Rio de Janeiro
Doing Business in Brazil
Felipe Hsieh
Trade & Receivables Finance, UK
October 2012
Quick facts about Brazil
 Brazil is Latin America’s largest economy ; among the 10 largest in the world (GDP in 2011: $2.5trn)
 Brazil is the world’s fifth-largest country by geographical area, 8.5 million km2 and fifth most-populous country, with 190 million
inhabitants
 Brazil’s ‘investment grade’ economy is diverse and has large and developed agricultural, manufacturing, mining and services sectors
Brazil







Population: 190,732,694 (IBGE 2010)
Total area: 8,511,965 sq km
Capital: Brasilia
Major language(s): Portuguese
Time zone: GMT -3 (Brasilia)
Currency: Real (BRL)
Central bank: The Banco Central do
Brasil (BCB)
 Gross domestic product: 2.5trn (2011)
 Inflation rate (consumer prices): 6.5%
(2011)
Agencies
Notations
Moody's
Baa2
Northeast Region
S&P
BBB
Central-west Region
Fitch
BBB
R&I
BBB
Source: Ministerio da Fazenda
North Region
Southeast Region
South Region
The great transition
 Brazil’s growth story from 1995-2011: from short boom-and-bust cycles in the 1990s to more-sustained growth more recently
 The performance of the economy in the last 15 years can be divided into two main periods: Fernando Henrique Cardoso
administration (1995 – 2002) and second, the Lula administration (2003 – 2010).
Brazil GDP growth
(%, annual)
Source: IBGE, HSBC
Growth, consumption and social mobility
A structural shift in Brazil’s demographics
- Strong job market
- Government income distribution programs
- Relatively stable inflation
Brazil: Distribution of Economic Classes
(millions of people)
• Demographics and increasing household
income are positive drivers for the next two
decades
• Middle Class is growing as poverty is
reducing
%
• Per capita GDP is expected to more than
double by 2030
Social Mobility impacting around 40m
individuals over the next 4 years
Source: Ministry of Finance
Retail sales and industrial production - contrasting picture
 Consumption has been a compelling story in Brazil in the last few years
 The intensive migration of lower income Brazilians to the middle-income segments brought to the market 40 million potential
consumers that have access to credit
 While retail sales have expanded more or less continuously since 2008, industrial production has been stagnant since 2Q2010
 Demand-led growth; competitiveness still a challenge
Gap between demand and supply (Jul 2008 = 100)
Household ownership of durable goods
% of Household
Source: IBGE
Source: PNAD
Key Challenges
• Infrastructure deficiencies
• Complex Taxation System
• Slow legal framework
• Corruption
Trade – Facts & Figures
Exports are almost three times larger compared to ten years ago
Brazilian Foreign Trade
200
198
173
56
55
-50
Source: MDIC
25.0
25.3
2008
2009
2007
2005
2004
2003
2002
2001
2000
-0.7
BALANCE
2006
US$ Billions
0
128
IMPORT
100
50
153
EXPORT
150
Trade – Facts & Figures
EXPORTS (2009)
IMPORTS (2009)
China represents now 13% of Brazilian exports against 2%
in 2000
China represents now 13% of Brazil’s imports against 2.2%
in 2000
European Union
US$ 34.0 bi
22%
USA
US$ 15.6 bi
10%
13%
34%
Others
US$ 52.0 bi
Source: MDIC
European Union
US$ 29.2 Bi
23%
China
US$ 20.2 bi
21%
Latin America
US$ 31.2 bi
USA
US$ 20.0 Bi
16%
13%
31%
Others
US$ 40.2 Bi
China
US$ 15.9 Bi
17%
Latin America
US$ 22.2 Bi
Trade – Facts & Figures
Exports*: Brazil’s Rank and Market-Share
Coffee
1st
32%
Poultry
1st
* Data from 2009
39%
Orange
Juice
1st
86%
Soy Bean
2nd
39%
Sugar
1st
45%
Corn
2nd
13%
Beef
1st
30%
Pork
4th
12%
UK – Brazil Trade
Trade between Brazil and UK grew by 4 TIMES over the last 10 years
Goods and services sold by UK institutions to Brazil grew by same rate
300
250
200
150
100
50
Exports
Source: MDIC
Imports
2010
2008
2006
2004
2002
2000
1998
1996
1994
1992
1990
Year
0
UK – Brazil Trade
MAIN PRODUCTS SOLD TO BRAZIL
MAIN PRODUCT BOUGHT FROM
Fuel Products
Iron ore
Cars
Soybean Grains & Byproducts
Chemicals
Meat & Byproducts
Carbon Fibres
Gold Bars
Whiskey
Minerals
Pharmaceutical Goods
Sugar
Medical Equipments
Paper Fibre
Mechanical Parts
Orange Juice
Heavy Machinery
Aircrafts
Enriched Uranium
Coffee
Source: MDIC
Trading with Brazil
Since 1990 Brazil has made substantial progress in reducing border trade barriers
(tariffs, import licensing, etc.)
