The situation in Brazil is too complicated. | Overseas Insights

When it comes to expanding business into Latin America, Brazil is often regarded as the second choice after Mexico. Thanks to the close political and diplomatic exchanges between China and Brazil in recent years, Brazil has attracted significantly more attention on Chinese Internet platforms.

Within Brazil, Chinese brands have a strong presence. "Large - scale advertisements of BYD can be seen everywhere at the airport and along the roads in São Paulo. Every time I go out on business wearing my work badge, young people would come up to me enthusiastically and tell me that they often shop on SHEIN," said Marco, a newly - arrived SHEIN sourcing manager in Brazil.

Compared with the newly - arrived Marco, Fang Ke has lived in Brazil for many years and established "Anjun Logistics", the largest local logistics company. As his understanding of Brazil deepened, he began to notice the emerging contradictory phenomena behind the booming trend of Chinese companies going global. For example, in 2024, China's exports to Brazil reached a new high, but the market share of Chinese cross - border e - commerce platforms in Brazil declined. While Chinese car companies were building factories locally, most expatriate employees chose to return to China after their assignments ended, and few continued to stay.

As a vast and untapped market, the "soil conditions" and "climatic environment" of the Brazilian market are not suitable for all Chinese enterprises. Sun Xinyue, the CEO of Jingwei Consulting, who has lived in Latin America for a long time and helps Chinese enterprises invest, introduce resources and implement operations locally, summarized that Chinese enterprises in Brazil present a polarized pattern of "success of leading brands and dilemmas of a large number of small and medium - sized enterprises coexisting". "Compared with Mexico, I'm not that optimistic about Brazil. The Brazilian market is very open and welcomes Chinese investment, but the market environment is not friendly to small businesses, and the entry threshold is extremely high."

Even if a business opportunity is found, enterprises need a long time to understand and adapt to the complex market rules in Brazil. The underlying logic of investing in Mexico is often to target the US market, while the investment value of Brazil lies in its vast market of 200 million people. Compared with the close economic and trade relationship between the US and Mexico, Brazil is more geographically and culturally isolated from its neighboring countries.

Therefore, long - term commitment to local market penetration is particularly important for Chinese enterprises expanding into Brazil. "In doing business in Brazil, being hasty means being slow, and being patient means being fast. Enterprises must understand this before taking action," said Fang Ke.

This article attempts to help Chinese enterprises interested in expanding into Brazil better understand and grasp the future by answering several key questions about the Brazilian market:

Which industries are suitable for investment in Brazil?

Is cross - border e - commerce still a profitable business in Brazil?

What are the most difficult localization challenges for enterprises "going global physically"?

01 Emerging industries are the focus, while traditional industries have high barriers

"When I first came to São Paulo a few years ago, there were only three Chinese restaurants in the southern district. Now, there are dozens of them, and some streets are just like Chinatowns," said Marco. According to media statistics, more than 40 Chinese enterprises have settled in the southern district of São Paulo. In the EZ Towers, the most expensive office building, the offices of Huawei, Hisense, and Great Wall Motors are all located on the same floor.

From a macro - data perspective, the official website of the Ministry of Commerce shows that in 2024, China's exports to Brazil reached a new high of US$72.08 billion (approximately RMB 513.779 billion), a year - on - year increase of 22%. "Now, the bilateral trade volume between China and Brazil in two days is equivalent to that of a whole year 30 years ago," said Lau, the vice - president of the Brazilian IEST Group, in comparison.

In addition to physical trade, Brazil is also one of China's major investment destinations in emerging markets. In 2024, China's investment in Brazil exceeded US$4.8 billion (approximately RMB 34.2 billion), more than doubling year - on - year (a 113% increase).

Initially, what attracted Chinese enterprises to invest in Brazil were its abundant energy resources and a growing consumer market. During the first decade of the 21st century, the main investors in Brazil were energy companies such as the State Grid and Sinopec, and manufacturing enterprises such as Gree and Huawei. After 2010, seeing the opportunity between the rapid growth of the Brazilian automobile market and the high import tariffs on cars, Chinese car companies such as Chery and Geely began to invest in building factories in Brazil. In 2011, Brazil became the largest export destination for Chinese cars.

