China
10,360,105
3
Japan
4,601,461
4
Germany
3,852,556
5
United Kingdom
2,941,886
6
France
2,829,192
7
Brazil
2,346,118
ALERT: ongoing recession since 2014 SOURCE 2: WORLD BANK.ORG
Goldman Sachs predict that it will grow to the 4th biggest economy in 2050. The 2014 World Cup and the 2016 Olympics are hosted by Brazil, these two show the progress Brazil has had.
PAGE 07 . SOURCE 3: KOTLER AND KELLER 2016, PAGE 244.
IMAGE SOURCE 2: EXOBASE
S達o Paulo
1.4: GDP PER CAPITAL BY STATE 44 million population (in 2012)
São Paulo is the most wealthy & highest populated state in Brazil. followed by: Rio de Janeiro Brasilia Belo Horizonte Curitiba THESE ACCOUNT FOR 25% OF BRAZIL’S TOTAL GDP.
PAGE 09 . SOURCE 4: BBC NEWS.CO.UK
HARRY BJARNASON & JACLYN GABBERT
2.0: BUSINESS CULTURE
2.1: SOCIETY & CULTURE 2.2: THE DO’S AND DON’TS
HIDDEN TIPS: Class is determined by economic status and skin colour.
2.1: SOCIETY & CULTURE
• Family / Group is fundamental • Hierarchy is respected • Qualification and age are praised • Nepotism is important • Bargaining is entertained • Be aware of taboo gifts • Kissing and touching is common
PAGE 11 . SOURCE 5: RICHARD 2002.
2.2: THE DO’S AND DON’TS
Build personal relationship
Face-to-face communication
Business Preparation Do not reject invitation Do not rush into a deal
Book meeting two weeks in advance
During Meeting
TOP TIPS:
STEP 1: Be punctual STEP 2: Greet everyone accordingly STEP 3: Give business card
STEP 4: Interrupt to show interest REMEMBER: Do not criticise or confront! Be comfortable to personal touch.
Wear fashionable three-piece suits. Avoid green & yellow colour!
DO NOT WORRY: Being late is acceptable everywhere except Sao Paulo & Brasilia.
PAGE 13 . SOURCE 5: RICHARD 2002.
2.2: THE DO’S AND DON’TS
Socialise
Mix business with
Pleasure
Do not rush to leave
After meeting
Do not discuss business over lunch
Business quirks
‘OK’ sign is not OK!
A local partner is critical
Expect to debate
Do not change the team
PAGE 15 . SOURCE 5: RICHARD 2002.
BURIN THIENPHICHET (KEN) & CIAYI LIM
3.0: BUSINESS OPPORTUNITIES 3.1: 3.2: 3.3: 3.4: 3.5: 3.6: 3.7:
INFRASTRUCTURE TELECOMMUNICATION BEAUTY & PERSONAL CARE TEXTILE & GARMENT AUTOMOBILE POULTRY NATURE & ENVIRONMENT
market demand
Business Opportunities market resources
Manufacturing / Export PAGE 17
THE QUESTION IS:
Where would you ямБt in?
3.1: INFRASTRUCTURE
On June 9, 2015, President Rousseff unveiled a new infrastructure concessions program, which is intended to draw US$64 billion in investment over the next five years and beyond to upgrade and operate highways, railways, ports and airports across 20 states in Brazil. INVESTMENT | CONSULTANCY | TECHNOLOGY
PAGE 19 . SOURCE 6: EXPORT.GOV
Big mobile adoption & Growing consumer base IMAGE SOURCE 3: BMIRESEARCH.COM
3.2: TELECOMMUNICATION
63mil
55.7%
access via mobile devices
access to internet
In 2014
In 2015, up-to-date
93.2mil
social network users Estimation in 2016
INVESTMENT | CONSULTANCY | PARTNERSHIP | JOINT VENTURE | ONLINE BUSINESS (E-COMMERCE)
US$ 26.12 billion on B2C e-comm Estimation in 2017
PAGE 21 . SOURCE 7: STATISTA
IMAGE SOURCE 4: ITTAKESMOXE.COM
3.3: BEAUTY & PERSONAL CARE According to Euromonitor
Brazil is the world largest market for deodorants and perfumes. 2nd largest for hair care and men grooming’s products; 3rd largest for coloured cosmetics and oral hygience; 4th largest for skincare. INVESTMENT | CONSULTANCY | PARTNERSHIP | JOINT VENTURE | ONLINE BUSINESS (E-COMMERCE)
PAGE 23 . SOURCE 8: IN-COSMETICS.COM
IMAGE SOURCE 5: THE BRAZILIAN FASHION DESIGNERS ASSOCIATION (ABEST)
3.4: TEXTILE & GARMENT
Brazil is the 4th largest garment industry in the world. The textile and fashion industry worth US$63 billion. ALERT: Majority of output for domestic market; Export declined from US$74mil in 2006 to US$39mil in 2011.
