Understanding the Brazilian Market

Let the U.S. Commercial Service connect you to a world of opportunities.

Rick A. de LambertU.S. Commercial ServiceU.S. Department of Commerce, International Trade Administration

Agenda

Why Brazil?

U.S. Brazil Trade Relations

Some Best Prospects

Doing Business in Brazil

U.S. Commercial Service -Brazil

Why Brazil?

• Almost 200 million consumers

• Represents half the economy of Latin America

• GDP of $2.5 trillion in 2011 > Russia or India

• Per capita income 2X China and a growing consumer class

• Weathered financial crisis better than most markets

• Shared history, culture, values

Why Brazil?

• 2014 World Cup and 2016 Olympics

• Agricultural Superpower

• Massive pre-salt offshore oil and gas deposits

• U.S. FDI in Brazil (stock) was > $71 billion in 2011.

• Two-way US-Brazil goods trade > $70 billion in 2013

• US goods exports to Brazil totalled $44.1 billion

U.S. – Brazil Trade Relations• BRAZIL BUSINESS CONCERNS RE THE U.S.• Agricultural Supports (cotton, ethanol, soybeans)• Tariff Rate Quotas (sugar, OJ, ethanol)• U.S. Anti-dumping policies

• U.S. BUSINESS CONCERNS WITH BRAZIL• High tariffs (20%) and complicated taxes (Up to

60% FOB)• Enforcement of Intellectual Property Rights• Onerous licensing and regulatory requirements• Transparency and bureaucracy

• Aerospace/Aviation

• Agriculture Equipment and Services

• Food, Equipment and Services

• Airports

• Apparel/Textile and Equipment

• Architecture, Construction

• Engineering Services

• Automotive

• Beauty and Cosmetics

• Biotechnology

• Building Products

• Chemicals and Chemical Equipment

• Civil Nuclear• Construction Equipment/Building• Cosmetics• Defense• Drugs and Pharmaceuticals• Educatio n and Traiing• Electrical Power and Renewable

Energy• Environmental Technologies• Financial Services• Food Processing and Packaging• Franchising • General Industrial• Healthcare• Hotel and Restaurants• IT Hardware and Software • Laboratory and Scientific

Equipment

2013 Best Prospects• Medical Equipment• Mining• Oil and Gas• Pharmaceutical/Nutritional• Processed Foods• Renewable Energy• Retial• Safety and Security• Scientific and Lab Instruments• Services (Professional, Training

and Consultation)• Sporting Goods and Recreation • Telecommunications • Transportation• Travel and Tourism

• Numerous trade and investment opportunities in several areas• From 2010 through 2016, est. US$50 billion

- Infrastructure- Construction- Transportation- Public Security- Education & Training

• Most through Public-Private Partnerships (PPPs) under Brazil’s Growth Acceleration Program (PAC)

• 12 Brazilian Cities• will host World Cup

Games | Jun-Jul 2014

• Rio de Janeiro• will host South America’s first Olympic

Games | Aug-Sept 2016

WILL GENERATE

World Cup 2014 & Olympics 2016:Business Opportunities

• Potential suppliers to the Rio Olympic Committee should register at portaldesuprimentos.rio2016.com/sustentabilidade/

$51 billion Infrastructure

$2.7 billion Stadiums

$3 billion Airport Renewals

$56.7 billion

World Cup 2014 & Olympics 2016:Business Opportunities

TOTAL

• Temporary Construction for Sporting Events

• Transportation – Buses, Vans, Private Cars

• Materials and Services for Sporting Events

• Contracted Services• Catering• Mobile Equipment• IT• Marketing/Branding for Games• Software• Marketing Services• Sports Management Systems• Cleaning and Laundry Services• Video and Broadcasting Equip• Portable Office Equipment

• Other- Sporting Equipment- Installation Equipment- Cruise Ship Accommodations- Radio Com. Equipment- Public Relations- Marketing Materials

What will the Committee Purchase?

Market size in 2011: US$ 3.6 M, expected to grow 14% in 2012 US$ 4.6 M in total exports, US$ 2.5 M in total imports in 2011

– US$ 1.5 M (60%) from the U.S.Source: MDIC – Ministry of Development, Industry & Foreign Trade/ Embraer/ Brazilian Association of Aerospace Industry

2nd largest general aviation fleet in the world Helicopter market increased 15% in 2011Source: ABAG – Brazilian Association of General Aviation

Aviation market grew 19% in 2011 compared with 2010Source: IATA – International Air Transport Association

Market predicted to expand: 2014 Soccer World Cup and 2016 Summer Olympic Games Embraer: 1,941 aircrafts ordered in 2011, valued in US$ 16 B.

Main opportunities:– Airplane and helicopter parts and components– Long term: law enforcement segment

AEROSPACE & AVIATION

AIRCRAFT & PARTS• In 2012, Embraer delivered 205 aircraft and closed the year with firm orders of 185 aircraft

valued at US$ 12.5 billion. The company produces commercial, military and executive aircraft.

• On February 27th, 2013, the U.S. Air Force announced the selection of A-29 Super Tucano manufactured by Embraer for its Light Air Support (LAS) Program.

• Brazil has the 2nd largest fleet of executive aircraft, and the 3rd largest helicopter fleet. Aircraft imports in 2012 totaled US$ 4.7 bi, an increase of 21% compared to 2011.

Source: Brazilian Association of General Aviation (ABAG) Marketing Opportunities• 2014 FIFA World Cup & 2016 Olympic Games should increase the demand for executive

aircraft and helicopters.

• The offshore oil segment where the Brazilian Government is making enormous investments in the pre-salt oil-fields also presents significant business opportunities for helicopter manufacturers.