Subsequently, infrastructure in new energy, the digital economy, and logistics gradually became the key investment and cooperation areas for China in Brazil. According to the information disclosed by the Brazilian Trade and Investment Promotion Agency in May this year, China will invest a total of 27 billion reais (approximately RMB 35 billion) in Brazil in the next few years, covering areas such as clean - energy vehicles, key minerals, and transportation services.

The new - energy vehicle industry is the most typical example. In recent years, the demand for new cars in Brazil has been continuously expanding. It is the largest automobile market in Latin America and the sixth - largest in the world. According to data from the National Association of Motor Vehicle Manufacturers of Brazil (ANFAVEA), in 2024, new - car sales increased by 14.1% year - on - year to 2.635 million units. Although fuel - powered cars are still the mainstream, the Brazilian government is vigorously promoting the transformation to new - energy vehicles, introducing policies such as exempting imported electric vehicles from tariffs and halving the tariffs on plug - in hybrid vehicles.

Chinese car companies have accelerated their expansion into the Brazilian market. According to CCTV News, based on data from Brazilian government departments and industry associations, in the first four months of 2024, the sales volume of Chinese electric vehicles in Brazil reached 48,000 units, accounting for 36.2% of the total imported electric vehicles in Brazil. Among them, BYD, Great Wall Motors, and Chery all ranked among the top five in the sales of new - energy vehicles in the Brazilian market.

To reduce the costs of direct exports, such as transportation costs, Chinese car companies are also increasing their investment in local factories in Brazil. As early as 2014, Chery's first overseas factory rolled out its first complete vehicle in Jacarei, São Paulo. In 2021, Great Wall Motors acquired a Mercedes - Benz factory in São Paulo to produce new - energy passenger cars. In July 2025, BYD announced that its first pure - electric vehicle production base in Brazil was officially put into operation in Camacari, Bahia. At the factory's opening ceremony in October, Brazilian President Luiz Inácio Lula da Silva, who used to be an automotive metalworker, also attended in person.

"The establishment of factories by car companies in Brazil has driven the development of the industrial chain. Enterprises in the fields of auto parts, glass, and tires have followed suit. In the past two years, many companies in the automotive industrial chain have contacted us to inquire about doing business and setting up companies in Brazil," Lau introduced. For example, BYD has established several industrial - chain factories in Brazil, including those for electric buses, iron batteries, solar energy, and lithium - iron - phosphate batteries.

Lau suggested that new entrants to the Brazilian market should also pay attention to the technical route of using ethanol as fuel to find opportunities for differentiated competition. Currently, 90% of cars in Brazil are equipped with engines that can run on both gasoline and ethanol. Due to the slow popularization of charging piles, BYD is also considering developing hybrid cars that can use ethanol.

Photovoltaic energy is another key investment area in the field of clean energy. About 80% of Brazil's territory is located in the tropical region, with an average annual sunshine duration 1.2 times that of China. It has abundant sunlight resources, and the government has introduced a series of policies to support the development of the photovoltaic industry since 2012. In December 2023, CGN's first green - field photovoltaic project in Brazil officially started construction in Russas, Ceará. Six months later, a photovoltaic power station invested and constructed by SPIC Brazil was put into operation in the same state, with an installed capacity equivalent to the annual electricity consumption of more than 350,000 local households.

In addition, Lau added that the fields of the Internet of Things, industrial drones, medical devices, and biotechnology are also worthy of attention and investment from Chinese enterprises. "More and more Brazilian business delegations are visiting China to connect with Chinese emerging technology companies and bring back new technologies and products that are not yet available in Brazil."

If the domestic market demand in Brazil is the pulling force attracting Chinese investment, then the cooperation plans between governments at the international - relations level are the continuous driving force behind it. After communicating with several Brazilian scholars, Sun Xinyue believes that this year, Brazil is facing the challenges of sluggish growth and inflationary pressure, compounded by the impact of the US "reciprocal tariff" policy. Therefore, Brazil hopes to expand its exports to China and attract Chinese investment to avoid being restricted by Western countries and to enhance its autonomy in technology and energy.

According to a previous report by Xinhua News Agency, in November 2024, during the visit of Chinese national leaders to Brazil, the two countries signed a cooperation memorandum between Yuanxin Satellite, a Chinese low - orbit satellite company, and TELEBRAS, a Brazilian state - owned telecommunications enterprise. Yuanxin Satellite will officially provide commercial satellite - communication services in Brazil in 2026, which means it will replace Elon Musk's "Starlink" as the satellite - communication service provider in Brazil.

