With 210 million inhabitants, Brazil is the fifth largest country and the ninth largest economy in the world. Not surprisingly, Brazil is at the top of the list for Swiss exporters who are not yet present in Latin America. “However,” Speciale points out, “Brazil is no easy market and certainly not an entry-level market for export beginners.”
Many entrepreneurs see Brazil as the ideal hub for entering Latin America in general or Mercosur along with Argentina, Uruguay and Paraguay. They put down roots there and work from not only Brazil, but also the other countries. “However, the differences between Brazil and the other markets are considerable,” says Speciale, making reference to the different cultures and, above all, the different languages. He therefore recommends selecting two strategies; one for Brazil and one for the rest of the continent.
Government reform agenda
In terms of protectionism and regulatory density, Brazil scores relatively poorly in a World Bank ranking; it also scores poorly in comparison with the other Mercosur countries. The new Bolsonaro government has announced its intention to change this. With regard to the current political situation S-GE expert Speciale says: “Bolsonaro has announced his intention to reduce the complexity of the market. A whole reform agenda is currently being pushed. While it is mainly focused on the pension system, other objectives directly affect Swiss SMEs: Opening up the economy and simplifying the whole system, including imports, reducing bureaucracy and the tax burden.”
It seems the government is taking these problems rather seriously, but companies are nevertheless cautious of entering the market currently. Speciale remains optimistic:
Brazil shows that companies with the necessary stamina can do good business. In the individual industries and niches, market size plays a role, and there is a need for high-quality products and solutions.
The signs are good, especially for the consumer goods industry. According to Speciale, Made in Switzerland not only enjoys an excellent reputation with regard to watches and chocolate, but also in general.
Medtech: a success story
For Swiss companies in Brazil, those active in the pharmaceutical, chemical and medtech industries are currently at the forefront. Speciale sees great potential in the medtech sector in particular. Against this backdrop, he says, the dental sector has been a real success story in recent years. Despite crises and recession, the population’s increasing health awareness in the area of dental hygiene has ensured steady growth.
Increasing environmental awareness – great potential for clean mining
The mining and agricultural industries are also of great importance. As an exporter of agro-products, Brazil has to meet certain quality requirements. Because Swiss companies in the MEM industries offer their own food processing services, they are well positioned, according to Speciale. As a country rich in raw materials, Brazil also has a great need for engineering services. In addition, environmental aspects are becoming more and more important and Speciale sees Swiss companies as optimally positioned as clean mining specialists.
It’s all about São Paolo
Brazil is a huge market in terms of both population and surface area, but the economic heart is São Paolo. For Speciale, it is no coincidence that the Swiss Business Hub is there. He says that many companies need representation in other regions depending on the sector, but every company need at least one anchor point, partner or company headquarters in São Paolo.
A Swiss company must perform a market analysis before entering the Brazilian market.
Customs tariff numbers can be used, for example, to clarify how many comparable products are already imported and who the competition is. “Together with the Swiss Business Hub and our extensive network of experts, we can provide good assistance,” says Speciale, pointing out that clarifying regulatory issues and tracking down product registrations are also part of the homework.
Speciale stresses the importance of the tax environment: “No one can enter the Brazilian market without a local tax expert on board.” He stresses that the correct application of import and customs duties, as well as tax claims, are key elements for success.
There’s no going forward without the right business partner
Swiss companies in Brazil can draw on a dense consulting network. Whether it be market analysis, clarification of technical issues or the involvement of legal or tax experts, companies can call on the Swiss Business Hub, the Swiss-Brazilian Chamber of Commerce or the Embassy. Because one thing seems clear: Market entry is not really feasible without the right business partner. Speciale adds: “We have accumulated a lot of experience over the years. This means we can now be the eyes and ears on the ground for Swiss companies. From the launch of a new product at an event in the residence of the Consul General in São Paolo to the establishment of contacts, our services allow companies to build bridges.”
Step by step – taking the long road to success
According to Speciale, the best approach or the ideal sales model does not exist. He says that the approach or model must also be adapted depending on size, sector, product or environment. Speciale recommends all those who are interested to proceed step by step. In his view, a market analysis and the search for an agent or distributor is only the beginning of the journey; once the business gets going, the question of setting up a branch office arises. Establishing joint ventures with Brazilian companies is also an option, he says. “In any case, however, the decisive factor is staying power: a long-term perspective. Companies that are successful today entered the market ten or more years ago. What they have in common is that they didn't pull the plug after the first problem or bad year,” says Brazil expert Speciale.