Exporting and Doing business in Brazil
Brazil is the largest economy in South America. national capital city is Brasilia, the language is Brazilian Portuguese, and has a strong business base and modern banking system, with the presence of the world’s largest banks.
Brazil is simply too big a market to ignore. It is the fifth-largest country in the world, with a population of approximately 210 million. It has one of the world’s most rapidly developing economies and a GDP per head that is greater than either India or China. It has natural resources in abundance, a developed industrial base, high standards in scientific research and substantial human capital.
Today, Brazil has the world’s ninth-largest economy – by far the largest in South America, representing over 50% of regional GDP, including large states such as São Paulo with the largest port in the continent and the point of access for most imports from Europe, and an economy bigger than Argentina, making it the UK’s most important trading partner in Latin America, with bilateral trade exceeding £5.8 billion in 2019. The UK is also one of the largest investors in Brazil.
HOW ATTRACTIVE AND BIG ARE THE OPPORTUNITIES FOR BRITISH BUSINESSES IN BRAZIL?
Negotiations between Brazil and the United Kingdom after Brexit also revealed that there are problems in another economic bloc. As part of Mercosul, Brazil can only close trade agreements with its members which in an atmosphere of growing resistance was reached with the EU in 2019, but it is not yet a done deal as the final agreement has not yet been ratified and therefore has not entered into force.
However, because Brazil is extremely interested in a trade deal with the UK and is pushing for a broader agreement. the possibility of Brazil leaving the Latin American block is to be taken seriously.
Although there is currently no Free Trade Agreement with Brazil, the nation is still extremely attractive to British companies.
Many UK companies, such as Rolls Royce, Shell, BP, GSK, JCB, John Deere, Unilever, Compass, Rexam, and Experian operate in Brazil, as well as more than 400 of the world’s largest companies, alongside the country’s thriving e-commerce culture.
Food and drink
Brazilian consumers are well travelled and prepared to pay more for high quality free-from and functional foods having a firmly established retail market enjoying stellar growth in recent years. With that in mind, consumer interest in such products supporting digestive health and those catering for special needs as well as indulgent variants points to new product development opportunities, for example:
- Free-from confectionery, cakes, biscuits, pasta, jams, and others (Dairy Free, Gluten Free, Egg Free, Nut Free, and Sugar Free), Vegetarian and Vegan
Functional foods cover a variety of foods, including whole foods along with fortified, enriched, or enhanced foods, and may include: Conventional such as grains, fruits, vegetables sardines, salmon and nuts; Modified such as yogurt, cereals and orange juice; and fortification when products include added vitamins and other nutrients.
- confectionery, biscuits, and jams
- ethnic sauces
Products will be treated as premium because of high import duties. UK companies interested in exploring the market will need to be open to negotiating prices to adjust them to the local market.
Brazil has the largest healthcare market in Latin America. It is worth £78 billion, with opportunities for UK companies in:
- designing and managing hospitals
- healthcare systems
- medical devices
Brazil has a strong shipbuilding industry which delivers vessels for a variety of applications, with opportunities for UK companies in all areas including:
- maritime equipment
- marine construction and maintenance
- maritime navigation
Brazil’s £6.7 billion investment plan aims to make sanitation services available to all by 2033. Private sector operators will have a major role in this process.
Current only 82.5% of the population have access to water supply. 48.6% has access to sewage collection systems, but only 39% of the sewage is treated.
Opportunities for UK companies include:
- partnering with local companies in public private partnership (PPP) / concessions to design, build and operate new municipal water and sewage systems, solid waste management facilities and energy recovery plants
- water quality monitoring equipment
- water distribution network instrumentation
- energy saving water and wastewater pumping and aeration technologies
- membranes and sludge treatment techniques
Brazil is the largest producer of niobium, the second largest producer of magnesite, and the third of iron ore and graphite. There is also significant production of rare earth minerals and gold.
Opportunities for UK companies:
- innovative technology, including in sustainable reuse of waste, dam tailings solutions and water treatment
- environmental and water services expertise
- equipment, especially focused on cost reduction and productivity gains
- other supply chain products and services, including energy efficiency, project and asset management, health and safety, IT solutions and security systems
- port and rail logistics
- research and development, including industrial applications of advanced materials
Brazil is the world’s second largest supplier of food and agricultural products. The sector is also responsible for one-third of Brazil’s total energy supply through a complex bio-renewables supply chain.
Brazil needs access to innovative technologies to improve yields and efficiency. Opportunities exist for British companies in:
- animal health and wellbeing
- agricultural machinery and equipment
- precision agriculture
No matter the sector or industry, there are many cultural customs should be aware of.
A major part of the Brazilian economy is driven by family businesses, which is important to consider before starting any ventures within the country. Close and personal element of business is key to embrace if you are a British business looking at expanding into Brazil.
It is clear to see that Brazil has many opportunities available, especially if their cultural customs are embraced.
WHAT ARE THE CHALLENGES?
Brazil has 26 states, and a Federal District all with different regulations. So, before you do any sort of business in Brazil, you need to do a great amount of research into this enormous market and to locate where in the country your business will be most successful to launch and grow.
Different states have different strengths – some are more about manufacturing, some are more related to agriculture, and in the states in the south of the country where there are more of the middle classes based, there are more professional service companies.
On the other hand, the country has a complex tax system and regulation for imports, with many extra taxes for companies who are not from Brazil. Multiple government agencies are involved in the control, labelling, packaging, and quality/safety requirements for different products. Overall, there are over 90 taxes, duties, and contributions that British companies need to be aware of.
Services can attract taxation of 40-50% on the basic cost. Not only that, but import duties can apply on entry, and between States for certain products, increasing the cost of some products by 60%, depending on the sector.
You should seek expert advice from https://peglerinternational.co.uk/contact-us/ before exporting or doing business in Brazil, as knowing the culture, language, legal system, and market as a whole, along with close and personal contacts, allows us to identify your needs, relate them to opportunities and introduce your products or services to the appropriate sales channels.
Demand for UK goods and services in Brazil is strong, as we are seen to have high quality products and to be trusted business partners.