Market
WHY BRAZIL?
According to the International Monetary Fund, in 2026 Brazil is the world’s 10th largest economy (a GDP of about 2.65 trillion US dollars). It is the 5th largest country in the world by area and the 7th by population, with more than 210 million inhabitants, and it is today one of the largest economies, with high development potential, currently held back by internal structural deficiencies, for which the Government has recently launched a plan of reorganization and expansion, allocating enormous resources.
It is one of the countries with the greatest natural resources in the world: iron ore and bauxite (aluminum), gold, silver, oil (it is among the world’s top 10 producers); it has immense agricultural resources (coffee, cellulose, cocoa, soybeans, corn, sugar cane, fruits, cereals) and livestock (cattle, poultry, pigs), of which it is a major producer and exporter (1st place for soybeans, coffee, orange juice, beef and poultry). It is also one of the largest producers of energy from renewable sources.
The hydroelectric plant of Itaipu, on the Parana river, between Brazil and Paraguay, is the plant that has produced the most energy in history: with 20 generators and a capacity of 14 GW, it supplies about 90% of Paraguay’s electricity and 10% of Brazil’s. Other plants are currently under construction. All this, combined with the extraordinary industrial growth and the government program for the expansion of infrastructures (US$ 80 billion spending), is placing Brazil among the countries with the highest growth potential in the world.
This growth has led, over the last 10 years, to a large-scale redistribution of wealth between the social classes of the country, where now 60% are from the middle class. First capitalist country to have attracted the ten largest car manufacturers on its territory, Brazil has regular and intensive trade relations with over 100 countries. The development of science and technology, so far strongly supported by the Government (Brazil develops, for example, submarines and aircraft, is active in space research and is a pioneer in the search for oil in deep water), a highly developed, diversified, dynamic and innovation-driven industry, a solid financial sector and reserves of over US $ 360 billion, an internal market among the most attractive in the world, with over 100 million potential buyers of both primary and durable goods, with a high propensity to buy and concentrated in urban areas, the overall optimism of many financial analysts for its future, despite periods of recession and political scandals, are attracting companies from all over the world.
“Made in Italy” is highly appreciated, even in B2B sectors not directly related to the end consumer, such as, for example, the precision engineering and ICT (Information & Communication Technology). The Brazilian industry today has a great need to bridge the gap in global competitiveness in many sectors – primarily the food industry, which in the last 10 years has had great development – a need that Italian companies, appreciated for their innovation and flexibility, can effectively meet through the transfer of technology, know-how and excellent training.
The medium-term outlook of Brazil now depends on the success of the current measures and on increased investment and further reforms that can promote growth. For Brazil, it is the decisive challenge: the success is linked to an ambitious goal of sustainable productivity and competitiveness. For its achievement the Italian companies can play a major role, with the provision of advanced machinery and technologies.
The country attracts more than 6 million tourists a year, a growing number; it boasts some of the most extraordinary ecosystems in the world (Pantanal, Amazon), beautiful beaches and countryside, a favourable climate, democracy, openness to many different people and customs (it is a multiethnic country, with a high degree of racial integration, although serious social problems persist).
It is very important, in approaching the market, to use specific tools, such as market analysis and business plan, for the development of the proper marketing strategy.
Selling successfully in Brazil means very often selling as well in other countries of South America, for which Brazil is a privileged gateway.
For all these reasons, Brazil is one of the most attractive markets in the world – and therefore also one of the most competitive. It is essential to study the market entry strategy carefully, through a detailed analysis of all critical parameters and a robust action plan.
Mistakes to avoid
– Exporting a product without internationalizing the company
One of the common mistakes is to think that it is enough to send a container of products to Brazil to easily find some distributor or get an agent to represent your company. Not only is it sometimes necessary to change the product substantially, but the adaptation must involve the whole company, which must acquire the processes and service levels required by the Brazilian market.
– Starting activities without careful preparation
Many company owners assume they already know how to operate in Brazil because they have some contacts there, without considering that they may have received misleading or incomplete information, albeit in good faith.
A common illusion is that Brazil is a relatively easy market, because, although the rules are often more complicated than elsewhere, the Brazilians are well disposed towards the European products, which can take advantage of the superiority in design and/or technology (a belief that, on closer inspection, is not always true). This is a mistake: the Brazilian market is “super-crowded” with competitors coming from all over the world; so it is expensive, competitive and provides forms of protection for the benefit of local producers, which raise the cost of entry of the imported products and can put them immediately out of the market. It is very risky to invest in Brazil without a thorough market research and a solid business plan.
Particular attention should be paid to the so-called “Brazil cost”, which is not only made up of duties and other taxes on entry, which are multi-stage and cumulative, but also of logistics and product handling costs, due to poor infrastructure and long distances. Other problems, with related cost increases, may result from the difficulty in finding skilled local labor and from management of legal and fiscal aspects, because of a strong bureaucracy and a complex system of taxation.
Brazil has continental dimensions, considering that on its territory there are 6 different climates and three different time zones; it is made up of five major regions and 26 states + 1 federal district (home to the capital, Brasília). Each region has features that distinguish it, even in a radical way, from the other ones and each state has its own rules for the application of taxes and the distribution of funding and incentives to businesses. When defining a market strategy, you need to take all these factors into account. For certain categories of products, it is appropriate to set a different strategy for each region.
