DOING BUSINESS IN BRAZIL
5 good reasons to do business in Brazil
Brazil is one of the most stable
democracies amongst the
high potential markets,
with a large domestic market,
comprising a substantial purchasing
and working population,
a large young population (0-14 years)
and an emerging middle class.
Annual household consumption
is the 7th highest in the world
An abundance of natural
resources supports massive
exports of primary goods,
underpinning Brazil’s economy
investment is needed
in transport and energy,
opening up opportunities
for suppliers in all categories
Brazil is an effective
gateway to the Mercosul
political and economic conditions,
are emerging, opening the
way to promising new markets
Favourable FX rates during
the economic downturn making
acquisitions attractive for foreign
companies looking for long-term
rewards in the Brazil market
as the underlying political
and structural issues are resolved
Key sector growth
areas for Brazil
- Higher Education & Training
- Clean Energy & Environmental Activities
- Agro and F&B
- Consumer & Retail
Increasing professionalization of the workforce is driving demand for technical and business education at all levels. The private sector currently meets over 80% of the demand and with over 5 million students in private higher education, access to the top Brazilian public universities is becomes increasingly difficult, creating an opportunity for foreign institutions, as wealthier Brazilians look overseas for undergraduate studies.
Widely recognized as needing massive investment if Brazil is to be competitive in the long-term. Over US$200 billion in investment opportunities are opening up in highways, railroads, ports, and energy. Public-private partnerships and tenders for utility concessions are now the preferred model, with foreign investment essential.
The private health care industry is consistently growing at c. 10% per annum, well above average GDP growth, as improved sanitation moves health care away from infectious disease to chronic and degenerative conditions. Equally, the national pharmaceutical industry is growing rapidly, increasing its participation in the market from 33% in 2003 to over 50% in 2013, in turn, generating demand for equipment and specialist supplies.
Whilst Brazil has traditionally drawn well over 50% of its energy needs from sustainable sources, primarily hydroelectric power – climate change, environmental concerns with infrastructure such as dams, and the inexorable increase in demand are driving a need for energy diversification, opening up opportunities for wind power (General Electric’s wind generator manufacturing plant, its largest worldwide, is operating at 100% of capacity), solar power and increased investment in ethanol production and gas generation. Environmental concerns in the mining and other sectors continue to drive demand for improved production and monitoring technologies.
As 70% of the population is in employment, Brazil has one of the highest percentage of high growth market populations, generating disposable income for the consumer market. The inward-looking, largely domestic retail market of 30 years ago has transformed into an international market, with lively, aware consumers of all ages following international consumer trends with little lag time. Competitive on-line retail outlets now distribute efficiently throughout the country, facilitating consumer access to goods in all regions. Sectors such as beauty products (Brazil is the largest nail varnish market in the world!), specialist food and beverages, and fashion continue to grow faster than average GDP.
Brazil is rapidly becoming essential to the world’s food security as the country is the world’s 5th largest agricultural producer. Improved productivity is key to this success. Brazilian agricultural research is highly respected internationally and is open to partnerships with agribusiness throughout the world. 25% of agricultural inputs are imported.
At the retail end, consumer tastes are rapidly becoming more sophisticated, opening up major new markets for imported dairy products, beverages, snacks, and speciality health foods in general. There are also major fast-food franchise market opportunities, with ready acceptance of new food categories, helped by Brazilian ‘eat away from the desk’ lunchtime culture.