UK technological expertise is in high demand the world over, but even mature businesses grapple with certain markets. Brazil is one example of a destination that sets the bar particularly high in terms of business legislation and import duty. Julian Bashford, Chief Executive of satellite communications business Vocality, visited Brazil on the latest Breakthrough trade mission. Vocality provides innovative communications technology to maritime and defence organisations, and already has a clientele based around the world, in locations including the Middle East, Europe and Australasia.
A seasoned business traveller across Russia, Asia and Africa, Julian says he knew little about Brazil as a commercial destination prior to the trip. The visit represented an important first step in terms of learning about the people, culture and opportunities. However, obstacles to trading in the country soon became clear. “It’s true to say that Brazil is more problematic as a market than we had thought,” says Julian. “The trip opened our eyes to the demands of shipping finished products in. The Brazilians don’t make it easy to do business. The legislation, the tax, the tax and the tax... On the face of it, the import duties are capable of inflating the cost of our product two or three-fold.” Julian can see why the Brazilian legislation is structured this way. “They want to force companies to buy locally manufactured equipment and they want to promote final assembly of goods in Brazil,” he says.
“The way into Brazil is different for each business – We are working with IGS Global, import agents, as well as Brazilian legal and financial experts.” Julian Bashford, CEO Vocality
Cracking the market
Brazil’s import tax regime and the need for local buyers to acquire official authorisation if they wish to import goods can be frustrations, particularly since Vocality attracted strong interest on the trip. Bashford had meetings with three potential customers: two systems integrators in the satellite communications arena and a Rio de Janeiro-based satcomms distributor. “All of them were beyond keen to work with us,” he says.
The company is now in the process of trying to export equipment to Brazil, although the country remains a difficult market to test. Selling ex-demonstration equipment is forbidden, as is selling equipment for evaluation purposes. Julian is currently working on the logistics with import and taxation experts. “The way into Brazil is different for each business,” he explains. “We are working with IGS Global, import agents, as well as Brazilian legal and financial experts. It’s in the hands of others now to work out how best selling into Brazil can be achieved. We’re not giving up. We just need to be sure that the import tax doesn’t outpace our pricing.”
By the book
Plans for Vocality’s first shipment into Brazil are now well underway. “This will be the first time we will have seen the tax applied,” says Julian. “If the goods arrive realistically priced, then OK. If not, we will explore setting up locally and finishing goods in Brazil.” As the Breakthrough trade mission delegates found out first-hand, the Brazilian market represents huge opportunities and is an important gateway to the rest of South America. However, squaring up to becoming an importer into Brazil takes commitment and resources. “You need to be a company with legal and administrative capabilities,” says Julian. “Importing into Brazil needs to be done by the book.”