Eduardo Lorenzetti Marques | Campedelli, Marques e Zarif | São Paulo – Brazil

COMPARATIVE DATA (CHINA VS BRAZIL) 2012 COMPARATIVE DATA CHINABRAZIL Population1,3 Billion200 Million Area9,6 Million Km²8,5 Million km² GNP per capita (current US$)7.945,00 USD USD GNP (current US$ billion)8,227 Trillion2,449 Trillion Anual Growth of GNP (%)7,80%0,90% HDI/Position (Ranking)0,699/1010,73/85 Life expectancy (years)73,7 years old73,8 years old Inflation %3,10%5,85% Unemployment %4,10%4,60%

Eduardo Lorenzetti Marques | Campedelli, Marques e Zarif | São Paulo – Brazil ORIGIN OF CHINESE IMPORTS (MAIN COUNTRIES) - BRAZIL: 2,73%

Eduardo Lorenzetti Marques | Campedelli, Marques e Zarif | São Paulo – Brazil DESTINY OF CHINESE EXPORTS (MAIN COUNTRIES)

Eduardo Lorenzetti Marques | Campedelli, Marques e Zarif | São Paulo – Brazil ORIGIN OF BRAZILIAN IMPORTS (MAIN COUNTRIES) USD BILLIONS – CHINA: USD 34,2 BILLIONS

Eduardo Lorenzetti Marques | Campedelli, Marques e Zarif | São Paulo – Brazil DESTINY OF BRAZILIAN EXPORTS (MAIN COUNTRIES) USD BILLIONS – CHINA: USD 41,2 BILLIONS

Eduardo Lorenzetti Marques | Campedelli, Marques e Zarif | São Paulo – Brazil CURRENT TRADE – BRAZIL VS CHINA

Eduardo Lorenzetti Marques | Campedelli, Marques e Zarif | São Paulo – Brazil MAIN PRODUCTS EXPORTED BY BRAZIL TO CHINA AND IMPORTED BY BRAZIL FROM CHINA The main sectors - Exportation – Brazil to China Share in total exportsAmount exported (USD) Iron extraction43,30%USD ,00 Crop Production23,20%USD ,00 Extraction of oil and gas13,20%USD ,00 Cellulose for paper manufacturing3,70%USD ,00 Vegetable oils and fats manufacturing2,60%USD ,00 Sugar manufacturing1,70%USD ,00 The main sectors – Importation – Brazil from China -2010Share in total exportsAmount exported (USD) Machinery and equipments for data processing9,70%USD ,00 Television and radio receivers8,40%USD ,00 Electronic material6,60%USD ,00 Telephone equipment6,40%USD ,00 Steel5,30%USD ,00 Machinery and equipments for general use4,90%USD ,00

Eduardo Lorenzetti Marques | Campedelli, Marques e Zarif | São Paulo – Brazil DIRECT INVESTMENTS – BRAZIL VS CHINA (USD BILLIONS) – 2012

Eduardo Lorenzetti Marques | Campedelli, Marques e Zarif | São Paulo – Brazil DOING BUSINESS IN BRAZIL AND IN CHINA COMPARATIVE DATA BRAZILCHINA Doing Business 2014 Rank11696 Starting a Business Dealing with Construction Permits Getting Electricity14119 Registering Property10748 Getting Credit10973 Protecting Investors 8098 Paying Taxes Trading Across Borders Enforcing Contracts12119 Resolving Insolvency13578

Eduardo Lorenzetti Marques | Campedelli, Marques e Zarif | São Paulo – Brazil GEOGRAPHICAL DISTRIBUTION OF BRAZILIAN INVESTMENT IN CHINA

Eduardo Lorenzetti Marques | Campedelli, Marques e Zarif | São Paulo – Brazil BRAZILIAN PRESENCE IN CHINA (i) in 2012, there were about 60 Brazilian enterprises in China (e.g. Inbev, Banco do Brasil, Banco Itaú BBA, Bovespa, Embraer, Odebrecht, Petrobrás, Vale, Votorantim, etc.); (ii) In the last 10 years Brazil invested in China about about 560 million dollars (0,04% of the total amount of foreign direct investments in China); (iii) the service sector is what most attracted the interest of Brazilian companies, representing 51% of the group; (iv) Brazil is considered a latecomer to China. When it arrived in the country, American and European compnaies had already a consolidated position.

