MAURITIUS Business Opportunities to Brazil

Transcription

1 MAURITIUS Business Opportunities to Brazil Prepared by: ENTERPRISE MAURITIUS & ABMR Valentim Rebouças & Ivone Andrade São Paulo, Brazil - 15 April 2014

2 AGENDA 1. Objectives of Survey 2. Research Methodology 3. About Brazil 4. Trade between Mauritius and Brazil 5. Doing Business in Brazil 6. Brazilian Consumer Market 6.1 Breakdown of Brazilian Population by Social Status and Purchasing Power 7. Market Potential 7.1 Textile and Apparel 7.2 Luxury Products Leather products Ship Models Jewelry 7.3 Catheters 7.4 Animal Feed 8. Summarized Conclusions by product category 9. Market Strategies and Recommendations

3 1 OBJECTIVES OF MARKET RESEARCH To assess competitiveness and export potential to the selected Mauritian products in the Brazilian market To identify targeted and relevant importers who would be interested to import Mauritian products To determine key success factors for Mauritian suppliers to penetrate the Brazilian market

4 2 RESEARCH METHODOLOGY Desk Research Interviews with relevant importers Product Testing Mystery Shopping Marketing Strategies & Recommendations

5 LW-12/05 5

6 3 ABOUT BRAZIL (1/3) Capital: Brasília Surface area: 8,515 thousand km² Official language: Portuguese Population: 201 mn (228,4 M by 2042) Head of State and Head of Government: President Ms Dilma Rousseff Currency: Reais (R$) Exchange Rate: USD 1 = R$ 2.3 (15 April 2014) GDP: USD 2.2 bn (2013) GDP Per capita: USD 11,700 (2013) Inflation: 6.4 % (2014) Major Sectors: - Agriculture (3.5% of 2013 GDP) - Industry (2.7% of 2013 GDP) - Services (66.8% of 2013 GDP) Corruption Index: 72º at Corruption Perceptions Index 2013 Transparency International

7 3 ABOUT BRAZIL (2/3) 2 nd Largest emerging economy after China Forecast to become 4th largest economic power by 2050 Massive investment in Infrastructure due to 2014 World Cup and 2016 Olympics in Rio A major market of 100 mn middle-class consumers Rising per capita spending (Consumer spending forecast is to increase by 22% between )

8 3 ABOUT BRAZIL (3/3) BRAZIL GDP FORECAST GROWTH UP UNTIL 2015* * Source: The International Monetary Fund

9 4 TRADE BETWEEN MAURITIUS AND BRAZIL Domestic Exports to Brazil ( ) - Rs Domestic Exports

10 4 TRADE BETWEEN MAURITIUS AND BRAZIL - MAIN PRODUCTS EXPORTED TO BRAZIL Main products exported to Brazil Products T - shirt,singlet & other vest of other textile excl cotton,knittted/crochet Men's or boys' shirts of cotton, knitted or crocheted Sunglasses,corrective, protective or other Fabrics Animal Feed Source: Statistics Mauritius, 2013

11 4 TRADE BETWEEN MAURITIUS AND BRAZIL - DOMESTIC EXPORTS BY SECTOR Industry Rs Rs Rs Rs Rs Rs Total Textile and Apparel 92, , ,162 1,173,188 4,159,941 21,911,058 % on Total DOE to Brazil 37% 100% 42% 59% 28% 97% Total Agro 709,173 10,822, ,796 % on Total DOE to Brazil 35% 72% 3% Total Other Manufacturing (Non Textile & Non-Agro) 156, , ,379 % on Total DOE to Brazil 63% 29% 6% Total Manufacturing Sector 248, , ,601 2,004,740 14,981,954 22,611,854 % Increase -51% 292% 316% 647% 51%

12 5 DOING BUSINESS IN BRAZIL (1/3) Visa Processed by the Embassy of Brazil in Pretoria, South Africa Takes two to three weeks (if documents are in order) Website: or you may contact the Honorary Consulate of Brazil in Mauritius (Ms, Marie Noelle Migale, Tel: ) Yellow Fever Vaccination Language Language is a challenge in Brazil (Portuguese) Potential exporters will require a translator or a facilitator

