8 biggest mistakes that Chinese companies commit doing business with Brazil

COPYRIGHT © China Link Group 2008 - 2014 © Todos os direitos reservados

Flexibility for SME. Structure for corporations. See more: www.chinalinktrading.com | Write to us: [email protected] | Talk with us: +86 755 8283-0432

8 biggest mistakes that Chinese companies make when

doing business with brazil

http://www.chinalinktrading.com

mailto:[email protected]

mistake nº1

COPYRIGHT © China Link Trading 2008 - 2014 © Todos os direitos reservados

you have slept in your geography classes at school




mistake nº1 you have slept in your geography classes at school


I heard Buenos Aires is very nice. That is your capital, isn’t?

What is your capital? Rio de Janeiro

or São Paulo?

Hola, mucho gusto! Gracias! (speaking

spanish)

Brazil is in Africa, right?

What language you speak there? 巴⻄西语吗？






• Brazil is located in South America; !

• It is the biggest country in the continent and 5º in the world with 8,515,767 km2;






• Population is 201,032,714 (5th), density 23.7/km2 (China is 139.6/km2); !

• GDP $2.422 trillion (5th) and per capita $12,118 (79th);






• Portuguese (7th language in world); !

• Brazilian Real (BRL) - 1 R$ = 2.65 RMB; !

• Dilma Rousseff is our current president






• 26 states, Brasília as capital; !

• Was discovered in 1500 by Portugal; !

• Great concentration of wealth on Southeast Region; !

• 3/5 of Amazon forest is in Brazil; !

• 30% of drinkable water in the world is in Brazil;






• Multicultural people: • 47.73% white • 43.13% pardo (mixed) • 7.61% black • 1.09% asian • 0.4% Amerindian

!• More than 64% of people are Roman Catholic;





mistake nº2

use google translator or try to conquer brazil just with english





A carga ficou presa na receita federal porque a

documentação não foi assinada com a caneta azul.

负载陷⼊入联邦收⼊入，因为该⽂文件不是⽤用蓝⾊色钢笔签名。

mistake nº2 use google translator or try to conquer brazil just with english





Do you have any idea of what he means?






Do you have any idea of what he means?

let’s make this translation more accurate…






A carga ficou presa na receita federal porque a

documentação não foi assinada com a caneta azul.

因为⽂文件没有⽤用蓝⾊色钢笔签字，所以货物被海关查处了。







• Less than 1% of the Brazilian population speak English; !

• Don't you like when a foreigner speaks Chinese with you? So do we.





don’t use google translator for important quotations or media material

mistake nº2 use google translator or try to conquer brazil with only english





don’t use google translator for important quotations or media material

really… don’t!

mistake nº2 use google translator or try to conquer brazil with only english





mistake nº3

not understanding about Brazilian social etiquette





mistake nº3 not understanding about Brazilian social etiquette

• Men shake hands (like a man); !

• Men may ‘hug' you if you are close; !

• Kiss on the cheek (woman with woman) - 1 for SP and 2 for RJ; !

• Men don’t cheek kiss (like some European or Arab countries)






• Most of Brazilian people take shower twice a day and brush their teeth three times a day; !

• We use perfume; !

• As in China, people care about how others will think of them (clothes, car, watches, bags, etc) - ⾯面⼦子; !

• Wear office clothes (you don’t need a suit);






• I believe you will love Brazilian food, but you don’t need to demonstrate it loudly in the table or make any sound with your mouth; !

• Try not to burp, soak up the noodle or chew with your mouth opened;






• Try to avoid personal questions or comments when you just have met someone:

• How much is your salary? • How old are you? (for woman) • How many wives you have? • You are so fat! • You are thirty years old and still not married? Why?






• Tips? Try to ask about: • Ask your customer how he started his business; • Tell him to tell more about the city he lives, where he

comes from in Brazil; • Explore how you two could cooperate more; • Tell more about your company history;





mistake nº4

neglect how Chinese are seen by Brazilians




mistake nº4 neglect how Chinese are seen by Brazilians?


• Products MADE IN CHINA still don't have a good image for some people; !

• Chinese in Brazil may be famous for selling fake and low quality products; !

• “No problem, my friend. Of course"




mistake nº4 neglect how Chinese are seen by Brazilians?


• Always offer samples, focusing on the quality of your products and warranty policy; !

