compare two countries for corporate axpansion

8/8/2019 Compare two countries for corporate axpansion

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International Expansion Green

Group Wireless

Brazil vs Chile

12/14/2010Green Group Presentation II1


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Company Profile

Presenter: Peter



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Company Profile


Company demographics 3rd largest domestic carrier

Utilize CDMA network standard

Employ over 42,000 personnel

Domestic growth fueled by: Emphasis on innovative product

lineup Investment in network

expansion

Strong customer service culture

Need for International

Expansion First Mover Advantage

Domestic penetration: 93%

Net growth deccretion Year overYear

Domestic Market Share

GG Wireless

Remainder

-26.5

-26

-25.5

-25

-24.5-24

-23.5

-23

-22.5

Q1 Q2 Q3 Q4

NetAddsY

OY

Domestic Market Share

GG Wireless


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Economic Profile

Presenter: Maria



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Economic Statistics


Statistic Chile BrazilGross Domestic Product (USD) $161.8 billion $1.574 trillion

GDP - Real Growth Rate (1.7%) per year (0.2%) per year

GDP (Per Capita) $14,600 $10,100

GDP - Composition by Sector

Agriculture 5.60% 6.10%

Industry 34.50% 25.40%Services 51.90% 68.50%

Unemployment Rate 9.60% 8.10%

Investment (Gross Fixed) 21.4% of GDP 16.7% of GDP

Budget

Revenues $32.62 billion $354.8 billion

Expenditures $39.82 billion $434.9 billionPublic Debt 6.1% of GDP 60% of GDP

% below poverty line 18.20% 26%

Human Development Index Rank 45th 73rd


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Trade Policy

CHILE BRAZIL


Active Policy of Trade liberalization throughthree channels:

Unilateral liberalization (1975-2002):

Unilateral reduction of Tariffs

Flat rate of 6% tariffs

Real actual tariffs on goods and services: 1.7% Signature of several free trade agreements

Multilateral liberalization: Participate in World Trade Organization (WTO)

Continuous support for fairness, transparency andnondiscrimination.

Bilateral / Regional Agreements: Active policy of Free Trade Agreement negotiations

since the 1990s. Overall Analysis:

Dedicated to Free Trade

Welcoming environment to international expansion

Began modest trade reforms in 1990s

Unilateral liberalization (1990s to date)

Reduction of Tariffs: 1990 average tariff rate: 32%

2000 average tariff rate: 13.7%

Multilateral liberalization: Participate in the World Trade

Organization (WTO)

Bilateral / Regional Agreements: Limited policy of pursuing Free Trade

Agreement negotiations since the 1990s.

Overall Analysis: Significant trade reforms over last two

decades

Moderately welcoming environmenttoward international expansion


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Trade


Statistic Chile BrazilTrade Balance $530 million ($25.3) billion

Exports $53.74 million $153 billion

Imports $39.75 million $127.7 billion

Major Export Markets:

China, 16%

USA, 11%

Japan, 9%

Major Trade Partners:

USA, 22%

China, 13%

Argentina, 10%

Brazil, 6%

Major Export Markets:

China, 13%

USA, 10%

Argentina, 8%

Major Trade Partners:

USA, 16%

China, 13%

Argentina, 9%

Germany, 8%


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Summary: Economy (25 pts)


Points in Favor:

Tremendous economic growthover the past 20 years

High level of foreign trade

Strong financial institutions

Points Against:

Chile's economic and politicalsuccess is vulnerable

Small market

Points in Favor:

Attracting foreign capital

Raising income level among

middle class

Brazil has continued to bepublicized as a so-calledemerging country that offers

investors solid and stable

returns. Huge market

Points Against:

Higher volatility

Chile

Brazil

Conclusion: Chile 15 points. Brazil 22 Points


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Infrastructure / Geography

Presenter: Boris



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Infrastructure

CHILE Paved Roadways: 16,745 km.

Unpaved Roadways: 63,760km.

Railways: 5,483 km. Major Airports: 6

Major Ports: 7

Notes:

87% of trade is done in Ports.

International Airport Arturo

Merino Benitez.

Mi. Paved Road / Sq. Mi: 0.22

BRAZIL Paved Roadways: 96,353 km.

UnpavedRoadways:1,655,515km

Railways: 28,857 km.

Major Airports: 15

Major Ports: 30

Notes:

Greater portion of Brazilsexports and imports areshipped by sea.

International Airport GovernorAndr Franco Montoro.

Mi. Paved Road / Sq. Mi: 0.113


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Mi. Rd / Sq. Mi. Area

Brazil

Chile

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Pops / Airport (M)

Brazil

Chile

Population Serviced By Airport

Measures availability of air transit

Chile has clear advantage in aerospaceinfrastructure

Miles of Road per Square Mile ofArea

Measures availability of paved road

Chile appears to have betterhighway infrastructure


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INFRASTRUCTURE

CHILE Communications:

Main lines: 3.575 million

Mobile cellular: 16.45 million

Internet users: 1.056 million

Broadcast media: About 250radio stations & no more than25 TV stations, many state-owned.

