Brazil. Agenda Country Overview Brief History Geography People Government/Politics Economy Business & Culture Information Technology Landscape Telecommunications/Infrastructure

Brazil

Agenda Country Overview

Brief History Geography People Government/Politics Economy Business & Culture

Information Technology Landscape Telecommunications/Infrastructure Electronic Commerce Hardware & Software

Overall Recommendation – Strengths & Weaknesses

Brazil – Brief History Portuguese “discovered” in 1500 Independence – September 7, 1822 After WWII – Industrialization advancements 1980s – Oil crisis and foreign debt 1990s – Reforms and economic growth

http://www.odci.gov/cia/publications/factbook/geos/br.html

Brazil – Geography

Brazil – GeographyFive Regions

Largest country in S. America Fifth largest in the World Area: 8,511, 965 sq. km. Climate: mostly tropical Major Cities:

San Paulo Rio de Janeiro

Terrain: mostly flat to rolling hills Capital: Brazil (Brasilia) Environmental Issues:

Natural Hazards Deforestation Illegal Wildlife Trade Air and Water Pollution


Brazil – People Population: 182, 032, 604 Population Growth Rate: 1.15% Urban: 81% Median Age: 27 years Life Expectancy: 71.13 years HIV/AIDS

Adult Prevalence Rate: .7%


Nationality: Brazilian Ethnic Groups

White 55% Mixed White & Black 38% Black 6% Other 1%

Religions Roman Catholic 89% Protestant 6% Other 5%

Languages Portuguese (Official) Spanish English French

Literacy: 86.4%

Brazil – People


Brazil - Government/Politics 60s & 70s – limitations on rights 80s – democracy restored 90s – democratic institutions strengthened Governed by Constitution (est. 1988) Similar to U.S. Major Political Parties

. PFL--Liberal Front Party (center-right) · PMDB--Brazilian Democratic Movement Party (center) · PSDB--Brazilian Social Democracy Party (center-right) · PP--Progressive Party (center-right) · PT--Workers Party (center-left) · PDT--Democratic Labor Party (center-left) · PTB--Brazilian Labor Party (center-right) · PSB--Brazilian Socialist Party (left)

http://www.nationmaster.com/encyclopedia/Economy-of-Brazil

Brazil – Technology Leadership

Industrial Policy

IT Diffusion

Environmental Parameters

Industry Structure

Economic Payoffs

Significant Investment

encouraging R&D

Deregulation – Allowing private

and foreign investment

Emerging Technology

Infrastructure. Education level growth through R&D experience

Technology development in Brazil is beginning, with limited E-Commerce currently, but the potential exists for success.

Investors can utilize the “Lessons Learned” from the U.S. dot-com era, and capitalize on Brazil’s emerging Technology landscape

Brazil - Economy Currency Floating System $1 US = 2.87 Brazilian Real (as of 11/6) Open Trade Import tariff reductions Increase in consumer good imports Recognize need for quality (ISO 9000 series) Automatic licensing Equal opportunity Exports exempt of indirect taxes Unemployment Rate: 7.5%

San Paulo

http://www.nationmaster.com/encyclopedia/Economy-of-Brazil

Brazil - Economy Foreign Investments

Government approval not required No minimum investment or local participation necessary (exception:

banks and insurance) Inflow and outflow of money exchanged through the Central Bank Foreign ownership restricted in:

Banking and insurance Press and broadcasting Rural land

Taxes Federal IPI (equipment) State Some Municipal

Property rights cover trade and service marks, patents, technology transfer, franchising, and scientific/technology services

Technology is considered a ‘know-how’ not protected by patent. Can be sold but not licensed

Between 1996-2000 net direct investments presented a growth of 273.6%

http://www.lexmundi.com/publications/INTL_Guides/guide-brazil.pdf

Brazil - Economy Incentives to stimulate technology R & D:

Reduction of 50% of IPI due on equipment Deduction of 4% on income tax due Credit of 30% of income tax withheld Assistance of 10% of net revenue from sale of produced

goods as a result of this technology Reduction of 25% of the IOF applying to values paid.

Brazil Country Commercial Guide FY 2002, International Copyright, U.S. Department of State, 2001

Brazil -Economy

Main Economic Indicators

GDP

1993-97 1998-99 2000

Total 4.18 0.50 4.46 Manufacturing 4.70 -1.53 5.01 Per Capita GDP 2.70 -0.83 3.10

Inflation 12.17 5.23 5.97

Exports* 47,460 49,597 55,088

Imports* 49,177 53,508 55,783

- 1/3 of Brazil’s exports go to the U.S.

