Doing business

(Last updated: 28 May 2008)
 

Business opportunities

Austrade’s business development specialists have prepared a range of market profiles that offer potential to assist in your exporting investigations. Austrade’s in-market teams have identified opportunities for Australian exporters in various industries (see 'Profiled industries in this market' on the left side of this page).

In conjunction with the market profiles, the Opportunities Online portal may be a useful addition to your information sources. The database established by Austrade aims to deliver international sales leads ('export opportunities'), including tenders, identified by our overseas network to Australian businesses.

Registering is simple and once this is done you will have the option of accessing a weekly newsletter featuring the most recent opportunities uploaded onto the system in industry sectors of interest to you. Another feature is the ability to view, and also print, the complete page of opportunity details.

For general inquiries concerning Austrade’s services, please contact Austrade Direct on 13 28 78.

Business etiquette

Business tips

When negotiating with Brazilian business people, be aware that they usually think in terms of US dollars.

It is important to keep in mind that personal contacts do play an important role in Brazil and can make the difference in doing business deals.

Although many Brazilians speak English, some may feel more comfortable in business meetings if an interpreter is present.

Austrade São Paulo recommends that you are accompanied to business meetings by a local contact and that all initial written correspondence with potential business partners be in Portuguese or in English. Avoid using Spanish as a substitute for Portuguese.

In business conversations, use titles if any (eg. Professor, Doctor), and ‘Senhor’ (Mr) or ‘Senhora’ (Mrs).

During meetings, use the title ‘Mr’ or ‘Mrs’ and then their first name, not their last name (ie. Sr Carlos, Sra Julia).

They are not very straightforward businesspeople and have a policy of never blatantly saying ‘no’.

Due to the sheer size of the city, business people coming to São Paulo should have some idea of where they are going in order to determine how much travel time will be needed. If possible, try to avoid the rush hours (8.00am-10.00am and 5.30pm-7.30pm). During the rainy season, (January to March) the traffic is virtually paralysed.

Normal business attire is the same as per Australia.

Please also note:

Bribery of foreign public officials is a crime. Australian individuals and companies can be prosecuted in Australia for bribing foreign officials when overseas. For more information, go to the Attorney General's Department on foreign bribery.

Tariffs and non-tariff barriers

Tariff

All products exported to Brazil are taxed by an import tax (unless otherwise specifically exempting the product from such payment). The key points to note about the import tax include:

• It is levied on the customs value.
• The customs value is generally assessed based on the transaction value and that coincides with the cost, insurance and freight (CIF) value.
• The import tax rate is selective and depends on the product's tariff classification.

Special preferences granted on a wide range of items imported from member countries of the Latin American Integration/Development Association and, in particular, from Mercosul member countries (Argentina, Uruguay and Paraguay).

Products manufactured or exported to Brazil are classified under the Mercosul Common Nomenclature (NCM) classifications. It is important to check the sub-classifications as there is a wide variation of import tax rates. Companies called ‘despachantes’ provide a valuable service by doing this check.

Most duties are ad valorem, based on the GATT Valuation Code (approximately CIF value) (Incoterms 2000).

The drawback regime is an incentive for exports introduced by the Brazilian Government. The requirement for requesting the regime is that the finished product that has been manufactured in Brazil and then exported has used some parts and pieces that have been imported into Brazil. This presents opportunities for Australian exporters in all industries.

If you would like to find out about classifications for both product tariffs and the NCM, Austrade São Paulo has an offline subscription service to get updates as well as any new information on the drawback regime.

It is important to note that Brazil requires special labels for toxic and food products that need to be addressed when exporting.

Non-tariff barriers

Import restrictions

Free unless otherwise informed by SISCOMEX in the 'Tratamento Administrativo' section. SISCOMEX (online system to register exporters and importers, supported by the SECEX - Foreign Trade Department, Federal Tax Department, and Central Bank of Brazil).

Pre-import licence products have up to 60 days to proceed with the shipment. Merchandise must be on board the carrier prior to expiry date of import licence. Some imports are subject to quota or to special requirements.

Product certification, labelling and packaging

Labelling

In accordance to the product shipment specification.

Methods of quoting and payment

Quotations should be FOB and C&F (Incoterms 2000), ex-works, Brazilian port, in US dollars. Payment terms can be in advance, collection (payment terms are freely negotiable, averaging 360 days), with or without a letter of credit coverage.

Documentary requirements

Documentation required includes:

• Commercial invoice
• Bill of lading
• Certificate of origin - if a product is eligible to special multilateral agreements

Insurance

Insurance must be obtained through a Brazilian firm registered in Brazil. Agents will advise exporters in this regard.

Weights and measures

The metric system.

Public health requirements

In accordance to the product shipment specification.

Setting up in Brazil

Finding the right partner

It is important to remember that you will not succeed in Brazil without developing a sound business plan and a longer-term strategy. Important points to address early on include:

• Potential local business presence — agent, representative office or joint venture partner.
• Strategies to deal with administrative and legal requirements, including tariffs and taxes.
• A strategy to counter variations in the economic climate and how these may affect your business plan.
• The need to localise manufacture of the product at some stage.

