doing business in brazil · 10/10/2012 · brazil is still relatively vulnerable to a downturn in...

Doing Business in Brazil Jade Sims Business & International Trade Specialist International Business Center Michigan State University

Jade Sims, Michigan State University

International Business Center Mission: To provide superior education, research, and assistance to businesses, public policy makers, academics, and students on international business and trade.

CIBER * U.S. Commercial Service Affiliate * MEDC STEP Program Statewide Partner & Training Provider * Global

Business Club * International Trade Center * globalEDGE * Michigan Export Growth Program *

Academy of International Business


Benefits of Trade:

• Interchange of new ideas, technologies, shared platforms, emergence of “best of the best”

• Lower costs, market efficiencies, development of core competencies (95% potential customers/75% purchasing power abroad)

• Main source of economic growth for U.S. (esp. manufacturing)

– exports make up 12.5% of U.S. gdp (11.2% in 2009) – exports make up ½ of the 2.9% gdp increase between 2009

and 2011 – International trade represents _25_% of world economy

• Evidence suggests export-related jobs pay more—18% • For every $1b in US exports, 6,000 jobs are created

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25%!!!!!!!!!!!!!!!


Cross-Border Business Continues to Grow Exponentially

Source: The World Bank World Development Indicators

Shifting Global Marketplace

Percentage share of the world production

Source: The World Bank World Development Indicators

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5% world population, 40% production, 25% resources

We Need to Have the Ability to View the World through Alternate Lenses…


…And That Takes Global Competence

• A survey of Human Resource Managers on six continents: global competence is critical to the success of international managers and necessary for professional development.

• Global competence refers to the acquisition of in-depth knowledge and understanding of international issues, an appreciation of and ability to learn and work with people from diverse linguistic and cultural backgrounds, proficiency in a foreign language, and skills to function productively in an interdependent world community (NEA Education Policy and Practice Department, 2010).


What does the US Export?

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The United States is the world's largest manufacturing economy, producing 21 percent of global manufactured products. China is second at 15 percent and Japan is third at 12 percent.


US Exports of Goods


US Exports of Services


Growth in US Exports to Top 10

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2010-2011


Welcome to Brazil


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5m for latin america


Brazil Population 194,946,000

GDP (ppp) per capita $11,210 (2010)

Inflation rate 6.5 percent

Politics & freedom index (1-30=Free, 31-60=Partly Free, 61-100=Not Free)

40

Corruption index (10=least corrupt, 0=most corrupt) 3.8

Country risk rating A4 - A somewhat shaky political and economic outlook and a relatively volatile business environment can affect corporate payment behaviour. Corporate default probability is still acceptable on average.

Global competitiveness (of 144 countries listed 48

Economic freedom index (higher score is better—179) 99

Foreign policy globalization index (higher score is better)

67

Ease of doing business ranking (higher score is better)

126

E-readiness ranking (ranking of 70 countries included) 42

Global services location index (highest ranked country is the most attractive as a potential offshoring destination) 50

12


MSU globalEDGE MPI


Leading Export Market Countries


Leading Exports from Brazil


Leading Import Market Countries


Leading Import Products


Top US Exports to Brazil

Brazil – Strengths & Weaknesses

• Strengths – Brazil boasts abundant and varied

natural resources and a relatively diversified economy.

– Manufactured products constitute a growing proportion of production and exports.

– The country has increased its economic and financial stability and its capacity to withstand international financial market volatility.

– The policy of preserving fundamental macroeconomic equilibrium should stay on track.

– Brazil's domestic market potential and favorable labor costs have tended to enhance its attractiveness to foreign investors.

• Weaknesses – High cost of credit – Substantial political roadblocks and lack of

official commitment to addressing uneven income distribution, poor public education imbalanced market concentration, and informal economy (limited tax collection), complex & confusing law & tax structure*

– A lack of investment has resulted in deficiencies in energy, rail, road and port infrastructure, with public/private partnerships not yet really effective.

– Brazil is still relatively vulnerable to a downturn in raw material prices.

