Brazil

Acknowledgment
We the group members take immense pleasure in thanking Prof.Ravi Nagarajan for giving us an opportunity to take up this project. We have learnt a lot through this project ,which we think will be of great use for us in all our future assignments . We would also like to thank our Director Dr.G.K.Sharma .for his support.

I.

Overview A. Milestones B. Economic Structure C. Culture D. Foreign Trade

page no:no:-

II.

III. IV. V.

Legal System page no:no:A. Foreign Capital Registrations B. Forms of Business Organizations C. Antitrust D. Arbitration Political and Economic Outlook page no:no:A. Presidential Elections Overview of the steps to Starting a Business in Brazil Titan industry

Introduction to Brazil
 Official name Federative Republic of Brazil  Population 196,342,227*  Official Language Portuguese  Currency Brazilian real (BRL)  Capital Brasilia  GDP purchasing power parity $1.836 trillion*  GDP Per Capita $ 10,100 (2008)  Religions: Roman Catholic (nominal) 80%  Language : Portuguese is the most spoken language, but English and French are also spoken  Government: Multiparty Federal Republic
Source: www.ciafactbook.com

Ethnic groups
190,732,694 2010 Ethnic groups (2008) 48.43% White 43.80% Brown (Multiracial) 6.84% Black 0.58% Asian 0.28% Amerindian

Culture of Brazil
Brazilian culture is a culture of a very diverse nature An ethnic and cultural mixing occurred in the colonial period between Native Americans, Portuguese and Africans formed the bulk of Brazilian culture

In the late 19th and early 20th centuries Italian, German, Spanish, Arab and Japanese immigrants settled in Brazil Brazil was a colony of Portugal for over 3 centuries

 For that reason, Brazil also holds Amerindian influences in its culture, mainly in its food and language Brazil has the largest Catholic population in the world. Carnival in Rio de Janerio, as it is known in Brazil, is an annual celebration held forty days before Easter and marking the start of Lent.

 First names should normally be used, but titles are important and terms like Doctor can be used. If we dont know their professional titles, the term Senhor[Mr.] & Senhora[Mrs.]. When we meet somebody in Brazil expect a firm handshake and for longer time. Both men and women greet women with a kiss on each cheek. On departure you should repeat all the handshaking and kissing.

Meeting Etiquette
Conservative European dress code is the norm for all meetings in big cities. As a foreigner, try to always be on time however as this will be expected of you. Never start into business discussions before your host does. Business meetings normally begin with casual 'chatting' first. Avoid confrontations. It is best not to appear frustrated with your Brazilian colleagues.

Contd.
Do expect interruption, while a important discussion is going on. Dont bring topics like crime, corruption, deforestation etc as these are sensitive issues at the moment. Bring plentiful supply of business cards, since Brazilian tend to be very keen about exchanging them.

Dress Code
Brazilians pride themselves on dressing well. For Men
Wear conservative, dark colored business suits. Three-piece suits typically indicate that someone is an executive.

For Women
Wear suits or dresses that are elegant and feminine with good quality accessories. Manicures are expected.

Jeans are often unacceptable as they are considered too casual, however this depends on the industry.

Communication Style & Eye Contact

Communication Style:
Communication is often informal and does not rely on strict rules of protocol. Anyone who feels they have something to say will generally add their opinion. Brazilians tend to be direct in most situations.

Eye Contact:
Brazilians favor direct eye contact over indirect. While conversing they will constantly stare, they associate steady gaze with sincerity.

Gestures
Gently pulling the lower eyelid down can indicate "watch out, be careful or "do you think I'm stupid enough to believe that?" Thumbs up means OK, cool, positive, good-luck, thanks, you're cool, I agree. Thumbs down means the opposite. Pretending to suck your thumb means that one has been left out or is disappointed. The "OK" sign made by joining the index finger to the thumb in the shape of a ring is also inappropriate. You should expect friendly pats on the back.

Socializing & Entertainment

Formal lunches and dinners have always been a part of doing business in Brazil. Brazilians do not arrive on time for social functions. Sometimes it is easier to invite a senior contact for a meal than for a meeting at the company. Keep the conversation at the social level and if business is to be discussed, wait until the coffee is served. If you are to a Brazilian home, consider it rare honour.

Business Negotiations
Expect a great deal of time to be spent reviewing details. Often the people you negotiate with will not have decision-making authority. Use local lawyers and accountants for negotiations as Brazilians resent an outside legal presence. Brazilian business is hierarchical and decisions are made by the highest ranking person. Brazilians negotiate with people, not companies.

 It will probably take several trips to bring the negotiations to satisfactory conclusion. Do not change your negotiating team or you may have to start over again from the beginning. One should always place an emphasis on increased power and status to the Brazilians, rather than money. Never leave a meeting as soon as it gets over. A document arent signed immediately after an agreement is reached; a hand shake and persons are considered sufficient.

