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Three Things to Consider When Expanding Into Brazil

By August 20, 2021September 2nd, 2022No Comments
Brazil Rio de Janeiro with Sugarloaf and Guanabara Bay at morning

Many companies that expand internationally or build a distributed workforce in the LATAM region focus on Brazil. And for good reason.

Brazil is one of the ten largest economies in the world, home to the sixth-biggest population globally. That gives it a deep talent pool to draw from—especially in the tech field. Home to a burgeoning tech scene, Brazil also boasts a growing number of developers, programmers, coders, and technologists with in-demand skills. The same goes for the AI community, which is rising in prominence on the world stage.  

While there are rich rewards to be found in the Brazilian marketplace and hiring pools, expansion is not without its challenges. Read on to discover three considerations from the experts at Velocity Global.  

Get to Know the Brazilian People

The Brazilian people are famously open, gregarious, and fun-loving. In addition to the fact that Brazilians speak Portuguese—and not Spanish—there are other important facts you should consider.

Brazilians are shrewd negotiators, entrepreneurial, and creative in their approach to business. These qualities are sometimes overlooked as Brazilians put a large emphasis on building relationships first before engaging in business.

As a result, patience is important when working with Brazilians. Be prepared to talk, over a cafézinho (small dark coffee), about social, non-business-related topics during meetings for a much longer time than is customary in the U.S. or Europe. Enjoy the process of building relationships with your Brazilian counterparts and try not to rush—business will eventually be discussed.

Prepare for Brazilian Labor Regulations

Like many other countries in the LATAM region, the Brazilian market is still mired in rigid rules and practices. Companies that expand into Brazil or engage talent in the country must think about the impact of higher-than-normal labor costs and the challenges of a complex bureaucracy. 

Despite these hurdles, there is light at the end of the tunnel. More and more multinational corporations move into Brazil with the goals of engaging talent that meets their budget, finding professionals with the skills they need, and reaching new customers and clients. As a result, the Brazilian government is making strides towards creating a more welcoming employment market. That means loosening some strict employment laws and making it easier for international companies to engage talent.

As such, it is now easier than in previous years to engage temporary and contingent employees, handle payroll, and comply with employment regulations. Still, it’s wise for your internal HR, legal, or finance teams to constantly stay up-to-date on classification rules, salary requirements, and more. Companies that don’t want to divert internal teams partner with global employment experts like Velocity Global. 

Understand Brazil’s Digital Compliance Rules

Companies that do business in Europe are already familiar with the challenges of adhering to the General Data Protection Regulation (GDPR). Those that move into Brazil face a new obstacle: meeting the requirements of Brazil’s Lei Geral de Protecao de Dados (LGPD). 

Like the GDPR, the LGPD sets strict rules for how companies acquire, manage, and use personal data from customers. Personal data refers to anything related to names, health history, political opinions, sexual orientation, web data like IP addresses, and more. 

The LGPD requires companies to appoint a Data Protection Officer (DPO) to ensure that their company meets LGPD standards. The DPO must maintain contact with Brazil’s compliance authorities (locally known as the Autoridade Nacional de Protecao de Dados) while ensuring the company continues to compliantly manage user data. 

The penalties for noncompliance are steep, even if they are not quite as severe as the penalties of the GDPR. Companies that do not meet LGPD requirements face a fine of 2% of their Brazilian revenues for one year. These penalties max out at 50 million BRL, which is equivalent to about $9.4M. Because the LGPD is a newer data regulation, authorities started enforcing it in August of 2021. Companies must act accordingly to avoid the costs of noncompliance. 

Partner With an Expert to Confidently Expand Into Brazil

As the business saying goes, “Brazil is not for amateurs.” That’s why companies set themselves up for success when they partner with a local expert like Velocity Global. Our Brazilian labor and expansion partners streamline every step of your expansion into Brazil: from onboarding new talent and administering payroll to opening bank accounts, maintaining compliance with authorities, and understanding cultural norms.  

Ready to fast-track your entry into Brazil—and compliantly manage your talent once you’re there? Reach out today to find out how we can streamline your operations in Latin America’s largest market.