• Understand that shipping products for replacement is not cheap; !

• Getting new customers is more expensive than keeping old ones;


mistake nº5

Not understanding how Brazilian economy can be so protective




mistake nº5 Not understanding how Brazilian economy can be so protective


• Brazilians’ Big Mac is the second most expensive in the world; !

• Ipad in Brazil is the most expensive in the world; !

• Mobile phone - the fourth most expensive in a ranking of 161 countries (ONU); !

• Mobile Internet – among 78 emerging countries the voice and data plan in Brazil is the most expensive !

• Rio de Janeiro ranks sixth as having the most expensive hotels in the world, ahead of cities like Paris and London.






• Start to understand that Brazil has it’s own certificates and licenses. Some products may need more than one;

!• You will need a rep office in Brazil or a partner if you want to sell your products licensed; !

• Certification may take 3 to 24 months. If you have CE or FCC, it will be easier;

Eletronic Eletric parts

Engines Toys

Cables Many others

Medical equipment Cosmetics Perfume

Medicines Pharmaceutical

Others

Mobile phones Telecommunication

Wi-fi products 3G products

Radio devices Others

Security equipment required for work

Glasses Gloves

Helmets Others

Battery Tires

Chemical Harmful and hazards

Others






• On import, we have a ‘snowball system’ of taxes, on which we pay taxes over taxes; !

• This can make a product more than double its price after it is ready to be sold; !

• Below you will find the main taxes that are involved in an import process for Brazil;

I.P.I. Industrialized

product tax

I.I. import tax

PIS / COFINS SOCIAL incentive

tax

icms vat sales tax

Federal tax; !By HS code; !from 0% to 60%

Federal tax; !By HS code; !from 0% to 35%

Federal tax; !Fixed for import; !9.25%

State tax; !By state; !from 0% to 19%






• Let’s simulate how much tax we are going to pay for:

HSCODE 85193000 USD 20,00

ORDER 400 PCS !

FREIGHT COST: USD 2,000

!USD to BRL

1 = 2.3






• Let’s simulate how much tax we are going to pay for a CAR DVD, HS CODE 85193000, 400 unit x USD20 each, USD 10,000 CIF SANTOS (BRL 23,000);


product tax

I.I. import tax

PIS + COFINSICMS

VAT SALES TAX

TOTAL (BEFORE CUSTOMS

FEE)

20% 30% 9.25% 18% (SP)







product tax

I.I. import tax

BRL 23,000 x 20% II !BRL 4,600

20% 30% 9.25% 18% (SP)


PIS + COFINSICMS

VAT SALES TAX


FEE)







product tax

I.I. import tax

BRL 23,000 x 20% II !BRL 4,600

BRL 23,000 + BRL 4,600 (II) x 30% IPI !BRL 8,460

20% 30% 9.25% 18% (SP)


PIS + COFINSICMS

VAT SALES TAX


FEE)







product tax

I.I. import tax

BRL 23,000 x 20% II !BRL 4,600


BRL 23,000 + BRL 4,600 (II) + BRL 8,600 (IPI) x 9.25% PIS/COFINS !BRL 3,348.5

20% 30% 9.25% 18% (SP)


PIS + COFINSICMS

VAT SALES TAX


FEE)







product tax

I.I. import tax

BRL 23,000 x 20% II !BRL 4,600



BRL 23,000 + BRL 4,600 (II) + BRL 8,600 (IPI) + BRL 3,348.5 (PIS/COFINS) x 18% ICMS !BRL 7,118.73

20% 30% 9.25% 18% (SP)


PIS + COFINSICMS

VAT SALES TAX


FEE)







product tax

I.I. import tax

BRL 23,000 x 20% II !BRL 4,600



BRL 23,000 + BRL 4,600 (II) + BRL 8,600 (IPI) + BRL 3,348.5 (PIS/COFINS) x 18% ICMS !BRL 7,118.73

BRL 46,667.23 !

50.72 USD p/ pcs

20% 30% 9.25% 18% (SP)


PIS + COFINSICMS

VAT SALES TAX


FEE)






10,000 USD CIF 10,290.10 USD

23,000 BRLCIF

TAXES

23,667.23 BRL

1,500 USD

3,450 BRL

average customs FEE

21,790.1 USD

50117.23 BRL

TOTAL

54.47 USD

125.29 BRL

Per piece

400 pcs 20 USD

400 pcs 46 BRL

172%




172%! OMG! THAT IS SO MUCH!

