Brazil is a fascinating country endowed with wealth, both in his people and in its resources

The market is immense, with the majority of the populations’ consumer behaviour still geared towards lower order preferences, there is an opportunity for consumption to grow drastically. It is for this reason that companies from abroad come to Brazil.

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Furthermore, this increase in the quality of life has an impact on the economic performance of Brazil, meaning the productivity does not increase at the same rate or in the same rhythm as that of their “competitor” countries.

The main reasons for the variance in economic performance rates includes:

  • The fiscal, customs and secular barriers, to protect Brazils internal market.
  • The level of rather high inflation, a true ghost for the Brazilian.
  • The constant demand which is not completely satisfied, of qualified employees – representing a certain pressure on the level of salaries.
  • The weakness of the national currency, which has been strong during the years of strong growth, is now experiencing a slow breakdown compared to the euro and to the dollar.
  • A strong political crisis along with several scandals and corruption.

This of course has an effect on the observed slowdown in the economy, as well as on the forecasts for the economy of Brazil.

However, Brazil continues to be a target country for several foreign companies and this means the years of crisis represent, generally, important developmental opportunities.

In this context, the understanding of the particularities of Brazil is a major aspect, not only for those who want to come to develop the country, but also especially for those who are there already. Among the most striking characteristics of Brazil, appear to be:

  • Cultural differences to understand
  • An administrative and fiscal complexity which you should not be careless about
  • A necessity of penetrating into the networks of the power
  • An awareness of ethical standards

We are going to present in this article our vision concerning every characteristic highlighted above.

Cultural differences to understand

The big cultural difference, more important than anticipated at first to several companies, has significant impacts on the development and in the execution of the operations or the projects in Brazil.

Brazil is made up by several cultures stemming from diverse immigration and the people have lived a rich history with many milestones (colonisation, dictatorship, and hyperinflation).

The French people judge themselves to be similar to Brazilians; nevertheless, the differences are so tiny that they often drive one to misunderstand them. It is imperative to understand our differences and to integrate them into our way of functioning to strengthen the collaboration.

France has a culture of the writing, the analysis, the implementation of methods and process, as well as the sophisticated planning of projects. Brazil has an advantage in the culture of the oral, the constant flexibility and one of more elastic time.

Generally, the French people have behaviours which include individualism and to always be in the search off any efficiencies, while the Brazilians are rather collective; they highly favour good relations in the workplace, as well as a strong respect for the hierarchy.

Below, we confront the most frequent visions of both cultures:

 The vision of an European on the Brazilian cultural facts: 

  • The wish to please each other and to be always positive:

In the communication, there is always a little bit of an underlying message; the search for the other one wants to hear. Generally, there is a strong empathy which drives to be very fast convinced of the legitimacy of the expectation of other one by reducing the critical analysis of this expectation

It can drive to identify a priority, which is not one, to agree on milestone in a project or of an objective, which is not possible.

  • A different timeline :

It is less the case than in Asia. However, there is a lot of reason to be careful in the management of time. One month does not mean one month 

Then the optimism and the behavior in the taking of objectives (and not of commitment). The rest is not estimated in a technical way in many cases but in an emotional way. And then the projects have some delay

  • A capacity of reaction doubled by an absolute confidence:

In relation with the difficulties of project management, there is an impressive element, it is the absolute optimism of every Brazilian who keep an unwavering faith in the success of its projects. This faith in a context of big solidarity of the group of surrounding people allows to have rescues in the last moments of situations which can seem to us desperate at first.

  The vision of a Brazilian on the European cultural facts in Brazil: 

  • A too direct approach, sometimes perceived as arrogant and a suspicion to the communicated information:

The consideration of highly-rated optimistic of the Brazilians can let quickly a suspicion on all which is said

 The European then fetches to misguide this received risk in a more or less friendly way.

It can be translated by the aggressiveness, what will not be understood.

In addition, many people think about it, a certain arrogance from French people.

It is important to keep the formal way in a peaceful relationship 

  • A recognized professionalism but sometimes overrated:

Most of the Brazilians are humble and are ready to learn. Nevertheless, things are sometimes different in certain companies which have the feeling to be part of one the elite (the national champions). It can also succeed to recognize qualities and expectations to foreigners who do not deserve it …

  • A little bit stiff and pessimistic vision:

The absence of consideration of the Brazilian cultural facts makes that the capacity of strong mobilization over short periods is not integrated by the foreigners, what brings them to structure strongly the projects by stiffening them to mitigate the risks – and also to approach the deadlines and the results in a pessimistic way.