13 5 DOING BUSINESS IN BRAZIL (2/3) Steps to Import in Brazil Siscomex -The company must first register in order to obtain an import license Import License This license must be acquired before the product is shipped to Brazil (Ministry of Development, Industry and Foreign trade) Import Declaration, custom clearance and verification of goods Tax payments IPI, PIS/Cofins and ICMS Duty Structure Customs duties from 0-35% Industrial Products Tax: 20% Cofins Tax: 7.6% of total import value (it is a Social Security Contribution) PIS Tax: 1.65% (Contribution to the Social Integration Programme Tax) Merchandise Tax: 18% (ICMS)

14 5 DOING BUSINESS IN BRAZIL (3/3) Freight Rates A 20ft container costs around USD 3,200 by sea via Durban and takes 26 days to reach Port Santos, Brazil Internal Travelling Sao Paulo is a very congested city (one should be prepared to spend at least one hour in traffic jam) Office Hours Generally between 8 am to 6 pm Best times to meet Brazilian Executives are between 10am-noon and 15h00 17h00

15 6 BRAZILIAN CONSUMER MARKET Inhabitants/SEL Class A : 5% => 10 mn Class B : 31% => 62 mn Class C: 49% => 98 mn Class D/E: 15% => 30 mn Household Monthly Income Brazilian consumption More than USD 1.2 tn in 2013 (an increase of 10% compared to 2012) Class B accounts for 31% of national consumption and spent approximately USD 650 bn in 2013 Class A and Class C spent approx the same amount A US$ 6, B US$ 2, US$ 5, C US$ US$ 1, D US$ US$ E US$ TOTAL SPENT CLASS A US$269 billion CLASS B US$650 billion CLASS C US$ 259 billion Most Brazilians buy on impulse (Around 85%) Brazilians are status driven, but also increasingly price and quality conscious Increasing access to credit (In 2013, USD 211 bn were spent on credit card transactions a maximum of 6 instalments, 16% higher than in previous years) Source: Price WaterHouse Coopers & Brazilian Institute of Geography and Statistics

16 6.1. BREAKDOWN OF BRAZILIAN POPULATION BY SOCIAL STATUS AND PURCHASING POWER Core Luxury Target 5000 Ultra HNWI 150,000 HNWI Most of them come from traditional wealthy families & expats Mainly Entrepreneurs This group s money is typically new and self-made Most of them are business executives, doctors & entrepreneurs They are in their age bracket Concentrated in Sao Paulo 10-11M Affluent-Upper Class Married and highly educated Dinks (Double Income No Kids) Concentrated in Sao Paulo and Rio de Janeiro 90 M Middle Class Corresponding to nearly half of the population, the increase in the social group is driven also by the growing number of women entering the workforce

17 7.1 PRODUCT CATEGORY: TEXTILE & APPARELS

18 7.1. MARKET POTENTIAL FOR TEXTILE & APPAREL (1/4) Brazil holds a prominent position in The Retail Apparel Index, that identifies the top 10 developing countries ranked in terms of market attractiveness, retail development and country risk for their clothing retail industries: Country Region Rank China Asia 1 UAE Mena 2 Kuwait Mena 3 Russia Eastern Europe 4 Saudi Arabia Mena 5 India Asia 6 Brazil Latin America 7 Turkey Mena 8 Vietnam Asia 9 The clothing sector imports is growing at a faster pace of 12.7% year-on-year to USD 957 mn Main sourcing countries are: China, India, Indonesia and Argentina Brazil exports have decreased from USD 74 mn in 2006 to USD 39 mn in 2011 High Production cost leading to closure or relocating to low cost countries Estimated expenditure of Brazilian families on textile & apparel was around USD 102 bn, which represents 3.7% of total consumption expenditure on households Chile Latin America 10

