There are too many pitfalls behind going to sea in Brazil, and companies are advised not to move overtime and involution culture to the past|Hundreds of people talk about going to sea

In the past two years, Brazil has become the second most popular place for enterprises to go overseas, and the voice of "capital running into Brazil" is endless, but the excitement is lively, and it is not easy for people who want to enter Brazil to enter this blue ocean.

Logistics customs clearance, tax treatment, qualification certification, sales subjects, etc. are big thresholds and problems for a large number of overseas enterprises. This year, many sellers even bluntly said that Brazil cross-border stores can no longer do: "The original 17% state tax is already a big blow, and the 20% tariff on small parcels after the tax reform this year has dried us up." ”

The change in these voices made many people who were ready to enter the sea fall into a fog. In this issue of Leifeng.com's Whale Rhino Hundred People Talk Column, we invited Alai, CEO of Yimo Technology, to share their experience of going to Brazil, and talk about whether Chinese companies have any opportunities to go to Brazil, where the opportunities are, what pits those who have already gone to Brazil have stepped on and what their solutions are.

Alai believes that Brazil's high taxes, complex categories, and extremely high compliance thresholds are really too many pitfalls behind it. Although there are many service providers in the market that provide relevant services for enterprises to enter Brazil, some service providers themselves do not know the pitfalls behind them. "We also tried to figure out what each pit looked like and how to avoid it, but then we found that it was not clear or endless."

One of the sad results of Wanshuiguan is that there is no advantage in cross-border, the cost is extremely high, and many platforms and sellers are carrying out localized layout. At present, among the orders of cross-border platforms such as SHEIN, Shopee, and AliExpress, local goods far exceed cross-border goods. "Now there is a lot of reduction in cross-border business in Brazil because profits are getting worse. Doing a local supply chain is the way out. Ah said.

However, there are also many pitfalls to step on in the layout of the locality, and the huge differences and conflicts caused by the different Chinese are a big problem.

From the perspective of A, unlike the overtime culture and involution culture of Chinese enterprises, labor relations in Brazil also need special attention. Brazil people must not roll and do not work overtime, and many Brazil companies and Chinese enterprises are very careful about their employees and dare not offend them. Uncomfortable office environment, noise, etc. can be a reason for employees to sue the company, and the company has to pay a considerable cost to deal with the lawsuit in the process.

Brazil has high taxes, complex categories, and extremely high compliance thresholds, and there are many pitfalls behind it

Whale Rhino: Please introduce yourself to the friends who have talked to hundreds of people who have gone to sea to talk to whale rhinos

Alai: I graduated from university in 2007 and entered e-commerce, entered cross-border in 2010, and started my own business in 2019, and I have been paying attention to Brazil for the past two years. As early as 2013, when we went overseas as an independent brand station, we found that South America is a traffic depression, and the entire operation is inseparable from a series of problems such as tariffs, logistics, and customs in Brazil. So since a long time ago, we have had good performance in Mexico and Argentina in South America, but Brazil has not won it.

After starting my business in 2019, I started to pay attention to Brazil again, thanks to the changes in the market and some opening policies in the mainland, many domestic logistics companies and customs clearance companies have paved the way for everyone to Brazil, and now Brazil has opened up the opportunity for us to re-enter this market. At the end of last year and now about a year ago, we officially launched the project in Brazil, and in the process found many pitfalls that we were not aware of before. Although many service providers, media outlets and third-party organizations are now introducing Brazil, there are still many information biases.

Mao Mao: I have always been a domestic entrepreneur, mainly engaged in domestic consumer goods, about a scale of several hundred million. We represent a Chinese brand that is in the stage of seeing the sea, so I look more at whether consumer goods have the opportunity to go global. I think Brazil is a market with a large information gap, firstly because of the locale, and secondly, because of the physical environment. Brazil is indeed a very attractive market, but most people are not clear about how to do it and how to enter it.

Whale Rhino: How is the overall business environment in Brazil different from that in China? What are the advantages and challenges for Chinese companies going to Brazil?

Alai: According to our research, Brazil is one of the top developed countries in the world, with a per capita GDP of more than 9,000 US dollars, good consumption capacity and economic foundation, and relatively sound software and hardware facilities. In terms of e-commerce, whether it is mobile payment, logistics or credit system, it is relatively sound. Local e-commerce and social media in Brazil are also blooming everywhere, and there is a relatively large gap in business.

