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REQUIREMENT OF THE AWARD FOR THE DEGREE OF MASTER OF BUSINESS ASMINISTRATION UNDER THE GUIDANCE OF Prof. Nidhi Yadav Submitted by 1)Dharmesh J. Ahir (107160592027) 2)Asutosh A. Patel (107160592090) 3)Hemal J. Barot (107160592118) 4)Pratik R. Thaker (107160592038) 5)Rashmi R. Mav (107160592018) 6)Monali C.Pandey (107160592094) Batch : 2010-12 MBA SEMESTER III/IV GIDC RAJJU SHROFF ROFEL INSTITUTE OF MANAGEMENT STUDIES MBA PROGRAMME Affiliated to Gujarat Technological University Ahmedabad May, 2012

Students Declaration

We, Dharmesh, Asutosh, Hemal, Pratik, Rashmi and Monali hereby declare that the report for Global/ Country Study Report entitled Political Environment in Brazil is a result of our own work and our indebtedness to other work publications, references, if any, have been duly acknowledged.

Place : .. Date :

(Signature) (Name of Student)

Institutes Certificate

Certified that this Global /Country Study and Report Titled POLITICAL ENVIRONMENT IN BRAZIL is the bonafide work of Mr.Dharmesh Ahir (107160592027), Mr.Asutosh Patel (107160592090), Mr.Hemal Barot (107160592118), Mr.Pratik Thaker (107160592038), Miss.Rashmi Mav (107160592018) and Miss.Monali Pandey (107160592094), who carried out the research under my supervision. I also certify further, that to the best of my knowledge the work reported herein does not form part of any other project report or dissertation on the basis of which a degree or award was conferred on an earlier occasion on this or any other candidate.

Signature of the Faculty Guide (PROFF. NIDHI YADAV)

(Certificate is to be countersigned by the Director/HoD)



we feel immense pleasure to thank Dr. Pankajray patel (Director), Gidc rajju shroff rofel institute of management studies, Vapi, for making available all facilities in fulfilling the requirements

for the research work. we feel pleasure in expressing our deep sense of respect and indebtedness to our institute project guide, Mrs. Nidhi Yadav , Faculty, Gidc Rajju Shroff Rofel institute of Management Studies, Vapi, for his valuable guidance throughout preparation of this Global project report on Brazil. We are sincerely thankful to all the faculty member of MBA department who directly or indirectly supported me during the project. I am also thankful to all the non-teaching staff of GRIMS for their kind support.





Cabinet of Brazil:-

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Commercial Relations India-Brazil Top ten items of Brazilian Exports to India

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Top Ten Items of Indian Exports to Brazil

India Brazil bilateral trade 2007-2009 (US$ million)


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Automobile Production INDIA-BRAZIL TRADE

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Sales data of Brazil Auto Industry:-









AGE 8 TO 34

Demographic Profile of the Country- BRAZIL Cabinet of Brazil The Political Environment of Brazil Overview Different economic sectors of Brazil LEGAL ASPECTS IN BRAZIL Present Trade Relations and Business Volume of different products with India Commercial Relations India-Brazil Bilateral Trade relations of India and Brazil PESTEL Analysis

PART 2 AUTOMOBILE INDUSTRY IN BRAZIL 50 General introduction Joint venture

Brazil show interest in importing Tata Nano cars Automobile Manufacturers In Brazil Sales data of Brazil Auto Industry:-

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Part 1

Demographic Profile of the Country- BRAZIL

Total Population: 198,739,269 (July 2009 est.), ranked # 5 behind the United States (307,212,123) and Indonesia (240,271,522).

Age Profile: 0-14 years: 26.7%, 15-64 years: 66.8%, 65 years and over: 6.4% 8

Median age is 28.6, Average life expectancy is 71.99 years, ranked #123 in world Male & 51 % Female


Gross Domestic Product Contribution by Economic Sector 67.7% Services, 25.8% Industry, 6.5% Agriculture (2009 est.) Industries: textiles, shoes, chemicals, cement, lumber, iron ore, tin, steel, aircraft, motor vehicles and parts, other machinery and equipment

Languages: Portuguese (official and most widely spoken language); note less common languages include Spanish (border areas and schools), German, Italian, Japanese, English, and a large number of minor Amerindian languages

Religions: Roman Catholic (nominal) 73.6%, Protestant 15.4%, Spiritualist 1.3%, Bantu/voodoo 0.3%, other 1.8%, unspecified 0.2%, none 7.4% (2000 census)

Ethnic groups: white 53.7%, mulatto (mixed white and black) 38.5%, black 6.2%, other (includes Japanese, Arab, Amerindian) 0.9%, unspecified 0.7% (2000 census) School life expectancy (primary to tertiary education): 14 years

Cabinet of Brazil:-

Total Land and Water Area:8,514,877 sq km, ranked #5 behind the United States (9,826,675 sq km) and China(9,596,961 sq km) .

Office President Vice President Ministry of Agriculture, livestock & supply Minister of Industry and trade Minister of Finance Minister of Environment Minister of Labor and Employee

Name Dilma Rousseff Michel Temer Mender Ribeiro Fernando Pimentel Guido Mantega Izabella Teixeira Carlos Lupi

The Political Environment of Brazil:The politics of Brazil take place in a agenda of a federal presidential demonstrative democratic republic, whereby the President is both head of state and head of government, and of a multi-party system. The political and structural organization of Brazil comprises the federal government, the states, the federal district and the municipalities. 10

The federal government workouts control over the central government and is divided into three independent branches: executive, legislative and judicial. Executive power is exercised by the Chief, advised by a cabinet. Legislative power is vested upon the National Congress, a two-chamber legislature comprising the Federal Senate and the Chamber of Deputies. Judicial power is exercised by the judiciary, consisting of the Supreme Federal Court, the Superior Court of Justice and other Superior Courts, the National Justice Council and the regional federal courts. The states are autonomous sub-national entities with their own constitutions and governments that, together with the other federative units, form the Federative Republic of Brazil. Currently, Brazil is divided constitutionally and administratively into 27 federative units, being 26 states and one federal district. The executive power is exercised by a governor elected to a four year term. The courts is exercised by courts of first and second instance addressing the common justice. Each State has a unicameral legislature with deputies who vote state laws. The legislative meetings supervise the activities of the Executive power of the states and municipalities. The municipalities are minor federative units of the Federative Republic of Brazil. Each municipality has an autonomous local government, comprising a mayor, directly elected by the people to a four year term, and a legislative body, also directly elected by the people.