PAGE 25 . SOURCE 9: THEGUARDIAN.COM
S達o Bernardo do Campo, birthplace of the automotive industry in Brazil. IMAGE SOURCE 6: YAHOO.COM
3.5: AUTOMOBILE
4th largest 3.5mil units automobile market & 7th biggest producer in the world. In 2014,
SOURCE 10
SOURCE 11
INVESTMENT | CONSULTANCY | PARTNERSHIP | JOINT VENTURE | CARPOOLING OR RENT-A-CAR SERVICE
PAGE 27 . SOURCE 10: GOV.UK | SOURCE 11: THE WALL STREET JOURNAL
IMAGE SOURCE 7: GOOGLE IMAGE SEARCH
3.6: POULTRY
Brazil 3,943
In 2011 (million) EUA 2,966
EU-27 1,100
Thailand 460
China 410
Others 917
Brazil is the world largest chicken exporter. INVESTMENT | CONSULTANCY | PARTNERSHIP | JOINT VENTURE | EXPORT TO THE UNITED KINGDOM
PAGE 29 . SOURCE 12: BRAZILIANCHICKEN.COM.BR
Over 60 percentage of Amazon rainforest in Brazil.
IMAGE THEMYSTERIOUSWORLD.COM IMAGE SOURCE SOURCE:8:THE BRAZILIAN FASHION DESIGNERS ASSOCIATION (ABEST)
3.7: NATURE & ENVIRONMENT
Brazil has the most resources in the world of tropical forest. INVESTMENT | CONSULTANCY | PARTNERSHIP | JOINT VENTURE | WATER & WASTEWATER TREATMENT | WASTE MANAGEMENT TECHNOLOGIES | RECYCLING | HAZARDOUS WASTE | CONSTRUCTION WASTE | AIR POLLUTION CONTROL | CLIMATE DEVELOPMENT MECHANISM | RENEWABLE ENERGY
PAGE 31 . SOURCE 13: HANDELEXPORT.NET
TOLULOPE ADEGOKE
4.0: BUSINESS CHALLENGES 4.1: 4.2: 4.3: 4.4:
BUSINESS EXCLUSIVITY BUREAUCRACY CORRUPTION TARIFF & CUSTOMS BARRIERS
What are the limitations? Possible barriers?
PAGE 33
4.1: BUSINESS EXCLUSIVITY Sector
Exclusivity
Recommendation
1
Radio, TV & Publishing
Brazilians or foreigners (naturalised >10 years)
Partnership
2
Air transportation
Brazilians (Native)
Consultation
3
Health care
Brazilians
Consultation
4
Security services
Brazilians
Consultation
SOURCE 14: THE BRAZIL BUSINESS.COM
4.2: BUREAUCRACY
119 days to start a business; 469 days for construction permit. Subsidiary or Branch? TOP RECOMMENDATION 1:
1. Get a lawyer 2. Ample time
PAGE 35 . SOURCE 15: THE BRAZIL LAW BLOG.COM
4.3: CORRUPTION
70% businesses identify corruption as a constraint. nearly 4,000 employees were fired between 2003-2012.
TOP RECOMMENDATION 2:
Better to be safe than sorry
PAGE 37 . SOURCE 16: TRANSPARENCY.ORG
Brazilian money SOURCE 9: PICTURE OF MONEY
4.4: TARIFF & CUSTOMS BARRIERS
At least 67% of proямБts on taxation and it takes 156 days. more than 275,000 norms regarding the payment of taxes.
TOP RECOMMENDATION 3:
1. Hire a legal & tax advisor 2. Use SPED to facilitate PAGE 39 . SOURCE 17: THE BRAZIL BUSINESS.COM-2
Not openly discuss:
a Jetto or Jettino is sometimes expected in Brazilian business. SOURCE 10: THE HUFFINGTON POST
5.0: TOP RECOMMENDATIONS
TOP RECOMMENDATION 4:
Get a local agent
A Jetto is a favor that borders on a bribe of varying degrees. A Jettino is a small Jetto which is more likely to involve using your political connections or family influence in business affairs.
