The B of BRICs, just like the R, the I and the C, is not an easy market to crack. Anyone who’s tried it will know that. We have advised many clients about the difficulties of trading with Brazil. Bureaucracy, protectionism, corruption, payment. We discuss Brazil also in our ebook about Latin America, and we always say that it is a great market with lots of potential – if you have the resources for it.
SMEs in the UK are every day reminded of the huge potential of the Brazilian market but I insist, Brazil isn’t for everyone. Before you embark on your own journey to Neymar’s land, let us save you a headache or two. Take your time, make sure you have the resources to invest in Brazil. It doesn’t happen overnight. Actually, it won’t even happen within a year or two. Experienced exporters tell me of a 5-10 year strategy and remind me of the thousands of pounds spent “just trying”. And there’s no other way. We can research Brazil for you for years, we can find you partners to work with and we can support you in every way we can, but you’ve got to know, before we even start, what you’re really going to put yourself through.
Yesterday I read in Folha (one of Brazil’s best-known newspapers) that American retailer Gant is leaving Brazil. I’m sure they’ve tried. But costs were just too much. Brazil is expensive and can price you out quickly also because of its protectionism. Brazilians will raise import duties and add a set of never-ending taxes and charges to protect their industry. That’s the same topic we advised a wine exporter about this week. Brazil will also exhaust you with its world-famous bureaucracy. Gant had enough. And so did Ralph Lauren a while ago. Gant Brazil (owned half by a Swiss group and half by a Portuguese group) opened three stores in 2008 and in 2010 announced it would open 20 more from 2013. It just didn’t happen. The Folha article also mentions the fact that seasonal collections had problems getting to point of sale on time because of the administrative, bureaucratic and customs burdens mentioned before.
Pricing is key and you need a strong pricing strategy for Brazil. As the Folha article explains, Gant garments in Brazil cost 120% more than in the US or Europe. This reminds me of something else: make sure you understand how your consumers shop. Gant is probably loved by the Brazilian upper-middle class but they have the opportunity to buy it in Europe or the US. I’ve seen Brazilians happily buying Tommy Hilfiger clothes are the Duty Free Shop here at Montevideo airport and also shopping in Punta del Este and Santiago de Chile (apart from London and Miami, of course!)…
Brazil is tricky, to say the least. But remember, whatever the British press leads you to believe, Latin America is not just about Brazil… we leave you with a short video to get you inspired to look elsewhere, while you study whether or not Brazil is for you…
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