Overview Different economic sectors of Brazil

Brazil's major economic sectors are all well developed. The agricultural sector of Brazil represented a larger percentage of the gross domestic product than industry until 1945. At that time, the government supported industrialization and direct investment in industry, with subsidies and trade protection for Brazilian industrial products. Industry was almost 3 times more valuable than agriculture as a percentage of gross domestic product by 1999. In the agriculture sector, Brazil is one of the world's largest producers of soybeans 11

and coffee. International competitors watch Brazil's climate to determine the success of the soybean and coffee season, setting international prices based on Brazil's yield. The agriculture sector represented 8.4 percent of the gross domestic product in 1999 and employed 31 percent of the workforce. The government uses import taxes to protect many Brazilian industries against international competition. These industries include textiles, shoes, chemicals, cement, lumber, iron ore, tin, steel, aircraft, motor vehicles and parts, and other machinery and equipment. The footwear industry is the most important finished good exported from Brazil. Government-owned Petrobras and Brazilian Aeronautics Enterprise are important companies headquartered in Brazil that produce oil and aircraft, respectively. The industrial sector represented 31.7 percent of the gross domestic product in 1999. Twenty-seven percent of the employed workforce was in the industrial sector. The third most important developed part of the Brazilian economy is the services sector. It represented 59.9 percent of the gross domestic product in 1999. Tourism has increased speedily with an estimated 4.82 million foreign tourist arrivals and revenue of US$3.68 billion from foreign tourists in 1998. This represented an increase from 2.67 million foreign tourist arrivals and receipts of US$2.47 billion in 1996. Forty-two percent of the employed working strength was in the service sector.


The Brazilian judges is organized by the Brazilian Federal Constitution, which divides the judicial formation into federal and state courts. In general terms, the Brazilian courts have control over any proceedings somehow connected with the Brazilian territory. The federal courts have select authority over any claim where the federal government or any of its agencies or quasi-governmental bodies is a party of or has interest in, as well as over 12

cases involving foreign states or international agencies. All labor and electoral courts are also under central rule. Nonetheless, the bulk of all private commercial litigation is entertained before the state courts. In any case if the claim is filed either before a federal or a state court, parties have a lawful right to request to an Appellate Court. In the state system every State has its own State Court of Appeals. The Federal Appellate System, on the other hand, is comprised by 5 (five) trail Court of Appeals. In a higher layer the judicial structure has 2 (two) superior Courts, which are called "Superior court de Justia" (Superior Court of Justice) and "Supremo Tribunal Federal" (Brazilian Supreme Court), both located in Braslia, Capital of Brazil. Brazil is a civil law control and decisions are based on the application of constitutional laws. Where there is no specific legal provision, the courts may decide on the basis of similarity and general uses and practices, or by applying general principles of law. In general, precedents are not compulsory but be likely to be respected by Lower Courts. All rules of civil process are federal and applicable throughout the country, which permits attorneys to practice all over the country. Brazil grants more powers for judges to control the actions and to obtain facts than one normally finds in civil law countries. Hence, finding is not allowed and attorneys, for instance, cannot privately collect depositions and make requests for admission and questions addressed to the rival party. In addition, Brazilian system permits an huge variety of appeals, particularly interlocutory appeals that can delay actions for lengthy periods. Finally, all decision are made by Judges and panel of judges trials are only permitted in crimes committed against someone else's life, such as cases of murder in 1st degree and abortion.

Present Trade Relations and Business Volume of different products with India


Indias relations with Brazil go back five centuries. Portugals Pedro Alvares Cabral is formally recognised as the first European to discover Brazil in 1500. Cabral was sent to India by the King of Portugal after the return of Vasco da Gama from his new journey to India. Cabral is reported to have been blown-off course on his way to India. Brazil became an important Portuguese colony and stop-over in the long journey to Goa. This Portuguese relationship led to the exchange of several agricultural crops between India and Brazil in the grand days. Indian cattle was also imported to Brazil. Most of the domestic animals in Brazil is of Indian origin. Political relations between India and Brazil were established in 1948. The Indian group opened in Rio de Janeiro on May 3, 1948, moving to Braslia on August 1, 1971. One of the major sources of tension between the two nations was the decolonization process of the Portuguese enclaves in India, mainly Goa. In spite of pressure from India on Portugal to move away from the subcontinent, Brazil supported Portugals claim for Goa. Brazil only changed course in 1961, when it became increasingly clear that India would succeed is taking control of Goa by force from an increasingly weak Portugal, which faced too many internal problems to front a strong military threat to India. Still, when Nehrus armies snowed under Portuguese fight and occupied Goa, the Brazilian government criticized India harshly for violating international law. While Brazil tried to explain to India that its position was to be understood in the context of a long tradition of friendship between Brazil and Portugal, the Indian government was severely disappointed that Brazil, a democratic and a former colony, would support a non-democratic Portugal against democratic and recently independent India.

Commercial Relations India-Brazil

Trade between India and Brazil Trade between the two countries over the last few years are best depicted in the table below:


Top ten items of Brazilian Exports to India


Top Ten Items of Indian Exports to Brazil


Major Investment from India to Brazil

Name of the companies: Oil and Natural Gas Commission Videsh Limited (OVL) Cellopharm Glenmark Vijai Electricals Ranbaxy Tata Consultancy Services Satyam Computers WIPRO Mahindras & Mahindras Pidlite Praj Industries Claris Lifesciences BESCO Ltd

Major Investment from Brazil to India

Name of the companies: Gerdau Marcopolo Stefanini WEG


Economic relation
In recent years, relations between Brazil and India have grown very much and co-operation between the two countries has been extended to such diverse areas as science and technology,pharmaceuticals and space. The two-way trade in 2007 nearly tripled to US$ 3.12 billion from US$ 1.2 billion in 2004.[6] Global software huge, Wipro Technologies, also set up a business process outsourcing centre in Curitiba to provide shared services to AmBev, the largest brewery in Latin America. AmBev's zonal vice president, Renato Nahas Batista, said "We are honoured to be a part of Wipro's expansion plans in Brazil and Latin America." AmBev's portfolio includes leading brands like Brahma, Becks, Stella and Antarctica.

Overview of industries trade and commerce of Brazil

Brazil has established manufacturing, mining and agriculture sectors and rapidly expanding technology and services industries. It is also home to the most difficult and diversified science, technology and innovation system in Latin America. Having made important economic reforms over the past few years, Brazilians are now reaping the benefits of new-found stability and growth. Brazil is experiencing rising commodity exports and an overrated currency, driving up the price of its manufactured exports. International corporations are investing billions in Brazil, effectively securing its place in regional and global supply chains. The country is also becoming a major source of outward investment. Furthermore, with 191 million people, a well-educated middle class and millions of working-class citizens, Brazils importance as a consumer market is on a sharp upward move backward and forward. To take advantage of the many commercial opportunities that Brazil offers, Canadians will need to be aware of key commercial influences, including foreign competition, import tariffs, tax and regulatory systems, labour supply and infrastructure challenges.

