Brazil: business as usual?

5th August 2015 by

Much has been published about the Brazilian economy recently, mostly of a negative connotation and invariably pessimistic. The economic growth seen between 2005 and 2010 largely promoted by commodities prices and domestic consumption is now settling down. The Brazilian currency is also weakening in the face of current international market trends and low GDP growth. Nevertheless Brazil is still a country with great potential for businesses with a medium to long term strategy.

Brazil is the 7th largest economy. It is a settled democracy with a well-established government, sophisticated institutions and a diversified economy. Inflation has been under control for 20 years or so.

The potential for foreign investors is largely related to the country’s demand for infra-structure, healthcare, education and technology. The demand for these is of huge proportion. This makes Brazil a significant investment destination for those who intend to capitalise on the opportunities offered among the emerging economies, if not the most significant of them all.

With a population of 203 million, Brazil is a market in its own right. It is also a gateway to do business in the other economies of South-America via Mercosur, the South-American economic bloc, with a combined population of approximately 260 million.

As a dual-qualified (Brazil and England) lawyer, I have helped foreign businesses navigate through complex legal issues in Brazil. In my practice I have seen that the majority of unsuccessful deals is largely related to (i) lack of understanding, and planning, of the structures available to invest; (ii) inappropriate due diligence of their Brazilian business partner (or target company in an acquisition deal) before proceeding; and (iii) lack of an exit plan. I have also seen, as an extraordinary example, an SME in the healthcare industry attempting to enter the Brazilian market without any due diligence on its Brazilian business partner.

For a successful business strategy in Brazil it is vital that you focus your efforts, at a very early stage, on obtaining advice to address the issues above. This will certainly save you time and money in the long run. However, the quality of the advice is key. Make sure that the adviser is proficient in dealing in Brazil and has a good track record in the industry. Always remember that you do not have to pay exorbitant fees for advice from “big players”. These are invariably non-personalised and lack local knowledge. Nothing substitutes local knowledge, especially when doing business in that country.

As head of Brazil Desk, I would be delighted to offer you and your business more detailed information about the issues above and appropriate legal advice to assist with your successful business strategy. For more information on this topic or any of the services we offer please contact Luiz Costa on 020 7822 4183 or email luiz.costa@healys.com.