Mandala gp   presentation to CAP Delegates , Aug 2013
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Mandala gp presentation to CAP Delegates , Aug 2013

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CAP is Council of Atlantic Premiers - this is their second trade mission, last year they went to Atlanta, USA. This October they will leading a delegations of over 130 business people across various ...

CAP is Council of Atlantic Premiers - this is their second trade mission, last year they went to Atlanta, USA. This October they will leading a delegations of over 130 business people across various sectors to São Paulo and Rio de Janeiro.

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  • ; * Time it takes to prepare, file and pay (or withhold) corporate income tax, VAT and social security contributions (in hours per year); ** Amount of taxes and mandatory contributions on labor paid by the business as a percentage of commercial profits.

Mandala gp   presentation to CAP Delegates , Aug 2013 Mandala gp presentation to CAP Delegates , Aug 2013 Presentation Transcript

  • 2740 Matheson Boulevard East, Unit 5 Toronto, Ontario, L4W 4X3 Phone: +1 416 737.2280 Fax: +1 416 465.6206 CAP Mission BRAZIL October 21st-25th , 2013 AGENDA Country Outlook Brazil-Canada Business Culture São Paulo Rio de Janeiro Conclusion: why Brazil? Practical Info Matchmaking
  • Brazil – A world within a Country
  • Brazil: South America’s Powerhouse Sources: International Monetary Fund (IMF). Brazil represents 50% of South America’s total GDP GDP per capita: U$11.400 US$ 2,5 trillion of GDP
  • Brazil in numbers or Brazil’s Facts Source: Brazilian Institute of Geography and Statistics (IBGE) and Brazilian Central Bank
  • Brazil in numbers (2011)
  • Growth of Brazilian GDP Source: Brazilian Institute of Statistics and Geography.
  • Investment Prospects (R$ billion, and %change) Source: GT Investimento, APE/BNDES, Mongan Stanley LatAM Economics.
  • Numbers by Region Source: IBGE, 2009-10.
  • Population  Brazil’s population is roughly 194 million (2012) and estimated to be growing at about 1.17% per year.  About 42% of the population is under 24 years and 11% is 60 years and over.  The average life expectancy is 73.1 years.  A reduction in poverty has been witnessed, especially among those living in extreme poverty (with income of up to one-quarter of the minimum wage per capita). Source: IBGE, 2012.
  • More Buying Power Source: Cetelem BGN Observador Brasil, Fecomercio SP, Data Popular .
  • Growing Middle Class → Expanding Consumer Market  The expansion of the classes C, B and A, in recent years should continue. The country has witnessed a very positive moment in terms of reducing inequality and increasing income. * FGV Projection Source: Brazilian Central Bank / FGV
  • Brazilian remarks in market and production  Largest consumer market in Latin America;  3rd largest market of cell phones, cosmetics and soft drinks;  5th largest market of personal computers;  World’s 7th largest manufacturer and 4th largest consumer of automobiles;  World’s 4th largest manufacturer of aircraft and top producer of models seating up to 120 passengers;  Largest consumer market for renewable energies (UN);  Largest producer of biofuels;  Top 5 producer of medical and dental equipment; Source: Apex, 2011.
  • Brazilian remarks in market and production  Home to the world’s 10th largest petroleum reserves;  Leader in production and exports of several agribusiness products and 3rd overall largest exporter of agricultural goods;  13th largest producer of scientific articles;  10th largest industrial produce. Source: Apex, 2011.
  • Largest consumer markets in 2012 and 2020 Sources: EXAME (magazine), McKinsey, Escopo, Euromonitor, Anfavea and Abraciclo. Produced by: Ministry of Finance
  • Top 10 Imports (2011) Sources: Brazilian Ministry Development Industry and Foreign Trade. 1. Crude oil: 6,2% 2. Automotives: 5,3% 3. Liquid oils: 3,5% 4. Autoparts: 2,8% 5. Drugs and medicine: 2,6% 6. Naphtha: 2,1% 7. Electronic components: 1,9% 8. Bituminous coal: 1,9% 9. Reception and transmission parts: 1,6% 10. Potassium chloride: 1,5% Top 3 import countries 15.0% China 14.6% United States 7.0% Argentina Also: Netherlands, Japan, Germany and India.
