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Market Opportunity: Brazil

Market Opportunity: Brazil. Renata Vasconcellos rvasconcellos@porterwright.com May 2011. Brazil in Numbers. Territory: 514,876.599 square kilometers (3,287,612 sq mi) Population: 193 million Ninth largest economy in the world, expected to be the fifth economy in the next decade

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Market Opportunity: Brazil

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  1. Market Opportunity: Brazil Renata Vasconcellos rvasconcellos@porterwright.com May 2011

  2. Brazil in Numbers • Territory: 514,876.599 square kilometers (3,287,612 sq mi) • Population: 193 million • Ninth largest economy in the world, expected to be the fifth economy in the next decade • GDP: $1,594,489,675,024 (2009) • GDP per capita: $8,070 (2009) • Unemployment Rate: 8.3.% (2009), 6.5% (2011, IBGE) • Per capita incomes forecasted to grow at an average rate of 6% over the next several years

  3. U.S. Exports to Brazil • U.S. Exports to Brazil: $35.3 billion (2010) (Census) – up 35% from 2009. • The U.S. is the largest market for Brazilian imports (15% of the Brazilian import market). • U.S. exports of goods to Brazil increased by 42.2% in Jan. 2011 to $3.2 billion, compared to $2.3 billion in Jan. 2010. • Services: From 2002 to 2009, U.S. service exports to Brazil increased from $5.1 billion in 2002 to nearly $12.7 billion in 2009. Service exports to Brazil in 2009 were up 6% from the nearly $12.0 billion exported in 2008.

  4. U.S. Exports to Brazil (2010) • Largest categories of exports: • Machinery ($7.2 billion), • Aircraft and parts ($4.4 billion), • Electric machinery ($4.3 billion), • Mineral fuel and oil ($4.2 billion), • Chemicals ($2.0 billion). • Largest U.S. state exporters of goods to Brazil in 2010: • Texas ($7.2 billion), • Florida ($4.7 billion), • California ($2.8 billion), • Illinois ($2.1 billion), • Louisiana ($1.4 billion).

  5. Foreign Investment in Brazil • Must be registered with the Central Bank of Brazil. • Cash investments do not require prior official authorization. • No restrictions on the distribution or remittance of profits abroad. • Registered foreign capital may be repatriated without prior authorization. • International remittances that exceed the foreign capital invested is capital gain - subject to a 15% withholding income tax. • Participation of foreign capital is prohibited only in the following activities: nuclear energy, health services, post office and telegraph services, and aerospace industry. Rural land acquisition by foreigners is restricted. • Investment guaranty agreement between Brazil and the U.S. • Brazil is very supportive of international arbitration — a neutral and non-political forum for resolving commercial and investment disputes.

  6. Upcoming Events In Brazil • 2011 World Military Games • 2012 UN Rio +20 Climate Summit • 2013 Confederation Cup • 2014 World Cup • 2016 Olympic Games (www.rio2016.com)

  7. Olympic Games - Who is doing What? • Federal Government: • Ports • Airports • State and Municipalities • Stadiums • Urban mobility • Financed by Federal Government • Private Sector • Hotels

  8. Cities Hosting World Cup Games • Manaus (AM) • Natal (RN) • Fortaleza (CE) • Curitiba (MT) • Recife (PE) • Salvador (BA) • Brasilia (DF) • Belo Horizonte (MG) • Rio de Janeiro (RJ) • São Paulo (SP) • Curitiba (PR) • Porto Alegre (RS)

  9. Foreign Investment in Rio • Expected volume of investment 2011-2012: R$181.4 billion (approx. $113 billion). • Infrastructure: $36 billion • World Cup and Olympics: $11.5 billion • Petrobras: $107.9 billion

  10. Major Projects in Rio • Comperj Refinary • Ternium Metallurgy (Iron and Steel) • New Port of Açu • Navy and OSX Shipyards • Third Nuclear Energy Plant • Bus Rapid Transit System • Porto Maravilha Project to Remodel Rio’s Port

  11. Rio Investment: Oil and Gas • Largest oil (81%) and gas (53%) producer in Brazil. Royalty payments from oil and gas production have been increasing. • Rio’s deep oil extraction is currently 1.7 million barrels a day - more than OPEC members Nigeria and Algeria. • Recent discovery of vast oil reserves under the salt layer at the Rio coast will require construction of additional infrastructures for exploration. • Petrochemical – Duque de Caxias Refinery. • Exploration and production in the Campos Bay. • Green fuel projects.

  12. Rio Investment: Manufacturing Industries • Petrochemical (74.9%) • RJ Petrochemical Complex construction. • Shipbuilding (18%) • Expansion and modernization of shipyards. • New shipyards. • Steel Mills (2.7%) • Construction of new steel mills (Santa Cruz e Resende).

  13. Rio Investments: Infrastructure • Logistics for the World Cup and Olympics • Construction and remodeling of hotels. • Construction and remodeling of stadiums and other sport venues. • Modernization of Tom Jobim Int’l Airport. • Bullet train construction connecting RJ to SP. • Road works for the RJ Metropolitan Ring Road. • Construction of two new subway lines. • Duplication of BR101 North Highway. • Costa do Sol project (Cabo Frio).

  14. Rio Investments: Infrastructure • Logistics • Dredging of Itaguai port. • Itaguai port expansion of container and cargo terminals. • Açu Port Complex (large vessel capability). • Construction of Açu electric energy station. • Revitalization of the Port of Rio. • Construction of Nuclear Power Station Angra 3. • Construction of Simplicio Hydroelectric Complex.

  15. Promising Areas for U.S. Investments in Rio • Oil and Gas • Petrobras Supplier Registration is open to foreign companies • Iron and Steel • Infrastructure • Safety & Equipment • Tourism • Creative Industries

  16. Where to Get Assistance in Rio • Firjan (Industry Federation of RJ) • http://www.firjan.org.br • Invest Rio • http://www.investrio.com.br • CODIN (Industrial Development Agency of RJ) • http://www.codin.rj.gov.br • Rio Negocios (Investment Promotion Agency) • http://rio-negocios.com/ • Brazil Trade Net • http://www.braziltradenet.gov.br • Apex Brasil (FederalTrade & Investment Promotion Agency) • http://www.apexbrasil.com.br • U.S. Consulate in Rio • http://www.embaixadaamericana.org.br

  17. Where to Get Assistance in the U.S. • Brazilian Embassy in Washington D.C. • www.brasilemb.org • U.S. Chamber of Commerce • www.amcham.com.br • U.S. Department of Commerce (Brazil desk) • www.doc.gov • Brazil-American Chamber of Commerce • http://www.brazilcham.com

  18. Tips on Brazilian Business Culture • Things move slowly. • Portuguese language is essential. • First name basis is okay. • Companies tend to be organized along strictly hierarchical lines. • Better to deal with the real decision maker. • Relationships come first, second and third in Brazil. • Meetings are generally quite informal and relaxed. • Punctuality is a variable commodity in Brazil.

  19. U.S. Companies in Brazil Success Stories If you do not take into consideration the Brazilian culture, you will not succeed in Brazil. • Citibank • Federal Express • McDonalds • Coca-Cola • Mary Kay

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