First steps to establish business operations in Brazil
Brazil is considered one of the most interesting economies globally. At the same time, business leaders face a complex and bureaucratic system when they want to establish operations in the country. Learn more about how to establish business operations in Brazil.
The Brazilian economy is considered today as one of the most attractive for foreign investment, especially compared to other emerging countries. According to recent studies, Brazil is the leading economic presence in Latin America and the 8th largest economy in the world. With the Jair Bolsonaro government, the promise is to deliver a more open and pro-business economy meant to rank among the 50 best to do business in the world until 2022.
On the other hand, it is true that investors still have to struggle with some challenges, for instance, the complex tax system and the fact that Brazilian companies prefer to do business with companies that have local presence for tax and fiscal reasons.
In this article we will show you how to conduct the first steps in order to establish business operations in the Latin American country, depending on your business purpose and planned commitment. Following, we list and describe the four main ways to doing business in Brazil for foreign investors and companies.
You can hire a
- Business Development Agent
- Commercial Representative
- Incorporate a Brazilian subsidiary.
1. The Business Development Agent
Objective: On-the-ground support to analyze the Brazilian market or finding potential business partners or suppliers in Brazil.
Solution: Contract a local business development agent.
Individuals that are not resident in Brazil are generally not permitted to travel to the country to perform other business development activities than participating in business meetings and conferences. Consequently, in order to avoid visa issues, an international company may hire a Brazilian resident as its business development agent.
2. The Commercial Representative
Objective: Find Brazilian customers for goods, services or software
Solution: Contract one or several Brazilian commercial representatives
The commercial representative intermediates business transactions against payment of commissions. Furthermore, the commercial representative:
- identifies potential customers;
- signs contracts on behalf of the contractor (if empowered to do so);
- keeps the contractor informed about all developments relevant to the business;
- follows certain (e.g. pricing related) instructions of the contractor; and
- maintains confidentiality with regard to business information.
Brazilian law provides for several rules protecting the commercial representative. It is therefore important to sign a Brazilian commercial representation agreement that also protects the interests of the contractor.
3. The Distributor
Objective: Find a Brazilian partner that does not only intermediate business transactions but is itself responsible for distributing the goods to end customers.
Solution: Entering a partnership with a Brazilian distributor
Unlike the commercial representative, the distributor purchases the goods from the international company prior to reselling them to end customers in Brazil. Consequently, distributors working with foreign companies will also possess an import license and be able to import the goods.
4. The Brazilian subsidiary
Objective: Long-term business commitment in Brazil and building a Brazilian brand
Solution: Incorporating a subsidiary
All activities mentioned before may also be performed by a Brazilian subsidiary of the international company. Incorporating a subsidiary will allow to keep better control of the development of the Brazilian business. Besides, the Brazilian subsidiary can provide services to a Brazilian customer more tax efficiently compared to a non-Brazilian service provider. Last, a Brazilian company implies a long-term commitment to Brazil and can be important for building a Brazilian brand.
If you require further information or would like to talk to one of our business consultants,
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