Doing Business in Brazil: Challenges

The Brazilian market (and particularly any projects that are publicly funded and tendered) is challenging, writes Rachael Church-Sanders, editorial director of Major Events International. 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. As Karen Earl, chairman of ESA, says: “There is a lot of targeting of Brazil for both the FIFA World Cup and for the next Olympic Games because big events are seen as big sources of income. So you will find that most of our members in the consultancy area and indeed in the sports marketing area have sought partners in Brazil already, in Rio.”

Mills from 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.”

The Brazilian business practice of awarding contracts on the basis of a trusted individual or company could work against 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. “Overseas 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.”

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