Major cellular companies:

VTR, Nextel, Movistar, Entel,Claro.

BRAZIL Communications:

Main lines: 41.497 million

Mobile cellular: 173.959million

Internet users: 64.948 million Broadcast media: More than

1,000 radio stations & morethan 100 TV stations.

Major cellular companies:Brasil Telecom Participacoes,

Brasil Telecom, Tele NorteCelular Participacoes,Telecomunicacoes de SaoPaulo, Telemig CelularParticipacoes, TIMParticipacoes, VivoParticipacoes.


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Summary (25 pts)


Points in Favor:

Availability of roads, highways,etc

Availability of widespread airtransit

Points Against:

Highly mountainous geographycauses technical challenges for

wireless More towers needed to cover

smaller population

Points in Favor:

Geography tends to be morewireless friendly:

Low mountains, rolling terrain

Dense urban areas mitigate thetechnical challenge of putting uptowers

Points Against:

Few; infrastructure poorer thanChiles, but sufficient

Chile

Brazil



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Government, Regulation &Taxation

Presenter: Yvonne



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Starting a Business


Brazil

Starting a business in Brazil isnot a fast process and patienceis needed. Brazilians areentrepreneurial and have all ofthe infrastructure that is

enjoyed in America, but theyalso want to know and trust thepeople with whom they aredoing business. Raisingventure money in Brazil is alsoa time consuming process and

they will want to have themoney used for a Brazilian-based company.

Easy of doing business: 125out of 181

Chile

Chileans will ask foreignvisitors, very seriously, whythey have come to this narrow,string-bean of a country at theend of the Americas. Argentina

is more cosmopolitan, they say,Brazil more sexy, Mexico iscloser. Building a business inChile means serving a smallmarket at just 16 million people,but it's a great, stable spot from

which so service SouthAmerica and it has become anexporting powerhouse oncopper, salmon, wine and fruit.

Easy of doing business: 40 outof 181


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Government

BrazilChile


Government Type: FederalRepublic

Legal System: Based onRoman codes (Civil)

Corporate Tax: Brazil'scorporate tax rate for 2010 is34%.The tax consists of a basictax of 15%. There is also asurtax of 10% for annualincome of over BRL 240,000,

about $ 110,000. Additional 9%are added for socialcontribution on net profits.

Capital Gains: Capital gains ofcompanies are added to theregular income.

Government Type: Republic

Legal System: US-styleadversarial system (Common)

Chiles flat-rate corporate incometax, known as First Category Tax,

is 17%, which is much lower thanrates charged in most OECDcountries. Of the OECDs 31members, only Iceland andIreland charge lower corporateincome tax (15% and 12.5%,

respectively) than Chile.Companies in the United Statespay 39% while the rate inMexico, the only other LatinAmerican member of the OECD,is 30%.


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Business-Friendly Brazil


Brazilians need to know who they are doing business with before they can

work effectively. Brazilians prefer face-to-face meetings to written communication as it allows

them to know the person with whom they are doing business.

The individual they deal with is more important than the company.

Since this is a group culture, it is important that you do not do anything toembarrass a Brazilian.

Criticizing an individual causes that person to lose face with the others in themeeting.

The person making the criticism also loses face, as they have disobeyed theunwritten rule.

Communication is often informal and does not rely on strict rules of protocol.

Anyone who feels they have something to say will generally add theiropinion.

It is considered acceptable to interrupt someone who is speaking.

Face-to-face, oral communication is preferred over written communication.At the same time, when it comes to business agreements, Brazilians insiston drawing up detailed legal contracts.


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Business Friendly Chile


When meeting someone in Chile and handshake is customary. You may see women

patting each other on the right forearm or shoulder rather than shaking hands. Whenmeeting large groups, it is good etiquette to shake hands with all those present.

When addressing people start formal and wait for an invitation to go informal. Addresspeople by their surnames and Mr, Mrs or Miss. Most Hispanics have two surnames,one from the father and one from the mother. Only the father's is usually used.

In Chile people leave little space between each other when interacting. Don't besurprised if the person you are speaking with places a hand on your shoulder when

talking with you. Try not to step away or appear uncomfortable. Eye contact is important in Chile as it conveys trust, sincerity and interest.

Business entertaining usually takes place at hotels or restaurants. If you are the oneinviting them you should pick up the bill. Arrange for payment with the establishmentbefore the meal or meeting as this will help avoid a lengthy debate as to who shouldpay. If you are the guest, it may be polite to offer to pay although realistically you

would not be allowed to do so. In such cases, offer to reciprocate and ensure you do. Appointments should be made a few weeks prior to arrival in Chile. January and

February are the summer holidays so try and avoid them.