Gift Giving
Do not give any thing that is obviously expensive as it will cause embarrassment or be misinterpreted as bribe. Do give gifts of liquor, books, or nice pens. Do give gifts to children. If you did not bring a gift to the hostess, flowers the next day are appreciated. Gifts are usually opened when received.

Contd
Gifts to be Avoided
Avoid giving anything purple or black as these are mourning colors. Gifts of knives, scissors, or letter openers are interpreted as the severing of a close bond. Handkerchiefs are also associated with funerals, so avoid giving them. Avoid practical gifts, since they may be perceived as too personal. For example, avoid wallets, key chains, ties, sunglasses, jewelry and perfume.

Brazilian Business Etiquette

DO be patient. Brazilians negotiate slowly. DO impress your Brazilian business associates by staying in a nice hotel. DO expect to be invited to have a drink after work. DO discuss soccer (football), the beach, and Brazil's growth as a country.

Contd
Dont discuss Argentina, religion, the Rainforest, and Brazil's class system Dont ask personal questions, such as questions about age, salary, or marriage Dont speak Spanish with a Brazilian Dont simply rely on e-mails to give information, follow things up with the phone call or meeting personally Dont rush business with your Brazilian colleagues and avoid pressing for final decisions

Top ten Brazils Imports

Motor Vehicle Parts Television, Radio & Assessory Parts Aircraft Parts Passenger Vehicles Computer & Office Machines Parts

8% 8%
%

18%

17% %

Petroleum Gases Medicines in Doses Aircraft

10%

11% 10%

Non Crude Oil Parts For For ifts, ulldo ers & Graders

Top Ten Products Exported from Brazil 2008

Trade Value PRODUCTS Iron Ores & Concentrates Crude Oil Soybeans Passenger Vehicles Soda & Sulfate Chemical Woodpulp Cane Sugar Coffee Chicken Soybean Meal Motor Vehicle Parts (US$ thousands) 14,397,850 7,208,820 6,214,344 4,208,285 SHARE (%) 3.67 1.84 1.58 1.07 GROWTH (% 5yr) 259.75 609.38 87.34 112.86

3,387,592 3,343,046 3,026,899 2,709,649 2,699,448 2,598,678

0.86 0.85 0.77 0.69 0.69 0.66

142.43 116.37 125.26 146.87 10.99 117.08

Brazilian Embassy in Mumbai

Top Ten Brazilian Imports From India -2008

Main Products Diesel Oil Coke of Coal Generating Sets Wind-powered Single Cotton Yarn of Combed fibres (85%) Other heterocyclic compounds Textured Yarn of Polysters Fuel of Turbine Aviation Single Polyester Yarn Polypropylene Yarn Medicines Trade Value (US$ thousand) 15,24,698 1,08,488 1,07,184 99,038 75,386 71,188 58,229 56,124 40,526 36,367 Brazilian Embassy in Mumbai

Top Ten Brazilian Imports From India

58229 71188 75386 99038 107184 56124 40526 36367

Diesel Oil Coke of Coal Generating Sets Windpowered Single Cotton Yarn of Combed fibres (85%) Other heterocyclic compounds Textured Yarn of Polysters

108488

1524698

Fuel of Turbine Aviation Single Polyester Yarn Polypropylene Yarn Medicines

Brazilian Embassy in Mumbai

Potential Trade
We recommend to Export Cell phones, Video Recorders and Radio Transceivers India at present exports these products to other nations apart from Brazil. It gives India, trade value of US $2,94,627,000 which forms 0.10% of the total exports and has a growth rate of 1875.23% Moreover Brazil has a huge demand for them, and gives a trade value of US $ 3,228,436 which forms 1.39% of their total imports and has a growth rate of 280.32% .
Growth rate over a period of 5 years

Brazilian Embassy in Mumbai

Cont..
We also recommend to trade Ball & Roller Bearings with Brazil It gives India, trade value of US $ 201,036,000 which forms 0.07% of the total exports and has a growth rate of 209.76%. Brazil is huge into importing industrial and infrastructure related goods, and there is a big market with relation to bearings that we can try to capture. It gives Brazil a trade value of US$ 3,85,309(000) which forms 0.17% of the total imports and has a growth rate of 93.62%

 DOING BUSINESS IN BRAZIL

A. Milestones
1. 2. 3. 4. Privatization program started in 1990 Extensive import tariff reform from 1991 to 1993 Debt renegotiation completed in 1994 Real Plan a) Containing chronic inflation b) Promoting fiscal reform 5. 1994 Amendment to the 1988 Federal Constitution, which removed foreign investment restrictions in certain economic sectors, including petroleum, mineral, domestic transportation and local gas services activities

B. Economic Structure
1. 2. Large and diversified industrial sector mainly in the states of So Paulo, Rio de Janeiro and Minas Gerais Industrial sector: automobiles, steel, computers, aircraft, and consumer durables Agricultural products: coffee, soybeans, sugar, oranges, tobacco, coca, livestock Extensive mineral resources (iron, ore and manganese reserves) Highly developed financial system 126 of the 50 major Latin American banks are Brazilian Part of the Brazilian production is traded on the Commodities & Futures Exchanges (BMOF). BMOF currently ranks number 4 in the world in terms of trade contracts (US$ 7.3 trillion a year, with a daily average of US$24 billion)

3. 4. 5. 6.

