Still discussing the ways to establish your company in Brazil (see yesterday Blog: Steps to Establishing an Office in Brazil), trading companies could be another type of, basically import marketing organization, to set foot in Brazil.
Although principally designed as an export promotion tool, trading companies may play a role in importing through direct purchase or counter trade activities. The operation of Brazilian trading companies is open to foreign as well as to national interests.
In Brazil, trading companies are called "empresas comerciais exportadoras", "companhias comerciais", or "companhias de comercio exterior". They are set up to give small and medium-sized manufacturers the same operational flexibility as large manufacturers in promoting Brazilian exports, especially of non-traditional exports.
Whichever form of market entry is selected, the bottom line for an international companies is to do your homework before entering the Brazilian market.
Common sense and long-term approaches are a good idea too, but, if you are not sure about the way to go, we’re here to help you grow your business in Brazil.
Wednesday, May 31, 2006
Tuesday, May 30, 2006
Steps to Establishing an Office in Brazil
Either setting up a company in Brazil or acquiring an existing entity are options for investing in Brazil. Setting up new companies is relatively easy and inexpensive. Acquisitions of existing companies are monitored by the Central Bank (Banco Central).
The more critical issues are usually related to starting a business without a local partner who knows the lay of the land. Selecting the right partner, as in any other country, is also critical. Specific expertise, track record and business ethics are probably the more important issues to be looked at.
Branch offices are difficult to form, whereas corporations (S.A. - Sociedades Anonimas) and limited liability companies (LTDA - Limitadas) are relatively easy to form. Capital registration with the Central Bank is required for access to foreign exchange, capital repatriation and profit remittance.
Office space and personnel is quite expensive in Brazil so we strongly recommend against this exposure, at least in the beginning. Go slowly and carefully. Be absolutely sure you need an office because you will have to staff it.
Brazil's minimal capital requirements are nominal in general, but are significant for establishment of financial institutions. When selecting the site of an investment, potential local investment incentives should be carefully considered, as should tax considerations.
It is important to look at taxes during the evaluation of entry strategies into Brazil. There are several 'waterfalls' of taxes (Impostos em cascata) that need to be applied for the importation, sale and exportation of products in Brazil. Although there are many taxes, they are well-defined and well-known.
It is essential to consider taxes to assess if your products will be competitive in Brazil. Seek help on this, so you can be informed on all specific taxes and find a good customs broker to get products successfully imported. The broker will know or can research what taxes apply, and will fill out all the importation paperwork. Improperly filled out paperwork or the non-payment of applicable taxes can delay products and trigger heavy fines.
The more critical issues are usually related to starting a business without a local partner who knows the lay of the land. Selecting the right partner, as in any other country, is also critical. Specific expertise, track record and business ethics are probably the more important issues to be looked at.
Branch offices are difficult to form, whereas corporations (S.A. - Sociedades Anonimas) and limited liability companies (LTDA - Limitadas) are relatively easy to form. Capital registration with the Central Bank is required for access to foreign exchange, capital repatriation and profit remittance.
Office space and personnel is quite expensive in Brazil so we strongly recommend against this exposure, at least in the beginning. Go slowly and carefully. Be absolutely sure you need an office because you will have to staff it.
Brazil's minimal capital requirements are nominal in general, but are significant for establishment of financial institutions. When selecting the site of an investment, potential local investment incentives should be carefully considered, as should tax considerations.
It is important to look at taxes during the evaluation of entry strategies into Brazil. There are several 'waterfalls' of taxes (Impostos em cascata) that need to be applied for the importation, sale and exportation of products in Brazil. Although there are many taxes, they are well-defined and well-known.
It is essential to consider taxes to assess if your products will be competitive in Brazil. Seek help on this, so you can be informed on all specific taxes and find a good customs broker to get products successfully imported. The broker will know or can research what taxes apply, and will fill out all the importation paperwork. Improperly filled out paperwork or the non-payment of applicable taxes can delay products and trigger heavy fines.
Monday, May 29, 2006
Licensing in Brazil
As in other countries, licensing agreements are common forms of accessing the Brazilian market. All licensing and technical assistance agreements, including trademark licenses, must be registered so is very important to talk to a competent local attorneys specialized in structuring such agreements.
