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photo from Brazil Factoid
23 April 2011
After 10 years of researching
and living in Brazil, my business model has evolved through the years.
I get many e-mails asking for
help to set up a business in Brazil. Many ask how to import a product
into Brazil. Others have a service to offer and wonder how they can get
paid for their expertise.
Two important points must be
made:
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One must have a firm understanding of the
Portuguese language and business culture |
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One should have boots on the ground or address where
business can be conducted. |
These prerequisites in
conjunction with understanding the items listed on this page:
Taxes, social and employee
commitments, bureaucracy, bank fees, “fiscal” (governmental audits and/or regulatory
visits) and the general overall time is takes to accomplish simple tasks needs to be fully understood before
starting.
If one is looking at the “Ag
Sector”, we are in a grey period as of early 2011 as per the quantity of land a foreigner can own.
My personal view on this is that one must look for partnerships
with local Brazilians or permanent
residents inside Brazil. There is a way/style that local
influential Brazilians can finesse a given
situation.
As an outsider,
you may be taken advantage of in
one form or another. The fee or charge may
increase because of one’s lack of command of Portuguese, knowledge
of local markets and business practices and little international
business experience . The hiring of legal consult or a
confidant to assist you must be done with care. They may not
always be working in your best interest.
To sense these types of issues, it takes a long time in Brazil to
get up to speed.
Currently the dollar exchange
rate is very low. The dollar/real is bouncing around between
1.55:1 to 1.60:1. Seven years ago this was closer to 3:1. Relatively
speaking, Brazil has become an expensive country of late. Brazilians
that have the means are regularly traveling to USA and Europe to
buy clothing, brand name personal items (purses/cosmetics), and
electronic devices; not too mention investment abroad by Brazilian
companies.
The reason for this is two
fold:
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One is the strong REAL and
other are the taxes imposed on imported brand name items.
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Generally the prices of brand
name items inside Brazil are double of that outside the country.
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The key to success in Brazil
is to find a niche that does not already exist here in Brazil. This
might be in the form of
IP (intellectual property), value added services, liaison
capacities (enhancing understanding across borders), or adding
processing capacity to existing infrastructure. (Ideally this would be
accomplished by providing low cost capital in conjunction with Brazil
partner)
CONCLUSION:
There are no easy answers for
starting a new business in Brazil. From my experience watching other
GRINGOS, it seems as though one must SURVIVE in order to THRIVE. From my
experience, I highly recommend that one has a secondary source of income
while you are setting up shop. This can sustain you during the “dry
pockets” when zero revenue is coming in. I also think it is important to
put in a TIME AND DOLLAR AMOUNT stop loss order on your Brazilian
endeavor.
I have witnessed many foreigners fall into the “BLACK HOLE SYNDROME” in
Brazil. They come with the intention of investing X dollars in Brazil
with the dream of double digit returns. More often than not, the initial
investment was 2X or 3X what they planned on (start up cost surprises).
Murphy’s Law kicks in and the investment hits a bump in the road.
Because of pride, ego, stubbornness and ignorance, the investor hires
additional legal counsel to process (sue) the parties involved to recoup
his investment. Time, dollars, travel, lawyers, and opportunity cost of
money over time tend to bleed all parties dry.
Legal action in Brazil is not quick. It is normal for a legal action to
take several years or more.
Denial, anger and frustration increase to exponential levels.
Victimization and blame become common themes with the investor.
Negativism about the country grows and new “Real” opportunities are
missed while doing battle on other fronts. If you are reading this and
do not understand the subtle hints I am giving you, you are not ready
for Brazil. If you feel you can handle the landmines and are willing to
immerse yourself into language and culture while learning Portuguese,
give me a call. Maybe I can be of value to you. Until some of the
initial hoops are jumped through as eluded to on intro page, I think
further consultations are a waste of my time and yours.
There are numerous opportunities
here, but prepare first.
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