Corporate Expansion: Brazil
By Tucker Mitchell
Phase 5 Individual Project
Professor Jason Sheedy
In today’s international marketplace, it is impossible for multinational companies to avoid doing business in countries that do not adhere to internationally recognized treaties and governing bodies. One of the main international governing bodies is the World Trade Organization, or WTO. The WTO oversees international trade issues with any countries that have adopted its principles of trade and dispute settlement. However, it is not uncommon for many large and prosperous nations to adhere to their own laws and regulations in regards to international trade. One such country that would fall into this latter category is Brazil. Brazil has come a long way in the business landscape in recent years. The country long struggled to encourage foreign direct investment due to a combination of constraining factors including hyper-inflation, political and social corruption, overall inefficiency and lack of infrastructure and excessive taxation. (CDA Media, 2012) However, in the last decade or so, the country has gone from a difficult investment opportunity to one of the hottest areas for foreign direct investment in the entire world. This is thanks to a stabilizing political system that has helped the country’s currency stabilize coupled with a huge mineral wealth along with other natural resources. All of these factors added to the country’s population of 194 million residents, make it the fifth largest market opportunity in the world. (CDA Media, 2012)
Business Law in Brazil – Common and Civil Law
Organizations wishing to do business there must do so with an awareness of local customs and issues concerning business. Rather than adhering to common international business law governed by the WTO or the United Nations International Court of Justice (ICJ), Brazil has its own way of handling international business. Brazil operates internationally in the business world through its use of its own sovereign private law. For instance, in the case that there is a dispute, the country has two specific regulations depending upon the situation: the Civil Code Introductory Law and the Code of Civil Procedure. (Escritorio Juridico Elisio de Souza, 2004)
These statutes divide Brazil’s international business law into two distinct categories. The first category deals with any organization or individual that is based in Brazil or of Brazilian descent. In these cases, if the business is done on the grounds of another nation, Brazil will enter into multinational treaties and ways to manage disputes. On the other hand, the second code gives Brazil exclusive jurisdiction in the business matter. This law is used when dealing with property belonging to or located within the borders of the country. When this happens, Brazil reserves the right to maintain exclusivity in deciding the outcome of the business dealings.
Along with these national dictates on how to handle international business, there are also common cultural issues that an organization must understand and be prepared to deal with. Likely the largest and most omnipresent issue in the business world of Brazil is known on the local level as “Custo Brazil” or the ‘Brazil Cost’. (CDA Media, 2012) The term refers to all of the customary expected issues that one must expect to face in the country. While many of these issues have been lessened to a degree, corruption, inefficiency and inequality and poor infrastructure are still very real concerns and can be disheartening and/or frustrating for those attempting to do business within the country.
Human Rights Concerns
The country does not help itself in this area any with the human rights issues that continue to run rampant. While forced labor has been all but eradicated (only 4,000 workers were subject of forced labor in 2010 of the 194 million in its population) the country still has a