Doing Business in BRAZIL
Introduction
• Brazil is the fifth largest country in the world in
terms of population (207.8 million in 2015) and
land area as well.
• It is the economic leader of South America, with the
ninth-largest economy in the world
• It has a large iron and aluminum ore reserve
• The Amazon River system carries more water to the
ocean than any other river system in the world. It is
navigable for its entire 2,000-mile trip within
Brazil.
• Almost all of Brazil is humid as well and has either
has a tropical or subtropical climate. Brazil's rainy
season occurs during the summer months.
• Eastern Brazil suffers from regular drought. There is
little seismic or volcanic activity due to Brazil's
position near the center of the South American
Plate.
• Fast Facts: Brazil
• Official Name: Federative Republic of Brazil
• Capital: Brasilia
• Population: 208,846,892 (2018)
• Official Language: Portuguese
• Currency: Reals (BRL)
• Form of Government: Federal presidential
republic
• Climate: Mostly tropical but temperate in south
• Total Area: 3,287,957 square miles (8,515,770
square kilometers) 
• Highest Point: Pico da Neblina 9,823 feet
(2,994 meters)
• Lowest Point: Atlantic Ocean 0 feet (0 meters)
 BRAZIL GEOGRAPHY
Political Geography Culture and History
• Brazil is the only Portuguese-speaking nation in South
America.
Brazil encompasses
so much of South • A military coup d'état of the civilian government in 1964
America that it Brazil is divided into gave Brazil a military government for more than two
shares borders with 26 states and a
all South American Federal District. decades.
nations except
Ecuador and Chile. • Since 1989, there has been a democratically elected civil
leader.
• Though Brazil has the world's largest Roman Catholic
population, the birth rate has significantly decreased over
The state of the last 20 years.
The most populous
Amazonas has the
state is Sao Paulo.
largest area
• There are fewer than 300,000 indigenous Amerindians
living in the Amazon basin. Sixty-five million people in
Brazil are of mixed European, African, and Amerindian
descent.
Brazil Economic Geography
• The state of Sao Paulo is responsible for about half of Brazil's Gross Domestic
Product as well as about two-thirds of its manufacturing.
• The key industry of the country is automobile production.
• While only about 5% of the land is cultivated, Brazil leads the world in coffee
production (about a third of the global total).
• Brazil also:
• produces a quarter of the world's citrus
• has more than one-tenth of the cattle supply
• produces one-fifth of the iron ore
• Most of Brazil's sugar cane production (12% of the world total) is used to
create gasohol, which powers a portion of Brazilian automobiles.
RESOURCES
• Hydropower:
• Brazil has now overtaken the United States as the second
largest producer of hydroelectricity by installed capacity,
after 3,055 MW was put into operation in 2018 at the
11,000 MW Belo Monte complex in the country’s
northeast.
• Electricity generation from hydropower projects achieved
a record 4,200 terawatt hours (TWh) in 2018, the highest
ever contribution from a renewable energy source

• Petroleum
 Resources: Brazil’s Crude Oil
• Production was reported at 2,586.540
Barrel/Day th in Dec 2018.
• This records a decrease from the previous
number of 2,621.797 Barrel/Day th for
Dec 2017.
• Brazil’s Crude Oil: Production data is
updated yearly, averaging 596.057
Barrel/Day th from Dec 1960 to 2018,
with 59 observations.
• The data reached an all-time high of
2,621.797 Barrel/Day th in 2017 and a
record low of 85.114 Barrel/Day th in
1960.
Ease of Doing Business-
EOBD score

Brazil is ranked 109 among 190

economies in the ease of doing
business, according to the latest
World Bank annual ratings.

A positive EODB score change: +2.96

indicates an improvement in the
score between 2016/17 and 2017/18
and therefore an improvement in the
overall business environment as
measured by Doing Business.
Ease of Doing Business in Brazil

Ease of Doing Business

in Brazil averaged
The rank of Brazil
120.45 from 2008 until
improved to 109 in
2018, reaching an all
2018 from 125 in
time high of 129 in
2017.
2009 and a record low
of 109 in 2018.
Based on Doing Business report issued by World Bank 2019
about Brazil:
Doing Business reform making it easier to do business in Change making it more difficult to do
Brazil 2019 business in Brazil 2019