Chileans negotiate in a serious and straight talking manner. Be upfront but notoverbearing. Hard sell tactics or pressure never works. Always be prepared tocompromise as this shows you value the relationship more than the financial aspectsof the deal.


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Summary (20 pts)


Points in Favor:

Extremely business friendlygovernment

Very open to foreign investors

Very low business income taxes

Familiar legal system

High ease of doing business

Points Against:

N/A

Points in Favor:

Large market means findinglegal and tax representative

talent should be simple Cons

High rate of taxation

Strict legal code

Historic distaste for foreign

investors

Chile Brazil



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Population Demographics

Presenter: Khabirah



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Population Statistics

Brazil,202M

Chile,16.7M

Population

0.00%

0.50%

1.00%

1.50%

Brazil Chile

Population Growth Rate

Brazil a significantly largermarket Population growth rates do notsuggest a rapidly increasingmarket in Chile


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Age Demographics

Brazil

Median Age: 28.9years

Male Age: 28.1 years Female Age: 29.7 years

Age Structure

0-14 years 26.7%

15-64 years 66.8%

65 and over 6.4%

Chile

Median Age: 31.7

Male Age 30.7 years

Female Age 32.8 years

Age Structure

0-14 years 23.2%

15-64 years 67.8%

65 and over 9.1%


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Birth/Death/Sex Ratios

BRAZIL

Birth Rate 18.11 births /1000population

Fertility Rate: 2.19 children per

woman Death Rate 6.35 deaths/1000

population

Sex Ratio

At Birth: 1.05 male(s)/female

Under 15 years: 1.04male(s)/female

15-64 years: 0.98male(s)/female

TOTAL POPULATION: 0.98male(s)/female

CHILE

Birth Rate 14.46 births/1000population

Fertility Rate: 1.9 children per

woman Death Rate 5.9 deaths/1000

population

Sex Ratio

At Birth:1.05 male(s)/female

Under 15 years: 1.05male(s)/female

15-64 years: 1 male(s)/female

TOTAL POPULATION: 0.98male(s)/female


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Summary (15 pts)


Points in Favor:

Educated, stable population

Points Against:

Small population / market

Population growth unlikely

Points in Favor:

Large, growing population

Sustained population growth

seems likely

Points Against:

Lack of education

Comparably high rates ofmortality and disease

Chile Brazil



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Culture

Values & Norms

Presenter: Rich



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Greeting


Brazil

Men shake hands whengreeting one another, whilemaintaining steady eye contact.

Women generally kiss eachother, starting with the left andalternating cheeks.

Hugging and backslapping arecommon greetings amongBrazilian friends.

If a woman wishes to shakehands with a man, she shouldextend her hand first.

Chile

Men will usually shake hands.

Women generally pat eachother on the right forearm orshoulder.

Men may embrace andenergetically pat each other onthe back among friends.

Women will kiss once on theright cheek.


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Business Customs & Practices


Brazil

Use surnames and titles

Be on time

Dress conservative

Do not accept gifts

Business cards

Chile

Use surnames and titles

Be on time

Dress conservative

Gifts

Business cards


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Geert Hofstede Analysis



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Geert Hofstede Analysis


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PDI IDV MAS UAI LTO

SD Model of professorGeert Hofstede

United States Brazil

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PDI IDV MAS UAI LTO

SD Model of professorGeert Hofstede

United States Chile


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Summary (15 pts)


Points in Favor and Points Against



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Summary, Conclusion, andRecommendations

Presenter: Peter



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Summary

Chile Brazil


Points in Favor:

Strong economy

Strong prospects for economic

growth Political stability

Business-Friendly environment

Comparative infrastructureadvantage

Points Against: Small market

Mountainous geographypresents technical challenges

Points in Favor:

Large market / population

Geographically suitable for

wireless industry Suitable infrastructure

Points against:

Relatively weak economicenvironment

Unfavorable environment towardforeign investment

Higher population mobility


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Analysis - Points

Chile Brazil


Economic Conditions: 15 points

Geographic Conditions: 17 points

Governmental Conditions: 20points

Population Demographics: 5 points

Cultural Conditions: 13 points

Economic Conditions: 22 points

Geographic Conditions: 21 points

Governmental Conditions: 5 points

Population Demographics: 10

points

Cultural Conditions: 11 points


Recommendation: Chile


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Backup Slides

Brazil vs Chile



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CURRENCY

CHILE BRAZIL


PESO

1 Chilean peso = 0.0021 USdollars

REAL

1 Brazilian real = 0.5787 USdollars

1.0 Chilean Peso = 0.0036 Brazilian Real


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Main Lines Mobile Internet

Brazil

Chile


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Language


Brazil

Portuguese (Official)

Spanish

German

Italian

English

Chile

Spanish (Official)

German

English

compare two countries for corporate axpansion

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