 We know that these differences are the source of difficulties or failures to come, but also from successes.

“Enrich yourself with the Brazilian creativity, their capacity of adaptation, and their will to succeed. But do not get trapped by the Brazilian enthusiasm and the optimism without watching your interests and the respect for deadlines, and finally, always leave a place with the unforeseen”

Florence Sabot , Brazilian Culture : To consider the optimization of your business

An administrative and fiscal complexity, which you should not be careless about

Brazil is a federal country made up of 26 states (more the federal districts). As indicated before, the protectionist is not recent and it slow down in the complexity of development in Brazil.

And to sort out of this situation, the administration does not give credit terms to citizens which have an exemplary behavior. The technology helping, the mechanisms of declaration, controls, recording, explode. In the great pleasure of stamp duty offices (Cartórios – it would be the hypertrophied part of a notarial cabinet and his clerks), experts in any particular fiscal kinds.

The administrative heaviness increases year by year, it in spite of a more and more strong IT integration.

Then, the fiscal complexity is a fact:

  • Several taxes difficult to understand even for Brazilians with for one of the most important the ICMS ,a reform necessary for the fact of replacing it by a VAT but will never happened – That she would aim to be – while she sits on flows (credits and debits flows) and not on the value of the product only.
  • States which use a fiscal competition lobbying between them to attract importers. That was the case of Espírito Santo or certain states of the South (Paraná and Santa Catarina) before the Federal government regulates measures against these practices.
  • There is a lack of confidence of the Federal system in the citizens or because of the competition between states drives to the persistently  creation of new taxes: Dependent substitution, PIS/COFINS monophasic … With rules which depend on products (NCM Codes among others), of the country of origin, the port of entrance to Brazil and the addressee.
  • The Willingness to develop the isolated state, the Amazon, drove to create fiscal exemptions, in particular profit taxes of companies producing locally with a sufficient contents.

Anyway, people says that several hundred modifications (some minors, others more important and to see essential for the preservation of the competitiveness), are brought every day in the fiscal domain.

There is thus a big fiscal and administrative instability, which represent risks more and more hardly for foreign companies. 

A necessity of penetrating into the networks of the power

In china we talk about ‘Guanxi’ which means ‘relationship’, it is a bit different in Brazil.

In China, it is more or less impossible to work with somebody without contacts in their network assures that they can do it.

In Brazil, there is real networks of influence and power, which also organise the political and business environment, the very big landowners or industrial families.

And you are not invited there straightaway. It is thus necessary to find some allies to introduce you – otherwise the road will be long.

An awareness of ethical standards

The Brazilian society is not content any more with exceeding the threshold of the self-sufficiency. Brazilians rebel, because of the potential improper use of funds collected by the administration, while there is almost no infrastructure for public transportation, all while the system of public health is deficient.

This society notices the misdeeds of the endemic corruption, which exists in the high levels of the administration and beyond (Police, Justice and Politics).

As usual, there are all the same Companies and exemplary people. And this value is growing.

We are persuaded that the demonstration of an ethical rigor and citizen, is going to become more and more a distinctive value and that tomorrow a society which continues to play beyond rules, “the brazilian way”, if it takes false competitive advantages (by paying little or no taxes for example) it will be offside with contractors who will want to give wages of righteousness to their shareholders – national or international.

How to manage to succeed in Brazil

First of all, and it is true everywhere, it is essential for Brazil to surround itself with international collaborators to develop.

These collaborators will have to have personal qualities, whether it is in terms of ethical values or in rigorous terms to adhere to the collaborative modes to be implemented with foreigners.

Besides, they will know how to interpret the values and the behavior of the Brazilians, and identify their impact on the business will be the key of the success.

Finally, to understand the environment of Brazil (its history, culture, social organization, evolution politics, economy) will be also be a deciding factor, given that it is confidentially connected to your capacity of interpretation of the codes of Brazil.

Freelog, which made a success of its development in Brazil, is capable of helping you to decode the country and to increase your chances of international success.

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 Jean François is Freelog’s funding partner. He is in charge of development in Americas. He has participated in many operational turnarounds in international contexts in various industries: shipbuilding, offshore, tourism, transport and logistics, information technology…
 Diego is São Paulo office manager. This brazilian studied and started his professional life in France before he developped Freelog office in Brazil. He is a expert in every supply chain, logistic and each otheromplex project management subjects.