Starting a Business: Brazil made starting a business easier by launching online systems
for company registration, licensing and employment notifications. This reform applies to
both Rio de Janeiro and São Paulo.
Registering Property:
Getting Electricity: Brazil (São Paulo) improved the reliability of electricity by
modernizing its grid network and introducing new software programs allowing better
Brazil (Rio de Janeiro)
outage management and distribution planning. made registering
property more
Getting Credit: Brazil improved access to credit information by distributing at least two
years of historical data. This reform applies to both São Paulo and Rio de Janeiro. expensive by
Trading across Borders: Brazil reduced the time required for import documentary
increasing the
compliance by introducing electronic certificates of origin. This reform applies to both
Rio de Janeiro and São Paulo.
municipal property
transfer tax.
Employing Workers: Brazil changed regulations pertaining to intermittent work, work
scheduling, compensation, employee termination and union representation. This reform
applies to both Rio de Janeiro and São Paulo.
RISKS’ ASSESSMENT
High Context Culture
Brazilians prefer face-to-face
meetings to written
communication as it allows
them to know the person with
whom they are doing business.

It is not frowned upon to

interrupt someone when
The individual they deal
they are speaking as long
with is more important
as it is within context of the
than the company.
discussion and not to
overtly disagree or criticize.

Communication is often
informal and does not rely Be courteous and do not
on strict rules of protocol. openly criticize particularly
Anyone in the meeting can in a group situation as this
comfortably contribute to will cause offence.
discussions.
 Perceptions of Time

Brazilians have a flexible

time frame, they tend to
Mainly Polychronic society
be more patient, relaxed,
and live in the moment.
Hofstede’s Typology of Brazil*
Hofstede’s
*
Typology of Brazil
https://www.hofstede-insights.com/country/brazil/
Hofstede’s Typology of Brazil : Power Distance and Individualism

Power Distance Individualism

Brazil has a score of 38 which means that in this country people from birth
With a score of 69, onwards are integrated into strong, cohesive groups (especially represented
The different by the extended family; including uncles, aunts, grandparents and cousins)
Brazil reflects a
distribution of power which continues protecting its members in exchange for loyalty.
society that believes
justifies the fact that
hierarchy should be
power holders have
respected and This is an important aspect in the working environment too, where for
more benefits than
inequalities amongst instance an older and powerful member of a family is expected to “help” a
the less powerful in younger nephew to be hired for a job in his own company.
people are
society.
acceptable.

In business it is important to build up trustworthy and long lasting

relationships: a meeting usually starts with general conversations in order to
get to know each other before doing business.
In Brazil it is
important to show In companies there is
respect to the elderly one boss who takes The preferred communication style is context-rich, so people will often speak
(and children take complete profusely and write in an elaborate fashion.
care for their elderly responsibility.
parents).
Hofstede’s Typology of Brazil : Masculanity, Uncertainty
Avoidance and Long Term Orientation

• Brazil scores 49, a very intermediate score

on this dimension.
Masculanity • This means that in Brazil: success , • At 44, Brazil scores as
competition and standing out of the
: crowd are as important as caring for intermediate in this
others and having a good life quality.
LONG TERM dimension but more on the
Normative society side: Long
vs. SHORT Term Orientation.
• At 76 Brazil scores high on UAI – and so do the majority
TERM • This means that Brazilians
of Latin American countries.
• These societies show a strong need for rules and
ORIENTATIO prefer to maintain time-
elaborate legal systems in order to structure life.
• The individual’s need to obey these laws is weak. If rules N honoured traditions and
however cannot be kept, additional rules are dictated.
Uncertainty • In Brazil, as in all high Uncertainty Avoidance societies,
bureaucracy, laws and rules are very important to make
norms while viewing societal
Avoidance: the world a safer place to live in.
• Brazilians need to have good and relaxing moments in
change with suspicion .
their everyday life, chatting with colleagues, enjoying a
long meal or dancing with guests and friends.
• Due to their high score in this dimension Brazilians are
very passionate and demonstrative people: emotions are
easily shown in their body language.
Hofstede’s Typology of Brazil : Indulgence

INDULGENCE
Brazil’s high score of 59 marks it as an Indulgent society.
Brazilians exhibit a willingness to realize their impulses and desires with regard to enjoying life and having fun.
They possess a positive attitude and have a tendency towards optimism.
In addition, they place a higher degree of importance on leisure time, act as they please and spend money as they wish.
Religion

