Doing Business in Brazil

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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