Brazilians do not respond well to short and infrequent visits by foreign representatives, preferring instead a continuous working relationship. Rarely is a deal completed by telephone or letter. Buyers in particular are concerned with after-sales service and support, due to the extremely rigorous local consumer protection legislation.

In market representation

For most exporters it is necessary to establish a local presence through an  agent/distributor, representative office or joint venture partnership. Where business contacts need to be maintained or where regular sales or service follow-up is required, being on the ground is critical to your business prospects.

Agents

Brazil enjoys a large choice of reputable and experienced sales agents. Agents are a popular choice for new exporters seeking to develop a market presence, particularly for smaller companies. Agents generally involve lower market entry costs than representatives and can provide good access to potential buyers. The challenge is to find an agent with the right contacts and right experience to suit your product.

Representative office

A smaller number of exporters choose to establish representative offices. Given the considerable costs in setting up such an office, these companies usually have specific needs that cannot be met by agents or distributors. These are usually companies that require a high degree of control over their products and after-sales service, or where commercially sensitive intellectual property is involved.

Joint-venture partnerships

One option that is increasingly popular is the establishment of a joint-venture partnership with a local company. One attraction of such partnerships is that costs and risk are shared by the partners, with the Brazilian partner bringing to the venture local market knowledge, know-how and experience in the Brazilian business environnment.

Due to the peculiar legal, cultural, and especially bureaucratic characteristics of Brazil, it is highly recommended that Australian companies interested in entering the Brazilian market consult a law firm before establishing a binding link with a Brazilian partner.

Taxation

Foreign-controlled companies and foreign residents generally receive the same treatment with taxation in Brazil as local companies and residents.
 

The Industrialised Products Tax (IPI) is levied on most goods and is applied on the duty-paid value. The most common rate is between 10 per cent and 20 per cent, assessed on the duty-paid value. However, certain goods, such as alcoholic beverages are subject to rates of up to 150 per cent (tariff 20 per cent + IPI 130 per cent).
 

Merchandise and Services Circulation Tax is also levied and varies from state to state. In Sao Paulo, for example, it is 18 per cent levied on the aggregate of the duty-paid value plus the IPI.

Merchant Marine Commission of 25 per cent of freight cost.
 

Warehousing charges begin at one per cent for five days and increase progressively up to 1.5 per cent for each period of 10 days after 20 useful days of storage.
 

Port and dock charges vary based on the types of goods and their FOB value (Incoterms 2000), rates range from 3 per cent to 12 per cent.
 

SISCOMEX Fee: fixed fees in Reals for each import declaration, averaging US$20. A bank charge must be paid at the Bank of Brazil. The rate averages US$50.
 

Clearance agent's charge of two per cent, levied on the CIF value (Incoterms 2000).

Bank fees covering letter of credit emissions and document handling may reach three per cent of the FOB price.
 

Imports into the Free Trade Zone of Manaus (State of Amazonas) are exempt from import duty.

Intellectual property protection

Brazil is a signatory to the Uruguay Round Agreements, including the Trade Related Aspects of Intellectual Property (TRIPS) Agreement, signed in 1994. In addition, Brazil is a member of the World Intellectual Property Organisation (WIPO) and is a signatory to the Berne Convention (protection of copyrights). Brazil has also signed the Universal Convention on Copyrights, which protects literary and art works.

The registration of foreign software prior to marketing is no longer required. However, registration is usually recommended. The Ministry of Industry and Commerce provides registration through one of its agencies.

Software protection is granted for 50 years as of the following January from its publication. In contrast, copyright protection is for 70 years.

Foreigners may qualify for software protection, as long as their home country grants similar rights to Brazilians.

The registration of a trademark in Brazil is required to guarantee the protection of ownership rights. Trademarks that have not been registered previously, with certain exceptions, can be registered. Trademarks are registered at the INPI (Federal Intellectual Property Agency). Trade names are registered with the local “Junta Comercial” (Commercial Registry).

The fraudulent use of internationally “famous” marks has been a significant issue in Brazil. However, progress has been made in the last four years to provide greater protection for such marks. In addition, some foreign firms have been successful in taking court action against trademark infringements.

Four kinds of trademarks are legally protected in Brazil:

• industry trademarks used by manufacturers to distinguish their product;
• trademarks used by merchants to identify their merchandise;
• service marks used to protect services or activities; and
• general marks used to identify the origin of a series of products or services that are individually distinguished by specific marks.

In order for an invention to be protected it must be patented in Brazil. Brazil is a signatory of the Paris Convention. Therefore, citizens of other signatory countries, which have filed for patents in their home country, have an exclusive right to apply for patents during certain periods depending on the nature of the property.

Austrade strongly recommends that exporters obtain professional legal and accounting advice before conducting any business in Brazil.  Austrade can provide referrals to service professionals.