Utfordringer ved forretningsutvikling i Brasil

Terje StaalstrømPresident

OBJECTIVE of BNCC:Strengthen Commercial Relations

between Brazil and Norway

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Business Seminars

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Profiling BNCC and

Brazil

NORSHIPPING 2011

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Active participation in the official Reference Group for development of Brazil Strategy

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Challenges and Responsibilities for

Norwegian Business in Brazil

Numerous!

And you don’t always know before it’s too late!

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A succesful business requires facts. Not dreams.

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We need Facts about:

-Geography-Economy-Social structure-Political system-Legal systems-Historical background-Cultural dimesions of doing business-Population and competencies-Language-etc

As well as :Market and competitor info for products and servicesNTNU 26.10.2011

9

IT’S HUGE !

7th world economy in 2011 and 5th before the Olympic Games in

2016

Rank Country US$ M

1 United States 14,624,1842 China 5,745,1333 Japan 5,390,8974 Germany 3,305,8985 France 2,555,439

6 United Kingdom 2,258,5657 Italy 2,036,6878 Brazil 2,023,528

Country ranking GDP (nominal) . Source: IMF (2010)

In spite of oil riches – Brazil still has some way to go

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12

Brazil 2010 Brazil 2010

- Population 198 million- 134 million voters. World’s 4th largest

democracy - 88 % literacy- 26 % below poverty line - GDP growth 7,5% (5- 6 % average next

five years) - Unemployment 5.3% - Inflation 5,9% - Foreign reserves US$ 299 billion

- FDI : US$ 48,5 billion - Exports: increase 32% - Exchange rate: 1 Real = NOK 3,50

13

Norway is now the main destination for Brazilian exports to the Nordic Countries

(2007-2010)

0

100

200

300

400

500

600

700

800

900

1000

Norway S weden Finland Denmark

US

$ M

illi

on 2007

2008

2009

2010

Business negotiation fosters the confrontation between different values, visions and perspectives. These differences are conditioned by the culture of the parties – Norwegian and Brazilian.

So – understanding the cultural differences is paramount

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Brazilian culture is a dynamic product of the various population groups that make up the demography of the country - mainly Europeans, indigenous peoples and Africans

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“Culture is more often a source of conflict than of synergy. Cultural differences are a nuisance at best and often a disaster.“

Prof. Geert Hofstede, Emeritus Professor, Maastricht University.

•Power Distance Index (PDI): Degree of equality, or inequality, between people High Power Distance indicates inequalities of power and wealth within society.

•Individualism (IDV): Degree of individual or collective achievement and interpersonal relationships. A High Individualism ranking indicates that individuality and individual rights are paramount within the society

•Masculinity (MAS): Degree of traditional masculine work role model . A High Masculinity ranking indicates the country has a high degree of gender differentiation

•Uncertainty Avoidance Index (UAI): Degree of tolerance for uncertainty and ambiguity. A High Uncertainty Avoidance ranking indicates the country has a low tolerance for uncertainty and ambiguity. This creates a rule-oriented society that institutes laws, rules, regulations, and controls to reduce uncertainty.

•Long-Term Orientation (LTO): Degree of long-term devotion to traditional, forward thinking values. High Long-Term Orientation ranking indicates the country values long-term commitments and tradition.

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Just a reminder of cultural differences

BRAZIL

NORWAY

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Norway Brazil

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Examples on how Brazilians may be expected to act during negotiations

• 1. Nature of Negotiating Activity• 1.1. Basic conception of the negotiation Competition (30 %) Collaboration (70 %)• 1.2. Negotiating attitude Bargaining (50%) Integration (50%)• 1.3. Objective of the negotiation Contract (47%) Relationship (54 %)• 1.4. Strategy of the negotiation Planned (51%) Improvised (49

%)• • 2. The Role of the Individual• 2.1. Responsibility I Individual (33%) Group (67 %)• 2.2. Decision-making Leader (33%) Consensus (67%)

• 5. Trust• 5.1. Interpersonal trust Trust (71 %) Distrust (29 %)• 5.2. The basis for trust Reputation (74 %) I ntuition (26 %)

Source: Eugenio Carvalhal -2007 ”Cultural dimensions of negotiations”NTNU 26.10.2011

Bureaucrazy• Brazil’s history is a history of bureacracy • Low risk tolerance leads to rules and regulations• Demand for certificates,permits, credentials and

other official documents is a hotbed for bureacrats (and corruption)

• World Bank 2011 ranks Brazil as 126 of 181 in efficiency of setting up business (5-6 months)

• ”Despachantes” and ”Jeitos”

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Corruption• Transparency International ranks Brazil at

corruption level with other BRICs –and Italy• Norwegian companies - Norwegian and Brazilian

laws. ”Severe” = Public officials. • Increasing with distance from major cities• Public bids in Petrobras, but less transparency

with subcontractors. • Political problem, but Dilma adressing issue.• Growing middleclass demands political

accountabilityNTNU 26.10.2011

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Brazil is the land of taxes !

More than 50 different taxes and social contributions – federal, state and municipal levels

•Complex regulatory, tax and legal issues;•Difficult to structure a transaction; •Nature of tax legislation; frequent changes in tax laws;•High level of penalties and interest when non- compliance•Tax disputes are common and can take more than 10 years to reach a final decision

This complex environment makes the tax area as one of the key business issue for foreign companies in Brazil

YOU NEED A GOOD TAX LAWYER AND A GOOD TAX ACCOUNTANT

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But – don’t despair!

”Everything is going to be all right in the end,

and if everything is not yet all right,

that’s only because we haven’t reached the end!”

(A popular saying)

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Informative Brochures

Use the assistance available to you!

• Foreign service (Norway and Brazil)• Innovation Norway• Intsok• APEX• Chambers of Commerce (Oslo, Rio,

São Paulo)• Consultants on establishment process• Local legal firms specializing on Norway

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BNCC website: www.brazilchamber.noNTNU 26.10.2011

Takk for oppmerksomh

eten!Obrigado!