Brazil is the largest country in South America and the fifth largest country in the world. With a total area just slightly smaller than the U.S., Brazil is located in Eastern South America and borders the Atlantic Ocean as well as the countries of Argentina, Bolivia, Colombia, French Guiana, Guyana, Paraguay, Peru, Suriname, Uruguay and Venezuela.
Originally a colony of Portuguese Empire, Brazil declared its independence from Portuguese rule in 1822 and was formally recognized as independent in 1825. It abolished the monarchy and became a republic in 1889 before being thrown into several dictatorships and military rule. Brazil would eventually become a republic again in 1985.
Economists consider Brazil to be one of the strongest countries in emerging markets despite the recession of 2013 to 2016.
Manufacturing in Brazil
After the intense investment in infrastructure to support the 2014 World Cup and 2016 Olympics, along with the recent “Brasil Major” initiative, Brazil is an emerging powerhouse rich in natural resources and with a strong focus on manufacturing and the supply chain.
Despite its many advantages, Brazil still struggles with a reputation for high costs—primarily due to wages and taxes—which has left the country with a flat industrial sector. Even so, Industry makes up about 21 percent of Brazil’s GDP and employs 32 percent of the workforce. Brazil also has the third largest manufacturing sector in the Americas.
Manufactured products in Brazil include shoes, textiles, chemicals, cement, aircraft, motor vehicles and machinery and equipment.
Other Important Industries
Agriculture, especially the growing of coffee, sugarcane and tropical fruits, is an important industry for Brazil, making up about 9 percent of its GDP. Brazil is also known for the largest cattle herd in the world with over 207.5 million heads of cattle.
Brazil is one of the world’s largest producers of oil and gas and one of the leading producers of hydroelectric power. Service industries, which accounts for 59 percent of the country’s GDP, include telecommunications, banking, energy and commerce.
Supply Chain Infrastructure for Manufacturing
Both transportation and communication infrastructures are strong in Brazil. As you would expect of a country whose coastline stretches for more than 7,000 km, Brazil excels at ocean shipping, but most inland waterways are remote from populated and industrialized areas.
Brazil has nearly 700 airports with paved runways, most of which can handle large capacity airplanes for moving freight quickly to and from all parts of the globe.
Brazil has the ninth largest railway system in the world, which is ideal for moving forestry products, coal and other agricultural products as well as manufactured goods.
Brazil has a workforce that exceeds 104 million people but suffers from high unemployment, estimated at 12.8 percent in 2017. Most of the population lives along the Atlantic coast and in the southeast with more than 86 percent of the population living in urban areas. More than 92 percent of the population is literate, and most people complete 15 years or more of schooling.
Compared to other countries in South America, Brazil has a high ratio of immigrants, primarily from Argentina, Chile and the Andean countries. Many of these immigrants are illegal and unskilled, contributing to poverty and high unemployment.
Brazil is the eighth largest economy in the world, with a GDP approaching $2.055 trillion in 2017. At one point the country had debt equal to 73 percent of its GDP, but it has taken steps to rein in spending. Though, the country continues to spend on infrastructure projects such as oil and gas pipelines to reduce barriers to foreign investment.
Brazil belongs to Mercosur, the Common Market of the South. Other members include Argentina, Paraguay and Uruguay. Mercosur is in negotiations with the EU and Canada for Free Trade Agreements, which should increase the country’s competitiveness for manufacturers.
In 2017, Brazil exported about $217.2 billion worth of goods. Primary trading partners included China, the U.S., Argentina and the Netherlands. Exported goods include cars and transportation equipment, iron ore, soybeans, shoes and coffee.
Brazil imported $153 billion in 2017. The primary commodities included machinery, electrical and transportation equipment, chemicals, oil, car parts and electronics. Primary import partners were China, the U.S., Argentina and Germany.
Brazil consists of 26 states and one federal district. The capital of Brazil is the city of Brasilia.
Brazil ratified its latest constitution on October 5, 1988 and enacted a new civil law code in 2002.
President Jair Bolsonaro has been in office since January 2019. Brazil requires elected officials to receive an absolute majority of the popular vote and holds runoff elections until a clear majority is established.
Brazilian businesses can pay tax rates as high as 64 percent of revenue, and it can take an average 2,000 hours per year to file all the reports and forms. Taxes on profit can exceed 22 percent, and labor and contributions can be another 39 percent. The balance are miscellaneous taxes.
Brazil recently enabled organizations to file company registrations, licensing and employment notifications online.
Getting Down to Business
Brazil recently simplified its import and export procedures to reduce the time for documentary compliance, which can now be done online in many cases. In addition, in 2017 the country introduced a new mediation law that simplifies contract disputes.
When it comes to improving manufacturing efficiency, QAD Internationalization can help to alleviate the challenges associated with globalization and reduce infrastructure and resources costs when it’s needed most.
How would you describe the state of Manufacturing in Brazil? Learn more about manufacturing and doing business in other great countries around the world.