A major concern of foreign companies trading with Brazil is protection of intellectual property rights is often inadequate and uncertain. Brazil is a signatory to the Paris, Bern and Universal Copyright conventions on intellectual property rights (IPR) protection.
Most of the country's statutes on IPR are consistent with Western standards. However, serious gaps exist regarding patent protection for pharmaceuticals, trademarks and trade secrets. Legislation is before Brazil's Congress to address most of these issues.
A firm doing business in Brazil must carefully watch its trademark rights. Licensees, distributors, agents and sometimes purchasers will file trademark applications on your firm's trademarks. You should consider using a trademark watch so you will be able to oppose any such trademark application.
Companies established in Brazil are now virtually free to negotiate technology transfer contracts. INPI (Instituto Nacional da Proteção Industrial - http://www.inpi.gov.br/) will no longer express an opinion on the terms on which a company has negotiated a technology transfer agreement. However, contracts still have to be registered with INPI, a process that should take no longer than one month.
A major concern of foreign companies trading with Brazil is protection of intellectual property rights is often inadequate and uncertain. Brazil is a signatory to the Paris, Bern and Universal Copyright conventions on intellectual property rights (IPR) protection.
Most of the country's statutes on IPR are consistent with Western standards. However, serious gaps exist regarding patent protection for pharmaceuticals, trademarks and trade secrets. Legislation is before Brazil's Congress to address most of these issues.
A firm doing business in Brazil must carefully watch its trademark rights. Licensees, distributors, agents and sometimes purchasers will file trademark applications on your firm's trademarks. You should consider using a trademark watch so you will be able to oppose any such trademark application.
Companies established in Brazil are now virtually free to negotiate technology transfer contracts. INPI (Instituto Nacional da Proteção Industrial - http://www.inpi.gov.br/) will no longer express an opinion on the terms on which a company has negotiated a technology transfer agreement. However, contracts still have to be registered with INPI, a process that should take no longer than one month.
Thursday, May 25, 2006
Doing Business in Brazil: Market Entry Information
Brazil has recently been occupying a strong role in the international scenario, reactivating commercial agreements and relations with old partners, and reopening relevant issues for discussion on the development of trade goods and services throughout the international community. Although Brazil has always had a “natural vocation” for international partnerships and relations, it can be said that international trade has only recently received greater attention from the Brazilian government as a result of the need to generate resources internally, aiming at a development that is able to promote social integration.
Future investors seeking to take advantage of the opportunities Brazil has to offer are advised to approach with care. Rapid industrial, urban and commercial development has created a labyrinthine legal and tax system witch requires sound professional advice.
Almost any market entry approach is open to international companies seeking to tap into the huge Brazilian market direct sales (import), agents, distributors, partners, joint ventures, licensing or start-ups. The appropriate form depends largely on the product or service, as well as the international experience of the Company and its sales goals.
One important thing, however, is to find and use competent experts on Brazil. In other words, don't go in alone.
All standard international forms of business relationships are recognized in Brazil. It is difficult to freely state which form is most appropriate since it largely depends on the product or service, as well as the maturity of the business and the probable market penetration.
Small companies with financial and manpower restraints usually rely on agents or distributors to sell their products. This form of distribution is most favored by companies that have limited overseas market experience or exposure. There are low investment risks and this form permits penetration into a foreign market which otherwise would be impossible.
A company that has done its due diligence and has invested in a serious market analysis for its products would most likely prefer to enter into a partnership or joint venture. This permits it to have a participation in the development, marketing and growth of the product, and allows it to invest capital or know-how in the venture, maximizing growth potential.
Many times, it is preferable to license the rights to a local manufacturer rather than enter into a possible competitive situation with the local company.
Whichever form of business venture is decided on, in most cases it is best to stay on the conservative side until experience and results are obtained.
It is important to develop a market research. Do your due diligence and homework first! CompuStream can help you with the initial stages of market entry and strategic planning. When ready for implementation, the product will dictate the distribution channel. Basically, the channel that has proven successful in the US or Europe will prove successful in Brazil.