The first advantage of Chinese businessmen coming to Brazil is the supply chain, that is, the advantage of Made in China; The second advantage is that the local culture in Brazil is not business-oriented. Brazil's economy is based on agriculture and some mineral resources, the business atmosphere is not as competitive as at home, and their merchants are of a lower level than Chinese businessmen. In terms of business skills, Brazil is relatively simple and direct, which is also because Brazil is a relatively closed market environment, and there is relatively little foreign invasion or interference, so there is no special volume inside.

Brazil occupies 2/3 of South America's land and resources, and is also the main population component of South America, its territory is very broad, the population is relatively scattered, 30%-40% of the population is concentrated in the southwest of Sao Paulo and Rio, the rest are scattered everywhere. Therefore, the traditional business layout is also relatively scattered.

In addition, Brazil's taxation is similar to that of United States, which is federal, and each state and city has different tax policies for different products and industries. Our goods are taxed across regions in the distribution and sales links, because there are tax differences between regions, which also leads to some traditional enterprises and brands in Brazil being limited to their own small operations. Most of the local businessmen I contacted in Brazil did not have strong business ambitions, and many small but beautiful teams have been deeply involved in a subdivided industry for decades, doing very well in their own regions, having popularity and reputation, and forming their own small brands, but they have not promoted, expanded, or crossed industries.

When the Chinese go to Brazil, they compete more locally with the Chinese. However, the opportunity lies in the closed nature of the market and language, and only Brazil speaks Portugal in the whole of South America, so there are still relatively few Chinese entering Brazil, and there are more than 300,000 Chinese businessmen in Brazil according to official statistics. Since last year, domestic manufacturing, brand enterprises, cross-border e-commerce enterprises, etc. began to pay attention to Brazil, went to Brazil to investigate and research, participate in exhibitions, and seek orders and business opportunities, but very few really landed.

How do products get to Brazil? There are many problems in transportation, customs clearance, compliance and so on. We saw many Chinese companies in Brazil go to the exhibition and look for customers, but the products did not enter Brazil for a long time, and after the exchange, they all said that they were facing product compliance and customs clearance problems. Since last year, there have been many service providers in the market that have provided relevant assistance for enterprises to enter Brazil, but as far as I know, these service providers do not know the pitfalls behind it.

Whale Rhino: Brazil's taxes are relatively high, are there any categories that can be compared with China? In addition, in the process of operation, what creates a threshold for everyone?

Alai: There are 58 types of taxes in Brazil, including federal, state and municipal taxes. In terms of imports and exports, in addition to the two basic taxes of customs duties and value-added tax, Brazil also has industrial product tax, income tax, turnover tax, etc. Taxes are numerous and complex, and they are also relatively heavy, whether it is daily necessities, small products, digital 3C products or large cars, the prices are relatively high, and the prices are generally high. But Brazil lacks manufacturing, light and heavy industries are very scarce, and some industries that are mechanized are absent. Brazil has a strong aerospace industry, but there is no automotive industry, no car brands of its own. There is agriculture and processing of agricultural products, rich in mineral resources, mainly raw materials exported, processed and then returned. There are some differences in the tariff rates of different categories, Brazil's cross-border e-commerce comprehensive tax is about 70%-80%, but if you really do general trade customs clearance and tax declaration, the comprehensive tax rate may be 100%-150%. There are many subdivisions in the tax category.

At the beginning of this year, the cost of shipping rose from $3,000 to more than $30,000 now, and there are some miscellaneous fees for customs clearance. The original 100 yuan product may become 250 or even 300 costs after landing in Brazil. And sales in Brazil also need to pay sales-related taxes, such as IPI industrial product production tax, IPI is a tax levied on enterprises in the production and sales cycle, in Brazil's regulations, import equals production. The normal IPI tax rate is about 25%, if company A is used to import products, the cost is 300 yuan after the final customs clearance, and 25% tax must be paid; Then use company A to sell, the price is 500 or 1000, then you have to pay about 25% IPI tax on this base, so most products in this case are not profitable.

The measures taken by local enterprises in Brazil to avoid tax are that the import subject and the sales subject are two companies, and the transaction between the import subject and the sales subject will not have much profit, saving 25%, and the subsequent sales of the sales company do not need to pay IPI tax, only need to pay normal sales tax, income tax and some turnover tax, which may be as high as 30%-40% in combination. The importer and the seller need to be completely independent and have no equity relationship, which is also a threshold. Either find a partner seller or have two completely independent companies in Brazil.

