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Saturday, June 19, 2010

Business talking II

Establishing a Business in Brazil

Benefits of locating in Brazil

Brazil presents a prime opportunity for potential investors:
• The current population of approximately 184 million (according to
data published by IBGE in 2007), of which almost half is under 20
years of age, is projected to reach more than 259 million by the
year 2050.
• The spread of modern agricultural methods is bringing an increasing proportion
of the population into the market for manufactured goods.
• The Brazilian public is highly receptive to foreign brand names, which can
demand a premium price over competing domestic products.
• Has a democratic government.
• Has a stable economy and has been successful in controlling inflation.
• Has modern telecommunications and bank systems.
• Is one of the ten world’s largest economies.
• Has the most diversified industrial park in Latin America and the
• Is one of the world’s top generators of electric energy.
As far as the actual establishment of an operation in Brazil is concerned,
potential foreign investors will have no difficulty in obtaining skilled
professional assistance for the preliminary stages. They will also find that,
due to the large industrial base, few problems are encountered in locating
a joint venture partner or a suitable manufacturing facility. Investors may seek
assistance in the following areas:
• To determine whether a market exists for a particular product, there are
several competent consulting firms with wide experience in market
Investment in Brazil 15
Investment in Brazil
research. Several of these consulting firms are associated with major
multinational consulting companies.
• Similarly, plant location studies and industrial design services may be undertaken,
and there is an adequate supply of competent engineering expertise.
• Assistance is available for locating possible joint venture and equity
participation partners.
• Labor in Brazil is plentiful and there is a good supply of skilled and
disciplined production workers in the main industrial centers.
• Skilled local management is readily available and at a cost well below that
of the expatriate executive.
• Raw materials and energy supply are easily obtainable.
• The marketing and promotion industry is well developed and media
advertising is used extensively.
The potential foreign investor is, of course, interested in the long term
prospects. In this respect, the most important feature of Brazil is that it is a
truly developing country. A few of the factors that should ensure an
expanding market for manufactured goods and for services include:
• Population growth and demographic factors, as previously described.
• A flourishing, export-oriented agricultural base, with a huge potential for
expansion of land under cultivation and the improvement of crop yields by
the increased use of irrigation and fertilizers.
• The existence of vast, untapped mineral wealth and massive investment
projects currently in progress to exploit those resources.
• The development of energy source alternatives to imported oil, including
harnessing hydroelectric power and expanding the use of ethanol
and natural gas.
• The growth of an urban working class with expanded disposable income.
Overall, the best advice for potential investors in Brazil is to look at the past
experience and future plans of foreign companies already operating here.
From the smaller foreign company that has found a niche for its particular
product line or technological expertise to the major multinational corporation
whose Brazilian operation is among the largest of its international
subsidiaries, the general message is clear: Brazil is an option that is hard
to overlook for the long term investor.

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