Transcript Where is “your Brazil”?

Bar International do Brasil
Getting started: distribution & partnerships
Manu Melotte
Ponteaz
Mechelen, May 7th 2014
Who is who
Ponteaz, ‘ponte de A a Z’…
Kurt Hameeuw: Ponteaz Sao Paulo
• AGC: establishment, start-up, supply chain director in Brazil.
• General Manager Guardian Industries Corporation (Glass division) for Brazil and
Argentina.
• Start-up solar power.
Manu Melotte: Ponteaz Brussels
• Sales & Marketing Director Sara Lee Brazil
• General Management and Mergers & Acquisition
Roel Collier: Advisor Ponteaz Sao Paulo
• Joint-Ventures, Mergers & Acquisition (private equity)
• Clean Technology
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What we will NOT talk about today
Brazil is complex…
TAXES are endless…
Bureaucracy will be a major time-spent…
Operational costs are surprising…
infrastructure is not what you would expect.
Brazil is not a low-cost country…
Brazil is not only fun.
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Take-out
1. Why should you go?
(And why not)
2. Where is “your Brazil”?
The size of a continent.
3. Prepare.
Market analysis will be more than just about customers, dealers and prices.
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1. Why should you go?
• The internal market is driven by growing middle classes.
• Consumption of goods and services is booming.
• Europe = quality & culture (brands)
Consumption
• The need for technological know-how is high (b-t-b).
• Technology (what) and processes (how).
• In industry (production), construction, pharma.
• Agriculture.
Production of
goods & services
• Investment in infrastructure is gigantic.
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Energy (sourcing, transport, storage).
Agro-infrastructure.
Ports, roads, railroads, airports.
Hospitals.
Telecom.
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Infrastructure
enabling
economic growth
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1. Why should you go? (and why not)
• Brazil is not a “banana republic”… Added-value is key.
• “The right price for the right value.”
• Brazil is not a low-cost country.
• Producing in Brazil for export rarely will be the right option.
• Brazil is not your ready-to-use medicine against crisis.
• No immediate return. Investment (cash-out) will be significant.
• Expansion to Brazil will demand investment with time-perspective of 3 to 5 years.
• Brazil will help you counter your next crisis.
• World cup and Olympics…
• Big events can be a strong trigger to enter the country, but see it as part of the
investment.
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Take-out
1. Why should you go?
(And why not)
2. Where is “your Brazil”?
The size of a continent.
3. Prepare.
Market analysis will be more than just about customers, dealers and prices.
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2. Where is “your Brazil”
• North (-East) versus South (-East).
• Inland versus dense populated areas.
• Metropolitan and major city approach.
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2. Where is “your Brazil” – North vs. South
Higher growth rate.
 Governmental stimuli.
 Culture gap.
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70% of GDP
 More mature markets.
 Higher competition.
 Business culture.
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2. Where is “your Brazil” – North vs. South
Mother and child in Imbassaï, Bahia.
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View on traffic jams on Marginal Pinheiros, Sao Paulo.
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2. Where is “your Brazil” – Metropolitan area approach
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Brazil metropoles:
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Great Sao Paulo:
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Great Rio:
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Brasilia:
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Belo Horizonte:
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Curitiba:
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Manaus:
20 M
17 M
2M
5M
2M
2M
Manaus
Belo Horizonte
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Take-out
1. Why should you go?
(And why not)
2. Where is “your Brazil”?
The size of a continent.
3. Prepare.
Market analysis will be more than just about customers, dealers and prices.
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Prepare: 3-steps approach
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Me in
Brazil.
Me.
How.
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Structure the entry to feasibility.
Can I play “my game” in Brazil.
Readiness of my company.
 What makes me unique vs. competition.
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Me. What makes my company unique?
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The value chain: which activities make me unique
R&D
Supply
Chain
Operations
Mkt &
Sales
Postsales
• Crucial for defining your positioning in Brazil.
• Do not go for the obvious (e.g. “I have better quality…”).