Although the Brazilians

are typically tolerant
people ,it is a Catholic
country and raising
religion in conversation
particularly if expressing
any strong atheistic
views is a definite no-no.
 Cultural aspects of doing business in Brazil
• Before the Brazilians can work effectively, they need to know who
they are doing business with
• It is not recommended to rush the relationship-building time. It is
better to wait for the Brazilian part to raise the business subject.
Expect to spend time when negotiating with Brazilians
• Face-to-face meetings are preferred to written communication,
although when it comes to business agreements, Brazilians value
detailed legal contracts
• They attach more importance to the individual they deal with than to
the company
• As the Brazilians are more comfortable doing business with people
and companies they know, questions about the company are
expected;
• Normally the highest-ranking person is the one who makes the
decisions. This makes evident what hierarchical business is like in
Brazil
• Men greet by shaking hands, with a steady eye contact. This could be
done as an inter-gender greeting, too
• Kissing is a usual greeting for women. Brazilian friends often do
hugging and backslapping, too
• Embarrassing a Brazilian should be avoided, for this is a group
culture
• • When a person is criticized, he/ she loses face with the others
in the meeting
• The one who makes the criticism also loses face, as an
unwritten rule has been disobeyed
• Informality shapes communication, which normally does not
rely on strict rules of protocol
• Anyone who feels like adding their opinion will just say it
• Brazilians are normally more tolerant on interrupting someone
who is speaking
• People, rather than companies, are who Brazilians negotiate
with. Therefore, it is not advisable to change the negotiating
team. This would mean starting from zero.
• It is important to highlight that normally the people you
negotiate with do not have decision-making authority
• • During introductions at a meeting, business cards are
exchanged with everyone.
 Cultural Aspects of Doing Business in Brazil
• As Brazilians depend heavily on relationships with others, it is essential to
spend time getting to know, both personally and professionally, your
Brazilian counterparts.
• One of the most important elements in Brazilian business culture is personal
relationships. By cultivating them, and building trust, one’s chance of
successfully doing business in Brazil will increase greatly.
• Curiously, it is common to see members of the same family working for the
same company. This is due to the strong importance placed on family
relations.
• Brazilians prefer to do business with those they know and trust, what
reinforces this characteristic.
PESTELE Analysis
PESTELE Analysis- Political
 Brazil Politics - Overview
Brazil is a Federal Republic formed by the Union, States and Municipalities. It is a Presidential democratic system.

The Union is divided in three independent branches working harmoniously amongst them:
• the Legislative Power (elaborates the law),
• the Executive Power (executes programs, laws and provide public services)
• the Judicial Power (judges, solves conflicts – it is composed by the courts in different levels: Supreme Federal Court, the Superior Court of Justice and other Superior Courts, the
National Justice Council and the Regional Federal Courts) (Portal Brasil, 2009).

The Executive Power for the whole nation is headed by the President.

The State level is represented by the Governor and in the Municipality sphere is represented by the Mayor.

The President, Governor and Mayor are elected directly for four years having the possibility of only one re-election in a consecutive term.

The voting system is compulsory for citizens from 18 to 70 years old and it is optional for citizens from 16 to 18 and older than 70 years old
(Presidência da República, 1988).
Political Situation in Brazil 2019
https://www.bbc.com/news/business-48386415

On 1 January 2019, Brazil's far-right president But expectations soon started to fall apart.
Jair Bolsonaro took office

Brazil's president boasted during the election

that he did not understand anything about
economics.
Once in power, he delegated all decisions on
the subject to businessman Paulo Guedes,
who became a "super-minister" of the
economy.
A series of government blunders hampered
growth expectations:
• political infighting inside the administration,
• a clumsy attempt at state intervention in Brazil's fuel policy
• the lack of leadership in Congress

The task of rescuing Brazil's economy from

the brink of yet another recession was urgent.
Most analysts have halved their growth
expectations for Brazil and now believe significant
growth will not start until 2020.
 Brazil Corruption Index
Actual Previous Highest Lowest Dates Unit Frequency
35.00 37.00 43.00 27.00 1995 - 2018 Points Yearly

The Corruption Perceptions Index ranks countries and territories based on how
corrupt their public sector is perceived to be.

A country or territory’s score indicates the perceived level of public sector

corruption on a scale of 0 (highly corrupt) to 100 (very clean).

Brazil scored 35 points out of 100 on the 2018 Corruption Perceptions Index
reported by Transparency International.

Corruption Index in Brazil averaged 37.51 Points from 1995 until 2018, reaching
an all time high of 43 Points in 2012 and a record low of 27 Points in 1995.

This index has been declining as of 2016 reflecting the perception of increased
corruption of the public sector.

