hand - brazil - microsoft · brazil had positive changes in the last 25 years population circa 1989...
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DOING BUSINESS IN BRAZILECONOMIC DEVELOPMENT - LEGAL ADVICE
SÃO PAULO RIO DE JANEIRO BRASÍLIA
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BRAZIL HAD POSITIVE CHANGES IN THE LAST 25 YEARS
Population
Circa 1989
Household in class: A, B or C ~50%
Circa 2014
~87%
~203 million~140 million
GDP
Exports (including oil)
US$ 1.2 trillion
US$ 27 billion
US$ 2.2 trillion
US$ 213 billion
Socio-demographic
Economic
Source: The Brazilian business environment; Reflections on the Transformation of the last 25 years (McKinsey white paper); Target; Ipeadata.
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BRAZIL HAD POSITIVE CHANGES IN THE LAST 25 YEARS
Inflation
Circa 1989
Credit Status Default position
Circa 2014
Investment Grade
~6% per yearyearyearyear~6% per weekweekweekweek
Political System DictatorshipClosed Market
DemocracyOpened Market
Financial
Politics
Source: The Brazilian business environment; Reflections on the Transformation of the last 25 years (McKinsey white paper); Target; Ipeadata.
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� Deceleration in China� Argentina and Venezuela
crisis� U.S. Recovery
� Many interventions in various industries:
� Energy� Oil and gas� Financial
� From BRIC to "Five Fragile"
� Return of distrust in the macroeconomic fundamentals
� High public sector spending
� High infra-structure costs
� Since 2013 – Protests on the streets against:
� Corruption� High threat of job
loss� Inflation higher
than last last years
International contextMicroeconomic management
Macroeconomic fundamentals
Lack of progress in the structural issues Political deterioration
HOWEVER THERE HAS BEEN A DECLINE ON THE RECENT ECONOMIC SCENARIO.
WHAT ARE THE PROBABLE REASONS?
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Consumer Confidence Index
Industry Confidence Index Net Foreign Direct Investment
THEREFORE THE CONFIDENCE OF CONSUMERS AND COMPANIES WENT DOWN
Source: IBGE-FGV/ BLOOMBERG
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IN 2015 THE INFLATION AND FX EXPECTED TO REACH NEW LEVELS... AN ADJUSTMENT YEAR.
Brazilian inflation rate (IPCA) -%, YOY
USD Fx rate| R$
GDP growth forecast for 2015 - Percentage, YOY
SOURCE: BCB, Tendencias, Itau BBA reports
� 2015 expected to be the year of economic adjustments in the Brazilian economy.
� Fiscal adjustment and inflation control key priorities for the public administration
Challenging economic outlook
SOURCE: Brazilian Central Bank
5,9
4,3
5,96,5
5,8 5,96,4
7,3 ?
2008 2009 2010 2011 2012 2013 2014 2015
1,83 2,001,76 1,68
1,952,16
2,35
3,20 ?
2008 2009 2010 2011 2012 2013 2014 2015
4,514,36
3,83
2,23
-0,50
Aug 2011 Jan 2012 Jan 2013 Jan 2014 Feb 2015
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ANYWAY, WE HAVE GOOD REASONS TO BELIEVE! THERE ARE POSITIVE PROSPECTS FOR
THE FUTURE!
1
� Demographic tendencies are still positive� Potential growth of middle class� Increase in labor force qualification� Comparative advantages in Agribusiness� Pre-salt development
� In spite of the many crisis in the last 30 years, macroeconomic fundamentals have substantially improved
� Brazil faced previous crisis and always overcame it
� Northeast vs. Southeast� Medium sized cities vs. Megacities� Countryside vs. Capitals (different
regions with different opportunities)
”CHINA” INSIDE BRAZIL
HISTORICAL FACTSPOSITIVE TRENDS ”CHINAS” INSIDE BRAZIL
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A legal system expensive and very slow
High tariff and tax barriers
Expensive labor costs
Difficult customs system
Burocracy
1
5
4
3
2
THEREFORE, THERE WILL BE PLENTY OF OPPORTUNITIES. BUT DON´T IGNORE SOME
RELEVANT ASPECTS...!
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Check buyers and partners
financial situation /
certificates
Ask for guaranteesassets, promissory
note, confession of
debt – easier for
lawsuits
Visit the Buyer
check facilities
Involve a lawyer in
new business
Try to sell
by letter of credit
or some advanced
payment
AND HOW TO MINIMIZE RISKS IN SELLING TO BRAZIL?
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BE PREPARED! THERE ARE MANY OPPORTUNITIES IN BRAZIL!
EXPORT TO BRAZIL
ESTABLISH A NEW COMPANYJoint stock company (5%)
Limited liability company (95%)
FIND A PARTNER /
DISTRIBUTOR
ALWAYS CONSULT A LOCAL
LEGAL ADVISOR