Information and Communication Technology (ICT) and New Media: Brazil is the largest ICT market in Latin America, after Mexico. Canadian ICT exports to Brazil were $106.1 million. 18

Clean Technologies: In 2009, the Brazilian environmental technologies market was estimated by analysts to be worth US$9.0 billion. Given the projected growth of the Brazilian economy for the next 5 years, and the importance on infrastructure, the environmental industries market is expected to grow by 10% annually. Aerospace: Canada is recognized in Brazil as a qualified and cost-effective supplier of aerospace equipment. One of the major player in the Brazilian aerospace industry imports 70% of its content and as of 2010, is seeking more than US$ 17 billion worth of supply. Infrastructure: Infrastructure is key to the Brazilian governments economic expansion over the coming years, with Brazil looking at investments of over US$ 262 billion. The 2014 World Cup, the 2016 Olympics, and the federal government infrastructure program offer a broad range of business opportunities for Canadian firms. Life Sciences: The life sciences sector in Brazil is among the 10 largest in the world, and has averaged 4% percent growth per year since 2007. Mining: Brazil offers great potential for mining investigation activities and an expanding market for mining equipment and services due to its rich environmental formations and economic stability. Mineral production in 2009 was over US$21 billion. Oil and Gas Equipment and Services: The current five-year US$224 billion investment plan of Brazilian oil giant Petrobras is directly related to Brazil's recent pre-salt discoveries, and represents real opportunities for Canadian industry willing to undertake investment in Brazil.


Important Bilateral Agreements:A number of bilateral agreements/MOUs have been signed including expulsion Treaty, Cooperation in Tourism, Space, S&T, Air Services, Oil and Natural Gas, Audio-Visual Co-production, Academic Exchanges, Infrastructure, Hunger and Poverty, Civil Defence and Humanitarian Assistance, Agriculture and Allied Sectors, Plant Health Protection, Human Settlements, etc.

Bilateral Trade and Investment:Bilateral trade reached an unexpected figure of US dollar 5.6 billion in 2009 (Indias imports: US$ 3.41 billion; Indias exports: US$ 2.19 billion). It has registered a growth of 20% over 2008 when it stood at US$ 4.67 billion and crossed the 4-billion mark for the first time in the history of economic and commercial relations between the two countries. The trend of growth in bilateral trade is continuing during 2010 as well.

General Rules Foreign investment has been welcome in Brazil for a long time and constitutes an important source of capital for development of the Brazilian economy. The basic law regulating the matter was enacted in 1962 (Law No. 4131) and was amended in 1964 (Law No. 4390). The stability of the Brazilian foreign investment legislation is a clear signal of the countrys desire to attract overseas investors.


Restrictions on Foreign Ownership of Companies Foreign capital may be freely invested in Brazil, and it enjoys the same treatment granted to Brazilian capital, with the few exceptions noted below. There is a strong trend in the Brazilian Congress towards exciting restrictions on foreign investments. Thus, most of the following restrictions are expected to be removed from the 1988 Constitution. Restrictions on mining, telecommunications, oil, coastal, health services and river shipping have already been removed: (i) Property of Rural Land: purchase of rural land by non-residents requires prior approval for properties with more than 25,000 acres; (ii) Press and Broadcasting: management by non-residents is forbidden and ownership is restricted to 30% of the total capital of the company; and (iii) Banking and Insurance: opening of new foreign banks and insurance companies, or of new branches by foreign banks already operating in Brazil is unmoving until a new law regulating financial activities is enacted (such prohibition may be circumvented by a presidential ruling authorizing the investment).


There are two main types of companies that are used for most business operations in Brazil: the corporation ("sociedadeannima") and the limited liability company ("sociedadelimitada"), commonly referred to as a "limitada". A limitada, which resembles a U.S. Limited Liability Company (LLC), is a company in which the characteristics of each of the partners are given considerable weight and mutual trust. A limitadarequires at least two partners but all partners have limited liability. All amendments to the companys articles of association require the approval of seventy-five percent (75%) of the capital. It is important to note, however, that the limitadais taxed in Brazil on its earnings, whereas an LLC usually is not taxed in the U.S. A sociedadeannima, similar to a U.S. corporation, is a company in which decisions are generally taken by majority vote and in which the management is separate from the shareholders. It is a corporate form usually utilized for ventures capable of gathering concentrations of financial resources from a large number of investors.

Joint Ventures 21

Foreign investors may enter into joint ventures with Brazilian parties or with other foreigners. Such joint ventures are usually structured in the form of a limitadaor a sociedadeannima. The rights and obligations of the joint ventures in such companies are regulated by joint venture agreements, articles of association, bylaws, shareholders' agreements, and the valid corporate law.

LABOR ASPECTS One of the most important character of the Brazilian labor system is that the laws, to a much greater level than in the U.S., regulate the details of labor-management relations. Further, the concept of collective bargaining is also very strong in Brazil. Most of employees rights are compiled in what is known as the Consolidation of Labor Laws-CLT (Consolidao das Leis do Trabalho). The basic labor rights granted to employees in Brazil. Taxation Federal Tax- Corporate Income Tax, Import Duties, Export Tax, Tax on Manufactured Products , Tax on Financial Transactions , Social Contribution on Profits , Contribution to the Social Integration Plan , Contribution for Financing of the Social Security, etc. State Tax- Tax on the Circulation of Goods and services, tax on Vehicles Property and tax on Donation and on Inheritances Municipal Tax- Real Estate Transfer Tax and Real Estate Property Tax

India Brazil bilateral trade 2007-2009 (US$ million)

Indias Indias Balance ofTotal trade % Growth 22



Trade India


2007 2008 2009 2010 (January July)

2,169.27 3,564.31 2,190.90 2,098.56

957.85 1,102.34 3,415.04 2,223.19

1,211.42 2,461.96 1,224.14 124.63

3,127.13 4,666.65 5,605.94 4,321.75

29.60 49.23 20.12

Indias main exports to Brazil :Diesel oil, equipments related to wind energy, coke of coal, lignite or peat, naphtha, cotton and polyester yarns, pigments, medicines and chemicals, vaccines for human medicines and aviation fuel. Indias main imports from Brazil : precious and semi-precious stones, etc. India and Brazil have formed a bilateral Trade Monitoring Mechanism (TMM) for periodic consultations. There has been two-way investment between India and Brazil. While the Brazilian companies have invested in automobiles, IT, mining, energy, biofuels, footwear sectors in India, the Indian companies have invested in such sectors as IT, Pharmaceutical, Energy, agri-business, mining, engineering/auto sectors. Potential areas for cooperation: There is ongoing cooperation between the two countries in the Raw sugar, crude oil, copper sulphates, soya oil, denatured

alcohol, other minerals of copper and its concentrates, asbestos, valves, motor pumps, airplanes, wheat,

trade and investment, oil and gas, automobiles, IT, Pharmaceutical, engineering goods, bio-fuels, agriculture and allied areas, agro-food sectors which could further be improved. S&T and infrastructure are other promising areas.