According to the annual scale of operation of enterprises in Brazil, the tax is also gradient, from a fixed tax rate of a few points to millions of dollars, the comprehensive tax rate may be as high as 70%-80%, and no company can make a profit under such a high tax rate. Therefore, many local enterprises in Brazil have many sales companies under their umbrella and cooperate with many entities to sell, and the scale of each enterprise is controlled within a certain range and enjoys a reasonable low tax policy. These are the thresholds for Chinese companies to go to Brazil, because setting up a subject in Brazil, whether it is capital or equity identity, has a series of process problems to solve in the past, and the time and cost are higher than those in Europe, America and Southeast Asia.

Whale Rhino: Where are the main importers of manufacturing-related categories in Brazil?

Alai: A lot of things in the Brazil market come from China. A large number of Chinese businessmen operate in Brazil, bringing domestic products to the country, and even local brands in Brazil rely on Chinese production OEM. Because the Brazil government encourages the development of local enterprises and encourages foreign investment in local production and manufacturing, and builds supply chains, in recent years, some industries such as clothing have also begun to transform from traditional handicraft workshops to foreign supply chain participation, and these manufacturing factories have gradually risen. However, in terms of scale and production management level, it is relatively backward, and it does not have some complex processes and good production environment and conditions.

In addition, there are some tendentious guidance in Brazil's policy, such as the tax on the import of machinery and equipment, raw materials and the tax on finished products may differ by 100%. Now some Chinese companies such as Xiaomi, Huawei, BYD, etc. are inspecting the Brazil market, and some companies have even started to build factories. In fact, they all saw the market opportunities in Brazil, as well as the high compliance and tax thresholds, and chose to put the supply chain locally.

Whale Rhino: If you produce in China, how much is the difference between the import tax and the tax on the circulation of finished products?

Alai: Every category is different. For example, cosmetics, 10 yuan of things landed in Brazil, and the cost was 25 after customs clearance. Coupled with some local turnover tax, business tax, income tax, etc. in Brazil, if the cost of 25 is sold for 100 yuan, it may be a loss, and it can be sold to 150-200 to have a good profit. If you find a local enterprise for production and processing, you only need to pay 25% IPI tax, and the difference between the two methods may be 100%.

High taxes are one thing, and on the other hand, there is a matter of compliance. Many categories in Brazil are subject to mandatory certification, such as 3C, communications, signal transmitters with power and wifi, as well as cosmetics, medical, and food-related products. The complexity, cost and time cycle of certification are far greater than those in Europe and the United States. We have met many domestic companies that want to go overseas to Brazil are willing to pay tax costs, and they can also get better orders locally, but they just can't solve the problem of certification.

Some digital small household appliances produced in China have a certification cycle of up to 3-6 months, and the cycle of cosmetics is longer, and the cost is much higher than that of Europe, America and other countries, which may reach 3-5 times or even higher. This also led some Chinese companies to go to Brazil to participate in the exhibition, and after receiving orders, they found that they could not deliver orders this year, and they may have to wait for half a year to a year for certification.

Another threshold is that Brazil does not recognize foreign entities to do certification, including trademarks, imports, and customs clearance subjects, so enterprises need Brazil's import entities to register trademarks, do product certification, and the authorization of certification must also be given to entities in Brazil. That is, it is not possible to use a Chinese company for Brazil certification, in which case either register a Brazil company or find a Brazil agent, which has a very high risk. Because after finding an agent, from the right to the goods to the trademark certification qualification belong to the other party, no matter what kind of contract is signed, the legal protection is limited. Chinese enterprises in Brazil will basically be equipped with full-time tax and legal affairs, or hire consulting firms, because there are many problems related to tax and legal affairs, and there are many pitfalls.

Brazil is relatively sound in terms of the rule of law, meticulous in all aspects, and easy to obtain justice through legal means, but very weak at the level of enforcement. In Brazil, companies encounter some very common problems, such as employees stealing company property, companies can get evidence, sue the employee, or get a just court trial, but they can't get back the stolen things, or the equivalent value of money, from the employees, they will not enforce it. Even if an employee is fired for stealing company property, he still has to pay for the cost of termination, insurance, and other subsidies. If you don't have a good reason to fire an employee, even if you're willing to pay the cost, there are still a lot of hidden dangers. Therefore, in Brazil, labor relations are also a very difficult problem to solve, and there are many legal risks with trade unions.

Brazil is extremely protective of employees, and the culture of involution and overtime in Chinese enterprises is not applicable

Whale Rhino: Can you give some examples in terms of labor relations? What are some easy pits to step on?

Alai: First, it is absolutely not possible to force Brazil employees to work overtime. Maybe you ask him to do 10 extra minutes after leaving work at 6 o'clock, and he doesn't show any dissatisfaction, but maybe the next day you will receive a summons from the arbitration department, or a longer time later he will complain about you, report you, and ask you for compensation because you forced him to work overtime. This amount of compensation is relatively high.