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Challenge: Although Brazil is a solid democracy with strong economic growth, inefficiency and corruption still hinder the country from reaching its potential. Until recently, Brazilians had no visibility into the ways the government spent their money. This lack of transparency meant that they could not hold it accountable for corruption or for the poor use of public resources. Emerging solution: Brazil’s government is opening its books to the public through the Transparency Portal of the Federal Government, which publishes a wide range of information, including the expenditures of federal agencies, the charges of elected officials on government-issued credit cards, and a list of companies banned from contracting with the government. Bolstered by a recent law on information access, the portal is helping to create a new culture of accountability. Historically, Brazilians had no visibility into government spending—which areas got funding, how efficiently public money was being used, or whether fraudulent activity was occurring. Over the past few decades, many high-profile incidents of flagrant corruption have sorely tested the public’s trust, hurt Brazil’s image in the corporate sector, and hampered economic growth. In the World Bank and IFC1 Enterprise Surveys 2009, 70 percent of global and domestic companies responding said they viewed corruption as a “major constraint to doing business” in Brazil. An investigation by the Federation of the Industries of the State of São Paulo found that, in 2008 alone, corruption cost the country some $40 billion (2.3 percent of GDP)—equivalent to about half its education budget.


OPPORTUNITIES

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Tourists—feeding, housing, transporting, venues…


OPPORTUNITIES—transportation

• Waterways require upgrading (13% usage vs 25-35 in North America)

• High logistics costs

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Airports, other transportation, stadiums,


OPPORTUNITIES—agriculture

• Agricultural equipment to cultivate increasing acreage


OPPORTUNITIES—aerospace

• Planes & helicopters, parts & components, defense & executive use


OPPORTUNITIES—IT

• 7.3% CAGR over the next 4 years • Corporate network servers, networking equipment • Computer hardware & peripherals


OPPORTUNITIES—telecom

• Cell phone service infrastructure, satellite services (video/e-learning), broadband infrastructure, power line communications, pay TV

30 of 33


Opportunities—Social Media

Social Media • Social media growth in line with economic growth • 76 million internet users • 60% use social networks (facebook, twitter, Orkut/google),

231 “friends” or connections • Most social media growth in Rio, Sao Paulo, & the south • TV culture is strong and informs social media • 6th largest YouTube market—15 million views: http://www.youtube.com/watch?feature=player_embedded&v=5AFna6R-rAo#!

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http://www.facegroup.com/social-media-in-brazil.html

http://www.youtube.com/watch?feature=player_embedded&v=5AFna6R-rAo

http://www.youtube.com/watch?feature=player_embedded&v=5AFna6R-rAo



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http://www.facegroup.com/social-media-in-brazil.html

Brazil’s continuing GDP growth

Households by income level


globalEDGE

• Online Course Modules (70+) – Export Modules from “A Basic Guide to

Exporting”

• Export Tutorials • Country Insights • Country Rankings • Blog • Diagnostic Tools

– CORE – FREIGHT – PARTNER – DISTRIBUTOR

• Resource Directory

Online Course Modules

globalEDGE

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The online course modules provide interactive educational tools for use in the classroom or in executive training. These modules focus on issues pertinent to international business and include a case study or anecdotes, a glossary of terms, quiz questions, and a list of references when applicable. They are approximately equivalent to a chapter of a textbook. There are 60 modules currently, and the list keeps on growing.


globalEDGE: Online Course Modules

http://globaledge.msu.edu/academy/HpgdtmLH/61NEW/Doing Business in Brazil/player.html


globalEDGE - Export Modules

• The World is Open for Business • Developing An Export Strategy • Export Advice • Developing a Marketing Plan • Methods and Channels • Finding Qualified Buyers • Using Technology Licensing and Joint Ventures • Preparing Your Product for Export • Exporting Services • International Legal Considerations • Going Online: E-Exporting Tools for Small Businesses • Shipping Your Product • Pricing, Quotations, and Terms • Methods of Payment • Financing Export Transactions • Business Travel Abroad • Selling Overseas and After-Sales Service • BONUS MODULE: Analyzing a Company's Ability to Export

“Sourcing and selling goods around the world has never been easier, and more and more small U.S. businesses are competing and winning in the global economy. A Basic Guide to Exporting is a great source for anyone preparing to do business or to increase their sales overseas. We strongly recommend it to our customers.”