This score was last updated September 2019.

https://tradingeconomics.com/brazil/corruption-index
Brazil Corruption Rank
https://tradingeconomics.com/brazil/corruption-rank

• Brazil is the 105 least corrupt nation out of 175 countries,

according to the 2018 Corruption Perceptions Index reported by
Brazil corruption rank 2010-2018
Transparency International.
• Corruption Rank in Brazil averaged 63.50 from 1995 until 2018,
reaching an all time high of 105 in 2018 and a record low of 36 in
1997.
• The dropping corruption index and rank may be alarming and bad
news ; however, the compliance certified officer Patricia Punder
has a different take on this matter.
• In her article- “Brazil’s Falling Ranking in the Corruption
Perceptions Index .Why the Decline is Natural – And Could Be
Positive”Feb, 19- she explains that :
• Since the enactment of Brazil’s anticorruption law, the country has finally
started to speak publicly about corruption and take the first steps to fight this
evil.
• The above figures resulted from the fact that Brazilians started, as a society, to
confront corruption in a more transparent and almost effective way
PESTELE Analysis - ECONOMY
Brazil Economic Situation 2019- Overview

Economic growth is expected to remain in the doldrums this year as

the below factors combine to hamper export growth and investment:

• collapsed demand from Argentina,

• slowing growth in China,
• global trade tensions and problems in the mining sector

That said, lower interest rates should provide a boost to momentum,

while faster-than-expected passing of reforms could help rejuvenate
confidence.
Brazil Economy is Not Moving Forward

- Leading-- Upper-middle-income
producer
Emerging of
Financial
sugar and economy
Market
coffee in the
- 7th world economy world.
with high inequalities
Too Much Spending and Borrowing
• Some economists say the main culprit is the
pension system, with Brazilians retiring in their
early 50s and with too many benefits (especially
amongst civil servants).
• During the boom years, Brazil had a debt which
was 51% the size of its economy.
• The growing fiscal deficit raised the debt level to
77.1%.
• Mr Bolsonaro is proposing pension cuts and a
minimal retirement age of 65 for men and 62 for
women.

• The government admits that without a major

intervention, the country's debt will be the size of
its entire economy by 2023.
2- The Unemployment Problem Isn't Being
Solved
• Since the beginning of Brazil's
recession four years ago, prices
have gone up by 25%.
• There are fewer people with formal
jobs, while wages are barely
keeping up with inflation
• The official unemployment
survey shows that 28.3 million
people are under-utilised.
Economic Indicators 2019
Economic Recovery Seems Unlikely----
• In the previous decade, Brazil was considered as one of the Brics
powers : An emerging economy with superfast rates of economic
growth that is expected to surpass developed economies by 2050.
• The economic performance of this decade, however, suggests Brazil is
out of this group
The Economy is not Growing- Real GDP %
Growth
• After the crippling two-year recession
in 2015 and 2016 , economic recovery
has been sluggish.
• In 2017 and 2018, the economy grew
at a pace of 1.1% a year.

• And there is still more bad news: since

the beginning of the year, economists
have more than halved their
expectations of economic growth for
2019 to a rate not very different from
that seen in the past two years.
Deterioration of Brazil Fiscal Accounts
• The deterioration of the fiscal accounts over the past years is
mainly due to rising social security expenditures and this trend is
likely to continue without a reform of social benefits, most
notably old-age pensions.
• Restoring fiscal sustainability is the most pressing economic
challenge for Brazil.
• To address the dynamics of unsustainable debt, the government
has enacted Constitutional Amendment 95/2016, which limits the
rise of public spending.
• This amendment imposes:
• a fiscal adjustment of 5% of GDP through 2024 and
• stabilizes the debt at about 89% of GDP in 2026.
• Implementing this fiscal adjustment requires reducing the rigidity
of public spending and revenue-earmarking mechanisms, which
make more than 90% of the federal government's primary
spending mandatory
 Brazil Imports
and Exports 2019
• Brazil imports mainly manufactured goods (85 percent of total
imports), namely machinery, fuels and lubricants, chemicals and
pharmaceutical products, and parts and accessories for motor
vehicles and tractors. The country also imports raw materials (10
percent), mostly crude oil, coal, natural gas and wheat grain.
• Imports to Brazil went down 17.1 percent over a year earlier to
USD 15.57 billion in August 2019, due to lower purchases of
intermediate (-6.2 percent), capital (-37.8 percent) and
consumption goods (-11 percent). In 
• Brazil has an export-oriented economy, dependent on the shipments of raw material
(50 percent of total exports) and manufactured goods (36 percent). The country
exports mainly: soybeans and related soy products (17 percent of total exports);
transport equipment and components (12 percent) and oil and oil products (13
percent).
• Exports from Brazil fell 12.5 percent year-on-year mainly due to lower sales of
primary goods (-1.9 percent) and industrial goods (-21.5 percent), of which
manufactured products (-29 percent) namely passenger vehicles (-47.7 percent); cargo
vehicles (-34.6 percent); engine parts and aviation turbines (-23.7 percent); planes (-
23.6 percent) and parts (-21 percent).
• Meanwhile, sales of semi-manufactured products rose 9.4 percent, in particular iron
(471.5%), ferroalloys (64.3 percent), cast iron (34.9 percent), raw zinc (26.9 percent)
and gold (21.1 percent). 
 Inflation Rate
• In 2018, inflation grew slightly,
reaching 3.7% (compared to 3.4% the
previous year) and is expected to
increase to 4.2% in 2019.
• Fiscal consolidation is the
government’s main objective, but even
though the fiscal deficit is expected to
narrow in 2019, the President's
promise to reduce the imbalance to
zero this year is not feasible.
 Budget Balance ( % GDP )
• The government budget balance
registered in 2018 a deficit of
7.1% which is expected to
decrease to -6.0 in 2019.
 Current account balance- 2019
• Brazil ‘s current account balance is negative so it is mainly a net borrower
from the world.
• The results reflect a deterioration in the trade surplus as of 2017 and a
widening of the primary income deficit
• The primary income deficit has risen as profits and dividends were
sent abroad, causing capital flight out of the country.
• Meanwhile, foreign direct investment averaged 3785.18 USD Million from
1995 until 2019, reaching record low of -182.32 USD Million in June of 2019.
 FDI Brazil
http://www.economia.gov.br/central-de-conteudos/publicaco
es/relatorios-e-boletins/2019/foreign-investment-bulletin-sel
ected-countries_n02_2019_vf.pdf

