Doing Biz in Brazil - Kory Melbly's comments - Kory Melby's Brazilian Ag Consulting Services

Doing Business in Brazil

UPDATED: Aug 18

UC-Berkeley Tour: Students and professors learning about the balance between environment and ag expansion in Mato Grosso, Brazil

After 15 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.

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Cost of Importing to Brazil (updated Aug 18)

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Check with your government's export assistance office.

In the US it is - International Trade - Dept of Commerce.

US Consulates have commercial sections which can assist you, but check first with your local Commerce Dept. office.

Two important points must be made:

One must have a firm understanding of the Portuguese language and business culture
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:

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Taxes, social and employee commitments, bureaucracy, bank fees, “fiscal” (governmental audits and/or regulatory visits) and the general overall time it 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.

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.