*$US Millions


Brazil - Economy

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Brazil – Business Culture Personal Connections Long-term business relationships Appointments are important Business hours: 8:30 – 5:30 Poor punctuality (except with meals) Conversation – fast, interruptions, animated Brazilians consider themselves Americans

Don’t use the phrase 'in America' when referring to the U.S. Topics to avoid – ethnic, political, Argentina, criticism The O.K. sign is considered vulgar Guidelines to negotiating deals U.S. – Market; Brazil - Machine

http://www.executiveplanet.com/business-culture-in/136482266500.html

Brazil – Telecom/Infrastructure

Telecom – Largest telecom sector in Latin America (market size $8.3 billion US, 2000)

Large scale privatization – Until 1995, Telebras monopolized the country’s telecom services, in 1995 the Brazilian government approved Constitutional Amendment No. 8, authorizing the entry of private, domestic, and foreign investment

Teledensity: reached 16.8 in 1999 from 8.6 in 1994 Mobile Teledensity: reached 9.1 in 1999 from 0.5 in 1994 Quality connectivity to ROW: (64 Satellite stations, 3 coaxial submarine cables)

- Pent up demand for basic telecom services, make Brazil a very attractive market

- Some lingering Internet connectivity issues in remote areas


http://www.american.edu/carmel/cp8809a/landscape/index.htm - Brazil IT landscape

Brazil – E-Commerce Brazil Internet Connectivity – high number of individuals

connected to the internet Globally - 10th Latin America –1st

400 ISPs – mostly dial-up, heavily dependent on access fees Business to Customer: Far ahead of the rest of Latin

America, far behind the US. Majority of simple products (Books, CDs, etc) with the exception of groceries

Business to Business: Operating on a limited scale in niche areas (replacement parts, office supplies, computer parts), large opportunity for growth once logistics problems are solved



Brazil – E-Commerce (con’t) Factors driving E-Commerce as a key area for

Investment:(1) large user base(2) state-of-the-art banking equipment(3) large local retailers with strong brand recognition(4) A wide array of Portuguese language content providers(5) The Brazilian Government's new project to extend Internet

access to all citizens Problem Areas:

Considerable problems with Logistics/Transportation Infrastructure

Power Shortage Issues - Electrical power shortage announced by the Brazilian Government in 2001, including a strict power rationing program



Brazil – Hardware Hardware

Leading Industry in Brazil ( US - 7.3 Billion in 1999), rated as the leading industry for investment by US government groups

Q1 2000 – 80% growth in computer hardware and peripherals Manufacturer products domestically, import parts.

U.S. Department of Commerce's Trade Information Center – http://www.usatrade.gov/Website/ccg.nsf/CCGurl/CCG-BRAZIL2002-CH--00619FAE


Brazil – Software Software

Large Scale Investment – Well integrated into key vertical markets (Argibusiness, transportation, health, financial services, etc.), also as a key business management enabler (CRM and ERP software)

Large % of Imported Software: Small growth, however will change as E-Commerce develops.

U.S. Department of Commerce's Trade Information Center – http://www.usatrade.gov/Website/ccg.nsf/CCGurl/CCG-BRAZIL2002-CH--00619FAE


Brazil – Overall Recommendations

Electronic Commerce in Brazil is in its infancy, coupled with investment in telecommunication and technology infrastructure, and the government de-regulation to open markets, there is a significant gap in Internet services for Industry and general consumers. A unique opportunity exists to capitalize on Brazil’s emerging technology landscape. Over the next 5 years, significant growth is expected several key areas:

Brazil’s large internal market: 165 million residents and a single, unified language.

Opening to foreign capital investment Advancing Technology Infrastructure – Supporting Telecom growth Population demographics lend to E-Commerce Geography – Gateway to South America

Problems/Weaknesses to Overcome: Transportation and Power Infrastructure Distribution of Wealth Issues - Increase PCs per household ratio –

approx current (8 per 100 households). Top 10% of income -> 60% of computers

Documents

Brazil. Agenda Country Overview Brief History Geography People Government/Politics Economy Business & Culture Information Technology Landscape Telecommunications/Infrastructure