As of 2018, there
During the period
was a drastic fall in
between 2010 and
Until the end of As of 2010, the values of
2017, the US and
the last decade, Chinese Chinese and North
China alternated
the largest investments have American
in the position of
investment gained importance investments, and a
major investor,
amounts came because of rapid concomitant
considering the
from the USA growth in value. growth of French
sample of the five
and Italian
selected countries.
investments.
Public Debt

The is a consistent
increase in public
debt since 2016;
although, the
%increase is lower in
2018-2019 compared
to 2017-2018
 Index of Economic Freedom
• Economic freedom is measured based on 12
quantitative and qualitative factors, grouped into four
broad categories, or pillars, of economic freedom:
• Rule of Law (property rights, government integrity,
judicial effectiveness)
• Government Size (government spending, tax burden,
In the 2019
fiscal health) “Mostly
economic freedom
• Regulatory Efficiency (business freedom, labor Unfree”with a rank
index report issued
freedom, monetary freedom) of 150 out of 180
by heritage
• Open Markets (trade freedom, investment freedom, countries and a
foundation, Brazil is
financial freedom) score of 51.9 .
considered :
• Each of the twelve economic freedoms within these
categories is graded on a scale of 0 to 100.
• A country’s overall score is derived by averaging these
twelve economic freedoms, with equal weight being
given to each. 
 Index of Economic Freedom
• This graph is shows the Index of
economic freedom is Brazil in 2019
compared to South and Central
America and the World.( Issued by
Heritage Foundation)
• As shown, Brazil is considered
mostly unfree for many handicaps in
the areas below:
• 1- Judicial effectiveness
• 2-Government integrity
• 3- Fiscal Health: Major Handicap-
Classified as repressed.
 Source :
https://www.heritage.org/index/visualize

Fiscal Health 2019 Judicial Effectiveness 2019

 Unemployment Rate
• The unemployment rate in Brazil fell to 11.8 percent in the three
months to July 2019 from 12.5 percent in the February to April
period, below market consensus of 11.9 percent.
• The number of unemployed declined by 4.6 percent while
employment rose by 1.3 percent.
• The labor force participation rate increased to 62.1 percent from 61.9
percent in the previous three-month period which is a good sign.

• Although unemployment decreased, the country continues to face

social issues and has one of the highest levels of inequality in the
world. 
• Even though Brazil has lifted 28 million people out of poverty in the
last 15 years, 10% of the population still live in poverty.
• The country's richest 5% have the same income as the remaining
95%. There are high disparities between the regions, and there has
been a recent rise in the rates of delinquency and criminal violence.
The indebtedness of the state of Rio de Janeiro has had severe
consequences. Criminality rose during the past two years and a
controversial military intervention in Rio de Janeiro was decided in
February 2018.
 Ease of Doing Business
• Brazil is ranked 109 among 190
economies in the ease of doing
business, according to the latest
World Bank annual ratings.
• The rank of Brazil improved to 109
in 2018 from 125 in 2017.
• Ease of Doing Business in Brazil
averaged 120.45 from 2008 until
2018, reaching an all time high of
129 in 2009 and a record low of
109 in 2018.
Consumer Confidence 2019