Bilateral Trade relations of India and Brazil


The India's Union Minister of Commerce and Industry, Mr. Kamal Nath has reiterated the importance of trading relations with Brazil during his two-sided meeting with the Brazilian Minister for Development Industry and Foreign Trade, Mr. Miguel Jorge. He states down the recognition of India towards the very important role of Latin America and Caribbean and for this the Indian government has started out a special programme, FOCUS LAC for promoting the trading relations between India, Latin America and Caribbean."Brazil being the largest trading partner in Latin America has special importance for India. Over the years, Brazil has emerged out as our biggest partner in the LAC region with our two-sided trade crossing 3 billion marks in 2007. Bilateral trade has jumped to US$ 3.12 billion in 2007 from merely US$ 488 million in 2000. However, I feel that considering the huge opportunities of mutual interests, the volume of trade is still low and it could be enhanced manifolds by efforts of governments and trade bodies of our two countries. In the recent India-Brazil Joint Commission Meeting in April 2007, both the governments have set a target of US$ 10 billion by 2010 and we are working towards achieving this target" further added by the ministry. In view of the investments, Mr. Nath has asserted added that the "Our mutual investments have also increased in recent years, particularly in the field of information technology, biotechnology and pharmaceuticals. The Indian pharmaceutical companies have made a success story with their entry in Brazil. Almost all the major pharma players of India have established their presence in Brazil with supply of bulk drugs, finished formulations and establishment of manufacturing units and joint ventures. Areas of mutual interests between our countries cover pharma, aviation, engineering products, agriculture based industries including equipments and food processing industries, energy including ethanol, chemical products, auto parts and vehicles and two wheelers, IT, banking and urban infrastructure. South-South cooperation is an integral part of our two-sided relationship. India and Brazil have demonstrated their willpower in reformulating the big questions that affect foreign policy and trade at the international level. India and Brazil must continue to be close partners in the UN, WTO and other international attack on issues such as social development, health care, sustainable economic development and poverty improvement."

From the past few years, Brazil has emerged out as the biggest partner of India in the Latin American region. Merely from US$ 488 million, two-sided trade between Brazil and India have witnessed the quantum increase and has crossed the spot of 3 million in 2007. Both the governments have set out the target of achieving US$0 billion mark in next 2 years i.e., 2010 and have already started working in achieving the set standards. On the context of the MERCOSUR, which is the area trade agreement between Argentina, Brazil, Paraguay and Uruguay, the commerce union minister has said that the "India and MERCOSUR have agreed to give tariff concessions, ranging from 10% to 100% to the other side on 450 and 452 tariff lines respectively. 24

The PTA will come into force as soon as ratified by the legislatures of Brazil and Argentina. In the meantime the process of development of the coverage of the PTA has also been initiated in persuasion of the IBSA Declaration made by the Heads of India, Brazil and South Africa on September 13th 2006.". Shri Kamal Nath expressed the hope that he operationalization of PTA will help achieving the target of 10 billion two-way trade in years to come". In recent years more and more investments have been directed from the India to the Brazil, especially in the areas of information technology, biotechnology and pharmaceuticals. Many Indian companies like Tata Consultancy Services, Ranbaxy and Dr. Reddy's Laboratories etc, are striding towards making a mark in the Brazilian marketplace. TATA is also concrete its footprints for exploring new avenues in the Brazil.


Brazil was catapulted into world view in October 2009 when Rio de Janeiro became host for the 2016 Summer Olympic Games. Brazilian President Luiz Inacio Lula da Silva (2003-2010) wept with joy. "Our hour has arrived," he declared. 25

Brazil is the B in the BRIC emerging economies of the developing world, together with Russia, India and China. Over the past eight years, Brazil has grown as a developing industrial country and regional power, extending its global influence in areas such as trade, biofuels, biodiversity, and climate change. In 2011, it rose from tenth position to become the worlds sixth largest economy, as measured by nominal gross domestic product (GDP). Based on data (released 4 April 2012) obtained from the Central Bank of Brazil, imports and exports in 2011 totaled US$226.2 billion and US$256 billion, respectively. In relation to 2010, this represented increases of 24.5 percent for imports and 26.8 percent for exports. In 2011, the top export commodities by value, in descending order, were iron ore, crude oil, transport material, soja, metallurgic products, and raw sugar and ethanol. Primary products represented 48 percent of total exports, followed by manufactured products with 38 percent, and semi-manufactured products with 14 percent. (Source: MDIC/Secex)

Brazil Imports by end-use category for the year 2011 are shown in the diagram below.



Political 27

Type: Federative republic (with 26 states and a federal district) Independence: September 7, 1822. Constitution: Promulgated October 5, 1988. Branches: Executivepresident (chief of state and head of government popularly elected to no more than two 4-year terms). LegislativeSenate (81 members popularly elected to staggered 8-year terms), Chamber of Deputies (513 members popularly elected to 4-year terms). JudicialSupreme Federal Tribunal (11 lifetime positions appointed by the president). Political parties: Workers Party (PT-center-left), Democrats (DEM-center-right), Brazilian Democratic Movement Party (PMDB-center) , Brazilian Social Democratic Party (PSDB-center-left) , Green Party (PVleft) , Socialism and Freedom Party (Psol-left) , Brazilian Labor Party (PTB-center-right) , Brazilian Socialist Party (PSB-left) ,Democratic Labor Party (PDT-left) ,Communist Party of Brazil (PCdoB-left). Brazil has been a leading player in the World Trade Organizations Doha Round negotiations and continues to seek to bring that effort to successful conclusion. President Lula has made economic growth and poverty mitigation top priorities. Export promotion is a main component in plans to generate growth and reduce what is seen as a weakness to international financial market fluctuations. To increase exports, the government is seeking access to foreign markets through trade discussions and increased export promotion as well as government financing for exports.

