Entering the Market in Brazil
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Why Expand to Brazil?
It is a special moment for expanding a business in Brazil. So often described as a country of the future, Brazil has recently shown the world its time is now. Most of the people must have noticed that last October, when images of dozens of thousand people packed at Copacabana beach exploded in screams and hugs when the announcement arrived: after hosting the FIFA World Cup in 2014, Brazil will also host the 2016 Summer Olympics games in Rio de Janeiro.
The Brazilian government commissioned a study to quantify the economic rise the two major sports events mean. The first figures forecast a $24.5 billion boost between now and 2027, mainly thanks to increased spending by tourists, growth in employment and construction. It sounds almost funny that while the entire world is facing immense difficulties, Brazil is discussing abundance. Businesses interested in setting up a business in Brazil should rush to make sure they get invitation to the party.
Obviously, the choice of Rio for the Olympic Games did not come out of the blue. Brazil has experienced a tremendous economic growth over the past fifteen years, it has one of the most rapidly developing economies in the world and it is responsible for almost half of Latin Americas GDP. Brazil is already a global power in agriculture and natural resource and provides one of the largest workforces and consumers in the Americas.
The main sectors on which Brazilian economy relies are agriculture (forestry, logging and fishing), mining, manufacturing and services. The energy market is also developed, being Brazil a leading producer of hydroelectric power.
Brazil owns also a sophisticated technological sector and develops projects for submarines, aircraft and equipment for space stations. Major exports include aircraft, automobiles, iron ore, steel, electrical equipment, ethanol, textiles, footwear, corned beef, coffee, soybean and orange juice.
Attractions for UK businesses starting a business in Brazil
JETCO is the shorthand for the renewed trust Brazil government put in UK firms and products. JETCO means UK-Brazil Joint Economic and Trade Committee. The JETCO marked a step change in UK-Brazil bilateral trade and investment activity. It is an important channel for the UK and Brazilian Governments to engage at a senior level for improvements in the business environment. Main objectives of the agreement are:
- Strengthening co-operation and promoting key trade sectors;
- Encouraging innovation;
- Promoting co-operation in financial services
- Doing business and developing business environments;
- Sharing knowledge and raising profile;
- Promotion private sector collaboration.
It's the right time to expand a business in Brazil.
UK companies incorporating or licensing a business in Brazil must know that with an estimated 600,000 foreign visitors expected for the World Cup alone and with 12 host cities to prepare, Brazil is facing a huge challenge. Estimates of the investment in infrastructure required to prepare for 2014 range from £10 billion to £30 billion. This will include:
- Stadia: construction and modernisation
- Airports: infrastructures expansion and modernisation
- Railways: (long-distance passengers rail, LRV (light rail), Monorail, high speed trains and technological understanding of these technologies
Further opportunities will be available as soon as the plans for the Olympics Games will be implemented. Other interesting sectors in which you may find profitable registering a business in Brazil are:
- Hospitality and hotel (infrastructure and equipments)
- Public Security and safety
- Public Health
- Oil (high sea exploration) and natural gas
- Heliport infrastructure (new helicopters and new heliports on the coasts)
- Power and Renewable energy
- Shipbuilding (construction and maintenance)
- Water treatment (water, sewage, waste collection and treatment)
- Housing Programme
The expected boom of the Brazilian economy is attracting investors from all around the world. Companies from all around the world registering business in Brazil are queuing. Therefore, competition in many sectors may be harsh. The first rule, as usual, is to make sure your business plan is robust and based on accurate and up-to-date market research in Brazil.
Even if there are efforts to simplify procedures and accomplish an easier way to let foreign investor setting up a business in Brazil, the work is still in progress. Bureaucracy, a complex and burdensome tax system and pretty high interest rates are still recognised obstacles to trade and should be taken into account when looking to expand a business in Brazil.
The major complaints are about legal disputes, which can take a very long time to be heard and resolved especially if any part of the extensive bureaucracy is involved. Similarly, the tax system does have significant differences from that in Britain and errors can be difficult and costly to put right. It is always best to ensure that reliable legal, financial and fiscal advice is taken at the earliest possible stage, rather than risk long and possibly expensive wrangling at a later date.
Other obstacles are identified in the differences in language (English is still not widely used in business, you may need a translator) and business etiquette. You may need to ask for expert advice before incorporating, registering or licensing a business in Brazil.
Organisations that can assist with Entering the Market
Do you need advice from an expert in your field, on the ground? Need help finding the best route to market for your product or service?
When expanding your business to Brazil, donít forget to protect your brand. We provide Trademark Registration Services in Brazil and in all South America.
The Brazilian Chamber of Commerce has been actively promoting trade and business between the UK and Brazil for over 70 years.
Need to register a company or setting up a company?
Simplified Global Payroll Managing payroll in multiple countries is complicated with different systems, deadlines, and languages in each country, lack of reporting, and constantly changing laws and regulations. Trying to manage global payroll via fax and email with excel spreadsheets leads to data security issues, fines, and penalties for non-compliance. Blue Marble has solved global payroll challenges with cloud-based technology, customized aggregated monthly reporting, and a hybrid service model in 150+ countries around the world.