https://tradingeconomics.com/brazil/consumer-confidence

• Consumer confidence in Brazil declined to 47 in

the second quarter of 2019 from 48.4 in the
previous period.
• Consumer were more concerned about inflation
(59.6 from 59 in Q1) and unemployment (56.4
from 54.7).
• Also, household’s assessment regarding their
financial situation (47.7 from 49.4) and future
personal income expectations (49.7 from 50.5)
deteriorated.
• Consumer Confidence in Brazil averaged 77.95
Index Points from 1996 until 2019, reaching an
all time high of 116 Index Points in September of
2006 and a record low of 37.90 Index Points in
June of 2015.
PESTELE Analysis - Social
 Social status
• Brazil experienced a period of economic and social progress between
2003 and 2014, when more than 29 million people left poverty and
inequality declined significantly.
• The Gini coefficient dropped 6.6% (from 58.1 to 51.5) during that
time.
• The income level of the poorest 40% of the population increased by
an average of 7.1% (in real terms) between 2003 and 2014, compared
to a 4.4% increase in income for the population as a whole.
• Since 2015, however, the pace of poverty and inequality reduction
seems to have stagnated.
 Social status
• The overwhelming support of pension reform in Brazil’s lower house as of 2019 was a critical victory for both the Bolsonaro
government and the nation’s economic prospects.
•  The immediate reaction to the legislative victory was a jump in the value of the Brazilian real and a new high for the stock exchange.
• Still, expectations should be held in check. Brazil’s mediocre economic performance for much of the last three decades is reason enough for
skepticism.
• The Brazilian Congress, despite its solid backing of the pension legislation, is an erratic institution that could readily change direction.
• Public reactions to the loss of anticipated retirement benefits remain uncertain.
• The reform effort could also be upended by the Bolsonaro government’s fading support, mostly reflecting the country’s sluggish economy and
elevated unemployment, but also driven by unpopular policies, offensive statements, questionable choices of senior officials and a few
scandals.
PESTELE Analysis- Technology
 Technology
• “Brazil is the country of the future” was a familiar phrase for many years
• For tech startups, that future is now.
• The country is showing signs that the sleeping giant is finally waking up and moving towards its tipping point.
• The Brazilian Information Technologies (IT) market grew 9.8 percent in 2018, reaching $47 billion.
• It surpassed previous forecasts of 4.1 percent growth for the period and will continue to grow in 2019 according to a study
prepared by IDC in partnership with the Brazilian Software Association (ABES).
• Additionally, the device market is expected to represent 38 percent of all IT investments in Brazil (about $24.5 billion), due to
sales of higher value devices. 
• The growth expectation for IT investments in Brazil for 2019 is 10.5 percent, still driven by the sale of devices, while the global
average growth is estimated at 4.9 percent.
• With approximately a third of Latin America’s population, Brazil is the region’s largest telecom market.
• The Brazilian telecommunications services market is expected to reach $45.76 billion by 2022, a market growth of 20.42
percent  since 2016 based on a study prepared by Frost & Sullivan. It is right now one of the most promising sectors in Brazil
• Investments in 5G are expected to occur gradually, without significant impact to the sector in 2019/2020.
 Technology- Leading Sub-Sectors
1- Information Security

Investments in artificial intelligence (AI) and machine learning for security are expected to reach $671 million. The reason is the prevention of ransomware
attacks and compliance with the General Law of Protection of Personal Data, which is expected to take effect in August 2020.

2- AI
In Brazil, 15.3 percent of medium and large companies already have AI technology among their priority initiatives, and this percentage should double in the next
four years. The areas with the greatest growth potential are related to customer service, fraud analysis and investigation, IT automation, diagnostics and health care.

3- Big Data & Analytics

The big data & analytics market in Brazil is expected to grow to $4.2 billion in 2019 from $3.7 billion in 2018

4- Public Cloud

The public cloud segment in Brazil is expected to reach $2.6 billion in 2019, growing 35 percent annually to reach $6.5 billion in 2022. Portaria No 9 regulates
cloud computing for the federal government and includes a data localization requirement. 