– Believing that competitiveness can rest only on product quality
Providing a product/service above the average is only the minimum requirement for entering the Brazilian market, but it is not enough; it is only the first step of a long journey that characterizes the commercial development of a company in Brazil. Intensive efforts, time and money are required in the creation of networks of sale or in the definition of commercial partnerships. Moreover, if the product is really exclusive, more investment is needed to promote the brand. It should also be pointed out that the Brazilian market is a “market of relations”, which relies heavily on interpersonal relations and frequent contacts; so it is crucial not to underestimate the importance of Fairs, Conventions and all actions of marketing/promotion, in support of the sale of any product and service.
– Managing your business from your home country
Many times it happens that companies invest tens of thousands of euros in fairs and visits to customers, receiving great appreciation for their products, which seems to promise positive business developments soon. Unfortunately this promotion of their products is totally nullified by the fact that, after a few days, there is no one in the area that will continue to fuel it. Brazilians do not establish a business relationship based on just a product catalog, however attractive it may be, and a business card; it is a big mistake to underestimate the need for “closeness” to the client, which includes construction of mutual knowledge and respect, timeliness and clarity in the responses and frequency of contacts. It is very risky to rely totally on distributors, agents or representatives, especially if they are also engaged with different firms.
– Not operating in full compliance with local laws and procedures
It is necessary to pay close attention to the certifications required for the products and to the local rules governing relations with distributors and customers; Brazilian lawyers are expensive, as elsewhere, but it is always better to get the assistance of a local professional, rather than running into unpleasant situations. In Brazil, in fact, the rules must be respected; shortcuts and “cunning” may seem like winning the first few times, but in the medium and long terms you risk paying the bill with interest.
– Expecting to rely on the creditworthiness built up in your home country
To operate in a stable and continuous way in Brazil, many times you need to rent an office and/or a stock facility, buy a car for your employees, etc. Unfortunately, newly opened branches do not have a “history of debts paid”, reason why the credit institutions are not yet able to verify the reliability of the client. This means that, even for the most solid companies of its kind in the EU, it is generally not possible to obtain a car lease or credit cards for everyday purchases from banks. Even suppliers may initially refuse 30/60-day payment terms.
– Not answering the four standard questions a Brazilian buyer asks a potential European supplier
a) Where is your base in Brazil? You must always have a Brazilian address and a local telephone to provide; in fact, a Brazilian buyer rarely buys products, especially complex ones, from suppliers who are not based in the country
b) Do you have staff in Brazil? The answer must be yes, as far as possible
c) Are your products certified for the Brazilian market? You must have all certifications, otherwise your product will have zero chance of clearing customs
d) Where are your products and spare parts stocked? You should always indicate a warehouse where you have stocks of products and spare parts; Brazilians are afraid of being abandoned by Europeans, once they have purchased the products. Only after passing this initial screening, Brazilian buyers consider foreign products.
– Neglecting after-sales service
For the Brazilians, there is no buying activity if adequate post-sales activities are not secured; which is why a local facility is essential, for the storage of replacement parts, and of specialized personnel, able to provide service within a few hours. It is also wrong to think that you can worry about the after sale process only after scoring the first sales.
– Underestimating Brazilian work visa rules
Very often companies that sell equipment or machinery in Brazil have to send their technical staff for installation or final testing at customers’ premises; it is necessary in this case that their technicians have a specific work visa for Brazil. To obtain a work visa, a company based in Brazil or a subsidiary based abroad, or a company having a representative contract with a Brazilian company must submit a request directly to the “Coordenação-Geral de Imigração – CNIg” of the Brazilian Ministry of Labour.
Even entrepreneurs and investors must obtain an appropriate visa to work in Brazil; in this case you must submit a business plan and demonstrate that you have the “relevant” funds to start and run the business. Foreign nationals may apply for this type of visa by certifying an investment in foreign currency, for a value equal to or greater than R$ 150,000.00 (one hundred and fifty thousand reais). In the evaluation, the following elements will be examined: compatibility of resources vs. expected investment, the nature of the company, its productive impact and social interest.
Managers and directors can apply for the permanent visa; the application is to be submitted to the “Coordenação-Geral de Imigração – CNIg” of the Brazilian Ministry of Labour.
– Managing the Brazilian market as you would a European one
The Brazilian territory covers an area greater than that of the EU: this means long travel times within the country and high travel and logistics costs; the Atlantic Ocean is a geographic barrier that complicates any transport operation from Europe.
All this impacts significantly on the level of service, which is a very important issue for Brazilians; while any city in Europe can be reached within a day from any other European country, this is almost never possible when travelling to a Brazilian state from Europe.
European countries share similarities that make their markets fairly homogeneous, while the Brazilian market is very different from any other European market and varies from one region to another.
– Behaving in Brazil as you do at home
One of the most common mistakes is to think you can operate in Brazil like you do in your country, as when dealing, for instance, with Italians, French or Germans. Many times entrepreneurs underestimate the cultural differences between the two countries; you must pay attention to both the written and the unwritten rules, in the Brazilian business culture. In case of Acquisitions, it is recommended to immediately implement a program of “change management” for the local staff, who often also need additional training, to achieve satisfactory levels of productivity.