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Me in Brazil: market analysis
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What do we want to know.
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How.
Understand how the industry works.
(value chain & industry analysis)
- Who are the players and how do they work.
- How is the sourcing.
- Technology / Quality levels.
- Geographical differences.
- Market segments.
- Price levels.
- Sales & distribution channels.
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Positioning
“Can I play my game”
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FIT / AWEX, Brascam, Belgalux:
- 'Landendossier'
- Ask for main suppliers / competitors /
customers.
- Associations / federations
- Available market info (size, etc.).
Google... Brazilian business is very 'digital'.
External help (e.g. consultants)
- Language, time.
- Extended market structuring (in depth).
- Objective contacting of competitors /
potential partners.
Field visit ('get a taste yourself')
- Trade fairs.
- Visit competitors, customers, suppliers.
- Visit different regions.
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Can I play “my game”: market analysis
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Tip for market research:
start at the client of your client and move backwards.
YOU
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Your customer
Your customer
Your customer
Your customer
End-client
End-client
End-client
End-client
How relevant / important is your product for him?
What does “better quality” mean to him.
What is lacking (market gap).
How could you help him? (delivery time, packaging, order quantity, …)
How much does he pay?
How much does your product way in his cost.
Alternatives / competitors.
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Prepare: 3-steps approach
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3
Me in
Brazil.
Me.
How.
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Feasibility.
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Logistics
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Fiscal
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Dealership set-up
Can I play “my game” in Brazil.
Readiness of my company.
 What makes me unique vs. competition.
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Dealership model A: direct import
Dealer x
Dealer y
Dealer z
YOUR
COMPANY
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In order to import, the dealer will need to obtain an import license (bureaucratic).
The importing dealer will need to pre-finance all taxes at customs clearance:
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Import tax (between 0% and 35%).
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IPI
(generally between 10% and 15%).
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PIS/COFINS
(between 9% to 10%).
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ICMS
(in SP 18%).
(remark: taxes are from within and cumulative…)
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You sell at full cost, so taxes are on your cost price + margins + insur./freight.
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Remark:
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some of the above taxes are recuperated by the dealer. Important for
NET-PRICE calculation!
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Dealership model B: master dealership(s)
Dealer x
Dealer y
Dealer z
YOUR
COMPANY
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Potential royalty agreement
The master dealer will be taking over the import bureaucracy and will assure market
coverage.
The issue of the taxes remains: the product is imported at full price.
In the case of technology transfer or patented technology, a fiscal advantageous royalty
agreement is to be evaluated.
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Dealership Model C: via your own subsidiary
Export to YOUR CY do Brasil
at low prices.
YOUR
COMPANY
Do Brasil
Dealer
Dealerxx
Dealer
Dealeryy
Dealer
Dealerzz
YOUR
COMPANY
Recuperation of profit:
• Via dividends.
• Via royalties.
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Your company will own the dealership network in Brazil.
Your subsidiary in Brazil imports at low prices (minimizing the import cost).
Profit is realized in Brazil and recuperated via dividends and royalties.
This set-up is advantageous especially in the case of high margin products.
The recurrent costs and set-up costs of the operation in Brazil in most cases are low and
should be evaluated even in the case of lower business volumes.
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Summary
• Know yourself before you go.
• Define a regional approach.
• Include in your market analysis the “full picture”.
• The impact of the business scenario on your logistics, market
potential and local prices (taxes) is enormous.
• Market analysis and business scenario’s should be in parallel.
• Get a detailed view on your tax scenario. If not your local
partner will take advantage…
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Tchin tchin!
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Ponteaz contact details
Ponteaz Brussels:
Manu Melotte
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[email protected]
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M.
+32 498 10 98 85
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Skype
manu.melotte
Ponteaz Sao Paulo:
Kurt Hameeuw
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[email protected]
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M.
+55 11 97272 7195
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T.
+55 11 3042 8020
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Skype
kaahameeuw
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International do Brasil' -
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