You may have heard it from many friends, colleagues and business contacts:
- “It’s unbelievably difficult to do business in Brazil.”
- “I’d never go back to Rio for business.”
- “Brazil, oh… my friend [my co-worker, my business acquaintance …] lost big money in Brazil! But, hey! He did learn good Spanish!”
- “You’re investing in Brazil? You must be travelling a lot to Buenos Aires?”
Oh, yes! These are the common things I hear about Brazil. I’ll spare you from the comments I get when someone refers me to those classic Brazilian investment videos; those ones with aerials shots of ports, stadiums and beach properties, featuring caipirinhas and beautiful women dancing samba. They provide a very strange view of how business is done in this country. They bring very little information about the reality of investing in projects in Brazil.
When there has been so many misleading ideas and preconceptions about doing business in Brazil, it may be frustrating to overcome these strange cultural barriers and work effective to enter in the Brazilian market.
So, does it mean you need to be Brazilian to understand the complexity of the Brazilian market?…
I don’t think so! And I’m writing you here to prove the contrary. I strongly believe that, using the appropriate strategy, any foreign investor can succeed doing business in Brazil and can operate in the same way locals do.
Entering a Foreign Market is a Business Decision.
Entering the Brazilian market is not different from entering any other foreign market. You need to base your decision in the prospect of getting something back for your investment.
Sure, there are market specifics, the economy and the politics. However, for those venturing outside of their domestic market, it is a question of finding the right opportunities. That means finding opportunities that make business sense, whether they may be in Brazil or not.
The process of entering a foreign market starts with a decision at your office: “Yes, we should look into a new market for our products.” This is the exact point when your strategy begins to take shape – not when you are landing for the first time in Guarulhos, São Paulo.
Companies that were successful entering the Brazilian market very likely would also be able to successfully enter other foreign markets.
What I am trying to say is that what makes a company succeed in the Brazilian market goes beyond having knowledge about the local market. It has lots to do with how your company defines objectives and manage them, as well as, how it tackles unexpected issues as they appear.
Foreign companies that do well in Brazil have clear goals.
They know when things are working well and they do know when it is time to change direction.
They spend considerable time doing their homework. They are resilient and prepared for changes in economic and political environment.
And they understand that entering a new market is a long term commitment.
Entering the Brazilian Market by the Front Door
A prudent approach to enter the Brazilian market is to do structure your activities in phases. Doing it this way will help you aggregate knowledge about the country as you go and give you the opportunity to manage risks as they arise. This way you evolve your market entry process based on your own perspective of things and by controlling each stage of the process progresses.
First, define your major business goals for your Brazilian venture. Start broad and think about how your competitive advantage can be leveraged outside your domestic market. Consider how your company products and services can benefit Brazilian consumers. Focus on creating a strategic plan that can be further expanded as time passes. Having clear goals will save you time and money because it will help you focus in the main opportunities that really matter to your organization.
Second, take time aside to visit the country and build business contacts. Organize a business visit to Brazil, tag along an official trade visit and get involved with local chambers of commerce. There is a lot of exploration that needs to be done in this phase. Be prepared to travel and visit sites and facilities. Don’t rely in the international press for the latest news. Learn Portuguese and start to follow the main Brazilian newspapers. Take the time to build your local team of advisors with bankers, lawyers, translators, certified accountants and domain experts.
Third, structure and pursue one relevant opportunity. This will help you test the waters. Start asking as many questions as you can. What would be the best way to structure a business, finding a local partner, opening a subsidiary or manufacturing locally? Is your Brazilian lawyer answering your emails timely? Is your accountant avoiding you and not answering your phone calls? This is the time you will see if all your connections are working correctly. At this point, you will be dealing in the Brazilian enviroment for 2-3 years. Drill down to the details, search for answers about cash flow, how money moves around, legal agreement, taxes, financing options, and international insurance mechanisms. There are lots to be learned, but, at the end of this process you are more likely to that you will end up knowing more about your industry than many of your advisors
Forth, you are ready for takeoff. At this point, you have a great grasp of what works and what doesn’t work so well in Brazil. You’ve learned about how to do business in the country. Maybe it is time to think about bigger business. Maybe, pursue an acquisition or venture partnership. More importantly, by reaching this milestone, you certainly have experienced a few changes in the Brazilian economy and in the government. At this point, you have developed your own “ginga”, you learned to deal with issues and tested your persistence.
You don’t need to be Brazilian to do business in Brazil. You need to have your goals clearly set and develop a long-term plan. All the effort will yield a considerable return. I assure you.
Your Market Entry Strategy Starts Now
Get to Action. Don’t wait for later, take a sheet of paper now and write down your business goals in Brazil. Think about the future and structure your entry plan. Don’t worry about the details. They will come with time. Go! Write it down now!
Having any plan is better than having no plan. Having a good plan is better than having any plan. Having an excellent plan is better than having a good plan. Everything starts with this page you just created.
Photo Credits: Fernando Stankuns