Second, we see that many Brazil companies, Chinese companies are very careful about their employees, and dare not offend employees. If the employee is uncomfortable, he can stay in the company and rest on the table, you can't disturb him, and you can't say that you go back and don't take today's salary; Employees sitting at their workstations playing with their mobile phones should not yell at them, ask them to work, think that you are harassing them or that you are forcing them to work, etc., which will lead him to complain about you.

For example, there is a friend's company, they have about five or six workers in the warehouse to manage the warehouse, of which 4 are boys and the others are girls, and there are 4 men's toilets and 4 women's toilets to ensure the working environment of employees. Because if an employee is fired by the company because of personal behavior problems, the employee may complain and report to the company, and he may not find a suitable reason to report that there is a problem with the office environment provided by the company, and the sanitation of the toilet is always not cleaned in time, which affects my health. In this case, Brazil laws and policies protect the employee, the employee does not need to have specific proof, and the company must compensate him.

There is also a friend's company that has an employee who leaves for personal reasons under normal circumstances. When she left, neither she nor the company knew she was pregnant, and a month after she left, the company found out that she was pregnant. Under Brazil law, pregnant people cannot be dismissed, so the Chinese friend wanted her employees to come back to work, but she said she didn't want to go back. The safe way to do this is to sign a leaflet stating that the employee did not leave the company knowing she was pregnant, but they did not sign the document. Because the employee had a very good attitude at the time, everyone reached a consensus. As a result, about two or three years later, she sued the company, saying that the company terminated the labor relationship during her pregnancy, and demanded that the company pay 50,000 yuan in compensation. The Chinese friend was very angry and appealed, but Brazil's law protects the employee from not supporting the appeal, and the appeal is subject to a fine of 70,000 yuan.

In general, there are a lot of these similar things, and there are a lot of pitfalls. Employees feel uncomfortable in the office environment, noise, etc., can be a reason for them to sue the company. Businesses have to pay costs and deal with lawsuits. Many enterprises are not large in scale and do not necessarily have full-time HR personnel, so they need bosses or managers to give emotional value to employees.

Whale Rhino: What is the general working status of employees in Brazil?

Alai: Brazil must not be rolled, and the work team does not feel the competitive atmosphere, or the pressure of performance and efficiency. The culture of Brazil is welcoming, open and tolerant, and people are friendly, but at work, it has to be said that they are relatively lazy and lie flat mentality.

There are two types of employees in Brazil, one is lazy and does not work well; There is also a certain level of professionalism or professional ethics, they will do things at work, but they will do it slowly. What normal Chinese may do in a few hours, Brazilians will stretch out to days or even a week or two. We encounter a lot of this kind of thing, there is a kind of person who doesn't work, is messing around, hip-hops every day in the company, and has a good time. There is also a kind of person who does do things quietly, but very slowly and depending on his mood.

Whale Rhino: Are Brazil's labor costs relatively high compared to China?

Alai: It's definitely relatively high, the average income of ordinary employees in Brazil is about three or four thousand lei. Compared to China, Brazil's comprehensive labor costs may be doubled, because Brazil is really inefficient and has long annual holidays. Employees don't need to go through the leave process like in China, they may not come to the company for a vacation, and there is no problem with this behavior, they can arrange their vacation at what time, and they will have up to one to two months of vacation every year. And you can't ask employees when they're back, their vacation is to be discretionary. If you ask them when they will not be able to come back, it is oppressive to them. Some employees may tell you when they will come back, but there is no such thing as a handover during this process, which is more common. Some Brazilians are more professional, but most Brazilians are more liberal and hedonistic.

Of course, this is also the reason why we Chinese go to Brazil to do business very well. It is true that prices in Brazil are relatively high, but they are very fond of consumption and pleasure. Whether it is an ordinary employee with a monthly income of three or four thousand thunder, or a manager or senior manager with a monthly income of seven or eight thousand to tens of thousands, they will spend the entire month's income even more than their own income, all for consumption and pleasure. However, this is also related to Brazil's policy, Brazil's national treatment is very good, education, medical care are all free, there are many aid stations, public welfare organizations, volunteers. Even if you are a homeless person, someone will bring you food, you can go to school, free medical treatment, etc., Brazil have no stress in life. Very few Brazilians have a strong sense of professionalism, work is not a special need for them, and they may spend it when they have income.

Whale Rhino: Do you have any skills and experience in managing employees in Brazil?

