mandala gp presentation to cap delegates , aug 2013

2740 Matheson Boulevard East, Unit 5Toronto, Ontario, L4W 4X3Phone: +1 416 737.2280

Fax: +1 416 465.6206

CAP Mission BRAZILOctober 21st-25th , 2013

AGENDA

Country Outlook

Brazil-Canada

Business Culture

São PauloRio de Janeiro

Conclusion: why Brazil?

Practical Info

Matchmaking

Brazilian Economic Scenario and Investment Opportunities

Brazil – A world within a Country

Brazil: South America’s Powerhouse

Sources: International Monetary Fund (IMF).

Brazil represents 50%

of South America’s

total GDP

GDP per capita: U$11.400

US$ 2,5 trillion of GDP

Brazil in numbers or Brazil’s Facts

Source: Brazilian Institute of Geographyand Statistics (IBGE) and BrazilianCentral Bank

Brazil in numbers (2011)

Growth of Brazilian GDP

Source: Brazilian Institute of Statistics and Geography.

Investment Prospects (R$ billion, and %change)

Source: GT Investimento, APE/BNDES, Mongan Stanley LatAM Economics.

Numbers by Region

Source: IBGE, 2009-10.

Population Brazil’s population is roughly 194 million

(2012) and estimated to be growing at

about 1.17% per year.

About 42% of the population is under 24

years and 11% is 60 years and over.

The average life expectancy is 73.1 years.

A reduction in poverty has been

witnessed, especially among those living

in extreme poverty (with income of up to

one-quarter of the minimum wage per

capita).Source: IBGE, 2012.

More Buying Power

Source: Cetelem BGN Observador Brasil, Fecomercio SP, Data Popular .

Growing Middle Class → Expanding Consumer Market

The expansion of the classes C, B and A, in recent years should

continue. The country has witnessed a very positive moment in terms of

reducing inequality and increasing income.

* FGV Projection

Source: Brazilian Central Bank / FGV

Brazilian remarks in market and production Largest consumer market in Latin America;

3rd largest market of cell phones, cosmetics and soft drinks;

5th largest market of personal computers;

World’s 7th largest manufacturer and 4th largest consumer of

automobiles;

World’s 4th largest manufacturer of aircraft and top producer of models

seating up to 120 passengers;

Largest consumer market for renewable energies (UN);

Largest producer of biofuels;

Top 5 producer of medical and dental equipment;

Source: Apex, 2011.

Brazilian remarks in market and production Home to the world’s 10th largest petroleum reserves;

Leader in production and exports of several agribusiness products and

3rd overall largest exporter of agricultural goods;

13th largest producer of scientific articles;

10th largest industrial produce.

Source: Apex, 2011.

Largest consumer markets in 2012 and 2020

Sources: EXAME (magazine), McKinsey, Escopo, Euromonitor, Anfavea and Abraciclo.

Produced by: Ministry of Finance

Top 10 Imports (2011)

Sources: Brazilian Ministry Development Industry and Foreign Trade.

1. Crude oil: 6,2%

2. Automotives: 5,3%

3. Liquid oils: 3,5%

4. Autoparts: 2,8%

5. Drugs and medicine: 2,6%

6. Naphtha: 2,1%

7. Electronic components: 1,9%

8. Bituminous coal: 1,9%

9. Reception and transmission parts: 1,6%

10. Potassium chloride: 1,5%

Top 3 import countries

15.0% China 14.6% United States 7.0% Argentina

Also: Netherlands, Japan, Germany and India.

Opportunities

Timing Brazil is in a particularly

positive moment

Investments 2005 - 2013 (R$ billion)

Source: GT Investimento, APE/BNDES, Mongan Stanley LatAM Economics.

Investments 2013-2016 (R$ billion)

Source: BNDES. Study: Perspectivas do Investimento, 2013.

Infrastructure – GOALS, next 5 years (US$)

Global consumer market in 2020 (US$ trillion)

In January 2013, the exchange rate was approximately US$ 1 = R$ 2.00

Sources: Exame Magazine and McKinsey. Produced by: Ministry of Finance.

Expected growth in business

In January 2013, the exchange rate was approximately US$ 1 = R$ 2.00

Sources: PricewaterhouseCoopers (PwC) Produced by: Ministry of Finance.

A recent survey with more than 1,300 CEOs indicated that Brazil is the third most often mentioned country as the one that

the CEOs consider most important for their business overall growth prospects over the next 12 months (excluding the country in

which the CEO is based).

Booming sectors

Brazil - Canada

Brazil is Canada’s 10th export market

Top 10 Canadian Exports to Brazil 2012

Top 10 Canadian Imports to Brazil 2012

Foreign Direct Investment Brazil - Canada

Source: Statistics Canada – CANSIM.

Canada-Brazil Bilateral Investments 2012

CDIC$ 9.8 billion

Sectors: Agriculture, Mining, Shopping Centres, Telecommunications, Software, Environmental Ind. Automotive Parts Brazil is the 12th largest destination for Canadian outward investment

FDIC$ 15.8 billion

Sectors: Mining, Steel, Beverages, Cement, Software

Canada is the 7th largest destination for Brazilian outward investment

Source: Statistics Canada.

Understanding Brazil’s business culture

Building Relationships

Brazilians place great importance on personal and family relationships.

Establishing a personal side to the business relationship, often through social

occasions, is a way to build mutual trust and pave the way to close a deal.

Negotiations in Brazil are strongly influenced by personal contacts and

connections. Building this personal connection means that important deals are

normally conclude in person, and not by email or phone.

