What Do You Need to Know to Start a Business in Brazil in Time for the Olympics?
By Marwan Forzley
Brazil! The nation that brought us the Rio Carnival and Samba, the most successful World Cup winning soccer team ever and even Brazil nuts, is this year hosting the 2016 Olympic games. The eyes of the world will again be on the country that successfully hosted the 2014 World Cup and excitement is building towards the new event, but the hangover from 2014 still lingers and there have been some changes in the economy which have dimmed the rising star which was once the “B” in the now infamous “BRIC’s” (Brazil, Russia, India, China) acronym, highlighting the supposed fast growing emerging economies.
In today’s post we are going to take a look at why those changes could be hugely beneficial to companies here in the USA looking to do business in Brazil, and for those companies that do take the plunge, we have some helpful hints and tips for doing business there.
Brazil’s economy is dependent on a mix of exports such as iron ore, soybeans, beef and coffee which have all been caught up with plunging global commodity prices (most notably oil) driven by the slowdown in China. To make matters worse, while prices were high and the economy was growing, Brazil’s President Dilma Rousseff was enacting expensive social programs such as more generous pensions (the retirement age in Brazil is 50 for women and 55 for men) – Brazil paid 12% of GDP towards state pensions in 2015.
But Brazil is the 5th largest country in the world by landmass and population (200m) and until recently was the 7th largest economy in the world. Now the economy has encountered headwinds which have contributed to a huge fall in exchange rates of near 50% – from 2.4 to 3.9 to the US Dollar over the last year. So Brazil is cheap and the large economy presents a great opportunity – for the right businesses.
Should you choose to visit a local tradeshow, expand your operation there or even buy into a local business, here are some things to think about when starting a business relationship with potential Brazilian prospects:
As with many Latin American countries, Brazilian’s prefer to do business face to face, so they can get a feel for the person they are dealing with. Communication is often informal and does not rely on the more formulaic protocols you might find in Asia. Anyone who feels they have something to say will go ahead and add their opinion.
Be sure to schedule business meetings early in the relationship 2-3 weeks out – as you get to know each other meetings can be scheduled on short notice. Also don’t be surprised if meetings are cancelled or changed at short notice- it is always wise to confirm a meeting in writing beforehand.
Business cards should be exchanged with everyone in the meeting and it is advisable to the other side of your business card translated into Portuguese – you should present your business card with the Portuguese translation facing up.
When negotiating let your Brazilian counterparts raise the business subject. Its important not to be seen to rush the opportunity to build a relationship as Brazilians like to take their time when negotiating. In negotiations patience will be your friend and you are more likely to be rewarded with success.
Start high if any prices are to be negotiated as a little compromise is considered general practice. If negotiating with a group, understand that hierarchy is fundamental in Brazil, so expect one person to make the final decision, and once a deal is struck, it is usually sealed with a handshake, leaving paperwork to be completed later.
It’s important to do your research before expending effort and resources on negotiations. An understanding of the culture and people can help you make meaningful business relations without coming across as an ignorant gringo, and can greaten the chances of success. Brazil is a huge opportunity, and what better time to explore it than the present.
As the 2016 Olympics approaches, there are many opportunities for startups in countries outside of Brazil to do business with the locals. Marwan Forzley, CEO and co-founder of global small-business payments provider Align Commerce, would like to share his tips for startups who are trying to do business in Brazil.
Marwan Forzley is the cofounder and CEO of Align Commerce, a next-generation global payment provider which enables businesses to quickly and securely send and receive payments in local currency.