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.
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