6 Tips for Indian Businesses in Brazil
This article will explain you some key points regarding the business relationship between Brazil and India.
These 6 tips are based on several hundred interactions with Indian business men in the area of Technology and Engineering who want to grow their business on the Brazilian market by mainly searching for distributors or sales agents for their products.
1. High quality and Low Prices
Quality and price are important aspects when selling any product or service, but keep in mind that there are more companies that will enter the Brazilian market than there are distributors and sales agents to handle.
Brazilian distributors and sales agents can simply cherry-pick the best offering in the market, and a commodity product without any other attributes than price will mean lower margins for your Brazilian counterpart.
2. Low Price Promises without numbers
Brazil has been a closed economy up to the early 90s, and the perception about imported goods includes both the expensive and the luxurious ones. If you come to a Brazilian prospect with a promise regarding low prices, but you cannot demonstrate the final price including shipping, Brazilian taxation and possible Brazilian certification you will most likely not be considered.
The cost of doing business in Brazil is not much lower than in Western Europe and North America, but due to the big social differences, Brazilian companies have relatively low production costs on local factories at hand. This will often make it hard for foreign companies to compete in terms of price on the Brazilian market.
3. Research the Industry Standard for commissions
As mentioned, the cost of doing business is relatively high in Brazil and the commission rated / margins of sales agents and distributors are normally very different from Indian standards. Suggesting 2 - 3% margin to a distributor will most likely not bring you any business in Brazil.
4. Communication
English isn't as common in Brazil as it is in many other countries. Senior Indian business men often have an accent that is difficult to understand even for people with good English skills, and together with the Brazilians lack of English skills, good communication can be very difficult.
One common parameter for successful Indian businesses in Brazil that we have encountered is the fact that their representatives are more soft-spoken. Most Brazilians find soft-spoken people to be much more reliable than the more aggressive and direct personalities.
5. You will need Friends
Brazil is a country where most of the businesses are driven by relationships and personal connections. The interesting part is that most people in Brazil are more than happy to share their network with the people they like.
So treat the people you meet with respect and aim to build relationships not only to get a business transaction completed. Many Brazilians feel that the Indian style of price negotiation is disrespectful, and we have several times been told by Brazilian service providers that they would not like to deal with Indian clients.
Keep in mind that your broker, translator or even hotel receptionist might have a contact that you can benefit from, but they will not share this information if you don't try to establish a relationship.
6. Illegal means Illegal also in Brazil
Did anybody suggest you that you could import your goods to Uruguay and then further to Brazil in order to reduce import tax?
For some reason it seems like Indian companies, more often than others, are approached by brokers who can do shady arrangements. It's well known that this is happening, but it is categorized as organized criminality and has nothing to do with establishing sustainable business in Brazil.
Conclusion
Brazil and India are two very interesting countries in terms of international business. It's important not to underestimate the cultural differences when trying to establish business relations between two countries that are so different.
I'm highly impressed to see how well some Indian companies are able to easily overcome the pitfalls. They have all been doing their homework regarding pricing and value proposition, as well as having some form of Portuguese speaking representation.