The buzz over the past few years about export markets has been all about the BRIC countries—Brazil, Russia, India and China. But each of these represents a very different market, and the costs and benefits of entering these markets are not equal.
For a variety of reasons, both political and economic, opportunities in Russia have never truly materialized. India, due to issues such as entrenched government bureaucracy, slow decision-making and extreme price sensitivity, still presents serious challenges. And China, aside from not really being a new market, is a massive one that can be daunting for small and medium-sized Canadian companies.
Brazil, on the other hand, offers significant opportunities for Canadian companies right now. In fact, Canadian companies looking to enter the Brazilian market may have a leg up on competition from other countries because of similarities between our two economies. Both Canada and Brazil are resource-rich and have strong commodities markets. Both also are exporting nations and share the same main trading partners—namely, the U.S. and China. But Canadian trade with Brazil is not nearly as significant as it could or should be.
Brazil offers opportunities across various sectors. And many of these match Canadian industry strengths, such as information and communications technology, infrastructure, aerospace, environmental technologies, mining, and oil and gas equipment and services. Current growth in Brazil is making it difficult for domestic manufacturers and service providers to keep up with demand in these sectors.
Brazil also offers various incentives to foreign investors. These take the form of tax breaks for companies, as well as grants and other federal programs designed to support development in the less developed areas of the country, particularly the northeast and Amazon regions.
While there certainly are plenty of opportunities in Brazil, you have to do your homework—as with any foreign market. Be prepared to invest time, money and effort. The Brazilian business culture is built on relationships, so companies looking to trade with Brazil need to make building personal relationships a top priority. Also, be aware that there are certain industries that are restricted, and permission from the government must be obtained for foreign firms to operate certain types of businesses, such as transportation companies, mining companies, and oil and gas refineries.
It's never simple entering new markets. But by taking some time to explore market opportunities and potential partnerships, Canadian companies can find strong synergies in Brazil.
Joy Nott is president of I.E.Canada, the Canadian Association of Importers and Exporters, and has more than 20 years of experience in customs compliance. Prior to joining I.E.Canada, she was a vice-president and managing consultant for JPMorgan Global Trade Management Services.
More columns by Joy Nott