Alai: Some of the ways and means that are commonly used by domestic companies to motivate employees and volumes are not applicable in Brazil. Actions such as building corporate culture and team building activities in China are also not applicable in Brazil, and Brazilians do not understand the human feelings of domestic enterprises. A friend said that he treats the team members very well, often invites him to dinner, watch football games, and drink beer, hoping that the team will help him do a good job in the company's business. But in fact, it is completely contrary to what he imagined, when he is not in the company, these employees may not stay in the company, go out to play, and no one will receive customers or goods when they arrive.

I think that a more practical way for Chinese companies to go to Brazil is to transfer a large number of Chinese employees from China to form the backbone there. Now many Chinese companies that go to Brazil to do e-commerce, such as Meikeduo and Shopee, are more still done by Chinese teams, with sufficient Chinese manpower, or Chinese teams from the past in China.

But there is a language problem that needs to be addressed. So when we were doing it, we also wanted to build a Portugal team, and after looking for a long time in China, we found that many domestic universities opened Spanish, but there were very few Portuguese majors. For example, only four of the dozen or so universities in Guangdong have Spanish majors, including Portugal small classes, and each school has about fifty or sixty graduates. There are very few Spanish talents in the country, and the traditional Portugal language taught in domestic universities is significantly different from Portugal in Brazil. After the students we recruited from universities came to Brazil, there were also quite big barriers in communication, some things and cultural differences, not understanding, resulting in some mistakes in work.

The market pattern is undecided, and there is still big business both online and offline

Whale Rhino: What is the overall distribution of consumption channels in Brazil now?

Alai: Brazil has a population of 230 million, and official statistics say that there are about 30 million e-commerce packages a day, which I estimate may actually be more. In terms of proportion, China has a population of 1.4 billion, and the daily e-commerce package is normally more than 200 million, 1:7, the proportion is equal, so the penetration rate of e-commerce in Brazil is similar to that of China. However, Brazil e-commerce has a characteristic, unlike several large platforms in China that occupy more than 90% of the share, Brazil's e-commerce share is very fragmented. Brazil's Meike has about three or four million more packages a day, Amazon has two or three million packages a day, AliExpress may have more than one million a day, Shopee may have more than two million a day, and SHEIN has more than one million a day. That's a little smaller, and there are a lot of platforms with less than 100,000 orders. In addition to these, local brands and trading companies in Brazil have their own independent stations to do online sales, so Brazil's e-commerce is still relatively mature.

On the other hand, after my visit to Brazil, I found that offline business is still very large, and the proportion of offline business is not necessarily only 70%. Sao Paulo, Brazil, is similar to the Guangzhou or Yiwu small commodity markets in China, is a distribution center for trade, Sao Paulo has 25 wholesale markets, warehouses, stalls, there are goods from all over the world, after customs clearance through this market circulation to various states and cities in Brazil. We saw a stall before, pulled a container at night, the container moved out of the warehouse, and after two or three days, the warehouse was empty again, and the offline circulation was particularly fast. This year, because the cost of shipping has risen, many importers control their import volume or lengthen their import cycle, so there will be a break. But from the side, it can be seen that the goods are coming out very quickly.

Whale Rhino: Do you mainly cover e-commerce in the Brazil market or do you also need to do something else?

Alai: We went to Brazil with the idea of making a brand go overseas, not to do things that quickly seize the market at low prices. So after the research and analysis, our strategy is to do both online and offline. Online may first do some user accumulation and volume, Brazil's social media is quite developed, known as a big country of Internet celebrities, many amateurs are a small Internet celebrity, thousands, tens of thousands of fans are very many. Therefore, the cost of cooperating with influencers in Brazil, the cost of drainage through social media is relatively low, and the effect is relatively good.

Whale Rhino: Which categories do you think have the most opportunities in the Brazil market right now?

Alai: We pay special attention to several categories, one is cosmetics, because cosmetics will be divided into makeup, washing and skin care, and I think these three product lines have great opportunities. Cosmetics belong to the low-end brands in the wholesale channel of the market, and the price is probably concentrated below 60 bahns, and the volume is very large. Some international brands and imported brands, such as L'Oreal and Procter & Gamble's products enter Brazil, and the price is relatively high, basically above 200 lei. In Brazil, some international brands have not yet penetrated, and the product lines of some brands that have entered are not complete, so high-end products are actually not much, and the products are not rich enough. Our local research shows that many international brands are often out of stock after entering. At present, there are very few brands in the price range between 60-200 thunder, so there is still room for the cosmetics market.