Economy GDP (official exchange rate): $2.023 trillion 28

GDP (purchasing power parity): $2.182 trillion Annual real growth (2010 est.): 7.6%. Per capita GDP (official exchange rate): $11,220 Per capita GDP (purchasing power parity): $11,514 Natural resources: Iron ore, manganese, bauxite, nickel, uranium, gemstones, oil, wood, and aluminum. Brazil has 14% of the worlds renewable fresh water. Agriculture (5.6% of GDP): Productscoffee, soybeans, sugarcane, cocoa, rice, livestock, corn, oranges, cotton, wheat, and tobacco. Industry (27.8% of GDP): Typessteel, commercial aircraft, chemicals, petrochemicals, footwear, machinery, motors, vehicles, auto parts, consumer durables, cement, and lumber. Services (66.6% of GDP): Typesmail, telecommunications, banking, energy, commerce, and computing. Trade: Trade balance (2009)$ 25.3 billion surplus. Exports$153.0 billion. Major marketsChina 13.20%, United States 10.20%, Argentina 8.36%. Imports$127.7 billion. Major suppliersUnited States 15.69%, China 12.46%, and Argentina 8.84% Brazil is generally open to and encourages foreign investment. It is the largest receiver of foreign direct investment (FDI) in Latin America, and the United States is traditionally the number one foreign investor in Brazil. Since domestic saving is not sufficient to carry on long-term high growth rates, Brazil must continue to attract FDI. Many business groups and international organizations have decorated the need for Brazil to improve its authoritarian environment for investments and to simplify the tax code in order to attract increasing levels of FDI. Today, Brazil economy is on the rise. Blessed with rich natural resources, Brazil has become the most powerful country in South America in economic terms and thus is leading the other countries of South America. With large and growing Agricultural, mining, manufacturing and service sectors, Brazil economy ranks highest among all the South American countries and it has also acquired a strong position in global economy. Brazils gold production is rated as fourth in the world. The main problem linked with this factor however, is the pollution from mercury, which is a main component in the current gold processing techniques. 29

Mercury is used in the process of separating the gold from other surrounding rock sediments that usually come together with the mineral when it is mined. The largest gold deposits in Brazil in current times are found along the Venezuelan Brazilian border. This area is commonly referred to as the guard and covers an estimated 415,000 square kilometers of jungle and savanna grassland. With over 2,500 currently known gold occurrences within the country, Brazilian gold mining, development, and production is expected to continue increasing drastically in the foreseeable future. Brazils gold and mining sector is going through a stage of real growth. New mine projects and expansions in progress are expected to ensure that the country retains its leading position in global mineral commodity production for years to come. Brazilian gold explorers like Magellan Minerals should do very well over the next few years. Social Population: 190,732,694 (largest population in Latin America and ranks fifth in the world) Annual growth rate: 1.17%. Ethnic groups: African, Portuguese, Italian, German, Spanish, Japanese, Indigenous peoples, and people of Middle Eastern descent. Religion: Roman Catholic (74%). Language: Portuguese (Brazil is the only Portuguese-speaking nation in the Americas) Education: Literacy88% of adult population. Health: Infant mortality rate21.86/1,000. Life expectancy72.6 years in 2010. Work force (2009 est.): 101.7 million. Brazil underwent rapid urban growth; by 2005, 81% of the total population was living in urban areas. This growth aids economic development but also creates serious social, security, environmental, and political problems for major cities.

Environmental 30

Brazil is the worlds fifth largest country with a total area of 8.5 million square kilometres. It benefits from a good river system and 7.500 kilometres of coastline (1). The country has overflowing reserves of natural resources such as iron, copper, nickel, manganese or tin. In spite of having an estimated gold reserve of 2,000 tones the country accounts only for 2.5% of the global production and many regions are still unfamiliar, which make Brazil an attractive location for mine development and investment opportunity (1). However, the lack of transportation infrastructure (under-developed railway network, poor quality of the highways with development incompatible between regions) has long been seen as a major problem to economic growth (2). In addition, the country also lacks reliable and reasonable energy. Most of the countrys energy is produced from renewable sources, particularly hydroelectric power plants that provide four fifths of Brazils electricity. This dependence on hydroelectricity has resulted in severe supply shortage for example in 20012002 the Government had to put into practice an energy-rationing program (2). Brazils investment in infrastructure fell to just over 2% of its GDP from the year 2000, one third of the proportion allocated in China and Chile (1). However, investment in infrastructure has more recently become one of the priorities of the Government. In 2007, it launched an infrastructure development program, the Growth Acceleration Program (PAC) to speak to the country significant road, rail, energy supply and other infrastructure needs (2). Recent development includes the construction of two new railways connecting central Brazil to ports in the states of Rio de Janeiro and Bahia, and the construction of Au Superport, a port and industrial intricate one and a half times the size of the island of Manhattan that should be completed by 2012 (2).

Technological Brazil is the leader in science and technology in South America as well as one of the global leaders in fields such as biofuels and deep-water oil exploration (7). The Brazilian government tries to develop and support modernization in business, for example in 2004 the Innovation Law was passed, is meant to provide incentives to increase innovative activities, facilitate scientific and technological research by private companies and encourage collaboration between public and private sector (5). 31

More specifically, the mining industry has benefited from the Governments support in terms of technology and research, for example the Center for Mineral Technology (CETEM) is a federally funded research and development centre under the Ministry of Science and Technology. Sixteen universities now offer courses in geology, geochemistry and geostatic and seven offer degrees in mining engineering (4). Legal Brazil has an established Civil Law system based on codification and statutory legislation. The country ranks as one of the worlds leading jurisdictions for mining investment but because of its complex federal legal structure, the regulation in this area is bureaucratic, inconsistent and lacks belief. The prospecting and mining of mineral resources may be carried out by Brazilian citizens or by companies duly incorporated in Brazil holding an authorization or grant by the Republic of Brazil (10). Mineral resources are defined and mining rights guaranteed under the Brazils Federal Constitution and Federal Mining Code (8). Mineral resources belong to the state and can only be extracted pursuant to a concession (8). According to the Mining Code, mining activities need the grant of concessions from the Departamento Nacional da Produca o Mineral (DNPM) that consists of application for prospecting permits, looking at licenses and mining licenses (8). A law enacted in 2010 limits foreign investors to own more than 5,000 hectares of land (11). Brazilian law also protects original lands estimated to be around 895,000km. For example, the Constitution covers the boundary between the mining industry and original rights. It provides that the National Congress must approve the examination and mining activities and that the original community has the right to give permission and if the project is accepted, to share the results in the situation defined by the Congress (12). Brazil has also implemented strict environmental regulations. The regulations of environmental aspects of mining at both federal and local level and the inconsistencies between regulations in different states can create confusion and duplication in the application procedures (13). At Federal level regulations are developed by the Ministry of Environment and implemented by the National Council of Environment (CONAMA) and the Brazilian Institute of Environmental and Renewable Resources (IBAMA) controls the environmental licensing process (9). Three levels of control have been established, first an environmental impact assessment (EIA) and environmental-impact reports (RIMA) must be completed, an environmental license is then required and finally a plan of recovery of infected materials (PRAD) has to be submitted (13). The Brazilian tax system is also a matter of complexity. Brazil comprises many federal, state and municipal taxes. The law does not distinguish between domestic and foreign owned companies. Companies are generally subject to tax at a rate of 25% (15%, plus an additional tax of 10% on profits exceeding 240,000 BRL), plus social contribution tax equal to 9% of accounting income (10). The country has also implemented a royalties regime for the mining companies, the Compensation for exploiting mineral resources (CFEM) which 32