5- Internet of Things
The Internet of Things (IoT) segment in Brazil is estimated to reach $9 billion this year, driven by applications in agribusiness, health and public services, and is
expected to grow by more than 20 percent  annually by 2022. "The National Plan of IOT” has not yet been signed into law.
PESTELE Analysis- Legal
 Basis of the Legal System
• Brazil is a Federal Republic and its legal system is based on civil law.
That means that Brazil relies primarily on statute, rather than on case
law. Nevertheless, the new Civil Procedure Code, which came into force
on March 2016, strengthened the importance of judicial precedent, by
establishing that certain decisions issued by appeal courts shall be
binding.
• The Brazilian Federation is comprised by the Federal Government,
states, a federal district and municipalities. Each of these entities is
competent to legislate on matters defined by the Constitution. As a
rule, issues relating to Corporate Law and foreign investments in the
country fall within the Federal Government's legislative competence.
 Legal Analysis
• Brazil has implemented meaningful changes to its labor laws that have the potential to benefit employers in
structuring and carrying out their business plans in the country.
• Initially, Law 13,42 of 31 March 2017, secured the right of every company to outsource any of its activities
• The outsourcing of core activities was upheld by a paramount decision by the Federal Supreme Court on 30
August 2018.
• Another important change came with Law 13,46 of 13 July 2017, which made substantial alterations to
Decree-Law 5,452 of 01 May 1943, the Consolidation of Labor Laws by, among other measures, creating new
forms of labor contracts, empowering collective bargaining and amending certain litigation aspects to
discourage the filing of labor lawsuits by workers.
• The previous foreign statute was replaced by a more modern Migration Law on 24 May 2017. However, the
practical conditions to obtain temporary working visas for employees were not substantially modified.
• Another major recent development was the enactment of Brazil's General Data Protection Law which will
come into force on 15 August 2020. This new law provides for rules on the processing, by individuals and
private and public entities, of data belonging to identified or identifiable persons. Among other aspects, the
Law provides for stricter formal requirements for consent validity, as well as data security policies
 Restrictions on Foreign Investments
• Brazil is generally receptive to foreign investments. However, investments in
certain sectors, which are deemed strategic by the Federal Constitution, are either
restricted to nationals or subject to governmental authorisation. Among them:
• Financial institutions.
• Press and broadcasting services.
• Postal services.
• Private security and transport.
• Nuclear energy.
• Rural real estate.
• Activities in international borders and adjacencies.
• Cabotage (transport of foreign nationals or citizens and goods within the borders of a given
country by a foreign aircraft).
 Foreign Investments
• Foreign direct investments must be registered with the Brazilian
Central Bank.
• For investments in the securities market, registration with the
Brazilian Securities Commission is further required.
• Additionally, foreign investors must be enrolled in the Brazilian
Federal Revenue Office's taxpayer registry, in addition to appointing a
representative residing in the country.
Grants or Incentives Available for Investors

Brazil offers a • Tax exemption and deduction applicable to

sectors deemed strategic by the Government.
• Incentives for the development of
wide variety of infrastructure projects in several sectors (such
as energy, telecommunications, oil and gas,
federal, regional logistics and transportation), for example,
through public bidding processes and public-
private partnerships.
and local • Tax incentives applicable in "Tax Free Areas"
(for example, the Zona Franca de Manaus) and
incentives to Export Processing Zones.
• Funding from public banks, particularly the

investors. For Brazilian Development Bank.

• Lower taxation on investment by non-residents
in capital markets.
instance: • No taxation on the distribution of dividends.
Legal Summary

As a conclusion ,
there is a lot of
good action
aiming at good
future although it
will take some
time to implement
all the changes.
PESTELE- Environment
 PESTELE Analysis- Environment
About 43% of people still live in regions without access to
sewage, polluting scarce water resources and multiplying
vectors of diseases such as Zika, Chikungunya and Dengue
in periurban and rural areas.
The amazon river is “ dying” and this is the vast ecological
cost of Brazil’s mining disasters.
Despite large public security expenditures, crime and
violence rates in Brazil remain extraordinarily high. They
are reinforcing discrimination and social exclusion. This is a
vicious circle that jeopardizes development prospects for
the poor.
As there is a plenty of environmental
risks and a race to get them, the
following environmental risks emerged:
• Deforestation of the amazon forest
• Acid rain
• Endangered animal and plant species
• Air pollution
• Waste disposal
Awareness of environmental issues and
environmental sustainability is
increasing though.
 CAGE Analysis for Brazil
Cultural Distance
1-Portuguese speaking
country with the largest
population of Portuguese
speaking people
2- High diversity of
ethnicities that allows
companies to offer a
diversity of products and
services all around the
world
1-The only country that
speaks Portuguese in South
America
2-Brazil is the country with
biggest number of
Multilatinas
Administrative
and Political
Distance
1- Ease of doing business,
according to the latest
World Bank annual ratings:
The rank of Brazil improved
to 109 in 2018 from 125 in
2017
2- Creator and member of
Mercosur, Banco Del
Sur, and the Group of 20
coalition
1- High level of corruption
and government influence
2- High rates of crime and
domestic violence
3- High tariffs for input of
certain goods and services
4- One of the most complex
tax regime in the world
5-Ranked 109 on easiness
to do business in 2018
Geographic Economic Distance
Distance
1- Brazil shares a border 1-Biggest GDP in Latin America
with all South American 2-Very rich in natural resources:
Factors that
countries except Ecuador
and Chile
oil, copper, gold and silver decrease
distance
1- The immense Amazon Low income per capita
rainforest is the major Large gap between high and low Factors that
obstacle the hinders the income citizens increase
connection between Brazil The government has been
and other South American prioritizing many Brazilian distance
countries, such as companies
Venezuela, Colombia and
Peru
 MPI Brazil
https://globaledge.msu.edu/mpi/data/2019