However, compared with the open attitude towards Chinese investment in the new - energy and emerging - technology fields, Sun Xinyue also warned that traditional industries in Brazil, such as agriculture, steel, and banking and finance, which are monopolized by families and consortia, are reluctant to let Chinese companies "share the pie." For example, in 2009, a Chinese enterprise planned to buy land in Brazil to grow soybeans and other agricultural products but was opposed by the Brazilian government.

02 Under the complex tax system, small businesses thrive and struggle in cross - border e - commerce

Although some large enterprises have established a foothold in Brazil, it is actually very difficult for most small and medium - sized enterprises to enter the Brazilian market on their own, and the tax system is the biggest obstacle.

The Brazilian tax system can be described in one word: complex. There are more than 50 types of taxes in Brazil. They are divided into three levels according to administrative jurisdiction: federal taxes, state - government taxes, and municipal - government taxes. Each level includes multiple types of taxes, which can form different tax combinations with taxes at other levels. Brazil is thus jokingly called the "country of ten thousand taxes."

The "Doing Business 2020" report released by the World Bank shows that in the analysis of the "ease of doing business" among 190 countries around the world, Brazil ranks only 124th. In the 2025 Global Business Complexity Index (TMF), Brazil ranks 6th in terms of business - environment complexity among 79 jurisdictions worldwide.

Lau said, "When we provide consulting services to Chinese companies, a common question they ask is why the tax team in Brazil needs more people than the tax team at their Chinese headquarters. I always have to explain to them that due to the large number and complexity of taxes in Brazil, more people are really needed to handle them."

The complex tax system not only leads to a long business - registration process but also keeps the overall tax cost high. Sun Xinyue estimated that, including all types of taxes, the current comprehensive tax rate for Brazilian enterprises may reach over 40%. "If the gross profit of an enterprise is not high enough, the profit will easily be eaten up by tax costs."

The Brazilian government is also trying to address these issues. For example, in December 2023, it promulgated a tax - reform bill to simplify tax types and reduce tax rates, including merging the existing five indirect taxes into a two - level value - added tax. However, the new tax - collection plan will not be implemented until 2026, with a transition period of seven years. For foreign companies, the transition period itself is also a new challenge. Enterprises need to understand the current tax system and make continuous adjustments according to future changes.

Sun Xinyue is relatively pessimistic about the prospects of tax reform: "The problems in the tax system are deeply rooted, and it is difficult to see real improvement immediately. Brazil spends one of the longest hours in the world on tax calculations. Now, with the coexistence of new and old taxes, enterprises actually need to file two sets of tax returns, which will increase personnel costs and may also lengthen the cash - flow cycle."

Although the business environment is not very "friendly," business still has to be done. Since 2023, the "Four Rising Stars in Going Global" have launched a new round of competition in Brazil, providing a "shortcut" for small businesses to "hitch a ride and go global."

In April 2023, SHEIN chose Brazil as the first stop for its transformation into an e - commerce platform. In the same month, AliExpress announced at its annual merchant summit that it would focus on the Brazilian market. In December, Amazon officially opened its Brazilian site to Chinese sellers. Six months later, Temu also officially launched in Brazil.

Eva, the sales manager of a storage factory in Shenzhen, said that due to the high demand for digital hardware in the Brazilian market, many Brazilian customers found her through cross - border platforms such as Amazon and AliExpress. "When I first started using AliExpress in 2018, it took at least a month for packages to reach Brazil, and there were often problems with lost packages at customs, resulting in very high losses. In the past two years, the platforms have launched consignment services. We only need to provide the ex - factory price, and the platforms handle customs clearance and logistics, and the delivery time has been halved."

In addition to lost packages, the customs - clearance process in Brazil is also very cumbersome, usually taking about seven days, which prolongs the overall logistics time. Merchants may also fail to clear customs smoothly due to incomplete product information, lack of tax numbers, missing certificates, or exceeding the personal - purchase limit.

The consignment model, first proposed by Temu and quickly emulated by platforms such as AliExpress and SHEIN, takes care of the "dirty and tiring" tasks in tax, logistics, and payment, greatly reducing the threshold for merchants to enter the Brazilian market and preventing the risks associated with merchants' non - compliant shipping methods.