varies depending upon the mineral mined. Gold extraction is subject to this CFEM tax, which is set at 1% of total revenues (8). The Brazilian Ministry of Mining and Energy has proposed a reform of Brazils mining regulation and proposals will be put before the Brazilian Congress in June 2011 (8). If adopted this reform may have important implications for the mining sector. The aim of this reform is supposedly to increase government control and revenue from commodities as world demand and prices rise and to making Brazils mining sector easier to manage for international investors (8). Some of the key proposals are to: Establish a new National Mining Policy Council to rewrite the Mining Code Replace the DNPM with a new National Mining Agency A public command process will be established to award prospective concessions Limit the duration of examination permits to 5 years rather than 30 and impose a minimum

looking at requirement on recipients of concessions. Replace existing mining licenses by mining contract valid up to 30 years Raise the rate of royalties but charge them at differential rates, progressively lower for firms that

adopt more comprehensive ore processing within their overall production strategy in order to incentivise a move towards downstream production in Brazil. However, some concerns have been expressed that raising royalties could do Brazil more harm than good, making countries with lower taxes more attractive to investors.




Automobile Industry in Brazil

The automobile industry was established in Brazil in 1957, following governmental plans for national industrialization. Assembling and sales companies, however, had been present in the country since the 1920s. The industry was to begin with established in Sao Paulo state and extended through the 1980s into Rio Grande do Sul, Paran and Minas Gerais. In 1996, a new expansion phase began with the acceptance of the Brazilian automobile command, aiming at making Brazil one of the top car manufacturers worldwide, whether by modernizing existing facilities or by building new plants and creating new hubs. These new units, fitting in the industrial delegation process, were built in So Paulo, Paran, Minas Gerais, Rio de Janeiro and Rio Grande do Sul.


As a result of governmental policies, the automotive industry has, for many years, been one of the major contributors to Brazils GDP: Brazil has been used as an experimental zone by several major automakers in recent years, specifically with regard to the development of small-car manufacturing techniques. General Motors (GM), Ford, Volkswagen (VW), and Fiat Auto have all established famous small-car production facilities in Brazil and all four hold promising scenario for the future, In spite of the country's economic difficulties. The effectiveness of the plants in terms of manufacturing looks to improve the market share of the four automakers within Brazil, while at the same time giving Brazil the opportunity to expand its export markets. This, in the long term, should make Brazil a specialist in small-car production with Brazilian demand treatment towards the small, economy passenger car.


In Brazil, popular car status requires a 1.0 litre engine and entails a special tax structure that promotes its affordability. The popular cars are only offered with standard communication and have the simplest features in the car market. Since the rate of auto tax that consumers pay depends on the size of the car, vehicle makers such as Ford, Fiat, VW, and GM have better scenario at the smaller end of the market. The average tax paid for small cars is 10% of the total price compared to luxury cars, which is 25% tax on its total price. The Brazilian vehicle demand does focus heavily on small and compact cars because of the lifestyles and the traffic overcrowding in the major cities. For example, Sao Paulo is characterized by heavy traffic jams and narrow streets. Therefore, small cars become the most suitable source to save time, reduce 36

gas expenses, and fight congestions. A major issue in Brazil, as well as in other third world countries, is the danger of driving a stylish car. Many Brazilians utilize the popular car to drive to work, take the children to school, and to do grocery shopping. The simplicity of popular cars, permit individuals to drive to work feeling safe; because driving a more appealing/attractive car, for instance a Honda Civic, BMW, or a Toyota Corolla, increase the chances of being surprised by a robber with a gun. The Brazilian automotive industry depends heavily on the small car market. The major automakers are outperforming competition by adopting cost leadership strategies. Many companies, like GM, have built original manufacturing facilities to respond to competition and to the demand for low cost cars. By consolidating and attractive suppliers in the car production, automakers are able to cut prices and meet demand expectations.

Brazilian automobile production began in 1957, with an initial production of 1,166 units in the first year. Most of the production is concentrated in the states So Paulo, Minas Gerais and Paran.

Automobile production [27][28]


1 960 (in .042 0 .306 970

1 980 0 .933

1 990 0 .663

1 000 0 .36

2 004 1 .86

2 005 1 .50

2 007 2 .61

Units millions)

2 .97

Joint ventures


Tata MarcoPolo released a low-floor bus in India and now it is widely used as public transport in Delhi, Mumbai, Pune, Chennai, Hyderabad, Kanpur, Bangalore, Chandigarh and Lucknow. Tata Motors has formed a 51:49 joint venture in bus body building with Marcopolo S.A. of Brazil. This joint venture is to manufacture and assemble fully built buses and coaches targeted at developing mass rapid transportation systems. The joint venture will absorb technology and expertise in chassis and aggregates from Tata Motors, and Marcopolo will provide know-how in processes and systems for bodybuilding and bus body design. Tata and Marcopolo have launched a low-floor city bus which is widely used by Chennai, Coimbatore, Delhi, Mumbai, Lucknow, Pune, Kochin, Trivandrum and Bengaluru transport corporations. Its manufacturing facility is based in Dharwad.

Brazil show interest in importing Tata Nano cars

Brazil has evinced its interest in taking the world's cheapest car to the shores of the South American nation, according to a PTI report. Governor of Minas Gerais, the second most crowded state of Brazil, Antonio Augusto Anastasia, who is on an eight-day visit to India, said he had recently met Ratan Tata in Mumbai. 'We would very much like to take Tata Nano to Brazil,' he said at a CII event in Delhi yesterday. Tata Motors started exports of completely built units (CBU) of Tata Nano to Sri Lanka and Nepal earlier this year, and is allowing for the option of assembling the car abroad, through the completely knocked down units (CKD) route. Anastasia also required Indian investments in sectors like energy, automobiles, aeronautics and IT to build up the two-sided commerce between the two countries. 'Brazil and India already have good relationships. We want to support them lot more. We invite big corporates to invest there,' he said. The official also said that Indian corporates such as Infosys must expand their presence in Brazil. The two-sided trade between the countries stood at $ 7.51 billion in 2010-11, the report added.

Brazils Auto Industry is Booming!