Eduardo Lorenzetti Marques | Campedelli, Marques e Zarif | São Paulo – Brazil THE MAIN DIFFICULTIES FOUND BY BRAZILIANS TO OPERATE IN CHINA (i) Red tape: difficulties on obtaining permits and approvals from the Chinese government for projects in regulated sectors; (ii) Local partner: mismatch between the strategic objectives of Brazilian companies and the strategic objectives of the Chinese partners; (iii) Over regulation: the detailed regulation of various sectors by the Chinese government; (iv) Intellectual property: non-recognition by China of international practices relating to intellectual property; (v) Government interference with the market: limits imposed by the Chinese government to the free market;

Eduardo Lorenzetti Marques | Campedelli, Marques e Zarif | São Paulo – Brazil GEOGRAPHICAL DISTRIBUTION OF CHINESE INVESTMENT IN BRAZIL

Eduardo Lorenzetti Marques | Campedelli, Marques e Zarif | São Paulo – Brazil CHINESE PRESENCE IN BRAZIL (i) Chinese companies are divided into different sectors of production in Brazil; (ii) the amount China invested directly in Brazil until 2012 corresponds about 20 billion dollars; and (iii) in 2011, there were lots of Chinese enterprises in Brazil (e.g. Chery, Foxconn, JAC, Wuhan Iron An Steel Group Co., etc.).

Eduardo Lorenzetti Marques | Campedelli, Marques e Zarif | São Paulo – Brazil THE MAIN DIFFICULTIES FOUND BY CHINESE TO OPERATE IN BRAZIL (i) Red tape: bureaucratic processes; (ii) Taxes: high taxation and complex system; (iii) lack of infrastructure; (iv) floating exchange rate; (v) Visas: difficulties on obtaining working permits

Eduardo Lorenzetti Marques | Campedelli, Marques e Zarif | São Paulo – Brazil SPECIFIC ISSUES OF THE CHINESE PRESENCE IN BRASIL – TRADE (ANTI-DUMPING AND SAFEGUARD MEASURES) (i) The trade defense measures consist in the application of antidumping and countervailing duties, provisional or definitive; (ii) The safeguard measures consist in the application of tariff measures or quantitative restrictions against a surge in imports from various sources; (iii) Brazil promulgated law n /1995 that provides for the enforcement of rights under the Antidumping Agreement and the Agreement on Subsidies and Countervailing Measures of the WTO; (iv) Currently, even though China is considered an emerging economy, it is treated as non-market until 2016; (v) In 2004, China and Brazil signed a Memorandum of Understanding whereby Brazil granted China market economy status. This rule, however, has not been applied in practice; and (vi) Half of anti-dumping measures imposed by Brazil are against Chinese products;

Eduardo Lorenzetti Marques | Campedelli, Marques e Zarif | São Paulo – Brazil SPECIFIC ISSUES OF THE CHINESE PRESENCE IN BRASIL – RURAL LAND ACQUISITION (AGRICULTURE) (i) According to the last report of the Central Bank of Brazil, foreigners have bought USD 60 billion in land in Brazil. China is the first foreing investor in land acqusition; (iii) Trying to control Brazilian land acquisition for foreigners’ enterprises, mainly Chinese ones, the Brazilian government announced a change in the opinion of the General Advocacy of Union regarding leglistation; (iv) for purchasing a rural property in Brazil a foreign entity must be authorized to operate in Brazil and must obtain approval of an agricultural project of exploration tied to its contractual or statutory objectives; (v) the limit for acquisition of rural property by a foreign legal entity is 100 rural modules. For the acquisition of a superior amount the foreign legal entity must obtain an special approval of the Brazilian National Congress; and (vii) The amount of 1 rural module varies according to each Brazilian region.

Eduardo Lorenzetti Marques | Campedelli, Marques e Zarif | São Paulo – Brazil