II. Legal System

Civil law country The Brazilian Constitution establishes the structure of the Brazilian judicial system and provides for a system of federal courts functioning alongside the state courts. The bulk of all litigation occurs in state courts. The federal courts have exclusive jurisdiction over matters where the federal government or any of its agencies or quasigovernmental bodies is a party or has interest, as well as over cases involving foreign states or international agencies and cases based on international treaties, immigration matters, crimes committed on board aircraft and ships, matters involving Brazilian Indians. All labor and electoral courts are also under federal jurisdiction.

II. Legal System

Court decisions are based on the application of the laws. Where there is no specific statutory provision, the courts decide on the basis of analogy and general uses, or by applying general principles of law and public interest.

A. Foreign Capital Registration

1. Circular 2,997 enacted on August 15, 2000, by the Brazilian Central Bank (Bacen) regulated the declaratory electronic registration of direct foreign investments Direct Foreign Investments in Brazil must be registered electronically through the Online Information System of Bacen (Sisbacen) Capital Investments, repatriations and profit remittances related to foreign capital duly registered with Bacen can be effect at any time without prior authorization of Bacen, subject to compliance with applicable corporate and tax legislation

2.

3.

B. Forms of Business Organizations

1. 2. Two main types of companies that are used for most business operations in Brazil: corporations (sociedades annimas) and limited liability companies (sociedades por quotas, de responsabilidade limitada), commonly referred to as a limitada. A limitada, which resembles a U.S. Limited Liability Company (LLC), is a company in which the characteristics of each of the partners are given considerable weight and mutual trust. All partners have limited liability and are entitled to manage the company if the articles of association do not indicate the company's manager. It is important to note, however, that the limitada is taxed, in Brazil, on its earnings, whereas an LLC usually is not taxed in the U.S.

3.

B. Forms of Business Organizations

3. A sociedade annima, similar to a U.S. corporation, is a company in which decisions are generally taken by majority vote and in which management is separate from the shareholders. It is a corporate form usually utilized for ventures capable of gathering concentrations of financial resources from a large number of investors. A limitada offers a number of practical advantages, and this corporate form is recommended if the investor desires simplicity and flexibility in the corporate structure, reduced maintenance costs and the inapplicability of several legal formalities, which are mandatory in the case of a sociedade annima. As a general statement, the limitada is usually appropriate in the case of wholly-owned subsidiaries or restricted joint ventures.

4.

5.

B. Forms of Business Organizations

5. Sociedade annima :-form may be preferable for ventures
having a larger number or different groups of shareholders. In the event, however, that the company has future plans to issue debentures or other securities, become a publicly held company or admit other groups of investors, then the adoption of the sociedade annima form is mandatory. In the establishment of a joint venture, the principal negotiation issues are generally the purchase terms and conditions, object activities, ownership and management structure, know-how and technology transfers, representations and warranties, indemnification, guarantees, confidentiality, noncompete, dispute resolution and termination.

B. Forms of Business Organizations

6. Continued The preliminary understandings of the parties on these and other issues may be recorded in a prcontrato (memorandum of understanding) Which provides for further exclusive negotiations and due diligence investigations A memorandum of understanding is binding on the parties, unless the contrary results from the terms of the memorandum, nature of the business or circumstances of the case.

C. Antitrust
1. Law 8,884 (Competition Law) sets out the actions that must be submitted to the Administrative Council for Economic Defense (CADE) for its review. 2. Any acts which may (i) restrain or in any way adversely affect free competition or (ii) result in domination of a relevant market for goods or services, must be notified.

D. Arbitration
1. To be enforceable in Brazil, arbitral awards obtained outside of Brazil must be ratified by the Brazilian Supreme Court. 2. Enforcement of local arbitration decisions has been provided for by specific legislation (Law 9307, of 1996).

III. Political and Economic Outlook

In August 2002, the International Monetary Fund (IMF) agreed to provide a $30 billion rescue package aimed at restoring investor confidence in Brazil. The government raised its 2002 primary fiscal surplus target slightly, from 3.75% to 3.88% of GDP. A mini-tax reform at the end of August, enacted by decree, could help industry by levying a production tax only on finished products, rather than at every stage of the manufacturing process.