The other is sports and outdoor related products. Brazil still like fitness, fitness, outdoor is very popular, can be said to be national fitness. Whether it is the security guard of the apartment, the delivery person of McDonald's, or the courier all have muscles, they are all exercising, and the employees in our warehouse and the office staff will have a group of people who will go to the gym after work, and we basically have a small gym or outdoor fitness-related places in the residential area 50 meters or 100 meters. Including every shopping mall will have a health club, and the cost is relatively cheap, such as 90 lei a month membership.

Then there are pets. Brazil is also a pet country, with more than 70,000 pet cats and pet dogs registered with ID cards in Brazil. Brazil law is very protective of pets, and if you have a pet dog at home, keep it on a leash or keep it in a cage, and a neighbor finds out, the police will soon come to the door. You can only walk on the street with a pet dog on a leash, and at any other time, it is illegal to keep a pet on a leash in an enclosed space like a home or yard, and it is an act of animal cruelty. In shopping malls and shopping streets, I feel that there are more pet stores than mother and baby stores. In some places, there must be two or three pet stores, and there may not be one in the mother and baby products store.

However, we actually think that maternal and infant products are also a very large market. Brazil has a high birth rate, many families have three or four or more children, Brazil's culture is sexually open, there are many single mothers or single fathers, and because of Catholicism, abortion is not allowed, so there are many children. Of course, there is another reason for the government's policy, the children's food, clothing, housing and transportation are all covered by the state, school uniforms, regular clothes, meals, etc. Some of the products related to mothers and babies are consumed in large quantities.

Auto parts, Brazil cars mainly rely on imports. Cars don't have an end-of-life life, so they're tinkering all the time. There are no railways in Brazil, there are a large number of small airports on the territory and aviation is very well developed. Long-distance transportation is a bus, cargo is a truck, a car, a car and a motorcycle, motorcycles are a bit similar to Southeast Asia, very popular, young people like to ride motorcycles. So auto parts related things are also very marketable.

Hardware, home furnishing-related things. Because metal products in Brazil are harmful and more expensive. Although they produce iron ore, most of it is processed into finished iron and then returned, so metal-related things, whether it is utensils, ornaments, tableware, kitchenware, etc., are particularly expensive. If it is the same wooden home, the price may be similar to that of China's wooden home, and if it is metal, the price may be three or five times or even higher than that of China.

Whale Rhino: What is the attitude of Brazil towards Chinese and Chinese brands?

Alai: Seventy or eighty percent of Brazilians' daily necessities come from China, and they are aware of Chinese products. Brazil is culturally tolerant, a country of immigrants, multi-colored, multi-religious, multi-ethnic, and in this cultural context they do not strongly exclude or close to anyone. But there is one point in this, their cognition has formed a certain label, products from China are relatively cheap and affordable, and products from Europe and the United States are more expensive. So they will default to the fact that Chinese products are not expensive, and it is a bit strange if they are expensive. When some Chinese businessmen do it in Brazil, they will build a Chinese brand or register a European or American trademark.

We have communicated with local Chinese businessmen and some Chinese secondary and tertiary distributors and agents, and their general feedback is that the price of products from China should not be expensive. The reason is that they have been working with local importers for many years, and they bring in the goods and distribute them to them. There are two kinds of goods, one is from China, and a large number of things are quite cheap. One is a small amount of expensive products from Europe and the United States. Therefore, they do not accept expensive goods from China, and their habitual cognition is more acceptable to high-priced products from Europe and the United States.

Another point is that Brazil have a national complex similar to ours in China, and the entire social opinion or government level is also guided in this way. So if it's a local brand that is produced locally in Brazil, they are willing to give a good price, they want to have their own manufacturing or their own brand.

Whale Rhino: I heard that brands such as Huawei and Xiaomi are also very expensive in Brazil, what is the attitude of Brazilians?

Alai: They know that these are Chinese brands, and in the minds of ordinary consumers, they recognize Chinese things, and they also recognize that good Chinese things are expensive. It's just that businessmen in Brazil have formed this inertia, if there are two batches of goods to choose from, a little more expensive from United States, a cheaper one from China, they may choose China because it is cheap; But if China is as expensive as United States, then it may choose United States, and there will be this tendency.

In the past 20 or 30 years, Chinese businessmen have brought China's low-end, cheap products to the past, and let them form a perception that they are cheap and of average quality. But in the past two years, new brands and new domestic products have also begun to slowly change their outlook.

Local supply chains are more advantageous than cross-border, and if you want to do business in Brazil, you must be localized

Whale Rhino: The Chinese team went to Brazil to do the brand, where should the supply chain be placed? Compared with cross-border, will the proportion of future tax still account for the majority of local taxes? Need to build the supply chain in Brazil?