19 7.1. MARKET POTENTIAL FOR TEXTILE & APPAREL (2/4) Growing Middle Class Around 57% of apparel consumers fall under the social category of A and B while 31% belongs to the group C Consumers between years old spend most on apparel Rising Fashion Awareness Growing sales of sophisticated value added products Brazilians are extremely fashion conscious Rapid modern retail increase The prevalence of Shopping Malls (500) everywhere in Brazil accentuates demand

20 7.1. MARKET POTENTIAL FOR TEXTILE & APPAREL (3/4) Shopping Habits Consumers prefer to shop at different retail channels, particularly with respect to department, speciality and chain stores (53% consumers prefer to buy most of their clothes at chain stores) Purchasing Patterns 94% of the Brazilian consumers said that price was one of the main characteristics which they take into consideration before purchasing clothes What are they buying? T-Shirts (78% ) and Jeans (75%) Brazilians consumers also view cotton as a comfortable and fashionable wardrobe component

21 7.1. MARKET POTENTIAL FOR TEXTILE & APPAREL (4/4) The table below gives the various tax structure applied to textile & apparel products

22 7.2 PRODUCT CATEGORY: LUXURY PRODUCTS

23 7.2. THE LUXURY MARKET (1/2) Snapshot of Brazil s Luxury Market In Brazil there are 36 billionaires and around 165,000 millionaires according to Forbes 2012 World Billionaires List The 11 th country in the world for HNWIs 58% are women 73.5% of wealthy families with over USD 93,000 income are concentrated in southeastern Brazil (58% in the state of Sāo Paulo alone), 10% in the south, 8% northeast, 6% in the mid-west and 2% in the North 47% have post-graduate degrees 33% are in the age bracket USD 2,545 average price of a luxury purchase Credit facilities 70% of purchases in the luxury sector are divided into installments and payment on credit cards or cheques.

24 7.2. THE LUXURY MARKET (2/2) Geographic mix of global luxury goods expenses Luxury goods Value Sales, % Share 2012

25 MARKET POTENTIAL 7.2 LUXURY PRODUCT CATEGORY: LEATHER PRODUCTS

26 MARKET OPPORTUNITIES FOR LEATHER HANDBAGS (1/2) The imports of leather products amounted to USD 21,964,000 in 2012, representing an increase in value of 30% p.a., over the 2008 to 2012 period List of Main Supplying Markets for Product Hs Code China 17% Spain 3% The field investigation has revealed the following: Leather products imported from China often prove to be fake and of inferior quality We have observed a tendency for long established family manufacturing leather companies to reduce or stop production good opportunity for Mauritius to export, France 30% Italy 50% The Brazilian market is dominated by several well established international brands such as Louis Vuitton, Marc Jacobs, Chanel, and Prada,

27 COMPETITIVE ANALYSIS LEATHER HANDBAGS (2/2) Mauritian Samples (Price) Landed Costs USD 280 USD 576 USD 160 USD 329 USD 93 USD 191 Budgeted selling price With a combined operating cost and profit margin of 100%, the retail selling price can be USD 1,150 With a combined operating cost and profit margin of 100%, the retail selling price can be USD 660 With a combined operating cost and profit margin of 100%, the retail selling price can be USD 380 Price of existing products on the market Similar quality of leather and design starts as from around USD 910 Similar quality of leather and design starts as from around USD 640 Similar quality of leather and design starts as from around USD 320 Market Penetration Strategy: To work with a niche importer and local designer, which already has a brand and well established stores

28 MARKET POTENTIAL 7.2 LUXURY PRODUCT CATEGORY: SHIP MODELS

29 MARKET POTENTIAL FOR SHIP MODELS (1/2) Ship models similar to what is manufactured in Mauritius prices range between USD 1,000 - USD 2,000 Ship models are usually found in upmarket shopping mall Three broad market segments: Collectors Five-Star Hotels/Thematic Restaurants Museums/ Historical Sector

30 MARKET POTENTIAL FOR SHIP MODELS (2/2) FOB Price USD 600 Price CIF (+20%) USD 720 Customs Duties USD IPI (Industrial Products Tax) USD PIS (Contribution to the Social Integration Program Tax) USD COFINS (Contribution to the Financing of Social Security Tax) USD ICMS (Merchandise Tax) USD 1060 Market Penetration Strategy: Niche Market - Dedicated Luxury - Importers/Distributors/Upmarket Shops