Eva suggested, "When doing business in the Brazilian market, customs clearance and order fulfillment are the most headache - inducing issues. Merchants with little experience should make the most of the platforms' mature models to accumulate experience first. Hastily setting up a local team will lead to many pitfalls."

The platforms' logistics capabilities also solve to some extent the problem of returns that Chinese merchants often faced in the past. Eva introduced that the cost of returning goods from Brazil to China is too high, so merchants used to give the goods to customers. "Gradually, many customers would deliberately return goods to take advantage. Now, we can choose to return the goods to the platforms' local warehouses for resale, reducing some losses."

On the other hand, small and medium - sized merchants are highly dependent on the platforms. To maintain their competitiveness and attract more traffic, the platforms engage in continuous price wars, squeezing the profit margins of merchants.

In August 2023, the Brazilian government abolished the tax - exemption policy for small packages worth less than US$50, which was a heavy blow to Chinese merchants. In 2024, Brazil announced an additional 20% import tariff on direct - mail small packages, on top of the existing 17% standard circulation tax (ICMS) in each state, further increasing the tax cost.

After the abolition of the tax - exemption policy, the number of direct - mail small packages from China to Brazil decreased by nearly 30%. "Large - brand companies like Anker have the ability to increase prices to absorb the tariff cost, but small merchants can't do that," said Fang Ke. He also mentioned that the current customers of Anjun Logistics are mainly cross - border e - commerce platforms, local e - commerce brands, and large Chinese enterprises going global. "Many small and medium - sized merchants who come to us ask if there are any 'gray' ways to avoid taxes, but we won't take on such non - compliant requests."

Although merchants also use the method of "first - leg sea freight + overseas - warehouse stocking" to reduce tariff costs, it brings new problems. Eva gave an example: "We usually stock goods in Brazil according to a 60 - day sales cycle, with a large inventory. The most worrying thing is that if the platforms' promotion efforts are insufficient, the goods won't sell, resulting in losses." The longer sea - freight time also affects the capital - recovery cycle, increasing the cash - flow pressure on merchants.

Data from the Brazilian Federal Revenue Service shows that in 2024, the volume of cross - border shopping in Brazil decreased by 11% year - on - year. Fang Ke also noticed that "the e - commerce businesses (including cross - border and local e - commerce) of these Chinese e - commerce platforms currently account for only 30% of the Brazilian e - commerce market, and the proportion is still decreasing."

The platforms are gradually adjusting their strategies and shifting their focus to local e - commerce. In May this year, TikTok opened its e - commerce business to local Brazilian merchants but did not allow cross - border merchants to operate independently. In October, Temu's Brazilian site opened for local sellers to register.

"Many offline distributors in Brazil are rapidly transitioning to e - commerce. They have their own local sources of goods. Niche independent websites are also very popular in Brazil. For quality control and compliance reasons, they have their own Chinese purchasing teams and generally don't want to buy goods from Chinese merchants in Brazil." Fang Ke believes that compared with the competition among Chinese platforms, the local retail channels in Brazil are the strong competitors that need to be faced together. However, these channels are relatively unfamiliar and difficult for Chinese merchants to enter.

03 Compliance challenges for short - term expatriates and career expectations of local talents

In Fang Ke's view, Brazil is neither a "gold - rush land" where quick money can be made overnight nor a "springboard" like Mexico or Dubai. Instead, it is a vast and complex local market that requires continuous in - depth development.

Sun Xinyue also believes that "in Brazil, opportunities coexist with a highly competitive market. The market size and structural demand provide an excellent track for long - term winners, but short - term institutional and political fluctuations will quickly eliminate enterprises that lack localization and compliance safeguards."

The Brazilian government's attitude of encouraging localization is quite clear. According to the official website of the Chinese Ministry of Commerce, on September 23, Brazil extended the increased import - tariff measures for 30 types of chemical products, 2 types of corrugated cardboard, and 1 type of passenger - car tire for 12 months, except for special products related to its key industrial chains (such as specific models of lithium - ion batteries, automatic external chest - compression resuscitation systems, and specific electrical connectors for cable welding in printed circuit boards). It also extended the anti - dumping duties on flat - rolled steel and austenitic stainless steel imported from China and other countries.

Therefore, localization has increasingly become an unavoidable topic for Chinese enterprises investing in Brazil. Local employment and personnel management are the foundation of all localization aspects, including the tax system, channels and supply chains, and market expansion.

