Market research: Business environment in Brazil

Economy: Brazil is a developing country, currently facing great economic growth. Middle class is changing its consuming habits as a response to income increase and easier access to credit, but still suffers from great economic inequality and great shortage of qualified technical manpower, especially in the ITCs and engineering sectors. This enhances the obstacles to the appropriate infrastructure expansion needed in order to meet its economic growth, but it also represents an opportunity for foreign investors and specialized technical manpower. Abundant natural resources and strong agribusiness, mineral and energy sectors.

Most industrial economic activity, which includes automobiles, steel, petrochemicals, computers and steel, is focused around the southeastern states of Rio de Janeiro, Minas Gerais, and São Paulo. Brazil’s agricultural sector is well diversified and the country is a world leader in producing sugarcane, coffee, soybeans, and orange juice. [1]

There are a number of promising areas for foreign exports and investment, including: agricultural equipment; agriculture; aircraft and parts; airports; computer software; e-commerce; highways; insurance; iron and Steel; IT hardware; medical equipment; mining; oil and gas; pharmaceuticals; pollution equipment; ports; railroads; safety and equipment; telecommunications and tourism. [2]

Foreign trade overview for 2011.1, compared to 2010.1 [3]

  • International trade in Brazil reached a record USD 223,6 bi. A 30,1% growth over the same period in 2010.

  • Basic goods exports increased 44%, semi-manufactured 29,6%, manufactured 19,1% and industrialized 50,3%

  • Destination markets: Exports to Asia showed a 37,9% increase, along with 23,9% for Latin America and the Caribbean, and 31,4% for the European Union.

  • For imports, the acquisition of raw materials and industrial supplies and materials represented 45,5% of total, while 21,5% where of capital goods. This shows strong correlation with productive investments.

  • Consumer goods imports increased 31,1%, fuel and oil 39,2%, capital goods 27,5% and raw material and industrial supplies and materials 24,8%.

Society and Culture

Brazil is a democratic and federation structured society, with a population of over 190 million people of vast ethnic and cultural diversity. Increase of minimal wage and expanded coverage of income transfer policies in past years have contributed to the recent changes in its distribution pyramid. [4]

Demography [5]

  • Metropolitan areas concentrate major population groups with large demographic density disparity between regions.

  • Lower fecundity and birth rates indicate the reduction of children and teenage population, while the increase of life expectancy shows older population growth. According to UN statistics, life expectancy in Brazil reaches 72,9 years.

Education

  • In 2009, the population between 18 and 24 years old with 11 years of schooling was extremely low, at 37,9%. In the same year, 48,4% of students aged between 18 and 24 were at a graduation level of study.

  • In 2009, the illiterate population was still at 9,7% (14,1 million people). From this group, 32,9% were 60+ years old and 52,2% lived in the northeast region of the country. It is also a fact that Brazilian women are more literate than men.

Households

  • There was a total of 58,6 million households in Brazil. 85% (49,8 million) located in urban areas, averaging 3,3 people per household (2009).

  • Only 62,6% of urban households were connected to the water supply and sewage systems, and offered waste management services. (North: 13,7%; Northeast: 37%; Southeast 85,1%)

  • 49,1% of households had a landline while 83,1%  of households had at least one person with a mobile phone. This is a reflection of the high cost of landline phone services and the absence of such service in many locations.

  • Internet access: 31,5%. Computer possession: 39,3%. An important note is that internet access needs great investments regarding service offer and accessible prices.

  • Two million children aged between 5 and 15 were under some type of labor; 44% of them located in Brazil.

  • 48,5% of low income families where situated in northeast (2009).

People

  • The elderly population of 60+ years old accounted for 11,3% of the population. 55,8% of this group were women, and 30,7% had less than one year of schooling.

  • In 2009, 48,2% of the population declared being of white race (mostly European ethnicity); and a growth of indigenous population in rural and urban areas.

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[1] US Department of Commerce. Doing Business in Brazil. Access on August 31, 2011.

[2] Ibid.

[3] MDIC. Balança Comercial. Access on August 24, 2011.

[4] Portal Brasil. Business Environment in Brazil. Access on August 24, 2011. pp. 28-29.

[5] IBGE. Síntese de indicadores sociais. Access on August 24, 2011.

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