Is there any way to make these numbers better?

Yes! ;-)



• Brazil offers different benefits on taxes, which can make an import process much cheaper; !

• If you establish a company in Brazil, as a foreigner investor you can get even more benefits; !

• If you plan to have an assembly factory in Brazil, you may almost pay NO TAX!




Can I offer some tax benefit to my customer?

How?

You just have to use our trade company in Brazil to get really

good benefits on the import process.

Ask us how after this presentation.


mistake nº6

Not understanding cultural thoughts and likes of Brazilian




mistake nº6 Not understanding cultural thoughts and likes of brazilian


• NOT ALL OF THEM, but many Brazilians like football. If your customer does, you may ask what is his local team; !

• You may also invite a customer to watch a game in a pub or in the stadium if he is into football. This may improve your relationship with him;






• Carnival happens on february and it’s a national holiday as many others during the year. Each year, a Brazilian has around 45 days holiday (30 days work vacation included); !

• Many decisions are affected by that, so don’t expect fast decisions on orders and don’t be surprise with old customers returning after a long period looking for you to discuss ‘old' requests; !

• Processes will happen slower before, during and after holidays. Get a list of local holidays to understand and interact with your customer.






• As a catholic country, we celebrate Christmas. That is a very important date for us, just like the Chinese New Year; !

• Make sure to send a postal card and gift to your key customers and at least an email wishing Merry Christmas and Happy New Year; !

• Different from China, we love to celebrate birthday. Since kids we have a cake, presents and cards from our family. Make sure to know and make a call to personally wish a Happy Birthday to your key customer. A gift is also a good shot;





mistake nº7

not being open-minded




Is Brazil an important market for you?

!

Do you want to increase your presence there?

If your answer is yes, just see our example

mistake nº7 not being open-minded


I live in China for 3 years already. But I

don’t speak Chinese. I hate Chinese food! I only eat my local

food.

Chinese do everything in a

different way. They should do our way.

I don’t have any Chinese friends. They are

boring and we like different things.

Why am I not being successful

selling to China???




mistake nº7 not being open-minded


I live in Brazil for 3 years already. But I

don’t speak Portuguese.

I hate Brazilian food! I only eat my local

food.

Brazilians do everything in a

different way. They should do our

way.

Why am I not being successful

selling to Brazil???

I don’t have any Brazilian friends. They are

boring and we like different things.




Blend in! !

Be like water like Bruce Lee!Who has the biggest interest? You or the customer?


mistake nº8

Try to do everything on your own




mistake nº8 try to do everything on your own


• A natural product that makes your skin darker without having to go to the beach; !

• Do you think this would work in China? !

• "This product sells so well in Brazil, and it is also very new. I am sure this work in China! So many people there, if I get 5% of 1.7 bi people, I am rich! Am I right?"




Noooo! :-(



• We have heard and seen many products in China that would work very well in Brazil. But we have also heard and seen many products that Chinese love which would never work in Brazil; !

• Is my product already being sold in Brazil? How much is it? What are the most important features for Brazilian customers? Where should I advertise? How can I make partnerships with Brazilian companies? How can I find a distributor there? Which region is the best to launch my products? !

• Questions like these can all be answered with a market research;

集思⼲⼴广益






WHAT CAN WE OFFER?

Be prepared

!TRANSLATION

1 Understand the market

!TRAINING

2

Use our contacts

!CLIENTS

DATABASE

3Open R.O !

LEGAL, SALES, HR, ACCOUNTANT

4





mistake nº9

Do everything as everyone does




Surprise your customer!

mistake nº9 Do everything as everyone does


• Think new ways to do old things! !

• Explore social media and develop a better customer relationship and management; !

• Train your team for success, keep improving them! !

• Try to understand what customers need and offer them customized services;




COPYRIGHT © China Link Group 2008 - 2014 © Todos os direitos reservados

3Q!China Link Group

!Stephen Meng

[email protected] +86 755 8283-0432

8 biggest mistakes that Chinese companies commit doing business with Brazil

Marketing

mistake n4

understanding

industrialized

local food

mistake n2

73 mistake

mistake n8

mistake n1