  • Opportunities
  • Timing Brazil is in a particularly positive moment
  • Investments 2005 - 2013 (R$ billion) Source: GT Investimento, APE/BNDES, Mongan Stanley LatAM Economics.
  • Investments 2013-2016 (R$ billion) Source: BNDES. Study: Perspectivas do Investimento, 2013.
  • Infrastructure – GOALS, next 5 years (US$)
  • Global consumer market in 2020 (US$ trillion) In January 2013, the exchange rate was approximately US$ 1 = R$ 2.00 Sources: Exame Magazine and McKinsey. Produced by: Ministry of Finance.
  • Expected growth in business In January 2013, the exchange rate was approximately US$ 1 = R$ 2.00 Sources: PricewaterhouseCoopers (PwC) Produced by: Ministry of Finance. A recent survey with more than 1,300 CEOs indicated that Brazil is the third most often mentioned country as the one that the CEOs consider most important for their business overall growth prospects over the next 12 months (excluding the country in which the CEO is based).
  • Booming sectors
  • Brazil - Canada
  • Brazil is Canada’s 10th export market
  • Top 10 Canadian Exports to Brazil 2012
  • Top 10 Canadian Imports to Brazil 2012
  • Foreign Direct Investment Brazil - Canada Source: Statistics Canada – CANSIM.
  • Canada-Brazil Bilateral Investments 2012 CDI C$ 9.8 billion Sectors: Agriculture, Mining, Shopping Centres, Telecommunications, Software, Environmental Ind. Automotive Parts Brazil is the 12th largest destination for Canadian outward investment FDI C$ 15.8 billion Sectors: Mining, Steel, Beverages, Cement, Software Canada is the 7th largest destination for Brazilian outward investment Source: Statistics Canada.
  • Understanding Brazil’s business culture
  • Building Relationships  Brazilians place great importance on personal and family relationships. Establishing a personal side to the business relationship, often through social occasions, is a way to build mutual trust and pave the way to close a deal.  Negotiations in Brazil are strongly influenced by personal contacts and connections. Building this personal connection means that important deals are normally conclude in person, and not by email or phone.
  •  When meeting for the first time, business relationships are formal;  Some tips:  In most sectors, clothing should be formal and conservative: Man wear suits or dressy blazer; Woman can get away with a suit, dress or just a nice top/pants/skirt; (Late October weather is typically rain season, but warm)  Use Mr./Mrs./Ms. And last name – many people are only called by their last name in a work environment (but you should not do this until you reach a more personal level);  Common greeting is a handshake, although in informal situations man and woman sometimes kiss on both cheeks and hug briefly  It is usual to bring a small token/gift, such as pen, key-chain, etc. (Note that anything of value could be perceived as a bribe.) Business etiquette .
  • Doing Business in Brazil Closing the Deal
  •  Be committed to the market over the long-term;  Be prepared to explain your strategy to provide timely and local service to your Brazilian customer;  Develop a local presence for visibility with key clients:  After-sales service,  Technical assistance  Spare parts delivery & installation,  Portuguese communication;  Invest in local partnerships : JVs, MOUs, Strategic Alliances;  Get good advice: Legal, Accounting, Fiscal;  Collaborate with key professionals & sector associations in market. Market Strategies to Succeed Source: EDC Canada.
  • Foreign trade and investment opportunities  Brazil is the leading territory for investment opportunities in Latin America;  Large potential consumer market and a growing and thriving middle class;  Export-based enterprises are generally favored;  Foreign investors are eligible for most available incentives;  Restrictions on foreign ownership exist in several sectors, including aviation and publishing;  There have been favorable changes in the business culture and a spread of corporate governance and best practices;  Robust performance of IPOs and merger and acquisition (M&A) markets in recent years.