PAGE 41 . SOURCE 18: BUSINESS TRAVEL.ABOUT.COM
IMAGE REFERENCES: 1. Marciokenobi.wordpress.com, https://marciokenobi.wordpress.com/tag/ brazil-protests/ [Viewed on 24 October 2015] 2. Exobase, http://exosphe.re/exobase/saopaulo/ [Viewed on 24 October 2015] 3. BMIresearch.com, http://www.bmiresearch.com/news-and-views/ses-eyes-latin -americas-110mn-rural-telecoms-opportunity [Viewed on 16 November 2015] 4. Ittakesmoxie.com, http://ittakesmoxie.com/brazilianblowout.htm [Viewed on 16 November 2015] 5. The Brazilian Fashion Designers Association (ABEST) 6. Yahoo.com, http://news.yahoo.com/ap-impact-cars-made-brazil-deadly180411170.html [Viewed on 16 November 2015] 7. Google Image Search, http://resources0.news.com.au/ [Viewed on 17 November 2015] 8. The Mysterious World.com, http://themysteriousworld.com/top-10-most-popular -tourist-attractions-in-brazil/ [Viewed on 16 November 2015] 9. Picture of Money, http://pictureofmoney.tumblr.com/page/10 [Viewed on 17 November 2015] 10. The Huffingtonpost, http://www.huffingtonpost.com/frank-vogl/trade-trumps -anticorrupti_b_6075936.html [Viewed on 17 November 2015]
SOURCE REFERENCES: 1. Worldometers Population, http://www.worldometers.info/world-population/ [Viewed on 24 October 2015, BST+13:52] 2. World Bank.org, http://data.worldbank.org/data-catalog/GDP-ranking-table [Viewed on 16 November 2015] 3. Kotler, P. T. and Keller, K. L., 2016. Marketing Management, 15th Edition. London: Pearson. 4. BBC News, ‘Brazil: Key facts and figures’, http://news.bbc.co.uk/1/hi/8702891. stm [Viewed on 24 October 2015, BST+18:22] 5. Richard, R. G. 2002. Cross-cultural business behavior: marketing, negotiating, sourcing and managing across cultures [online], Viewed on 16 November 2015. 6. Export.gov, http://www.export.gov/brazil/doingbusinessinbrazil/index.asp [Viewed on 16 November 2015] 7. Statista, http://www.statista.com/topics/2045/internet-usage-in-brazil/ [Viewed on 19 November 2015] 8. In-cosmetics.com, http://www.in-cosmetics.com/Online-Press-Centre/Normal-Industry-articles/BoomingBrazil/ [Viewed on 16 November 2015] 9. The Guardian.com, http://www.theguardian.com/sustainable-business/blog/ brazil-textile-industry-potential [Viewed on 16 November 2015]
PAGE 43
SOURCE REFERENCES (CONT’): 10. Gov.uk, https://www.gov.uk/government/publications/exporting-to-brazil/ exporting-to-brazil#opportunities-for-uk-businesses-in-brazil [Viewed on 16 November 2015] 11. The Wall Street Journal, http://www.wsj.com/articles/brazil-auto-sales-production -and-exports-dropped-in-2014-1420730602 [Viewed on 19 November 2015] 12. Brazilian Chicken.com.br, http://www.brazilianchicken.com.br/home/ ofrangonomundo [Viewed on 16 November 2015] 13. Handle Export.net, http://www.handelexport.net/markets/brazil-countryprofile/business-opportunities-in-brazil [Viewed on 16 November 2015] 14. The Brazil Business.com, http://thebrazilbusiness.com/article/limitation-offoreign-participation-in-brazilian-companies [Viewed on 17 November 2015] 15. The Brazil Law Blog.com, http://www.thebrazillawblog.com/brazils-bureaucracy -causing-problems-export-businesses/ [Viewed on 17 November 2015] 16. Transparency.org, https://www.transparency.org/cpi2014/results [Viewed on 17 November 2015] 17. The Brazil Business.com-2, http://thebrazilbusiness.com/article/the-7-most -common-problems-for-businesses-in-brazil [Viewed on 17 November 2015] 18. Business Travel.about.com, http://businesstravel.about.com/od/resources/fl /Cultural-Tips-for-Doing-Business-in-Brazil.htm [Viewed on 24 October 2015]
THE END. THANK YOU. Published by Universal Consulting Bournemouth University, MBA (2015/16). Editorial Team: HARRY BJARNASON JACLYN GABBERT BURIN THIENPHICHET (KEN) CIAYI LIM TOLULOPE ADEGOKE
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