Transcript HSBC Brazil Presentation_SCC_Oct
Rio de Janeiro
Doing Business in Brazil
Felipe Hsieh Trade & Receivables Finance, UK October 2012
Quick facts about Brazil
Brazil is Latin America’s largest economy ; among the 10 largest in the world (GDP in 2011: $2.5trn) Brazil is the world’s fifth-largest country by geographical area, 8.5 million km 2 and fifth most-populous country, with 190 million inhabitants Brazil’s ‘investment grade’ economy is diverse and has large and developed agricultural, manufacturing, mining and services sectors
Brazil
Population: 190,732,694 (IBGE 2010) Total area: 8,511,965 sq km Capital: Brasilia Major language(s): Portuguese Time zone: GMT -3 (Brasilia) Currency: Real (BRL) Central bank: The Banco Central do Brasil (BCB) Gross domestic product: 2.5trn (2011) Inflation rate (consumer prices): 6.5% (2011)
Agencies Moody's S&P Fitch R&I Source: Ministerio da Fazenda Notations Baa2 BBB BBB BBB
North Region Northeast Region Central-west Region Southeast Region South Region
The great transition
Brazil’s growth story from 1995-2011: from short boom-and-bust cycles in the 1990s to more-sustained growth more recently The performance of the economy in the last 15 years can be divided into two main periods: Fernando Henrique Cardoso administration (1995 – 2002) and second, the Lula administration (2003 – 2010).
Brazil GDP growth
(%, annual)
Source: IBGE, HSBC
%
Growth, consumption and social mobility
A structural shift in Brazil’s demographics Strong job market Government income distribution programs Relatively stable inflation
Brazil: Distribution of Economic Classes
(millions of people) •
Demographics
and
increasing household income
decades are positive drivers for the next two •
Middle Class is growing
as poverty is reducing •
Per capita GDP
is expected to
more than double by 2030 Social Mobility impacting around 40m individuals over the next 4 years Source: Ministry of Finance
Retail sales and industrial production - contrasting picture
Consumption has been a compelling story in Brazil in the last few years The intensive migration of lower income Brazilians to the middle-income segments brought to the market 40 million potential consumers that have access to credit While retail sales have expanded more or less continuously since 2008, industrial production has been stagnant since 2Q2010 Demand-led growth; competitiveness still a challenge
Gap between demand and supply (Jul 2008 = 100) Household ownership of durable goods % of Household Source: IBGE Source: PNAD
Key Challenges • Infrastructure deficiencies • Complex Taxation System • Slow legal framework • Corruption
Trade – Facts & Figures
200 150 100 50 56 55 Exports are almost three times larger compared to ten years ago
Brazilian Foreign Trade
198 173
EXPORT IMPORT BALANCE
153 128 25.0
25.3
0 -0.7
-50 Source: MDIC
Trade – Facts & Figures
EXPORTS (2009)
China represents now 13% of Brazilian exports against 2% in 2000
IMPORTS (2009)
China represents now 13% of Brazil’s imports against 2.2% in 2000
European Union US$ 34.0 bi 22% 34% Others US$ 52.0 bi USA US$ 15.6 bi 10% 13% China US$ 20.2 bi European Union US$ 29.2 Bi 23% 21% 31% Latin America US$ 31.2 bi Others US$ 40.2 Bi USA US$ 20.0 Bi 16% 17% 13% China US$ 15.9 Bi Latin America US$ 22.2 Bi Source: MDIC
Trade – Facts & Figures
Coffee 1st Exports*: Brazil’s Rank and Market-Share 32% Orange Juice 1st 86% Sugar 1st 45% 1st Beef 30% Poultry 1st 39% Soy Bean 2nd 39% Corn 2nd 13% Pork 4th 12%
* Data from 2009
UK – Brazil Trade
Trade between Brazil and UK grew by 4 TIMES over the last 10 years Goods and services sold by UK institutions to Brazil grew by same rate
300 250 200 150 100 50 0 Exports Imports
Source: MDIC
UK – Brazil Trade
MAIN PRODUCTS SOLD TO BRAZIL Fuel Products Cars Chemicals Carbon Fibres Whiskey Pharmaceutical Goods Medical Equipments Mechanical Parts Heavy Machinery Enriched Uranium MAIN PRODUCT BOUGHT FROM Iron ore Soybean Grains & Byproducts Meat & Byproducts Gold Bars Minerals Sugar Paper Fibre Orange Juice Aircrafts Coffee Source: MDIC
Trading with Brazil
Since 1990 Brazil has made substantial progress in reducing border trade barriers (tariffs, import licensing, etc.) Moderate tariffs, especially on import taxes Import license required for certain products Free Ports, Zones Common Import Taxes: - Import Duty Industrialised Product Tax (‘IPI’) Merchandise and Service Circulation Tax (‘ICMS’)
Business etiquette and culture…
Most of companies have English-speakers, however using interpreters for 1 st meeting can be a good idea….
Establishing personal relationships is essential to conducting business Like South-Europeans Brazilian use a lot of body language and contact DO NOT attempt to do business during CARNIVAL!
HSBC in Brazil
Key Figures
Established: 1997 Branches: 897 Employees: 25,000 Customers: 5 million ATMs: 5,285
Retail Banking Trade Finance Payments & Cash-Mgmt Global Markets Corporate Banking Middle-West
Branches:
103
ATMs:
501
Mini-branches:
142 North North
Branches:
60
ATMs:
257
Mini-branches:
108 Northeast Northeast
Branches:
47
ATMs:
351
Mini-branches:
124 Middle West Southeast South Southeast
Branches:
445
ATMs:
2,654
Mini-branches:
675 South
Branches:
242
ATMs:
1,522
Mini-branches:
523
Key Contacts
l British Embassy, Brasília (Distrito Federal)
l British Consulate-General, São Paulo
l UK Trade & Investment - Enquiry Service
l Export Finance Programme (Programa de Financiamento às Exportações—Proex)
http://www.bb.com.br/ .
l Brazilian Association of Listed Companies (Associação Brasileira das Companhias Abertas— Abrasca
http://www.abrasca.org.br
(Portuguese only).
l Brazilian Export Credit Insurer (Seguradora Brasileira de Crédito à Exportação—SBCE)
http://www.sbce.com.br/ us/index.asp
l Brazilian Foreign Trade Association (Associação de Comércio Exterior do Brasil—AEB),
http://www.aeb.org.br/home.htm
(Portuguese only).
l Ministry of Development, Industry and Commerce (Ministério do Desenvolvimento Indústria e Comércio Exterior —MDIC)
http://www.mdic.gov.br/ (Portuguese only).
l São Paulo State Federation of Industry (Federação das Indústrias do Estado de São Paulo—FIESP),
http://www.fiesp.com.br
Q & A
Disclaimer
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