Utfordringer ved forretningsutvikling i Brasil Terje Staalstrøm President

OBJECTIVE of BNCC: Strengthen Commercial Relations between Brazil and Norway NTNU

Business Seminars NTNU

Profiling BNCC and Brazil NORSHIPPING 2011 NTNU

Active participation in the official Reference Group for development of Brazil Strategy NTNU

Challenges and Responsibilities for Norwegian Business in Brazil Numerous! And you don’t always know before it’s too late! NTNU

A succesful business requires facts. Not dreams. NTNU

We need Facts about: -Geography -Economy -Social structure -Political system -Legal systems -Historical background -Cultural dimesions of doing business -Population and competencies -Language -etc As well as : Market and competitor info for products and services NTNU

9 IT’S HUGE !

7th world economy in 2011 and 5th before the Olympic Games in 2016

In spite of oil riches – Brazil still has some way to go NTNU

12 Brazil Population 198 million million voters. World’s 4th largest democracy - 88 % literacy - 26 % below poverty line - GDP growth 7,5% (5- 6 % average next five years) - Unemployment 5.3% - Inflation 5,9% - Foreign reserves US$ 299 billion - FDI : US$ 48,5 billion - Exports: increase 32% - Exchange rate: 1 Real = NOK 3,50

13 Norway is now the main destination for Brazilian exports to the Nordic Countries ( )

Business negotiation fosters the confrontation between different values, visions and perspectives. These differences are conditioned by the culture of the parties – Norwegian and Brazilian. So – understanding the cultural differences is paramount NTNU Brazilian culture is a dynamic product of the various population groups that make up the demography of the country - mainly Europeans, indigenous peoples and Africans

NTNU “Culture is more often a source of conflict than of synergy. Cultural differences are a nuisance at best and often a disaster.“ Prof. Geert Hofstede, Emeritus Professor, Maastricht University. Power Distance Index (PDI): Degree of equality, or inequality, between people High Power Distance indicates inequalities of power and wealth within society. Individualism (IDV): Degree of individual or collective achievement and interpersonal relationships. A High Individualism ranking indicates that individuality and individual rights are paramount within the society Masculinity (MAS): Degree of traditional masculine work role model. A High Masculinity ranking indicates the country has a high degree of gender differentiation Uncertainty Avoidance Index (UAI): Degree of tolerance for uncertainty and ambiguity. A High Uncertainty Avoidance ranking indicates the country has a low tolerance for uncertainty and ambiguity. This creates a rule-oriented society that institutes laws, rules, regulations, and controls to reduce uncertainty. Long-Term Orientation (LTO): Degree of long-term devotion to traditional, forward thinking values. High Long-Term Orientation ranking indicates the country values long-term commitments and tradition.

NTNU

Just a reminder of cultural differences BRAZIL NORWAY NTNU

Norway Brazil NTNU

Examples on how Brazilians may be expected to act during negotiations 1. Nature of Negotiating Activity 1.1. Basic conception of the negotiation Competition (30 %) Collaboration (70 %) 1.2. Negotiating attitude Bargaining (50%) Integration (50%) 1.3. Objective of the negotiation Contract (47%) Relationship (54 %) 1.4. Strategy of the negotiation Planned (51%) Improvised (49 %) 2. The Role of the Individual 2.1. Responsibility IIndividual (33%) Group (67 %) 2.2. Decision-making Leader (33%) Consensus (67%) 5. Trust 5.1. Interpersonal trust Trust (71 %) Distrust (29 %) 5.2. The basis for trust Reputation (74 %) I ntuition (26 %) Source: Eugenio Carvalhal ”Cultural dimensions of negotiations” NTNU

Bureaucrazy Brazil’s history is a history of bureacracy Low risk tolerance leads to rules and regulations Demand for certificates,permits, credentials and other official documents is a hotbed for bureacrats (and corruption) World Bank 2011 ranks Brazil as 126 of 181 in efficiency of setting up business (5-6 months) ”Despachantes” and ”Jeitos” NTNU

Corruption Transparency International ranks Brazil at corruption level with other BRICs –and Italy Norwegian companies - Norwegian and Brazilian laws. ”Severe” = Public officials. Increasing with distance from major cities Public bids in Petrobras, but less transparency with subcontractors. Political problem, but Dilma adressing issue. Growing middleclass demands political accountability NTNU

Brazil is the land of taxes ! More than 50 different taxes and social contributions – federal, state and municipal levels Complex regulatory, tax and legal issues; Difficult to structure a transaction; Nature of tax legislation; frequent changes in tax laws; High level of penalties and interest when non- compliance Tax disputes are common and can take more than 10 years to reach a final decision This complex environment makes the tax area as one of the key business issue for foreign companies in Brazil YOU NEED A GOOD TAX LAWYER AND A GOOD TAX ACCOUNTANT

NTNU But – don’t despair! ”Everything is going to be all right in the end, and if everything is not yet all right, that’s only because we haven’t reached the end!” (A popular saying)

NTNU Informative Brochures

Use the assistance available to you! Foreign service (Norway and Brazil) Innovation Norway Intsok APEX Chambers of Commerce (Oslo, Rio, São Paulo) Consultants on establishment process Local legal firms specializing on Norway NTNU

BNCC website: NTNU Takk for oppmerksomheten! Obrigado!