31 MARKET POTENTIAL 7.2 LUXURY PRODUCT CATEGORY: JEWELRY

32 MARKET POTENTIAL FOR JEWELRY Brazilian Consumer Trends Brazilian designers are known for combining colored stones to create a rainbow of attractive colours in a single piece Brazilian women prefer jewelry that blends with nature, evoking a sense of free-flowing movement, Earrings that dangle are a favorite Brazilian jewelry designers come out with four brand-new collections a year While 18K yellow gold is the standard metal for Brazilian jewellery, 18K white and rose gold have been gaining popularity Brazilian women love both intense and pastel colours in gemstones

33 MARKET POTENTIAL 7.3 MEDICAL DEVICES: CATHETERS

34 7.3. MARKET POTENTIAL FOR CATHETERS (1/4) Compliance: Exporters to Brazil need to ensure they are operating an ISO compliant system Previous registration of the products and the authorization of the companies, after a long process of auditing by ANVISA (the Brazilian National Health Surveillance Agency) is required Registration process can take up to two years The various costs involved in registering a catheter in Brazil: ANVISA S Fee Around USS 4,000 for big companies; and Around USD 300 for small one Distribution GMP Around USD 7,000 for big Fee: companies; and Around USD 400 for small one Product Register Around USD 13,000 for big Fee: companies; and It is Free of tax for the small one ANVISA Manufacturer s GMP certification in company: It is the same price for all sizes of company = USD 17,500 for each company abroad

35 7.3. MARKET POTENTIAL FOR CATHETERS (2/4) Market Overview and Government Regulation: Brazil has become one of the major destinations for medical tourism. In the last 10 years, the level of requirements for companies to do business in the Medical Devices Area in Brazil have been increasing dramatically. ANVISA & Minister of Health Agency regulate this market and implemented several rules and procedures reinforcing the quality of companies and products. Product Registration is the most sensitive piece due to ANVISA lead times. Officially this process should take up to 6 months, in reality can take up to 2-3 years. Partnering with local companies/distributors already established and authorized tends to shorten this time to market.

36 7.3. MARKET POTENTIAL FOR CATHETERS (3/4) Export Strategy and Partnerships: There is some intent from Brazilian Medical Devices Manufacturers to produce other devices internally, but at the moment very few products have been produced in Brazil. Foreign companies typically partner with some local Importers / Distributors in order to start doing business. Best companies to partner in this area are all taken by competitors. The best strategy is to approach them offering a complete line of products with high quality / low price and full support for partnership. Still there is a big quantity of companies in Brazil able to perform this kind of partnership representing manufacturers that are interested in selling their products in Brazil. Catheters for Interventional Cardiology have the most prominent market, as this sector in Brazil was valued at around $ 550 Million (US Dollars) in 2013.

37 7.3. MARKET POTENTIAL FOR CATHETERS (4/4) General Import Duties and Taxes: FOB Price Price CIF (+10% of FOB) Customs Duty 16% IPI (Industrial Products Tax) 8% PIS (Contribution to the Social Integration Program Tax) 2% COFINS (Contribution to the Financing of Social Security Tax) 7.65% ICMS (Merchandise Tax) 18% Operating cost and Profit Margin USD 82 20% 16% 8% 2% 7.65% 18% 100% USD USD USD USD USD USD USD

38 MARKET POTENTIAL 7.4 ANIMAL FEED

39 7.4 MARKET POTENTIAL FOR ANIMAL FEED IMPORT RULES FOR ANIMAL PRODUCTS Procedure requires mandatorily a prior recognition of equivalence by Brazilian Public Health Control Agency (ANVISA) Animal Feed samples must be also inspected by ANVISA prior to shipment ex-mauritius even if this material has already been inspected in its origin. Samples must be accompanied by the International Health Certificate (CSI), signed by an official veterinarian. IMPORTERS LOCATION Most of the importers of cattle and goat feed are located in the interior of São Paulo, Mid- West and South regions of Brazil. FOOD ADDITIVES According to a general assessment on Brazilian Animal Feed Additives Market, as demand for feed additives is related to animal feed production, the continuous demand for poultry and swine led the growth of the animal feed industry and, consequently, additives.