Alai: First of all, the local volume exceeds that of cross-border, such as SHEIN, Shopee, AliExpress, and other cross-border platform orders, the goods from local are far more than cross-border, and cross-border is slowly decreasing. Logistics costs are also rising, and the previous preferential tariff policies for cross-border parcels are also being adjusted, and this year a new policy has been added invisibly, increasing the tariff cost by 50%, of course, it is still lower than the tariff ratio of normal general trade. However, due to the rising cost of logistics and tariffs, cross-border competition cannot be compared with local products, which have price advantages and supply chain costs are lower than cross-border.

In addition, the platform's policy rules and traffic tilt are also more advantageous in the local area. Now that Brazil has done a large reduction in cross-border and profits are deteriorating, they have begun to want to lay out their own territory. Of course, if you don't understand the rules here when you lay out the local market, the cost of the product in the past will exceed the cost of cross-border, and the cost of cross-border e-commerce will exceed the cost of traditional local Chinese businessmen.

If you want to do a local store in Brazil and prepare the goods to Brazil, there are many freight forwarders in China today that provide the direction of Brazil, which reminds you that some of the service providers I contacted may not be very clear about the risks that customers may encounter. For example, there is a minimum declared price for shoes, which is defaulted in each category, and the reasonable cost of the product is in what range and how the price is set. For example, a large number of $3 imported products, they think that the normal cost of this product is about $3, so when the import declaration can not be less than $3, less than $3 may be deducted, punished and so on. The regulations for different categories are very detailed, and each category has a reference price with a minimum declared price. Some friends may specify a price when looking for a cooperative customs clearance company, and the partner may not understand these rules, which will turn both parties into tax evasion, and this tax evasion will also harm the third party. This subject itself may be providing import and export agency services to everyone, and the goods of other people under the subject will also be implicated.

Whale Rhino: How to find a partner in the 0-1 stage, and how to avoid pits, do you have any suggestions?

Alai: At first, we tried to figure out what each pit looked like and how to avoid it, but then we found that it was not clear or could be said to be endless. At the beginning, we wanted to do it in a compliant way as much as possible, but when compliance came down, the cost went up a lot, and the profit was lost a lot. From the freight forwarding level, there are still quite a lot of freight forwarding companies with delivery capabilities today, but there are still relatively few that can really help you handle customs clearance safely, reasonably and at low cost. I can't give you a definitive recommendation at the moment.

Whale Rhino: What do you need to pay attention to when dealing with government agencies and commercial organizations in Brazil?

Alai: Brazil companies are basically strong, and will hire full-time legal and tax and financial personnel; Smaller companies will spend a certain amount of money every year to find a reliable lawyer and a long-term fixed cooperation with the tax office. When dealing with government departments, Brazil laws are very detailed and perfect, the rules of the government are very clear, and the efficiency is still possible, but some processes are complicated. For example, cosmetics certification, the government also has a designated third party, the whole process procedures, all aspects of the inspection are very much, of course, there are some gray methods to deal with these, the government's integrity or the professional ethics of some third-party institutions are not necessarily so good.

When doing business in Brazil, legal affairs and taxation must be paid attention to, and they must be frequently involved and confirmed. For example, in Brazil, you build your own warehouse or find a third party to rent a warehouse, your goods are put into this warehouse, this goods must be accompanied by an invoice, and the invoice has the address information of this warehouse. But in fact, most of this can not be done, because the entire import link is not necessarily so perfect, the import tax invoice is not necessarily complete, even if it is complete, the invoice may be your company or agency company, not necessarily your warehouse location, strictly this information is required to match.

Under normal circumstances, there will be no government department to take this matter seriously, but if a competitor complains, the warehouse and goods will be destroyed. The risk is actually quite large, you are not sure whether there are hidden dangers in the overseas warehouse itself, or you cannot guarantee that all your bills are complete and compliant.

Whale Rhino: What is the relationship between government and business in Brazil, is it a relatively transparent business environment? How does it compare to Southeast Asia? Have you encountered any of these problems?

Alai: Brazil is a federal state with a "separation of powers", with the executive, legislature and judiciary each having their own functions, but also valuing human relationships. Compared with Southeast Asia, whether it is the government's policy rules or some provisions of the law, it may be more mature, after all, it is an old developed country. In terms of political and business relations, or dealing with some daily problems, it is a bit similar to Southeast Asia.

Whale Rhino: Is the actual situation in Brazil really chaotic and unsafe? If it's really messy, what advice do you have?

Alai: Safety must be taken care of. Brazil does have many slums, homeless people, and it is not excluded that there will be robberies by lawbreakers. In Brazil, because of culture, government relief and various guarantees, many people lie flat. My experience is that many homeless people are harmless to humans and animals, but I do hear a lot of cases of being stolen or robbed by homeless people, and there is a high probability that they will not hurt you, but you may hurt you when you resist.