• May 12-16 U.S. Department of Commerce Aerospace Trade Mission to Brazil. http://export.gov/industry/aerospace/brazilaerospacemay2014/index.asp

Market size in 2011: US$ 4.5 M, estimated to grow 6.7% in 2012 US$ 1.1 M in exports, US$ 2.5 in imports in 2011

– US$ 1.1 M (44%) from the U.S.Source: Ministry of Defense/ Brazilian Association of Aerospace Industry (AIAB)/ Brazilian Association of Defense Material (ABIMDE)

Government efforts to increase natural resources, borders, and offshore oil reserves protection

Recent reorganization and modernization of Brazilian Armed forces Strategic priorities areas: space, cybernetics, and nuclear Military budget proposal for 2012: R$ 63 M (US$ 37 M) Best products and main opportunities:

– Army and Airforce:• F-X2 acquisition program

– Navy:• Current procurements for ocean patrol vessels, frigates

– Government investment of R$ 2.2 B (US$ 1.2 B) for construction of a launch center, launch vehicles and satellites

DEFENSE

Market size in 2012 : US$ 18.9 billion, expected to grow 5% in 2013 2nd largest IT market within emerging economies 5th largest PC market in the world IT spending expected to increase in the next few years 10% growth in demand for IT software products and services during 2013 Software services market projected to exceed growth of 10% a year until 2015

Best prospects:– Continue sales increase for notebooks and smart phones

(smartphones grew 109% and are expected to reach 32 million units in 2013)– Huge growth of 151% in 2012 for tablets reaching 2 million units.

Brazilian government has tax incentives for local production of tablets (Apple’s only factory outside of Asia is in Brazil)

– Increasing need of IT Security technology– Increasing demand for telecom software due to convergence of data and voice

ICT

MEDICAL DEVICES MARKET

Brazilian medical products revenue has shown a 15%-20% increase per year. In 2012, the medical products market reached an estimated US$ 16.5 billion, an increase of 4% from the previous year.

The U.S. accounts for approximately 30% of Brazil’s import market for medical products, with U.S. sales mainly going through local agents, distributors and importers who sell to hospitals and clinics.

May 20-23, 2014, U.S. Pavilion at Hospitalar, Latin America’s largest healthcare technologies trade fair: 1,250 exhibtors; 90,000 attendees. Exhibit in the U.S. Pavilion for $6,395. Gold Key Service option. http://export.gov/brazil/build/groups/public/@eg_br/documents/webcontent/eg_br_069113.pdf

COSMETICS

May 12-15, 2014 HAIR BRAZIL, U.S. Pavilion. One of the largest beauty fair events in Latin America. Contact Denise.Barbosa@trade.gov

14th largest source of overseas students to U.S. for education and training services

6th in Intensive English Programs studentsSource: Institute of International Education

8,777 Brazilian students in the U.S. in 2011 - 35% in graduate programs, 46% in undergraduate programs

“Science without Borders”: Brazilian government exchange program PROINFO: program to promote technology as important teaching tool Best prospects and main opportunities:

– Undergraduate and short-term ESL programs– U.S. colleges and universities offering science courses– Investment in technical courses for high school students and adults

Challenges:– Provision of creative financing options in recruitment processes– Language barrier for Brazilian students– Strong competition for U.S. higher education institutions

EDUCATION

4th largest source of overseas visitors to U.S. in 2011 Top arrivals market for South America (30%) 26% increase in Brazilian visitors to U.S. in 2011 compared to previous

year First in per capita spending of foreign visitors to U.S. Recent efforts to speed up visa process in Brazil 944,000 visas issued in 2011 – 51% increase over 2010 total numbers U.S. is Brazil’s second most popular destination 6th in country of origin for visitors to the U.S. during 2011 Most popular destinations: Florida, New York, California, Las Vegas Majority of visitors travel through travel agencies May 19-23, 2014 Visit USA Show Brazil (Sao Paulo, Rio, Campinas).

Stand alone travel and tourism event (coincides with events in Argentina & Chile). Participation options: $3,600; $6,400; $7,800 for one, two, three city options respectively. TableTop Exhibit and Seminar Presentation. Contact Jussara.Haddad@trade.gov

TRAVEL AND TOURISM

Doing Business In Brazil

• Is complex.• Requires an intimate

knowledge of local environment & “Custo Brasil”.

• Best done with qualified local agent or distributor.

SAO PAULO Steve KnodeDeputy Sr. Commercial OfficerEmail: Steve.Knode@trade.gov Phone: 55-11 3250-5429Fax: 55-11 3250-5343

Five CS Offices in Brazil

BELO HORIZONTE Devin RamboPrincipal Commercial OfficerEmail:Devin.Rambo@trade.gov Phone: 55-61 3312-7403 Fax: 55–61 3312-7656

RECIFEEric OlsonPrincipal Commercial OfficerEmail: Eric.Olson@trade.govPhone: 55-81 3416-3075Fax: 55 –81 3231-1906

RIO DE JANEIROAlan LongPrincipal Commercial OfficerEmail: Alan.Long@trade.gov Phone: 55-21 3823-2410 Fax: 55-21-3823-2424

BRASILIADevin RamboPrincipal Commercial OfficerEmail: Devin.Rambo@trade.gov Phone: 55-61 3312-7403 Fax: 55–61 3312-7656

Contact us today to connect with a world of opportunities.

Rick de LambertU.S. Commercial ServiceU.S. Department of CommerceInternational Trade Administration

Email: rick.delambert@trade.govPhone: 858-467-7032/7041

www.export.gov/Brazil

U.S. Commercial Service