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Doing Business in Brazil. Rio de Janeiro. Felipe Hsieh Trade & Receivables Finance, UK October 2012. Quick facts about Brazil. Brazil is Latin America’s largest economy ; among the 10 largest in the world (GDP in 2011: $2.5trn)

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Doing business in brazil

Doing Business in Brazil

Rio de Janeiro

Felipe Hsieh

Trade & Receivables Finance, UK

October 2012


Quick facts about brazil
Quick facts about Brazil

  • Brazil is Latin America’s largest economy ; among the 10 largest in the world (GDP in 2011: $2.5trn)

  • Brazil is the world’s fifth-largest country by geographical area, 8.5 million km2 and fifth most-populous country, with 190 million inhabitants

  • Brazil’s ‘investment grade’ economy is diverse and has large and developed agricultural, manufacturing, mining and services sectors

Brazil

  • Population: 190,732,694 (IBGE 2010)

  • Total area: 8,511,965 sq km

  • Capital: Brasilia

  • Major language(s): Portuguese

  • Time zone: GMT -3 (Brasilia)

  • Currency: Real (BRL)

  • Central bank: The Banco Central do Brasil (BCB)

  • Gross domestic product: 2.5trn (2011)

  • Inflation rate (consumer prices): 6.5% (2011)

North Region

Northeast Region

Central-west Region

Southeast Region

South Region

Source: Ministerio da Fazenda


The great transition
The great transition

  • Brazil’s growth story from 1995-2011: from short boom-and-bust cycles in the 1990s to more-sustained growth more recently

  • The performance of the economy in the last 15 years can be divided into two main periods: Fernando Henrique Cardoso administration (1995 – 2002) and second, the Lula administration (2003 – 2010).

Brazil GDP growth

(%, annual)

Source: IBGE, HSBC


Growth consumption and social mobility
Growth, consumption and social mobility

A structural shift in Brazil’s demographics

  • Strong job market

  • Government income distribution programs

  • Relatively stable inflation

Brazil: Distribution of Economic Classes

(millions of people)

  • Demographics and increasing household income are positive drivers for the next two decades

  • Middle Class is growing as poverty is reducing

  • Per capita GDP is expected to more than double by 2030

  • Social Mobility impacting around 40m individuals over the next 4 years

%

Source: Ministry of Finance


Retail sales and industrial production contrasting picture
Retail sales and industrial production - contrasting picture

  • Consumption has been a compelling story in Brazil in the last few years

  • The intensive migration of lower income Brazilians to the middle-income segments brought to the market 40 million potential consumers that have access to credit

  • While retail sales have expanded more or less continuously since 2008, industrial production has been stagnant since 2Q2010

  • Demand-led growth; competitiveness still a challenge

Household ownership of durable goods

Gap between demand and supply (Jul 2008 = 100)

% of Household

Source: IBGE

Source: PNAD


Key challenges
Key Challenges

  • Infrastructure deficiencies

  • Complex Taxation System

  • Slow legal framework

  • Corruption


Trade – Facts & Figures

Brazilian Foreign Trade

Exports are almost three times larger compared to ten years ago

EXPORT

IMPORT

US$ Billions

BALANCE

Source: MDIC


Trade – Facts & Figures

EXPORTS (2009)

China represents now 13% of Brazilian exports against 2% in 2000

IMPORTS (2009)

China represents now 13% of Brazil’s imports against 2.2%

in 2000

Source: MDIC


Trade – Facts & Figures

Exports*: Brazil’s Rank and Market-Share

Coffee

Orange Juice

Sugar

Beef

1st

1st

1st

1st

30%

32%

86%

45%

Poultry

Soy Bean

Pork

Corn

1st

2nd

4th

2nd

12%

39%

13%

39%

* Data from 2009


UK – Brazil Trade

Trade between Brazil and UK grew by 4 TIMES over the last 10 years

Goods and services sold by UK institutions to Brazil grew by same rate

Source: MDIC


UK – Brazil Trade

Source: MDIC


Trading with Brazil

Since 1990 Brazil has made substantial progress in reducing border trade barriers (tariffs, import licensing, etc.)

