Business rules in Brazil are complex and require that anyone thinking of doing business there have a clear understanding of the local rules and regulations.
Boeing Co.'s proposed $3.8 billion takeover of Embraer SA's commercial jetliner business is a test for Brazil's economic future
The Brazilian government has launched initiatives to achieve fiscal sustainability and liberalize one of the most closed emerging-market economies. The efforts have strengthened the country's competitiveness and provided a better environment for private sector development. This has resulted in tremendous interest from companies that have long sought to expand into Latin America's largest economy and access it's more than 200 million consumers.
But Boeing's deal for one of Brazil's most successful companies, a shining example of privatization, has stirred opposition ahead of October's presidential election. Left-leaning candidates have vowed to reverse the deal and unions are calling on the government to veto the transaction.
Government intervention to kill or restructure the deal would further harm Brazil's business reputation, already reeling from public corruption scandals, a huge budget deficit and weak economic growth. It could stunt some of the reforms that have been implemented in recent years to encourage business development and foreign investment.
Still, for companies looking to invest in South America, Brazil remains a top destination, home to about half of the region's population and wealth. The United States is one of the largest exporters to Brazil, and one of the leading sources of direct investment in the country.
Doing business in Brazil, however, requires an intimate knowledge of the country's bureaucracy, which is among the most complex in the world. In fact, the nation ranked 125th out of 190 countries in The World Bank's latest report evaluating the ease of doing business globally. The rankings are based on 10 topics, including trading across borders, registering property, getting credit, paying taxes and enforcing contracts.
The poor ranking is in large part due to Brazil's history of protecting local businesses and employees, which created a lot of local rules and regulations. The median time it takes to register a firm in Sao Paulo, the largest city in the country, is 101.5 days, more than three times the median for the Latin American region.
Doing business requires not only opening a local legal entity, but also registering...