2. Doing Business in Brazil Felipe Hsieh Trade & Receivables Finance, UK October 2012 Rio de Janeiro

3. Quick facts about Brazil  Brazil is Latin America’s largest economy ; among the 10 largest in the world (GDP in 2011: $2.5trn)  Brazil is the world’s fifth-largest country by geographical area, 8.5 million km 2 and fifth most-populous country, with 190 million inhabitants  Brazil’s ‘investment grade’ economy is diverse and has large and developed agricultural, manufacturing, mining and services sectors AgenciesNotations Moody'sBaa2 S&PBBB FitchBBB R&IBBB North Region Northeast Region Central-west Region Southeast Region South Region Source: Ministerio da Fazenda

4. The great transition  Brazil’s growth story from 1995-2011: from short boom-and-bust cycles in the 1990s to more-sustained growth more recently  The performance of the economy in the last 15 years can be divided into two main periods: Fernando Henrique Cardoso administration (1995 – 2002) and second, the Lula administration (2003 – 2010). Brazil GDP growth (%, annual) Source: IBGE, HSBC

5. Growth, consumption and social mobility A structural shift in Brazil’s demographics -Strong job market -Government income distribution programs -Relatively stable inflation Brazil: Distribution of Economic Classes (millions of people) Source: Ministry of Finance Demographics and increasing household income are positive drivers for the next two decades Middle Class is growing as poverty is reducing Per capita GDP is expected to more than double by 2030 Social Mobility impacting around 40m individuals over the next 4 years %

6. Retail sales and industrial production - contrasting picture  Consumption has been a compelling story in Brazil in the last few years  The intensive migration of lower income Brazilians to the middle-income segments brought to the market 40 million potential consumers that have access to credit  While retail sales have expanded more or less continuously since 2008, industrial production has been stagnant since 2Q2010  Demand-led growth; competitiveness still a challenge Gap between demand and supply (Jul 2008 = 100) Source: IBGE % of Household Source: PNAD Household ownership of durable goods

7. Key Challenges Infrastructure deficiencies Complex Taxation System Slow legal framework Corruption

8. Source: MDIC Trade – Facts & Figures EXPORT IMPORT BALANCE Brazilian Foreign Trade US$ Billions Exports are almost three times larger compared to ten years ago

9. EXPORTS (2009) China represents now 13% of Brazilian exports against 2% in 2000 IMPORTS (2009) China represents now 13% of Brazil’s imports against 2.2% in 2000 Source: MDIC Trade – Facts & Figures

10. Exports*: Brazil’s Rank and Market-Share Soy BeanPoultry Beef Pork Sugar Orange Juice Coffee 1st 2nd4th 32%86%45% 30% 39% 12% * Data from 2009 Corn 2nd 13% Trade – Facts & Figures

11. UK – Brazil Trade Trade between Brazil and UK grew by 4 TIMES over the last 10 years Goods and services sold by UK institutions to Brazil grew by same rate Source: MDIC

12. UK – Brazil Trade Source: MDIC

13. Trading with Brazil Moderate tariffs, especially on import taxes Import license required for certain products Free Ports, Zones Since 1990 Brazil has made substantial progress in reducing border trade barriers (tariffs, import licensing, etc.) Common Import Taxes: - Import Duty - Industrialised Product Tax (‘IPI’) - Merchandise and Service Circulation Tax (‘ICMS’)

14. Business etiquette and culture… Establishing personal relationships is essential to conducting business Most of companies have English-speakers, however using interpreters for 1 st meeting can be a good idea…. DO NOT attempt to do business during CARNIVAL! Like South-Europeans Brazilian use a lot of body language and contact

15. North Branches: 60 ATMs: 257 Mini-branches: 108 North Northeast Branches: 47 ATMs: 351 Mini-branches: 124 Middle-West Branches: 103 ATMs: 501 Mini-branches: 142 Southeast Branches: 445 ATMs: 2,654 Mini-branches: 675 South Branches: 242 ATMs: 1,522 Mini-branches: 523 Middle West Northeast Southeast South Key Figures Established: 1997 Branches: 897 Employees: 25,000 Customers: 5 million ATMs: 5,285 HSBC in Brazil Trade Finance Payments & Cash-Mgmt Global Markets Corporate Banking Retail Banking

16. Key Contacts l British Embassy, Brasília (Distrito Federal) press.brasilia@fco.gov.ukpress.brasilia@fco.gov.uk l British Consulate-General, São Paulo uktibrazil@fco.gov.ukuktibrazil@fco.gov.uk l UK Trade & Investment - Enquiry Service enquiries@ukti.gsi.gov.ukenquiries@ukti.gsi.gov.uk l Export Finance Programme (Programa de Financiamento às Exportações—Proex) http://www.bb.com.br/.http://www.bb.com.br/ l Brazilian Association of Listed Companies (Associação Brasileira das Companhias Abertas— Abrasca http://www.abrasca.org.br (Portuguese only). http://www.abrasca.org.br l Brazilian Export Credit Insurer (Seguradora Brasileira de Crédito à Exportação—SBCE) http://www.sbce.com.br/ us/index.asp http://www.sbce.com.br/ us/index.asp l Brazilian Foreign Trade Association (Associação de Comércio Exterior do Brasil—AEB), http://www.aeb.org.br/home.htmhttp://www.aeb.org.br/home.htm (Portuguese only). l Ministry of Development, Industry and Commerce (Ministério do Desenvolvimento Indústria e Comércio Exterior—MDIC) http://www.mdic.gov.br/ (Portuguese only).http://www.mdic.gov.br/ l São Paulo State Federation of Industry (Federação das Indústrias do Estado de São Paulo—FIESP), http://www.fiesp.com.br http://www.fiesp.com.br

17. Q & A

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