Frederick W. Smith President, Chairman, and CEO

FedEx Corporation

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The "Exporting" module series has been produced in cooperation with the U.S. Commercial Service. These modules were developed from the 2008 edition of A Basic Guide to Exporting and each module represents one of the book's seventeen chapters; the modules are listed by chapter in chronological order.

http://globaledge.msu.edu/academy/linkTraceCourses.asp?Path=HpgdtmLH/76NEW/The World is Open for Business/player.html&ID=54

http://globaledge.msu.edu/academy/linkTraceCourses.asp?Path=HpgdtmLH/77NEW/Developing An Export Strategy/player.html&ID=55

http://globaledge.msu.edu/academy/linkTraceCourses.asp?Path=HpgdtmLH/78NEW/Export Advice/player.html&ID=56

http://globaledge.msu.edu/academy/linkTraceCourses.asp?Path=HpgdtmLH/79NEW/Developing a Marketing Plan/player.html&ID=57

http://globaledge.msu.edu/academy/linkTraceCourses.asp?Path=HpgdtmLH/80NEW/Methods and Channels/player.html&ID=58

http://globaledge.msu.edu/academy/linkTraceCourses.asp?Path=HpgdtmLH/81NEW/Finding Qualified Buyers/player.html&ID=59

http://globaledge.msu.edu/academy/linkTraceCourses.asp?Path=HpgdtmLH/82NEW/Using Technology Licensing and Joint Ventures/player.html&ID=60

http://globaledge.msu.edu/academy/linkTraceCourses.asp?Path=HpgdtmLH/83NEW/Preparing Your Product For Export/player.html&ID=61

http://globaledge.msu.edu/academy/linkTraceCourses.asp?Path=HpgdtmLH/84NEW/Exporting Services/player.html&ID=62

http://globaledge.msu.edu/academy/linkTraceCourses.asp?Path=HpgdtmLH/85NEW/International Legal Considerations/player.html&ID=63

http://globaledge.msu.edu/academy/linkTraceCourses.asp?Path=HpgdtmLH/86NEW/Going Online-E-Exporting/player.html&ID=64

http://globaledge.msu.edu/academy/linkTraceCourses.asp?Path=HpgdtmLH/87NEW/Shipping Your Product/player.html&ID=65

http://globaledge.msu.edu/academy/linkTraceCourses.asp?Path=HpgdtmLH/88NEW/pricing, quotations, and terms/player.html&ID=66

http://globaledge.msu.edu/academy/linkTraceCourses.asp?Path=HpgdtmLH/89NEW/Methods of Payment/player.html&ID=67

http://globaledge.msu.edu/academy/linkTraceCourses.asp?Path=HpgdtmLH/90NEW/Financing Export Transactions/player.html&ID=68

http://globaledge.msu.edu/academy/linkTraceCourses.asp?Path=HpgdtmLH/91NEW/Business Travel Abroad/player.html&ID=69

http://globaledge.msu.edu/academy/linkTraceCourses.asp?Path=HpgdtmLH/92NEW/Selling Overseas and After-Sales Service/player.html&ID=70

http://globaledge.msu.edu/academy/linkTraceCourses.asp?Path=HpgdtmLH/29NEW/analyzing a companys ability to export/player.html&ID=23

http://globaledge.msu.edu/academy/exporting.asp

http://globaledge.msu.edu/academy/exporting.asp

Thank you! Jade Sims Outreach Specialist for Business and International Trade Michigan State University | International Business Center Eppley Center 645 N. Shaw Ln, Rm 7 East Lansing, MI 48824-1121 P: (517) 884-1660 F: (517) 432-1009 E: [email protected] W: http://global.broad.msu.edu/outreach/

mailto:[email protected]

http://global.broad.msu.edu/outreach/

doing business in brazil · 10/10/2012 · brazil is still relatively vulnerable to a downturn in...

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