According to a survey by LinkedIn, among Chinese enterprises expanding into the Brazilian market, 36.84% are in the pre - research stage, 31.58% are in the initial implementation stage, and 31.58% are in the large - scale expansion stage.

"In the early stage when an enterprise has not yet entered the large - scale development phase, it is a more prudent approach to send domestic employees to the local market for a trial run," said Zhang Fei, the general manager of the New Customer Development Department of LinkedIn's Talent Solutions in China. In 2024, the number of Chinese expatriate employees in Brazil increased by about 18% year - on - year, mainly concentrated in the new - energy, e - commerce, and manufacturing industries. "However, we also noticed that compared with the European and American markets, the average tenure of Chinese expatriate employees in Brazil is shorter. The core reason is that the cultural adaptation and compliance complexity in Brazil are higher. For long - term development in Brazil, enterprises ultimately need to rely more on local employees."

Expatriate employees are very likely to be punished for violating Brazil's strict labor - compliance requirements. For example, the Brazilian Federal Police conducted several surprise inspections on Huawei's Brazilian subsidiary. In 2007, 20 employees were repatriated, and the company was fined US$32,000.

The most recent and well - known labor - compliance incident occurred in December 2024. When the Brazilian labor department and police investigated BYD's construction site, they found that 163 Chinese workers employed by the Brazilian branch of Jinjiang Group (hereinafter referred to as "Jinjiang Company"), the project contractor, were "working under slave - like conditions." They condemned the existence of "forced labor" and serious violations of labor rights at the site. Eventually, the illegal worker - accommodation facilities were closed, and the project was ordered to stop for rectification.

"Many countries in Latin America have strong labor - protection laws. Chinese enterprises going global should pay special attention to this. The fundamental purpose of many local countries in welcoming Chinese capital is to promote industrial transformation and create jobs for the local workforce. Therefore, using a large proportion of foreign workers is not likely to be popular," said Sun Xinyue.

In her view, the relationship between China and Brazil is no longer just a simple trading relationship but one of industrial joint ventures and institutional docking. This requires Chinese enterprises not only to bring capital and products but also governance capabilities and compliance systems. She suggested that Chinese enterprises should try to avoid hiring foreign workers through opaque intermediaries, conduct third - party audits of contractors' labor conditions (accommodation, wages, passport control, etc.), implement a unified "Employee Rights Protection Manual" (in Portuguese) for all expatriate and local employees, and establish anonymous complaint channels and a mechanism for local legal advisors to be on - site.

However, increasing the proportion of local employees is not easy for Chinese enterprises, especially when it comes to recruiting senior talents with certain technical and management capabilities. "Many Chinese enterprises in Brazil find that although their products sell well and the brand is well - known, it is not as easy as expected to recruit suitable local employees. This is actually because enterprise owners confuse the commercial brand with the employer brand," Zhang Fei analyzed.

Senior talents in Brazil are more sensitive to company culture, career - advancement paths, welfare systems, and long - term career development. They also have higher expectations regarding salary structure, social security, and the union environment. Zhang Fei said, "Previously, Chinese enterprises liked to promote the provision of accommodation and meals, but talents in the Brazilian market are more concerned about work flexibility, how the job can help with personal development, and the enterprise's performance in environmental, social, and governance (ESG) aspects."

He gave an example: A Chinese enterprise required all new Brazilian employees to work at the Chinese headquarters for three months after joining the company so that they could better integrate into the company, understand its culture and values. "After they truly understand the company and then return to Brazil to conduct business in a familiar environment, they can work more efficiently, and employee satisfaction will also be higher."

During World War II, Stefan Zweig, who fled the turbulent Europe, described Brazil as "the country of the future." He wrote, "People here can hear the strong wind of the future's wings." 85 years later, this land still holds great appeal for Chinese enterprises on the other side of the globe. Another local Brazilian proverb may be more suitable for Chinese enterprises that hope to achieve long - term development in Brazil to keep in mind: "The devil is in the details."

References

"Go to Brazil", Caixin Weekly

"The Pioneering Road of a Chinese Logistics Company in Brazil", Brand Factory

Brazil shuts BYD factory site over "slavery" conditions, BBC

This article is from the WeChat official account "Hangzhou Qiantang Enterprise Going Global Service Base", author: Zhejiang Enterprises Going Global.