Martin is on his way back from Brazil this morning. So he has asked me to open the New Year with this special report, which, by the way is ALSO about Brazil! Brazil is the worlds fifth largest car producer, and according to its national automakers association: Auto sales are big and should total 3.5 million units for 2010, a 9.8 percent increase over the previous year. New cars are coming off assembly lines at an even faster pace. Automobile production in Brazil is forecast to grow 13.1 percent this year, more than the 6.5 percent expansion previously predicted. But the supply is not keeping up. Brazil still needs to import 20 percent of its demand for autos. Next, take a closer look at this auto production picture from a area viewpoint Brazil is Argentinas biggest trade partner. And Brazils auto demand is leading to a parts shortage in Argentina. Addition has become a focus for the regional auto makers who have plants in both countries. Any moves toward this should help the producers. In this case, the two large American companies, General Motors Corp (NYSE:GM) and Ford Motor Co (NYSE:F), have major operations in Brazil and Argentina.

Date : 13 Dec 2010 Location : New Delhi The details regarding trade between India and Brazil during the last three years are as under:

Values in US $ Millions 39

Year Exports to Brazil Imports from Brazil Total trade













The total bilateral trade between India and Brazil has increased from US $ 589.14 million in 2003-04 to US $ 3837.39 million in 2008-09. FOCUS LAC Programme of this Department is in force which provides a number of incentives and financial assistance for supporting and encouraging Indian exporters / companies to boost our trade with Latin America in which Brazil is a major partner. A Preferential Trade Agreement (PTA) between India and MERCOSUR (Brazil being one of the major members of this economic bloc) is in operation since June, 2009. Besides , buyer seller meets / business seminars are held every year in India and Brazil by the leading Chamber Commerce & Industry / apex Trade Bodies of the two sides focusing important sectors of mutual interest to enhance bilateral trade. This information was given by Shri Jyotiraditya M Scindia, Minister of State for Commerce and Industry, in a written reply in the Lok Sabha today.

Which Country Is A Better Investment: Brazil Or India?

The emerging markets of Brazil and India are greatly different in many ways. Brazil is not only blessed with many natural resources that the world wants but is also increasingly becoming as an exporter of manufactured goods. But Brazil has a small population compared to India. India on the other hand has limited natural resources but usually has had a large manufacturing sector. With a huge population India offers bigger market for growth.


For foreign investors, both the countries offer a wide variety of choices for investment from banking to consumer goods to real estate sectors. However the Brazil is ahead of India in terms of fairness market performance based on the MSCI country indices. The long-term performance of Brazil and India are incomparable as shown in the first chart. One reason for this huge gap between them could be that India adopted free-market economic policies only in the 1990s and for many years even after that depressed foreign investment in a number of key sectors of the economy. The 5-year chart shows that the fairness market performance of Brazil and India tracked each other though Indian stocks always lagged. Brazilian stocks fell heavily at the height of the credit crisis in 2009, but have recovered better than Indian stocks. The impartiality market performance of the next five years will be closely watched by investors as both countries are projected to have strong economic growth and continue to attract high foreign direct investment. Since each country has its own single risks and certain sectors offer higher potential for growth than others, investors must evaluate and invest in individual companies (or) sectors rather than simply going with countryspecific funds.


Brazil is larger than the continental US and Australia. It is the fifth largest country in the world. With a population of 195 million, Brazil is also the fifth most populous country and fourth largest democracy. Sao Paulo is the second most populous city in the world, with almost 11 million people and nearly 22 million in the city area. Brazil is also one of the most unequal societies. 5% of the population own 85% of the wealth. Brazil is the world's largest exporter of iron ore and soya; it will soon be the largest exporter of frozen meat. Brazilian industry produces more cars than Mexico, more steel than Italy, the same amount as India. Brazil is technically self-sufficient in oil and if recently discovered reserves are all confirmed, is likely to become a major oil exporter in the future. Brazil has the world's largest reserves of humid forest, freshwater and of bio-diversity. Enough water flows out of the Amazon each day to keep New York City going for 10 years.

How to export to Brazil?

Exporting to Brazil can be a complicated matter. What we can give is a overview of how the process is to export a generic product to Brazil: 41

1. Verify that your product can legally be exported to Brazil 2. Before shipment, a proforma invoice must be sent to the Brazilian importer 3. The Brazilian importer have to request a Import License (LI) from Integrated Foreign Trade System (Siscomex) 4. The exporter must send the Brazilian importer all necessary document following embarkation. This include:
o o o o

Shipping information Commercial invoice Certificate of origin Other certificates if required

5. The Import Duty and the Tax on Industrial Products (IPI) will have to be paid. 6. When goods arrive to Brazil the importer must prepare the Import Declaration (DI). 7. All documents including the Import Declaration, a receipt generated by the Siscomex and ICMS payment receipt (or waiver) must be presented to the Secretariat of Federal revenue (SRF). When completing these steps the clearance process is finished and the product can be traded in Brazil. Remember that you in addition to Import Duty, IPI and ICMS, you will also have to pay the PIS and COFINS taxes on the imported product. This is only a generic overview and some products will need product registration in Brazil before embarkation.


Automobile Manufacturers In Brazil

- Abais - Adamo - Akamine - Grancar - Hofstetter - Kadron - Lassale - Malzoni - Miura - bvio - Centaurus - Cheda - Pretty - Engesa

- Acha - Agrale - Aldee - Gurgel - JPX - Lafer - Lobini - Mirage - Nissin - PAG - Chamonix - Concorde - Puma - Envemo 43

- Farus - Fria

- FNM - Glaspac

Automobile industry Achievements:The maturity achieved by the automobile industry in Brazil as it celebrated 50 yearsof existence and passes 50 million vehicles produced has led the Brazilian Association of Automotive Vehicle Manufacturers (Anfavea) and the Brazilian Association of Automotive Components Manufacturers (Sindipeas), with an institutional and commercial focus, to produce and distribute worldwide this Brazil Automotive Guide. This publication is intended to show the huge progress made in quality, creativity, reliability, productivity, and competitiveness achieved by this sector in Brazil in recent years and above all in 2007, when the Brazilian vehicle market grew to a size comparable with the leading European countries. This progress has allowed the Brazilian automotive industry to sustain itself on the competitive worldwide market, such as for low-cost compact cars, as well as for trucks, buses, and agricultural machinery for use in the harsh operating conditions inherent to every country and region. This qualitative progress has been both vertical, including the whole production chain from the manufacture of steel plates, pieces and parts, to finishing details, and horizontal,in having occurred in all the companies operating throughout Brazils vast landmass. Currently Brazil is the eighth largest vehicle producer in the world. It is also the eighth largest market and the eleventh largest automotive exporter in the world, with Brazilian vehicles on the streets in over one hundred countries. The Brazilian industry is highly qualified and achieved this status with daring, innovation and perseverance, supported by a solid and experienced local automotive engineering base. In this context, the great innovation that has undoubtedly set the Brazilian automotive industry apart is the use of alternative fuels, such as ethanol and biodiesel. The development of flex fuel engines that enable vehicles to run on ethanol, gasoline or a mixture of both in any proportion, along with the undoubted competitiveness of the ethanol produced in Brazil from sugarcane, has put Brazil at the cutting edge of the alternative energy scenario. 44

This is the Brazilian automotive industry up close, which the country is proud to show the world in this first issue of the Brazil Automotive Guide.

