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
This country profile has been produced to give a short overview of some of the key concepts to bear in mind when doing business with contacts in Brazil. It is intended to be an aid to business people who have commercial dealings with counterparties in the country but should not be seen as an exhaustive guide to this topic or as a substitute for more substantial research should there be a need.
With this in mind, we have covered the areas which are key to a better understanding of the cultural mindset underpinning business dealings in Brazil and which are, quite often, extremely different from the approach and thought processes associated with business in other parts of the world.
Therefore this briefing note is broken into short, bite-sized sections on the following topics: