Over the past few years, Brazil has moved from a country with great promise sometime in the future to being seen as one of the hottest investment opportunities in the world to moving back into a country seen as having massive internal weaknesses. A more stable political system and currency, coupled with vast mineral wealth of the country made Brazil a must for all companies with truly global ambitions but recent political scandals and the drop in the price of oil has produced renewed turmoil.
With a population of 194 million, Brazil represents the fifth largest market opportunity in the world — after China, India, Indonesia and the USA. It is also the fifth largest country in the world by geographic size. An IMF (International Monetary Fund) report indicates that Brazil leads all other South American countries in terms of infrastructure and technological development.
Those facts, combined with a stabilising economic and political landscape — (the twin nightmares of corruption and hyper-inflation ravaged the country for decades) — and it appeared that Brazil was set for take-off. Then political corruption and volatile commodity prices seemed to drain all the optimism.
Whatever the prevailing economic and political situation, those wishing to do business with Brazil and the Brazilians should be aware of the various cultural and structural barriers which might confront them.
Probably the most pervasive barrier encountered by the unwary traveller would be the ‘Custo Basil’ or the Brazil Cost. This term refers to the very real extra costs of doing business in Brazil — corruption, governmental inefficiency, legal and bureaucratic complications, excessive taxation, inflation etc. Although this ‘Custo’ is difficult to define and has lessened in recent years, it remains real and the cause of great frustration for international business people.
Due to this ‘Custo Brasil’, it is important to work closely with local lawyers and accountants. Many people have found the services of local middlemen (despachante) extremely useful in overcoming many of the unfathomable local complexities.
So, as with many countries, the opportunities are there and they are real but it is essential to understand the local business landscape if you are to reap the rewards – regardless of whether your sector is computing, banking and finance or pharmaceuticals, local knowledge is vital.
Written and Produced by Keith Warburton
Brazil is a country with almost limitless potential. The problem is that Brazil has been a country with almost limitless potential for many decades but very, very little of that potential has actually been realised. The country seems to be constantly trapped in a cycle of political corruption leading to economic crisis followed by periods of growth which breed renewed optimism.
In addition, Brazil is a notoriously difficult country from a market entry perspective with massively protectionist policies being further complicated by very strongly pro-employee legislation and a labyrinthine system of inter-state taxes.
Having said all of that, Brazil is rich in mineral wealth (you name it and it can be found in Brazil) and has a rapidly growing population which is predominantly young and aspirational. There is also a growing recognition in the country that the historical inherent barriers to growth must be tackled and upsurge in populist demands for changes to happen.
The only way is up for Brazil and that makes it a very attractive mid to long-term investment opportunity. If you are thinking of doing business in Brazil now is probably the time to start the process. Many foreign companies have successfully navigated the complexities of Brazil and built solid businesses there in the past and the future looks bright.
If you speak to business people who have worked in Brazil they will all tell you the same thing – that the key doing successful business in Brazil is to develop a deep understanding of Brazilian commercial culture. You really to need to study the work-related culture and work out how you can best attack the market and develop those all-important early relationships.
This country profile provides an overview of some of the key aspects of Brazilian business culture in a concise, easy to follow-format. The document includes information on: