Doing business in Brazil
Now the sixth largest economy in the world, Brazil holds myriad opportunities for entrepreneurs. Here's a guide to trading with the South American powerhouse
Rich with natural resources, culture and a strong local market, Brazil holds great potential for UK businesses looking to test the waters of international trading. Latest economic data indicates that Brazil’s economy has overtaken Britain’s for the first time – with the nation now the sixth largest economy in the world.
It’s perhaps not a surprise development for Brazil, as the country has been touted as one of ‘the big four’ BRIC countries (Brazil, Russia, China and India) expected to overtake the G7 economies by 2027. Recognising the importance of this booming economy, Prince Harry recently visited Brazil in his role as trade and Olympics ambassador to strengthen ties and promote everything the UK has to offer to this overseas market.
Brazil is the fifth largest country in the world, 35 times larger than the UK and spanning three time zones – which is something to bear in mind when planning project timescales and business calls.
Sao Paulo is Brazil’s largest city, with a population of 10.9 million. The city is the economic hub of the country, home to 43% of the population, despite occupying just 11% of the country’s land mass.
The Brazilian economy represents half of Latin America’s total GDP and, along with the county’s new ranking of sixth largest economy in the world, this is a good reason for small businesses to start considering this as a potential market for overseas trade.
How do I get started with trading?
1) Research your target market
Research is key to success in exporting. Discovering a gap in the market or a demand for a particular product or service, for example, are insights that can propel your business into trading success. Although internet penetration in Brazil is only around 40% of the population, it is ranked in the top three countries that spend the most amount of time online, meaning that an e-commerce entry to this market might be the most strategic route for a business new to international trade.
Consumer purchasing power in Brazil is increasing and the newly affluent middle class now represents more than 50% of the 200 million Brazilian population, meaning that there are significant purchasing opportunities for businesses looking to target that market.
2) Planning is everything
Once you’ve researched your target market, you should aim to develop a robust exporting plan. Plans need to incorporate every step of the exporting journey and mark out potential pitfalls as well as opportunities. Considerations such as time zones and cultural differences can have a significant impact on your business plan.
For example, in Brazil business is seen as personal – so people are just as important as profits. For this reason, businesses are encouraged to initiate trading through a local contact, known as “despachante” – who can become an advocate for the business and introduce you to the right people. Planning therefore is essential; for example, establishing relationships with local resellers that might require more time.
There are a number of start-up costs associated with exporting and your plan should incorporate this, such as transport and insurance. The strength of the currency in your target market should be an important consideration too, as a strong pound may make your trading partners’ potential profits weaken – leaving them less willing to buy from you.
4) Customs and regulation
Each country comes with its own set of customs laws and shipping regulations – which can be hard to navigate when you first start out. Given the rich opportunities Brazil holds for UK exporters, taking the time to understand the regulation around shipping is important, as delays from incorrect paperwork can be costly to both your business’ reputation and bottom line.
For example, Brazil recognises two different types of shipment: courier and formal; where the former is normally used for documents and samples, and the latter is used for everything else.
A formal shipment must include a waybill, commercial invoice and packing list, all signed by the shipper in blue ink only.
5) Seek help and advice
Despite the myriad considerations, businesses should remember that once they’ve started trading, the process will naturally become much easier and has the potential to result in a healthy boost to profits. Fortunately, there are also a number of experts who can help you find your way.
Brazil’s bilateral chambers of commerce offer opportunities for networking that can help you establish new connections with importers in Brazil. Brazil’s ministry of external relations offers a similar resource, (www.BrazilGlobalNet.gov.br), providing potential traders with details of current Brazilian overseas trading companies – allowing you to search by ‘product sold’ as well as company name.
Neil Kuschel is sales director at global shipping company DHL Express . DHL Express offers help and advice to businesses planning on expanding internationally with export services, including information around customs rules and regulations that govern overseas markets