emerging markets presentation
DESCRIPTION
Brazilian market benefits and difficulties in doing business in Brazil and comparison to other BRIC countriesTRANSCRIPT
EMERGING MARKETSBRAZIL
Michael Lauenstein
BRAZIL
• Pop. 186 Million
• Pop. Concentrated along the coast
• Immigrant population
• Largest Market in SA– +50% of all SA
• Developed infrastructure, continual investment in roads, ports and airports
BRAZIL
• Higher interest rates (currently 8.2%)• Stable currency (FX - 2.06BR = 1USD)• Stable inflation (currently 4%)• Largest Export in $ - Airplanes• Positioning itself as a leader of developing
nations/Mercosur• Looks to Europe / Looks away from US
– Political Alliances– Design– Business
BRAZIL• Local Presence/Product
– Large market, difficult to manage from 5,000 miles away– Used import delays – Don’t want product outs
• Non-Hispanic– Prefer English over Spanish – Can be difficult to find a Portuguese speaker in US– Don’t want to work with non-Brazilian S. Americans
• Business is modernizing – Managers well trained and worldly– Product/Sales Analysis– Accustomed to Technology
BRAZIL
• Brand conscious consumers
• Important to build a relationship first, then do business
• Love to negotiate
• Will always figure a way to get something done.
BRAZIL• Complicated Tax system
– Varying state taxes– Various levels of taxes
• Import Procedures – Bureaucratic– Main ports expensive– Unions strong
Sample Import Costing
US TO BRAZILModel 1 Model 2 Model 3 Model 4
ModelBemis Mfg Price 10.00 25.00 10.00 25.00Freight&Insurance 35.00% 3.50 8.75 3.50 8.75Duty Plastic 19.50% 1.95 4.88 0.00 0.00Duty MWD 14.00% 0.00 0.00 1.40 3.50IPI Plastic 10.00% 1.00 2.50 1.00 2.50IPI MWD 0.00% 0.00 0.00 0.00 0.00ICMS 18.00% 1.80 4.50 1.80 4.50TOTAL $USD 18.25 45.63 17.70 44.25Brazilian Reals FX 2.06 37.60 93.99 36.46 91.16INTER Margin 15% 2.74 6.84 2.66 6.64Store Cost 40.33 100.83 39.12 97.79Store Margin % 40.00% 40.00% 40.00% 40.00%Store Margin $ 16.13 40.33 15.65 39.12Retail Price 56.47 141.16 54.76 136.91
Plastic Wood
BRAZIL
• Foreign Companies in Brazil
• Wal*Mart
• Carrefour
• GM, Ford, Chrysler, Renault, Peugeot, VW
• SC Johnson
• Johnson Controls
• Nestle
• Brazilian Multinationals
• Embraer
• AmBev
• Tramontina
• Azalea
• Varig / TAM Airlines
• Zoomp / ING
• Café do Ponto
EMERGING MARKETS
Brazil China India Russian FederationPopulation (millions) 184 1,300 1,100 144Population Growth 1.4% 0.6% 1.4% -0.5%GDP Per captia $3,000 $1,500 $62 $3,400Inflation 8.2% 6.9% 5.3% 18.1%Imports as a % of GDP 13% 31% 23% 22%No. of Day to star a business 152 48 89 36Internet users per 1,000 119 73 111 32Cel phone/Land line users per 1,000 587 499 85 508Source: World Bank 2004