• Brazil is ranked 51/97 which is in the middle. This

ranking however is deteriorating as of 2017.
Market Market
• The market size which is the most important
Market growth Market Consumption Commercial Market economic indicator is on the low side and similarly the market
Rank Country size rate Intensity capacity Infrastructure Receptivity Freedom Country Risk Overall score receptivity which reflects that Brazil is not open for
51Brazil 16 30 46 33 60 2 47 44 32 import.
• Market intensity is 46 which reflects that the buying
power of residents is average and on the lower side.
• Market consumption capacity which is related to
Year to Year Variation of the ranking middle class size is low.
19 18 17 16 15 14
Brazil 51 43 35 20 20 20 • Commercial infrastructure index is high and this
reflects the growth of technology discussed earlier.
• All above factors along with economic freedom and
country risk which were discussed earlier
contributed to the low overall score.
 Conclusion
• Brazil is the economic leader of South America, with the ninth-
largest economy in the world.
• It shares borders with all South American nations.
• The state of Sao Paulo is responsible for about half of Brazil's Gross
Domestic Product as well as about two-thirds of its manufacturing
• It is a high context culture, indulgent and Polychronic society that
values hierarchy
• Brazilians are passionate and caring people that value their traditions.
It is important for them to build up trustworthy and long lasting
relationships with their business partners.
 Conclusion
• Many business reforms were implemented in 2019 namely in Sao
Paulo making it easier to do business.
• Brazil ranking is 109 among 190 economies in the ease of doing
business in 2018.
• The political situation is not promising but the declining corruption
index as of 2016 reflects the perception of increased corruption of the
public sector and most importantly the fact that Brazilians started, as
a society, to confront corruption in a more transparent and almost
effective way
Conclusion
• Brazil economy is not moving forward
* Source Credit Suisse Analysis 2019-2020
with too much spending and
borrowing and an unsolved
unemployment problem.
• Its economic recovery doesn’t seem
soon with the deterioration of its
fiscal accounts and the growing
inflation.
• Public accounts have been on a path of
significant deterioration since 2014.This
is primarily due to the strong growth of
public expenditures mainly the
mandatory ones
 Conclusion
• Brazil ‘s current account balance in 2019 is negative so it is mainly a
net borrower from the world.
• Based on the index of economic freedom 2019, Brazil is considered
mostly unfree for many handicaps in the areas below:
• 1- Judicial effectiveness
• 2-Government integrity
• 3- Fiscal Health: Major Handicap- Classified as repressed.
• On the other hand, Brazil offers a wide variety of federal, regional and
local incentives to investors.
Conclusion
Brazil leads the world in coffee production

It is an export oriented economy , with a deteriorating MPI ranking as of 2017.

MPI 2019 indices show very low market receptivity and size .

Based on all above and since I lack experience in international business , I am

inclined to import coffee from Brazil rather then open a business in Brazil.
References
• https://www.bbc.com/news/business-48386415
• https://www.doingbusiness.org/en/reforms/overview/economy/brazil
• https://tradingeconomics.com/brazil/ease-of-doing-business
• https://www.thoughtco.com/geography-of-brazil-1435538
• https://www.hydropower.org/status2019
• https://www.petroleum-economist.com/articles/politics-economics/south-central-america/201
• https://www.commisceo-global.com/resources/country-guides/brazil-guide#c6
• https://www.hofstede-insights.com/country/brazil/
• Cultural Differences Between Countries: The Brazilian and the Chinese Ways of Doing Business
https://www.pucsp.br/icim/ingles/downloads/papers_2010/part_9/32_Cultural%20Differences
• https://tradingeconomics.com/brazil/corruption-index
• https://www.worldbank.org/en/country/brazil/overview
• https://www.export.gov/article?id=Brazil-Information-Communications-Technologies-ICT
• https://www.worldbank.org/pt/country/brazil/brief/brazil-policy-notes#recursoshidricos123
References
• https://www.worldbank.org/pt/country/brazil/brief/brazil-policy-note
s#topo123
• https://www.worldbank.org/en/country/brazil/overview
• Credit Suisse Analysis Brazil 2019-2020