My whole body feeling in Brazil is quite safe. Came back from the market very late and experienced it very late on the streets. Everyone said that buses and subways are not safe, and I have also taken long-distance buses at night, which is quite safe, and the health and service are also very good. Some Chinese businessmen told me that if the business is relatively large, they may be watched by gangs or some people who will come to steal your money, and if you resist, you may be hurt.

Whale Rhino: I heard that Mexico has the potential for losses at every stage of the shipment, what about Brazil?

Alai: It's the same in Brazil, but I don't think it's that common. High-value products coming out of the customs may be targeted, so usually there are armed escorts to pick up the goods from the customs, and ask the security company or the police to escort the goods to the warehouse. This situation is relatively common and the cost is not expensive. The security hardware setup of the warehouse in Brazil is also relatively good. A small number of armed people with guns look at their own warehouses, most of them have their own security guards, and the warehouse security doors are relatively strong and the monitoring is relatively perfect.

It is said that in the early years, there would be armed robbers, who would go directly to the warehouse and threaten you to open the door or break the door, but now this is not the case. But now some people will secretly or explicitly grab a package of goods and run away when they are open for business, and the security guards should stop this kind of sneak attack or deterrence. There is also a lot of stealing goods by warehouse employees, so now the camera and access control at the warehouse door are relatively fine. There will also be lost items in logistics and sales, and there are fewer stolen goods, because there are more cases of wrong delivery and late arrival.

Whale Rhino: What is the investment environment like in Brazil and is there anything you can share?

Alai: The market in Brazil can give birth to brands, and there is a lack of brands, whether it is price space or product space, there are opportunities to do brands, including brand overseas choices in Brazil. However, whether it is a brand or a trade that sells goods, it is recommended to localize, and cross-border has slowly lost its advantages, with fewer opportunities and less traffic. If you want to do business in Brazil, you must localize, or find a reliable partner, but this is actually quite difficult to find; Either your own team has built up the main body in the past and done localization, you will find more business opportunities with high gross margins.

Brazil's financial and real estate investments may be better. Because some Chinese businessmen in Brazil have done relatively successful and stable businesses, they have been buying land, building hotels, building apartments, and building restaurants in the past two years. There is actually not much Chinese food in Brazil, but Chinese food is just consumed, and the local Chinese and Brazil locals like it, and Brazilians are very willing to spend money on eating and drinking. The rent-to-sale ratio in Brazil is quite high, in São Paulo, a single apartment of thirty or forty square meters costs five or six hundred thousand, and if you buy an apartment at this price, the monthly rent can reach seven or eight thousand to ten thousand. It can be entrusted to a third-party company to take care of it, and it is also a hardcover apartment, and there is no public sharing. If the local Chinese businessmen have the strength, they will directly buy the land. The land is very cheap, the construction cost in Brazil is relatively higher than in China, and the Chinese businessmen are waiting for them to stock up on some land and do some long-term things, and the whole piece is worth investing in.

Some of our friends around us have gone directly to financial management in Brazil, or invested in real estate. Brazil's investment policy is about 100,000 US dollars, that is, more than 600,000 Brazilian dollars can get an investment visa, and after two years, you can become a green card and hold Brazil status. After having a Brazil identity, it is very convenient to invest or register a company. Brazil investment immigration may also be the next hot spot, because the cost of immigration is relatively low, and social benefits such as education and medical care are also better. Therefore, there are still many opportunities in Brazil, whether it is life or business, or investment and financial management.

Whale Rhino: How many years have Chinese businessmen stayed in Brazil, and are there different stages? What markets are they working on right now?

Alai: These wholesale markets in São Paulo may have been run by Brazil natives and Arabs, who are still the landlords behind many of the market's stalls. Most Chinese businessmen in Brazil are engaged in trade, most of which have been in the past two or three decades. In the past two decades, the entire market has basically been full of Chinese, some Brazilian faces are employees hired by Chinese, and a large number of Chinese have brought over products from all walks of life in China, including some new products and new categories, and they will find the cheapest and cheapest to bring over. The entire Brazil market is very rich in Chinese products, with more middle and low-end products, and now it is basically competition between Chinese businessmen and Chinese businessmen.

Whale Rhino: What are you going to do in Brazil next?

Alai: The products we are making now are taken from China after production, and we are also planning to move part of the manufacturing environment to Brazil to save tax costs and make more compliance for more new products in the future. (Leifeng.com)