  •  Business activities are generally regulated;  Prohibitions normally apply equally to local and foreign-owned businesses;  Considerable documentation and bureaucracy are involved in day-to- day operations;  Foreign-exchange transactions are controlled;  Stock markets are active, sophisticated and reasonably developed;  Patent, trademark and copyright protection is available. Regulatory environment
  • Most Problematic Factors for Doing Business Source: World Economic Forum, Morgan Stanley LatAm Economics.
  • Tax Burden Indicators It takes companies in Brazil 2,600 hrs/yr. to prepare and pay taxes vs. a median of 224 hrs in other countries. Source: World Bank, Morgan Stanley LatAm Economics.
  • São Paulo State
  • São Paulo State Sources: IBGE, Brazilian Central Bank and SEADE .
  • City – State  10th richest of the world  15% of Brazil’s GDP  Financial Center of the country
  •  Population: 41.9 million  GDP: US$ 590 billion (33.9% of Brazil’s total)  Home to vast majority of multinational regional HQ’s  63% of international corporations in Brazil  36% of the production of goods and services in the country  Largest medical center in Latin America  Strongest academic research center São Paulo State
  • Rio de Janeiro
  • Rio de Janeiro State Source: Decision Rio Investments 2011-2013.  Population: 15.9 million  GDP: US $ 254.5 billion (11% of Brazil’s total)  2nd largest city in Brazil and 3rd in Latin America  A logistics hub with 2 seaport, 3 commercial airports (2nd busiest in the country)  56% of Brazilian GDP comprised within a 500 km radius
  • Investments 2011-2013 Rio de Janeiro Source: FIRJAN.
  • Investments 2012-2014 Rio de Janeiro Source: FIRJAN
  • Conclusion A large country with an expanding population, rising salaries and a favored market for foreign investment in the region, Brazil’s medium-term prospects remain encouraging. Although the country needs to make a significant number of structural changes to boost its potential growth, there is clear potential for Canadian businesses to create collaborations and open new markets. These opportunities are not only in the main cities of RJ and SP - the Canadian Government has been developing relationships in other states, both in the South and Northeast regions.
  • Why Brazil?  2012 Context – Most comprehensive, positive Canada-Brazil Bilateral relationship in 20 years – business, political, academic, S&T;  Emerged market/sustainable economy – Trillion-Dollar Club member;  Powerhouse of South America;  Strong Domestic Market, with a fast growing middle class;  Richness of natural and cultural assets;  Environmental sustainability;  Open markets and multilateralism;  Clean and abundant renewable energy.
  • Before you get on the road, some practical info: Official language: Portuguese Electric current : 220v Time difference: UTC-3 (SP, RJ) There is no time difference with Atlantic Time in August. It will be 2hrs in October. Exchange: 1 Canadian Dollar = ~ 2.3 Brazilian Real (as of August 27, 2013) Please exchange at local banks before you leave, as international bank machines not always available. Only carry what you need for the day, leave the rest at hotel safe. Local Cell Phones: Can be purchased for R$10 chip +R $20 credit Security tips: - No jewelry, expensive watches; - Keep your electronics out of sight in public places; - Carry a copy of your passport and small amounts of cash; - Do not carry your wallet with all cards/documents; - Credit Cards widely accepted, advise your bank that you are travelling to Brazil. Take only one card with lower limit when out.
  • Matchmaking  At least 5 meetings per company in RJ/SP  Mandala local support team at pre-determined hotel location  SP: most meetings at hotel, but also client location  RJ meetings at hotel/client location  Interpreters provided if required  Transportation to meetings provided (private cars)  Possibility of meeting out of town, depending on your objectives
  • 2740 Matheson Boulevard East, Unit 5 Toronto, Ontario, L4W 4X3 Phone: +1 416 737.2280 Fax: +1 416 465.6206