Brazil is a new investment target, but the country still presents many problems for investors that want to participate in the Brazilian market. This article outlines these problems and also proposes solutions to make business in Brazil a clearer and more successful process.
Brazil is a developing country in ascension with many attractive features for investors. With a vast territory full of natural resources and opportunities for expansion. In addition to the growing Brazilian economy and the increasing purchasing power of the population, the country has caught investors attention worldwide. Making Brazil a very appealing area for foreign financial transactions.
Business Environment in Brazil
A recent report developed by the World Bank ranked the economies of 185 countries according to the ease of doing business. From 1 to 185, the countries are classified in accordance by their regulatory environment for starting a new business.
If the environment is favourable to open a business or a new business operation the ranking is lower, closer to 1, and if the regulatory conditions are unfavourable the ranking is higher, closer to 185. Brazil was ranked 130th, a poor result in comparison to other South American countries, such as Argentina (124th), Paraguay (103rd), Uruguay (89th), Peru (43rd) and Chile (37th).
Problems to be Confronted
The low position of Brazil in the study can be explained by the number of necessary days it takes to open a business in the country. In Peru it takes 60 days and in Chile 32, while in Brazil the whole process can be completed in a staggering 156 days.
The Bureaucracy Barrier
It is clear that bureaucracy has decreased the ease of doing business in Brazil. Even though the country has become an important target for foreign investments some Brazilian problems cannot be ignored.
The country is a victim of a system of administration with many divisions, rules, controls and redundant procedures that, most of the time, are unnecessary for the opening of a business.
The bureaucracy in Brazil can be so overwhelming that even Brazilians get confused. This type of system nurtures the idea that every procedure in Brazil takes much longer than it should actually take and also diminishes the government's efficiency.
Delays and Clearer Contracts
Not only is their unnecessary time spent on opening a business in the country, there is also a problem for investors in Brazil. Payment can also be an issue, especially regarding delays. Brazilians are recognized worldwide for their ability to be late and unfortunately this ability can be also perceived in payments and in financial remittances.
Not all Brazilians have this problem, but in order to be cautious, the establishment of a good contract with explicit and verified information is the best option to guarantee the success of any type of business in Brazil.
Avoiding Complications with Bank Transfers
To avoid any type of trouble when doing business in Brazil it's important to understand how Brazilian banks work. Just like in any part of the world, banks in Brazil work with digital systems and systems don't always recognize mistakes.
For a financial transaction in a bank to be processed correctly, it is necessary to present the exact information that the bank requests. To be sure that the information requested by a bank is the same provided by the person that is sending the money, double-check the information is the most advisable option.
Razão Social and Nome Fantasia aren't the Same Thing
The lack of information or errors is a normal complication encountered by legal entities, on reason is due to the fact that in Brazil companies have two different names: Razão Social and Nome Fantasia. This part could be tricky for foreigners, since Nome Fantasia and Razão Social aren't universal terms. Both are nuances of Brazil therefore being unknown terms abroad. However, the knowledge of their meanings is fundamental to guarantee the success of a foreign payment.
• Razão Social: It's the nome comercial, denominação social or firma empresarial, which means the name with the company as it's registered in Brazil.
• Nome Fantasia: The name which the company is commonly known as, which can also be called the nome fachada or marca empresarial.
Example: McDonald's is a fast food restaurant popularly known by its Nome Fantasia, McDonald's. The Razão Social of McDonald's is registered as Arcos Dourados Comércio de Alimentos Ltda.
To money transfers by a company must indicate the Razão Social in the bank system. The biggest mistake made by foreigners is that they usually send their money with the Nome Fantasia of the company, which hinders the data matching of the bank system. If the information submitted by the foreigner doesn't correspond to the data registered in the bank the transaction will not occur, and the money will be returned to the sender or remains with the bank.
The info graphic below here shows ways to Send money to Brazil or to Abroad
We hope this information helps to give you a better understanding about the financial world and doing business in Brazil, and if you would like to read more articles related to this, let us know!
A big thank you goes to our friends at The Brazil Business who were so kind to write this for us.
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