6 Tips for Expanding Globally into Brazil
Brazil may be best known for its breathtaking beaches and lush rainforests but its booming economy with excellent investment opportunities is now attracting more foreign business people than ever before. Going global can be daunting and there are always challenges when entering a new market. Follow these 6 tips to doing business in Brazil and you'll be saying "trato" in no time.
1. Seize the Opportunities
Brazil may be best known for its breathtaking beaches and it lush rainforests but its booming economy with excellent investment opportunities is now attracting more foreigner business people than ever before. With a population of 190 million and a GDP of almost $2 trillion, Brazil represents the 5th largest opportunity in the world after China, India, Indonesia and the United States. Opportunities abound for small to mid-sized companies in many sectors of the Brazilian market. With the preparations in full swing for the 2014 World Cup and the 2016 Olympics billions have been earmarked for infrastructure, roads, ports, airports, and stadiums. Agriculture, construction, security, mining, telecommunications are some other promising areas for exports and investment. While the oil and gas industry is also very strong in Brazil, the country is now one of the leaders of hydroelectric power making investment into this industry extremely promising as well. An IMF (International Monetary Fund) report indicates that Brazil leads all other South American countries in terms of infrastructure and technological development.
2. Do Your Homework
Brazil is a hotspot for companies looking to expand their business and boost global sales but doing business in Brazil requires knowledge of the local environment. Often referred as the "custom Brazil" there are many hidden costs associated with doing business in this vibrant country. For example, Brazil's inflation of labor costs is among the highest in Latin America and there are many labor charges on top of base salaries. Possible sources of funding must also be explored due to high interest rates on credit. Other obstacles in the way of smooth global sales for your company may include the complex customs system, lengthy legal processes and heavy taxes. Brazil may have dropped six points in the ranking since 2011 making it the 58th most difficult country to do business with but the strength of its economy, its rapidly expanding consumer class and the numerous opportunities for growth may make it worth the hassle.
3. Hire an Expert
If you're going to be doing business in Brazil, a trustworthy financial adviser and a great accountant can help you cut through the red tape and navigate the complex tax and labor laws. Don't speak Portuguese? Brazil has received a below-average score in a new report that rates English-language competency around the word so you may need to solicit a good translation company in order to effectively communicate your international business proposal and an international bilingual staffing consultant can make sure you have the right people working for you once your business is off the ground.
4. Plan a Trip
Once you've researched this booming market you'll need to start developing your market entry strategy. Some of the easiest ways are through a sales representative or distribution network, setting up a subsidiary of your existing company, or acquiring an already established Brazilian company. Personal relationships are the foundation of Brazil's business culture and many people find that visiting a trade show is the simplest way to begin doing business in Brazil. For public sector procurements a local Brazilian partner is a must and a face to face meeting is preferred. Learning a few words of Portuguese will go a long way towards showing your Brazilian business contacts that you respect their culture but a trustworthy local interpreter should be present to avoid miscommunication during any serious business meeting.
5. Familiarize Yourself with Local Customs
Since personal relationships are the key to a successful business venture in Brazil, you'll want to sharpen your Brazilian social skills. In a business meeting it is customary to start out with some casual small talk, never delve into business discussions before your host broaches the subject. It's most likely that entertaining will take place in a restaurant but if you are invited to a Brazilian home, it is seen as polite to send the hostess a flower arrangement the next day as a thank you. Gift giving is not expected at a business meeting, instead pick up the tab, a 10% tip is appropriate at a bar or restaurant. For a toast to your future success in Brazilian business try "saude" (sah-OO-day) or "viva" (VEE-va).
6. Pick a Brazilian Home base
It has been said that the biggest mistake a foreigner can make when doing business in Brazil is to visit Rio first. The city is breathtaking, the lifestyle is enticing and it's easier for your family to transition there. Rio may be the "marvelous city" but San Pablo, the "city of drizzle" is still the business center of the country and the place you'll likely want to be when doing business in Brazil. Setting up your Brazilian home base there from the start will save you an inconvenient and costly move later down the line and with a lot of planning and a little luck you'll see a quick return on your investment in this booming economy and you'll be celebrating on a beautiful Brazilian beach in no time.
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