The U.S. is taking its relationship with Brazil for granted, and that may hurt South Florida’s economy.
South Florida has long been Brazil’s primary gateway to the U.S. marketplace. During the first 11 months of 2010, Florida’s merchandise trade with Brazil topped $14.4 billion, a 27 percent increase over 2009. Brazilian tourists spend more money in Florida than in any other state. Thirty-five percent of real-estate buyers in downtown Miami are Brazilians.
However, in 2009, China became Brazil’s primary trading partner, surpassing the U.S. for the first time ever. The following year, China and Brazil signed several trade agreements boosting trade and energy co-operation. By 2010, China took top honors as Brazil’s largest foreign investor.
The growing importance of China to Brazil will change the traditional north-south flow of Brazilian trade and investment. For example, Brazilian aircraft maker Embraer recently signed deals for Chinese Airlines to buy 35 E190 planes worth up to $1.4 billion dollars. China plans to invest $300 million in technology and research centers in São Paulo and Goias while Taiwan based Foxconn Technology Group may spend $12 billion to build a factory in Brazil that will produce iPhones, iPads, and other Apple products. This will be Foxconn’s largest investment overseas.
Despite these challenges, the ties between South Florida and Brazil remain strong, and area businesses are well-positioned to capitalize on Brazil’s exploding market. To make the most of those opportunities, South Florida companies and professional services firms should consider five key issues before plunging into the market.
• The type of law. There are considerable differences between Brazil’s contract laws and laws in other jurisdictions.
• The type of business. Brazil’s Civil Code and other laws recognize more than nine different types of business entities. Before choosing a corporate structure, a South Florida company must look closely at its plans for operating in Brazil.
• The bureaucracy. In Brazil, foreign companies have more bureaucratic barriers to overcome than domestic businesses when filing documents and completing other business formalities with the correct authorities.
• Your Visa. In Brazil, the Departments of Justice and Labor handle immigration services. The visa application process can be surprisingly complex. As a result, it is important to select the most appropriate type of visa, its duration, and the proper application form in order to obtain approval.
• Your taxes. Brazil has one of the highest tax rates in the world, making it essential to choose the correct filing bracket to minimize tax consequences.
Despite Brazil’s growing trade with China and Washington’s focus on other markets, South Florida’s businesses can benefit by monitoring trends in Latin America’s largest market and meeting Brazil’s ongoing demand for goods and services.
Michael Diaz, Jr. is Managing Partner and Andre Linhares is an attorney at Miami-based Diaz Reus & Targ, LLP, a full-service international law firm focusing on litigation, trade, customs, financial, commercial and corporate transactions, tax, immigration, and arbitration matters. The firm operates offices in Miami, and Orlando, Florida; Shanghai, China; Mexico City, Mexico; Frankfurt, Germany; Caracas, Venezuela; Dubai, U.A.E.;and Bogota, Colombia, as well as an affiliate office in Sao Paulo, Brazil.