A. Presidential Elections
1. Candidates at a Glance LUIZ INACIO LULA DA SILVA, 56, of Workers Party. Burly former lathe operator who rose through union ranks, jailed as subversive for leading strikes protesting 196485 military dictatorship. 2.JOSE SERRA, 60, of governing Brazilian Social Democracy Party. Hand-picked candidate of President Fernando Henrique Cardoso. Cornell trained economist, served in Congress and Senate before joining Mr. Cardosos cabinet.

A. Presidential Elections 2. Agenda of the elected president a) Brazil's net public debt b) Mercosul c) Free-Trade Area of the Americas (FTAA). On November 1, 2002, Brazil and the United States will take over the joint-chairmanship of the talks for the final phase of bargaining.

I. OVERVIEW

DOING BUSINESS IN BRAZIL

WATCH USERS
Total users Men Women Around 80 to 90% 50% 40%

Age wise Youth 10 - 25 Mid Age people 60 or over

% of users 21% 53% 14%

Age wise

% of users

Youth 10 - 25

21%

Mid Age people

53%

60 or over

14%

Historical data: Starting a Business in Brazil

Starting a Business data Doing Busine ss 2008 0 18 152 10.4 Doing Business 2009 0 18 152 8.2 Doing Business 2010 128 16 120 6.9 Doing Business 2011 128 15 120 7.3

Rank Procedures (number) Time (days) Cost (% of income per capita) Paid-in Min. Capital (% of income per capita)

Overview of the steps to Starting a Business in Brazil

It requires 15 procedures, takes 120 days, And costs 7.26 % GNI per capita to start a business in Brazil.

Procedure 1 :-Check company name with State Commercial Registry Office Time to complete(days): 1 Cost to complete: R$ 9 Comment: The entrepreneur checks whether the company name exists in the state of So Paulo, A process that takes an hour to complete on average. Accordingly, the Board of Trade of the State of So Paulo is currently charging a R$9.00 fee for the company's name to be checked in the state of So Paulo.

Procedure 2:-Pay registration fees

Time to complete(days): 1 Cost to complete: see following procedures Comment: A receipt of payment must be obtained for use in the Procedure 3.

Procedure 3
Register with the commercial board of the state where the main office is located and obtain identification number (NIRE) Time to complete(days): 1 Cost to complete: R$75 registration + R$50 (expediting fee)

Procedure 4
Register for federal and state tax (Secretaria da Receita Federal do Ministrio da Fazenda, SRF/MF), obtain the CNPJ number, which also registers employees with the National Institute of Social Security (Instituto Nacional da Seguridade Social, INSS). Time to complete(days): 22 Cost to complete: no charge

Procedure 5
Receive state tax inspection. Time to complete(days): 1 Cost to complete: no charge.

Procedure 6
Get the authorization to print receipts/invoices from the Secretaria da Fazenda Estadual. Time to complete(days): 1 Cost to complete: no charge

Procedure 7
Register with the Municipal Taxpayers Registry (Secretaria Municipal de Finanas) of the City of So Paulo. Time to complete(days): 5 Cost to complete: no charge

Procedure 8
Pay TFE to the Municipal Taxpayers Registry. Time to complete(days): 1 Cost to complete: R$ 425.46 (for retailing business), may vary in accordance with the companys activities.

Procedure 9
Get the authorization to print receipts/invoices from the Secretaria Municipal de Finanas. Time to complete(days): 1 Cost to complete: no charge Comment: Upon registering the company at the Secretaria Municipal de Finanas, the company must file a specific form (known as the AIDF) and present it to that authority, along with Book No. 51 and 57

Procedure 10
Order receipts/invoices (notas fiscais) with CNPJ numbers from authorized printing companies. Time to complete(days): 3 Cost to complete: R$ 600 (R$0.6 per page, assume printing 1000)

Procedure 11
Apply to the municipality for an operations permit (auto de licena de funcionamento). Time to complete(days): 90 Cost to complete: no charge

Procedure 12
Register the employees in the social integration program (Programa de Integrao Social, PIS). Time to complete(days): 1 Cost to complete: no charge

Procedure 13
Open a special fund for unemployment (FGTS) account in bank. Time to complete: 31 days Cost to complete: BRL 700 Agency: Fire Department Comment: The fire department must approve the warehouse safety equipment. This inspection is valid for 3 years.

Procedure 14
Notify the Ministry of Labor (Cadastro Geral de empregados e desempregados,CAGED). Time to complete(days): 1 Cost to complete: no charge.

Procedure 15
Registration with the Patronal Union and with the Employees Union. Time to complete(days): 5 Cost to complete: Annual fee to be paid depending on the Union.