Moderate tariffs, especially on import taxes

Import license required for certain products

Free Ports, Zones

Common Import Taxes:

- Import Duty

- Industrialised Product Tax (‘IPI’)

- Merchandise and Service Circulation Tax (‘ICMS’)


Business etiquette and culture…

Most of companies have English-speakers, however using interpreters for 1st meeting can be a good idea….

Establishing personal relationships is essential to conducting business

Like South-Europeans Brazilian use a lot of body language and contact

DO NOT attempt to do business during CARNIVAL!


HSBC in Brazil

North

Branches: 60

ATMs: 257

Mini-branches: 108

Key Figures

Established: 1997

Branches: 897

Employees: 25,000

Customers: 5 million

ATMs: 5,285

North

Northeast

Branches: 47

ATMs: 351

Mini-branches: 124

Northeast

Retail Banking

Middle West

Middle-West

Branches: 103

ATMs: 501

Mini-branches: 142

Southeast

Trade Finance

Southeast

Branches: 445

ATMs: 2,654

Mini-branches: 675

South

Payments & Cash-Mgmt

South

Branches: 242

ATMs: 1,522

Mini-branches: 523

Global Markets

Corporate Banking


Key Contacts

l British Embassy, Brasília (Distrito Federal) [email protected]

l British Consulate-General, São Paulo [email protected]

l UK Trade & Investment - Enquiry Service enquiries[email protected]

l Export Finance Programme (Programa de Financiamento às Exportações—Proex) http://www.bb.com.br/.

l Brazilian Association of Listed Companies (Associação Brasileira das Companhias Abertas— Abrasca http://www.abrasca.org.br (Portuguese only).

l Brazilian Export Credit Insurer (Seguradora Brasileira de Crédito à Exportação—SBCE) http://www.sbce.com.br/ us/index.asp

l Brazilian Foreign Trade Association (Associação de Comércio Exterior do Brasil—AEB),

http://www.aeb.org.br/home.htm (Portuguese only).

l Ministry of Development, Industry and Commerce (Ministério do Desenvolvimento Indústria e Comércio Exterior—MDIC) http://www.mdic.gov.br/ (Portuguese only).

l São Paulo State Federation of Industry (Federação das Indústrias do Estado de São Paulo—FIESP), http://www.fiesp.com.br



Disclaimer
Disclaimer

This document is issued by HSBC Bank plc (“HSBC”). HSBC is authorised and regulated by the Financial Services Authority (“FSA”) and is a member of the HSBC Group of companies (“HSBC Group”). Any member of the HSBC Group, together with their directors, officers and employees, may have traded for their own account as principal, underwritten an issue within the last 36 months, or have a long or short position in any related instrument mentioned in this material

Spot and forward foreign exchange transactions generally are not ‘designated investments’ as defined in the United Kingdom Financial Services and Markets Act 2000 (the “Act”) and therefore do not benefit from the protections of the Act or the rules of the FSA. Any other product described in this document is a ‘designated investment’ as defined in the Act, even when used to cover a commercial trade position. Hedging instruments, such as caps or options, even when used to cover a commercial position, are investments under the Act.

HSBC has based this document on information obtained from sources it believes to be reliable but which have not been independently verified. All charts and graphs are from publicly available sources or proprietary data. Except in the case of fraudulent misrepresentation, no liability is accepted whatsoever for any direct, indirect or consequential loss arising from the use of this document. HSBC is under no obligation to keep current the information in this document. Neither HSBC nor any of its affiliates are responsible for providing you with legal, tax or other specialist advice and you should make your own arrangements in respect of this accordingly.

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Registered in England No. 14259

Registered Office: 8 Canada Square, London, E14 5HQ, United Kingdom

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DISCRETPRES100408


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