International companies need to do a good situational analysis of the industry and the participants before committing to one approach or another. Qualify people you are doing business with. The decision to use partners or to form joint ventures needs to be the product of thinking about what the company and local participants will each contribute, in terms of reputation, market, and product knowledge, management/ skills, and experience.
Whatever the inclination, it would be most advisable to seek professional help and benefit from the experience in identifying, screening and qualifying potential local parties, in order to make the best decision. CompuStream can help you on that.
Be cautious when selecting your Brazilian partner. Anywhere in the world, you will find people who are very entrepreneurial. Many people will say they can be your agent, distributor or partner, but they may or may not be your best choice. The importance of being there to understand the issues first-hand, assisted by someone objective who is an expert on Brazil, cannot be overstated.
Future investors seeking to take advantage of the opportunities Brazil has to offer are advised to approach with care. Rapid industrial, urban and commercial development has created a labyrinthine legal and tax system witch requires sound professional advice.
Almost any market entry approach is open to international companies seeking to tap into the huge Brazilian market direct sales (import), agents, distributors, partners, joint ventures, licensing or start-ups. The appropriate form depends largely on the product or service, as well as the international experience of the Company and its sales goals.
One important thing, however, is to find and use competent experts on Brazil. In other words, don't go in alone.
All standard international forms of business relationships are recognized in Brazil. It is difficult to freely state which form is most appropriate since it largely depends on the product or service, as well as the maturity of the business and the probable market penetration.
Small companies with financial and manpower restraints usually rely on agents or distributors to sell their products. This form of distribution is most favored by companies that have limited overseas market experience or exposure. There are low investment risks and this form permits penetration into a foreign market which otherwise would be impossible.
A company that has done its due diligence and has invested in a serious market analysis for its products would most likely prefer to enter into a partnership or joint venture. This permits it to have a participation in the development, marketing and growth of the product, and allows it to invest capital or know-how in the venture, maximizing growth potential.
Many times, it is preferable to license the rights to a local manufacturer rather than enter into a possible competitive situation with the local company.
Whichever form of business venture is decided on, in most cases it is best to stay on the conservative side until experience and results are obtained.
It is important to develop a market research. Do your due diligence and homework first! CompuStream can help you with the initial stages of market entry and strategic planning. When ready for implementation, the product will dictate the distribution channel. Basically, the channel that has proven successful in the US or Europe will prove successful in Brazil.
International companies need to do a good situational analysis of the industry and the participants before committing to one approach or another. Qualify people you are doing business with. The decision to use partners or to form joint ventures needs to be the product of thinking about what the company and local participants will each contribute, in terms of reputation, market, and product knowledge, management/ skills, and experience.
Whatever the inclination, it would be most advisable to seek professional help and benefit from the experience in identifying, screening and qualifying potential local parties, in order to make the best decision. CompuStream can help you on that.
Be cautious when selecting your Brazilian partner. Anywhere in the world, you will find people who are very entrepreneurial. Many people will say they can be your agent, distributor or partner, but they may or may not be your best choice. The importance of being there to understand the issues first-hand, assisted by someone objective who is an expert on Brazil, cannot be overstated.
Wednesday, May 24, 2006
Are you interested in selling your products or services in Brazil?
The business challenge
- Are you facing the prospect of growing your business into Brazil but don’t know where to start?
- Do you need local information to identify your most profitable local markets?
- Do you need local knowledge to build a productive local sales network?
- Do you need help to price your products competitively?
- Do you know what are and how to comply with Brazilian import regulations, licensing requirements and other details?
You're not alone
Many CEOs in small and medium sized businesses trying to reach out to the Brazilian marketplace are daunted at the prospect.
Selling to Brazil? Find someone locally to help you.
Find someone that speaks and understands your language... and knows something about your product or, at least, about your market and that will help you:
- make the right connections in Brazil;
- Select final partner candidates;
- Generate Letters of Intent;
- Negotiate partner agreements;
- Create a comprehensive business plan;
- Identify your most profitable local markets;
- Build a productive local sales network;
- Help you price your products competitively;
- Help you comply with Brazilian import regulations, licensing requirements and other details;
- Promote your products;
- Assist you in budgeting realistically for export sales and revenues;
- Ensure you get maximum results from your overseas trips, including visiting trade shows.
I hope that this will help you start or grow your business in Brazil.
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