When meeting for the first time, business relationships are formal;

Some tips:

In most sectors, clothing should be formal and conservative: Man

wear suits or dressy blazer; Woman can get away with a suit, dress or

just a nice top/pants/skirt;

(Late October weather is typically rain season, but warm)

Use Mr./Mrs./Ms. And last name – many people are only called by their

last name in a work environment (but you should not do this until you

reach a more personal level);

Common greeting is a handshake, although in informal situations man

and woman sometimes kiss on both cheeks and hug briefly

It is usual to bring a small token/gift, such as pen, key-chain, etc.

(Note that anything of value could be perceived as a bribe.)

Business etiquette

.

Doing Business in Brazil

Closing the Deal

Be committed to the market over the long-term;

Be prepared to explain your strategy to provide timely and local service to

your Brazilian customer;

Develop a local presence for visibility with key clients:

After-sales service,

Technical assistance

Spare parts delivery & installation,

Portuguese communication;

Invest in local partnerships : JVs, MOUs, Strategic Alliances;

Get good advice: Legal, Accounting, Fiscal;

Collaborate with key professionals & sector associations in market.

Market Strategies to Succeed

Source: EDC Canada.

Foreign trade and investment opportunities Brazil is the leading territory for investment opportunities in Latin

America;

Large potential consumer market and a growing and thriving middle

class;

Export-based enterprises are generally favored;

Foreign investors are eligible for most available incentives;

Restrictions on foreign ownership exist in several sectors, including

aviation and publishing;

There have been favorable changes in the business culture and a

spread of corporate governance and best practices;

Robust performance of IPOs and merger and acquisition (M&A) markets

in recent years.

Business activities are generally regulated;

Prohibitions normally apply equally to local and foreign-owned

businesses;

Considerable documentation and bureaucracy are involved in day-to-

day operations;

Foreign-exchange transactions are controlled;

Stock markets are active, sophisticated and reasonably developed;

Patent, trademark and copyright protection is available.

Regulatory environment

Most Problematic Factors for Doing Business

Source: World Economic Forum, Morgan Stanley LatAm Economics.

Tax Burden Indicators

It takes companies in Brazil 2,600 hrs/yr. to prepare and pay taxes vs. a median of 224 hrs in other countries.

Source: World Bank, Morgan Stanley LatAm Economics.

São Paulo State

São Paulo State

Sources: IBGE, Brazilian Central Bank and SEADE .

City – State

10th richest of the world

15% of Brazil’s GDP

Financial Center of the country

Population: 41.9 million

GDP: US$ 590 billion (33.9% of Brazil’s total)

Home to vast majority of multinational regional HQ’s

63% of international corporations in Brazil

36% of the production of goods and services in the country

Largest medical center in Latin America

Strongest academic research center

São Paulo State

Rio de Janeiro

Rio de Janeiro State

Source: Decision Rio Investments 2011-2013.

Population: 15.9 million

GDP: US $ 254.5 billion (11% of Brazil’s total)

2nd largest city in Brazil and 3rd in Latin America

A logistics hub with 2 seaport, 3 commercial airports (2nd busiest in

the country)

56% of Brazilian GDP comprised within a 500 km radius

Investments 2011-2013 Rio de Janeiro

Source: FIRJAN.

Investments 2012-2014 Rio de Janeiro

Source: FIRJAN

Conclusion

A large country with an expanding population, rising salaries and a

favored market for foreign investment in the region, Brazil’s medium-

term prospects remain encouraging.

Although the country needs to make a significant number of structural

changes to boost its potential growth, there is clear potential for

Canadian businesses to create collaborations and open new markets.

These opportunities are not only in the main cities of RJ and SP - the

Canadian Government has been developing relationships in other

states, both in the South and Northeast regions.

Why Brazil?

2012 Context – Most comprehensive, positive Canada-Brazil

Bilateral relationship in 20 years – business, political, academic, S&T;

Emerged market/sustainable economy – Trillion-Dollar Club member;

Powerhouse of South America;

Strong Domestic Market, with a fast growing middle class;

Richness of natural and cultural assets;

Environmental sustainability;

Open markets and multilateralism;

Clean and abundant renewable energy.

Before you get on the road, some practical info: Official language: PortugueseElectric current : 220vTime difference: UTC-3 (SP, RJ) There is no time difference with Atlantic Time in August. It will be 2hrs in October.Exchange: 1 Canadian Dollar = ~ 2.3 Brazilian Real (as of August 27, 2013)Please exchange at local banks before you leave, as international bank machines not always available. Only carry what you need for the day, leave the rest at hotel safe.

Local Cell Phones: Can be purchased for R$10 chip +R $20 credit

Security tips: - No jewelry, expensive watches;- Keep your electronics out of sight in public places;- Carry a copy of your passport and small amounts of cash;- Do not carry your wallet with all cards/documents;- Credit Cards widely accepted, advise your bank that you are travelling to Brazil. Take only one card with lower limit when out.

Matchmaking

At least 5 meetings per company in RJ/SP

Mandala local support team at pre-determined hotel location

SP: most meetings at hotel, but also client location

RJ meetings at hotel/client location

Interpreters provided if required

Transportation to meetings provided (private cars)

Possibility of meeting out of town, depending on your objectives

2740 Matheson Boulevard East, Unit 5Toronto, Ontario, L4W 4X3Phone: +1 416 737.2280

Fax: +1 416 465.6206

Thank You

MerciObrigada