Moderate tariffs, especially on import taxes
Import license required for certain products
Free Ports, Zones
Common Import Taxes:
- Import Duty
- Industrialised Product Tax (‘IPI’)
- Merchandise and Service Circulation Tax (‘ICMS’)
Business etiquette and culture…
Most of companies have English-speakers, however using interpreters for 1st
meeting can be a good idea….
Establishing personal relationships is essential to conducting business
Like South-Europeans Brazilian use a lot of body language and contact
DO NOT attempt to do business during CARNIVAL!
HSBC in Brazil
North
Branches: 60
ATMs: 257
Mini-branches: 108
Key Figures
Established: 1997
Branches: 897
Employees: 25,000
Customers: 5 million
ATMs: 5,285
Retail Banking
Trade Finance
Payments & Cash-Mgmt
Global Markets
Corporate Banking
North
Northeast
Middle-West
Branches: 103
ATMs: 501
Mini-branches: 142
Northeast
Branches: 47
ATMs: 351
Mini-branches: 124
Middle West
Southeast
South
Southeast
Branches: 445
ATMs: 2,654
Mini-branches: 675
South
Branches: 242
ATMs: 1,522
Mini-branches: 523
Key Contacts
l British Embassy, Brasília (Distrito Federal) press.brasilia@fco.gov.uk
l British Consulate-General, São Paulo uktibrazil@fco.gov.uk
l UK Trade & Investment - Enquiry Service enquiries@ukti.gsi.gov.uk
l Export Finance Programme (Programa de Financiamento às Exportações—Proex) http://www.bb.com.br/.
l Brazilian Association of Listed Companies (Associação Brasileira das Companhias Abertas— Abrasca
http://www.abrasca.org.br (Portuguese only).
l Brazilian Export Credit Insurer (Seguradora Brasileira de Crédito à Exportação—SBCE)
http://www.sbce.com.br/ us/index.asp
l Brazilian Foreign Trade Association (Associação de Comércio Exterior do Brasil—AEB),
http://www.aeb.org.br/home.htm (Portuguese only).
l Ministry of Development, Industry and Commerce (Ministério do Desenvolvimento Indústria e Comércio
Exterior—MDIC) http://www.mdic.gov.br/ (Portuguese only).
l São Paulo State Federation of Industry (Federação das Indústrias do Estado de São Paulo—FIESP),
http://www.fiesp.com.br
Q&A
ENQ54844
Disclaimer
This document is issued by HSBC Bank plc (“HSBC”). HSBC is authorised and regulated by the Financial Services Authority (“FSA”) and is a member of the HSBC
Group of companies (“HSBC Group”). Any member of the HSBC Group, together with their directors, officers and employees, may have traded for their own account as
principal, underwritten an issue within the last 36 months, or have a long or short position in any related instrument mentioned in this material
Spot and forward foreign exchange transactions generally are not ‘designated investments’ as defined in the United Kingdom Financial Services and Markets Act 2000
(the “Act”) and therefore do not benefit from the protections of the Act or the rules of the FSA. Any other product described in this document is a ‘designated investment’
as defined in the Act, even when used to cover a commercial trade position. Hedging instruments, such as caps or options, even when used to cover a commercial
position, are investments under the Act.
HSBC has based this document on information obtained from sources it believes to be reliable but which have not been independently verified. All charts and graphs are
from publicly available sources or proprietary data. Except in the case of fraudulent misrepresentation, no liability is accepted whatsoever for any direct, indirect or
consequential loss arising from the use of this document. HSBC is under no obligation to keep current the information in this document. Neither HSBC nor any of its
affiliates are responsible for providing you with legal, tax or other specialist advice and you should make your own arrangements in respect of this accordingly.
Figures included in this document may relate to past performance or simulated past performance (together “past performance”). Past performance is not a reliable
indicator of future performance. The instruments appearing in this document are not readily realisable investments; it may also be difficult to obtain reliable information
about their value or the extent to which they are exposed. Investments can fluctuate in price or value and prices, values or income may fall against an investor’s
interests. Changes in rates of exchange and rates of interest may have an adverse effect on the value, price or income of these investments. The levels and bases of
taxation can change. Derivatives can be utilised for the management of investment risk, however, derivative instruments may not be suitable for all investors, as they
may be contingent liability transactions such as swaps. This means that the investor may not only lose all the amount invested but may also have to pay an additional
sum at a later date. Prospective investors should ensure that they read the applicable standard risk warning in conjunction with this document, and where necessary
seek advice.
This document is intended to be distributed in its entirety. Reproduction of this document, in whole or in part, or disclosure of any of its contents, without prior consent of
HSBC or any associate, is prohibited. Nothing herein excludes or restricts any duty or liability of HSBC to a customer under the Financial Services and Markets Act 2000
or the rules of the FSA.
This presentation is a “financial promotion” within the scope of the rules of the FSA.
HSBC Bank plc
Authorised and regulated by the Financial Services Authority
Registered in England No. 14259
Registered Office: 8 Canada Square, London, E14 5HQ, United Kingdom
Member HSBC Group
DISCRETPRES100408
17