The history of steady growth and solid stability of International Markets is going through its most delicate and difficult times in recent years. Many companies and industries, from the major players to the medium and small ones are willing to expand their businesses and now have decided to turn their attention to emerging countries.
Brazil is one of those countries and now is in vogue. With the sixth biggest economy in the world – expected to occupy the fifth position in the next decade –, and the largest in Latin America, Brazil is currently one of the best markets for foreign investments.
The estimated GDP is expected to increase by 2,21% in comparison to 2012 (which closed with R$ 4,403tri) and an estimated R$ 60bi in foreign investments has made Brazil the land of opportunity. Source: http://g1.globo.com/economia/mercados/noticia/2013/08/mercado-reduz-previsao-de-alta-do-pib-neste-ano-e-em-2014.html
Nevertheless, it is very important to take into account the qualitative and quantitative risk assessment which represents a crucial step in the process of investing in Brazil.
Before foreign investors move forward with this venture, it is absolutely important to learn how to deal with the bureaucracy and cultural differences involved in the process.
Be aware of the steps ! We will post this week all you need to know.
Get all the information you can.
The Internet is certainly a good source to get started however it is strongly recommended to pursuit information on government websites. Consider visiting the Brazilian Government portal websites, such as:
. APEX (BrazilianTrade and Investment Promotion Agency): http://www2.apexbrasil.com.br
. Brasil Global Net (http://www.brasilglobalnet.gov.br/frmprincipal.aspx) and the Ministry of External Relations website in Brazil and Ubifrance website.
It is also recommended to read blogs of people who have already invested in Brazil and their experiences can make for valuable and sound advice. You can also check our blog as a resource for any information you may need.
Another way to get in touch with the ‘Brazilian way’ of doing business is participating in fairs dedicated to foreign investors; to learn more about such events please click on the following link: http://www.brasilglobalnet.gov.br/arquivos/Publicacoes/CalendarioFeiras2013p.pdf
Taxes Feasibility Study and Analysis
This is a very important step to any foreign business to become successful, but many investors do not consider a tax feasibility study before investing or exporting to Brazil, because of their experiences in their native countries, where only the VAT applies. The average of the tax burden in Brazil with its three levels of taxation (Federal, State and Municipal) plus the customs duties and other fees, can add up to 60% over the product value (the taxes can be quite variable since the percentages applied may differ according to the product/service).
Trademark and Patent Registration
It is strongly recommended to register the trademark and patent at INPI (National Institute of Industrial Property) http://www.inpi.gov.br/portal/) since there are no means or mechanism for auto recognition of those trademarks and patents.
Large international companies have already faced lawsuits and exhaustive negotiations in order to be able to use their trademarks in Brazil. The most recent case involves Apple and the trademark “Iphone” which a Brazilian company claims to have registered in Brazil long before Apple did. The same thing applies for patents.
Before joining in any partnership with a Brazilian company, the investors must ensure their patent has been registered, in order to prevent future issues or even lawsuits, once the procedure applied in Brazil is to grant rights to whoever files with the system first.
Step 4, final!
Companies who have worked with Representatives and Agents in their countries, shall be aware of the specific legislation for this activity in Brazil (Law 4,886/65 (Brazilian Commercial Representation Law ─ Lei de Representação Comercial Brasileira – “LRC”). Thus, before signing any contract it is highly recommended to get a legal analysis and approval to prevent investors from paying the an indemnity of 1/12 of the total commission earned during the term of the contract, once it is time to terminate the agreement.
Certainly, there are many other matters to be considered before investing in Brazil. However, if you follow these four important steps you will be half way there.