Sales data of Brazil Auto Industry:Sales are booming in Brazil, with double-digit increases year after year. Getting sales figures by brand for Brazil is difficult, because there is no one body that collates the sales data. An organization will do some brands and not others. When there is overlap, the sales don't usually quite tally, which makes it frustrating. From what I have been able to glean, Fiat came first in 2010 but with a reduced market share. Renault is doing well, although most of the sales are rebadged Dacias. Chinese brands are starting to impact too, such as Hafei and Chery. Because imported cars are taxed quite heavily, the market is dominated by locally made models. Those makes that rely on imported cars only sell in low numbers. In the chart below, italicized figures at the end of each line indicates a drop in market share. Now for the top 20:


Rank 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Fiat VW GM Ford

Brand 760,000 697,000 658,000 336,000 160,000 126,000 106,000 100,000 90,000 84,000 54,000

Sales 22.8% 20.9% 19.8% 10.1% 4.8% 3.8% 3.2% 3.0% 2.7% 2.5% 1.6% 1.3% 1.1% 0.4% 0.3% 0.2% 0.2% 0.2% 0.1% 0.1%

Share I

Renault Honda Hyundai Toyota Peugeot Citroen Kia Mitsubishi Nissan Mercedes BMW Hafei Chery LandRover Suzuki Chrysler

45,000 36,000 13,000 8,500 8,200 7,000 5,200 4,600 4,500

Total Vendas 3,330,000 10.6% increase.


Opportunity for doing business in Brazil:With well-developed agricultural, mining, manufacturing, and service industries, Brazil is the land for business opportunities. Brazil has been expanding into world markets and now export several products, including airplanes, vehicles, coffee, and more. The fact is Brazil has ample of business opportunities for those wishing to expand into the Brazilian market. With many of the new business opportunities available, Brazil is seeing an increase in several areas, such as services. By trying to reduce their trust on imported oil, Brazil has headed toward the top in producing hydroelectric power and instead of importing 70% of their oil, they now only import 33% of their oil. Their existing hydroelectric power supplies the nation with 92% of their electricity used. This project that has been undertaken has created a variety of business opportunities and jobs for its countrymen. There have also been increases in other types of service, as well. Telecommunication business opportunities are also on the rise in Brazil. Whether it is cell phones or internet communications, Brazil is undergoing a growth that can only be capitalized on. These types of business opportunities are everywhere, as well as manufacturing opportunities. Almost a third of Brazil's GDP is accounted for with the manufacturing of automobiles, computers, aircraft, and other durable goods. Business opportunities of all kinds are available in Brazil. Franchises, such as McDonalds have taken advantage of the more than fifty million people living in the closely packed cities. Other franchises would also do well and the business opportunities in such a largely populated country are there if one is to put some thought into what Brazilians would purchase. Revenues in the franchise area of business opportunities grew 13% in 2005 and according to the research by the Brazilian Franchising Association; the revenues equaled $16.3 billion in US dollars. This type of growth is forthcoming and the franchise industry actually created 22,000 new jobs and they currently employ over 553,000 Brazilians. If one is looking to expand themselves in the business world, they simply need to take a look at Brazil. The fact is Brazil offers many different types of opportunities for one, whether it may be in telecommunications or in the franchising industry. With such a beautiful country and a beautiful people, it is no wonder that many wish to be part of the Brazilian world. The business opportunities are there-you just have to open your eyes and look around.


Brazils Record Car Sales Set to Continue

RIO DE JANEIRO, BRAZIL Brazils automobile industry has beaten its own sales record for the fifth year running, bettering sales figures for the previous year, and making it the fifth biggest car seller in the world, market sources have revealed. Although lower than expected, the figures are particularly good in light of the implications of ongoing financial troubles in Europe and the U.S., and a painful tax hike on imported vehicles. Some 3.63 million vehicles, including cars, vans, trucks and buses were sold, according to figures released by Fenabrave, Brazils National Vehicle Distribution Federation, 3.6 percent up on the 2010 total. The 2011 figure includes over 3.4 million car and light vehicles sold, up nearly 2.9 percent on the previous year. However, the results were lower than some had expected, and Decembers car and light vehicle sales were actually down 8.9 percent year-on-year. Blame is being leveled partly at the introduction of a Brazils stinging tax increase on imported vehicles, which came into effect in the middle of the month. The tax represents a thirty percent increase in the IPI (tax on industrialized products) and is set to run until the end of 2012. The increase in IPI on imports, a cooler GDP forecast, and other measures taken by the government to curb inflation and rising interest rates coupled with the ongoing financial woes faced by European countries have taken their toll on the market, analysts say. But despite the results, Fenabrave says it predicts a market increase of some 4.5 percent this year. Fenabrave president Flvio Antonio Meneghetti says that the pace of growth in the second half of 2012 will be greater than that in 2011, accelerated by a reduction in the amount of debt in the country and a rise in the rate of the minimum wage. This more positive news for Brazils automobile industry has been brightened further by car giant Ford, which unveiled a new version of its EcoSport SUV last week in the Brazilian capital to be produced


initially in Brazil and India, and the company expects an annual output of over two million units by around 2015. In October 2011 French-Japanese car manufacturers Renault-Nissan announced that they would be expanding in Brazil, by opening a second manufacturing plant in Rio de Janeiro state and expanding production at a current plant in Paran. The group said they were keen to become a prominent player in the Brazilian market, and hoped Brazil would become the number two market for Renault after France. But some economists are warning that 2012 might not be all plain sailing for Brazil and that the country is not immune from Europes and other countries ongoing financial troubles.




POTENTIAL IN BRAZIL:Projected population for the year 2015 at 201,970,000 that provides ample of opportunity In Brazil 65% of imported wine drinker drink red wine atleast once per month Brazil is a largest econmy in South America Brazil is among the fifteen largest economies in the world. Brazil is abundant in natural and human resources

TRADE BARRIERS:Choices are limited, transport and storage are less than ideal and service and expertise leaves a lot to be desired. Macroeconomic risks still exists in Brazil The continuous growth of Brazilian economy is not definite The cost of establishing a position in the market are very high. Brazilian bureaucracy Language and cultural barriers.

Reasons To Do Business In Brazil:1.Brazil is the largest economy in South America 2.Brazil is amongst the fifteen largest economies in the world 3.Brazil is abundant in natural and human resources 4.Brazil is open for foreign competition 5.Brazil has a stable democratic government 6.Brazil has an important consumer market.


BIBLIOGRAPHY Source: Central Bank of Brazil, Economic Indicators, April 2012