COMPARATIVE DATA (CHINA VS BRAZIL) 2012

Eduardo Lorenzetti Marques | Campedelli, Marques e Zarif | São Paulo – Brazil


COMPARATIVE DATA (CHINA VS BRAZIL) 2012

COMPARATIVE DATA - 2012 CHINA BRAZIL

Population 1,3 Billion 200 Million

Area 9,6 Million Km² 8,5 Million km²

GNP per capita (current US$) 7.945,00 USD 10.152 USD

GNP (current US$ billion) 8,227 Trillion 2,449 Trillion

Anual Growth of GNP (%) 7,80% 0,90%

HDI/Position (Ranking) 0,699/101 0,73/85

Life expectancy (years) 73,7 years old 73,8 years old

Inflation % 3,10% 5,85%

Unemployment % 4,10% 4,60%


ORIGIN OF CHINESE IMPORTS (MAIN COUNTRIES) - BRAZIL: 2,73%


DESTINY OF CHINESE EXPORTS (MAIN COUNTRIES)


ORIGIN OF BRAZILIAN IMPORTS (MAIN COUNTRIES) USD BILLIONS – CHINA: USD 34,2 BILLIONS


DESTINY OF BRAZILIAN EXPORTS (MAIN COUNTRIES) USD BILLIONS – CHINA: USD 41,2 BILLIONS


CURRENT TRADE – BRAZIL VS CHINA


MAIN PRODUCTS EXPORTED BY BRAZIL TO CHINA AND IMPORTED

BY BRAZIL FROM CHINA The main sectors - Exportation – Brazil to China - 2010 Share in total exports Amount exported (USD)

Iron extraction 43,30% USD 13.338.017.356,00

Crop Production 23,20% USD 7.141.617.952,00

Extraction of oil and gas 13,20% USD 4.053.449.415,00

Cellulose for paper manufacturing 3,70% USD 1.126.181.015,00

Vegetable oils and fats manufacturing 2,60% USD 792.701.173,00

Sugar manufacturing 1,70% USD 514.767.047,00

The main sectors – Importation – Brazil from China -2010 Share in total exports Amount exported (USD)

Machinery and equipments for data processing 9,70% USD 2.480.110.832,00

Television and radio receivers 8,40% USD 2.158.785.808,00

Electronic material 6,60% USD 1.681.160.603,00

Telephone equipment 6,40% USD 1.633.856.151,00

Steel 5,30% USD 1.348.714.201,00

Machinery and equipments for general use 4,90% USD 1.254.178.354,00


DIRECT INVESTMENTS – BRAZIL VS CHINA (USD BILLIONS) – 2012


DOING BUSINESS IN BRAZIL AND IN CHINA - 2014

COMPARATIVE DATA - 2014 BRAZIL CHINA

Doing Business 2014 Rank 116 96

Starting a Business 123 158

Dealing with Construction Permits 130 185

Getting Electricity 14 119

Registering Property 107 48

Getting Credit 109 73

Protecting Investors 80 98

Paying Taxes 159 120

Trading Across Borders 124 74

Enforcing Contracts 121 19

Resolving Insolvency 135 78


GEOGRAPHICAL DISTRIBUTION OF BRAZILIAN INVESTMENT IN

CHINA


BRAZILIAN PRESENCE IN CHINA

(i) in 2012, there were about 60 Brazilian enterprises in China (e.g. Inbev, Banco do Brasil, Banco Itaú BBA, Bovespa, Embraer, Odebrecht, Petrobrás, Vale,

Votorantim, etc.);

(ii) In the last 10 years Brazil invested in China about about 560 million dollars (0,04% of the total amount of foreign direct investments in China);

(iii) the service sector is what most attracted the interest of Brazilian companies, representing 51% of the group;

(iv) Brazil is considered a latecomer to China. When it arrived in the country, American and European compnaies had already a consolidated position.


THE MAIN DIFFICULTIES FOUND BY BRAZILIANS TO OPERATE IN CHINA

(i) Red tape: difficulties on obtaining permits and approvals from the Chinese government for projects in regulated sectors;

(ii) Local partner: mismatch between the strategic objectives of Brazilian companies and the strategic objectives of the Chinese partners;

(iii) Over regulation: the detailed regulation of various sectors by the Chinese government;

(iv) Intellectual property: non-recognition by China of international practices relating to intellectual property;

(v) Government interference with the market: limits imposed by the Chinese government to the free market;


GEOGRAPHICAL DISTRIBUTION OF CHINESE INVESTMENT IN

BRAZIL


CHINESE PRESENCE IN BRAZIL

(i) Chinese companies are divided into different sectors of production in Brazil;

(ii) the amount China invested directly in Brazil until 2012 corresponds about 20 billion dollars; and

(iii) in 2011, there were lots of Chinese enterprises in Brazil (e.g. Chery, Foxconn, JAC, Wuhan Iron An Steel Group Co., etc.).


THE MAIN DIFFICULTIES FOUND BY CHINESE TO

OPERATE IN BRAZIL

(i) Red tape: bureaucratic processes; (ii) Taxes: high taxation and complex system;

(iii) lack of infrastructure;(iv) floating exchange rate;

(v) Visas: difficulties on obtaining working permits


SPECIFIC ISSUES OF THE CHINESE PRESENCE IN BRASIL – TRADE (ANTI-DUMPING AND SAFEGUARD MEASURES)

(i) The trade defense measures consist in the application of antidumping and countervailing duties, provisional or definitive;

(ii) The safeguard measures consist in the application of tariff measures or quantitative restrictions against a surge in imports from various sources;

(iii) Brazil promulgated law n. 9.019/1995 that provides for the enforcement of rights under the Antidumping Agreement and the Agreement on Subsidies and

Countervailing Measures of the WTO;

(iv) Currently, even though China is considered an emerging economy, it is treated as non-market until 2016;

(v) In 2004, China and Brazil signed a Memorandum of Understanding whereby Brazil granted China market economy status. This rule, however, has not been

applied in practice; and

(vi) Half of anti-dumping measures imposed by Brazil are against Chinese products;


SPECIFIC ISSUES OF THE CHINESE PRESENCE IN BRASIL – RURAL LAND

ACQUISITION (AGRICULTURE)

(i) According to the last report of the Central Bank of Brazil, foreigners have bought USD 60 billion in land in Brazil. China is the first foreing investor in land acqusition;

(iii) Trying to control Brazilian land acquisition for foreigners’ enterprises, mainly Chinese ones, the Brazilian government announced a change in the opinion of the

General Advocacy of Union regarding leglistation;

(iv) for purchasing a rural property in Brazil a foreign entity must be authorized to operate in Brazil and must obtain approval of an agricultural project of exploration

tied to its contractual or statutory objectives;

(v) the limit for acquisition of rural property by a foreign legal entity is 100 rural modules. For the acquisition of a superior amount the foreign legal entity must obtain

an special approval of the Brazilian National Congress; and

(vii) The amount of 1 rural module varies according to each Brazilian region.


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COMPARATIVE DATA (CHINA VS BRAZIL) 2012