Doing Business in Brazil: Part Two

In Part Two of this article looking at business opportunities in Brazil based around major events, Rachael Church-Sanders, editorial director of MEI hears about some of the challenges that overseas companies face.

The Brazilian market (and particularly any projects that are publicly funded and tendered) is challenging. There is a risk of litigation causing significant project delays or undermining the commercial value of projects.

Political influence is very widespread and can undermine good decision making in respect of major projects. Corruption is still a live issue in Brazilian public procurement and represents a potential threat to participation by overseas companies.

Overseas companies can only be expected to succeed in the Brazilian market if they make the right local contacts and use these to good effect.

Dennis Mills, chief executive of Major Events International, believes that preparation is everything when it comes to doing business in Brazil. “You have to make sure your market offer is correct for the country as a lot of companies are turning up there without knowing if what they are offering is actually right or needed. Some service provisions are simply not understood. We are seeking a lot of UK companies just wandering around Brazil aimlessly at the moment, not even able to speak basic Portuguese.”

Joe O’Neill, director of global overlay & event services, Arena Group agrees: “Before initiating a connection with the organising committees I would suggest any business seeking work from global opportunities needs to think about its point of differentiation, what makes it unique or different from competitors and develop that USP in all communication and marketing. Evidence of capability and credibility is everything so the better the client testimonials, the more likely the OCs and other stakeholders will pay attention. Ideally past work and involvement for the rights holders/ brand whilst not entirely a ‘must have’ is a ‘would like’.”

“Next comes commitment, that means investing time and effort visiting and returning again and again, a huge financial investment and undertaking so companies had better be prepared. The old adage is true be it Korea, Russia, Brazil or any other nation, ‘people buy people’ so spending regular time with prospects/stakeholders is the only way to succeed.”

“The last piece of the strategy is to resist the ‘smash and grab’ tactic. Promote your legacy ambitions and plans, send the message that your business is committed and intends to stay beyond the event; usually that always requires a local partner scenario, chances of securing work are more often exclusively about local partnerships. Even when there is an absolute recognition that the infrastructure required is not available locally, there is always an overriding desire to see it procured through local sources teamed with international suppliers who can comply with the specifications and regulations required.”

The Brazilian business practice of awarding contracts on the basis of a trusted individual or company could work against overseas companies without local expertise. Local partners can offer an understanding of this business culture and a willingness to work on personal/social relationships.

“The Brazilian market certainly favours local companies and the tax regime can make it hard for overseas companies to make a return,” explains Mills. “Opening an office is often too far down a path that not be right for you, so it is much better to seek local advice first. A lot of people try and skip that process which is a mistake as a good amount has to be done before they can even think about approaching the end client. Sometimes in Brazil you have to go more slowly in order to get there more quickly. Our experience has proven that without a local presence, such as that offered by Major Events International, success in Brazil is extremely unlikely. It is all about relationships and working with local people on the ground.” 

“Understanding the feasibility of investing in Brazil is an interesting proposition,” says Madeleine Blankenstein, business development and marketing partner, Grant Thornton Brazil. “UK companies should be aware of the current high cost of living, 'red tape' but most importantly the influence of taxes. Depending on the type of service or goods a company has to offer, taxes can become deal breakers. It is of utmost importance to choose the appropriate advisors in order to mitigate the risks presented by these perceived barriers and help navigate their way to successful and profitable operations. These barriers are not insurmountable but understanding the cultural and trading environment before entering the market is key to success.”

When it comes to actually doing business with Brazilians: “Stay away from informality, choose the appropriate partners to deal with, be aware of bureaucracy, and understand the different way Brazilians deal with time,” adds Blankenstein. “In Sao Paulo and Rio de Janeiro it is often the case that guests arrive a little late to an invitation, regardless of whether it is a professional or personal event.”

The last word goes to Mike Lee, chairman of Vero who advises overseas companies to look beyond 2016: “Brazil is a dynamic market and it won’t all end with Rio 2016. Brazil is a country with real ambition for the future and we are seeing a lot of significant new investment. You can see the impact of the global spotlight and the Brazilian authorities realise this is a crucial moment in their desire to attract international companies, raise profile and move forward as a country."

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