40 7 MARKET POTENTIAL Sectors Products Potential 7.1. Textile & Apparel 1) Fabrics 2) Denim trousers 3) Shirts 4) T-Shirts 5) Suits 6) Polo-Shirts 7) Lingerie 8) Swimwear 7.2. Luxury 1) Leather Handbags 2) Ship Models Medium to High for upmarket Medium to High 7.2. Luxury 1) Jewellery Medium 7.3. Medical Devices 1) Catheters Medium to High

41 8 SUMMARIZED CONCLUSIONS BY PRODUCT CATEGORIES TEXTILE & APPAREL Medium to high potential to upmarket. Export strategy focused on following through directly with buyers and make both fabric/textile swatches/finished clothes for buyers to evaluate quality. Promoting the Mauritian presence at Trade Fairs, directing the interested people to the Mauritius website and promoting a direct contact between Mauritian and Brazilian companies. LUXURY: JEWELRY Medium potential. Export strategy would be to provide samples, even though there are costs involved (manufacturing price plus delivery). Mauritian companies of this sector should attend Brazil Trade Shows & align Mauritian products with Brazilian trends from a design point of view. LUXURY: LEATHER PRODUCTS Medium to high potential. Market divided into low cost local production and high style branded-products. An export penetration strategy based on business matchmaking.

42 8 SUMMARIZED CONCLUSIONS BY PRODUCT CATEGORIES LUXURY: MODEL SHIPS Medium potential. The best export strategies would be Mauritian companies to identify collectors and luxury shops, through dedicated luxury importers/distributors. ANIMAL FEED Medium to high potential. The best export penetration strategy is to initiate contact with Animal Feed wholesalers/importers and verify the level of interest in this product & start the regular procedures with the local authorities through a formal approach to ANVISA, providing a sample for laboratory analysis and, depending on the results, to initiate the export process. CATHETERS Medium to high potential. Cardiovascular is the largest segment in Brazil. The volume of imported catheters in Brazil is expressive. Local importers source from different countries, such as USA, Turkey, China, India, etc. Mauritian companies should go to Brazil to meet the respective influential agents of this sector, who are commonly found at hospital angiology departments and hold the knowledge of this equipment need, importing procedures as well as market entry strategies.

43 9 MARKET STRATEGIES AND RECOMMENDATIONS 1. WEBSITE: Promotion of the Mauritian products in Brazil + catalogue of products/prices + across the various sectors + enquiry form +Future /other marketing activities. 2. TRADE VISITS IN BRAZIL: Next vital step; Export Trade Mission by Mauritian companies. Possible assistance of Brazilian Agency of Export Promotion. 3. TRADE VISITS IN MAURITIUS: In some cases, awareness of Mauritius and Mauritian product categories/capabilities is nonexistent. 4. BRAZIL REPRESENTATION: A full time representative in Brazil working to promote Mauritian companies and products. This will create an aura of awareness, credibility and seriousness.

44 9 MARKET STRATEGIES AND RECOMMENDATIONS 5. DIRECT CONTACT: Brazilians are usually resistant to cold approaches. Mauritian companies must undertake this activity to create a track record of dialogue as well as to build up knowledge of needs/requirements. 6. PRODUCT POSITIONING: Mauritian products based on VFM Value for Money (quality/price). Quality can only be evaluated by providing samples to be supplied to enquirers. 7. TRADE ADVERTISING: Investment in trade advertising in the most relevant specialized magazines proclaim that Mauritius is open for business and direct readers of such information to a Mauritius-Brazil website. 8. TRADE FAIRS: Further awareness and enhanced visibility of Mauritian products and brands. Participate in Premiere Vision Sao Paulo International Trade Fair.

45 Thank you