Week 2 Takeaway: Doing Business in Brazil

For my 2nd week takeaway paper, I continue last week’s focus on one key quote, concept, or theme from each professor/guide, and how it helped shape my unique cultural understanding of doing business in Brazil. Again, after evaluating my notes and pictures from the week, I submitted this as homework assignment my week to the program. As with last week, take much of my “facts” with a grain of salt, as they are neither verified nor validated.

Marketing in Brazil: “To work hard means nothing, if I don’t have a specific purpose” – Prof. Marcelo Prado

I struggled with this course for 2 reasons. One, it was the first class after our ridiculous trip to Paraty and I was barely alive, let alone awake. However, I also struggled because the course did very little to focus specifically on marketing in Brazil. This was more of a beginner’s course in general marketing and did not dive very deep into the unique qualities of Brazil and Sao Paulo. Unfortunately, the quote above really represented my key takeaway from this class. Just like in general business, a marketer must find the WIFM (“what’s in it for me?”) or the relevance that I care about, in order to gain my attention and win me over. Unfortunately, Prof. Prado did not find my WIFM, so his own words were ultimately his own demise.

Multinationals in Brazil: “Everyone needs 3 friends to survive doing business in Brazil.” – Prof. Rodrigo de Mello

I continue to be intrigued by how distrustful the business environment is in Sao Paulo. Prof. Mello helped reinforce what most of our teachers have insinuated all along … don’t do business in Brazil. If I was not deterred yet by the insane inflation rates, taxes/tariffs, traffic, lack of timeline respect, etc. then this class put the final nail in the coffin. We have a phrase in the US that President Teddy Roosevelt coined for his foreign policy – “speak softly, and carry a big stick”. This seems to translate well to what Prof. Mello told us about his business policy – Everyone needs 3 friends to survive doing business in Brazil:

  1. A good accountant to navigate the complex tax system
  2. A good lawyer to understand which laws to follow, and which to ignore
  3. A friend with connections in the government, in order to speed up the red tape

Why do you need this? Well, apparently because of the financial, legal, and regulatory implications, starting a business takes an average of 6 months to get off the ground. In the US, you could probably do this in about a week, but Brazil’s “lack of trust” culture appears to put so many complex demands on an emerging business owner: contracts need to be signed, notarized, government approved, re-notarized, etc. Your signature is literally not valid unless it matches a notary’s database and they have stamped the contract with their validation so. If a legal issue ensues, then forget it. Taking a case to court may never get resolved, so contracts have to have negotiation situations built in just to avoid that possibility. It is tough to do business in Brazil, and even harder to start one.

Negotiations in Brazil: “You are being watched for what you do, not what you say.” – Prof. Mark Burgbridge

Great class! Negotiations in Brazil are much like negotiations everywhere, but one key difference is the business that takes place after a negotiation is complete. Did you get everything you want; did they get nothing they want? Revenge is often common in these situations and given the complex legal system navigation, a reneged business deal could mean issues are never resolved. But Brazil relies very heavy on the relationship and trust of the person before a negotiation takes place. Because of the difficulty to navigate issues after the fact, trust is highly important up front. This is why most conversations begin with casual banter – any common ground you can discuss in advance will lay the foundation for a more trustworthy negotiation. “Oh, you studied at FGV? So did I … This is a commonality that you can now build a foundation of trust off of for the future. Here are a few other interesting facts about negotiations and general conversations in Brazil; for every 30 minute business meeting, here are some key figures of “Non-verbal communication” in Brazil vs. the US:

  • 0 silent periods of 10+ seconds (3.5 in US)
  • 28.5 conversation overlaps (10.3 in US)
  • 5.2 minutes of eye contact (3.3 in US)
  • 4.7 touches during conversation (0 in US)

Logistics and Operations in Brazil: “Shipping west and north along road/river intermodal tracks is cheaper than the direct eastern route” – Prof Manoel Reis

As mentioned earlier, Brazil is one of the world’s leading exporters of coffee, soybeans, sugar, ethanol, orange juice, cattle, port, chicken, pulp/paper, iron ore, steel, auto parts, and more. However, much of this country is disjointed, with no true logistics transportation system to rely on for supply chain use. For example, railroad tracks were never standardized, which means most rails in urban settings are a different size than rural ones. Even still, there are no major railroads connecting the producers of goods to the export locations in any direction. The quote above is crazy, yet true. For example, most of the soybean production takes place in the central and southern regions of Brazil – in theory, within 1000 kms of the export ports on the east coast. However, it is half the cost to drive them 1000+ kms east to the Madeira River, then another 1000+ kms up to the Amazon River, then another 1000+ kms up to the northern port city of Belem. This trip takes 7-10 days (twice as long as going east to Sao Paulo), but is literally half the cost. The infrastructure is simply not in place to support transportation on roads or rails in Brazil yet, and the River is a much more navigable landscape today. There are some major projects in line to create 12,000 km of standard rails going north/south and east/west in Brazil, but this will cost an estimated US$30 billion and years to complete.

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