retailbrazil
TRANSCRIPT
Retail Brazil 2006 / 2007
Trade Americas Conference Presentation
May 4, 2006
Retail in Rio Concept and Results
• The In-Store Promotion 2004 –2005– Phase I: Retail Outreach– Phase II: Instore Promotions– Phase III: Reporting Results
• General Concept Idea
• Financial Scenario
• Results
Benefits and Structure• 180 million consumers with increased purchasing
power.• Phase I: New web-based promotion.• Program allows you to test market and promote your
products for a small fee.• Phase II: participants avoid slotting fees and long
term contracts.• Local retailers receive products at a discount and get
to test potential new product lines.• Phase III: We let you know how well your products
did.
Retail Brazil – the Expanded Initiative
• More outlets: CS Rio, São Paulo, Porto Alegre, and Belo Horizonte
• Stores, distributors, online retailers, trade events
• Local promotions description
What type of products work best?
Type of company best suited to participate in Retail Brazil
– Highly motivated– Proven Retail Track Record– Export ready– Products with modern design– New gadgets @ right price– Catchy packaging– High-end and low-end – Increase to market
Things to Bear in Mind
– Registering food, health and cosmetics products
– Size standards for apparel– Need for FOB and electronic catalogs– US turnover and communication issues– Need to target products*– Portuguese translation needed in
some cases
Types of Products in Demand
• Apparel• Food products (FAS)• Cosmetics/• Health and Beauty• Housewares• High-end electronics• Office supplies• Pet supplies• Sporting goods• Toys
Local Events in Brazil
• May 20-23, 2006 –Toys Parties & Xmas Fair -SP
• June 2006 - Surf and Beach Show - SP• June 2006 - FLUMISUL – Rio • August 2006 –Expolazer-Sporting Goods -
SP• August 2006 –Photo Image Brasil - SP• August 2006- Escolar Paper Brasil Intl
Trade Fair
Local Events in Brazil• August 2006 - House wares and Gift Fair-
SP• September 2006 - Fitness Brazil-Sporting
Goods -SP September 2006 –Int’l Music Fair-SP
• ------------------------------------------------------• September 1- 4, 2006 –Beauty Fair -SP• September 23- 26, 2006- Cosmoprof Int’l
Exhibition & Conference – SP*
IBPs Targeted for RB Promotion
April 28-May 5, 2006 – IBS 2006 NY Hair showMay 20-23, 2006 –NRA Show Chicago, ILJuly 24-28- Las Vegas Market July 11-13 – VSDA Home Entertainment July 16- 18 Cosmoprof Las Vegas August 23-26 International Woodworking
Machinery and Furniture Supply Fair USAOctober 16 –22 High Point - International
Home Furnishing CenterOct 31 – Nov 3 - SEMA SHOW / APPEX
Phase I: Retail Outreach
• April 1-June 15 Market Test Phase I begins: US companies who register with appropriate products send samples and catalogs.
• Ship 3 samples and 10 catalogs for each city to: Camille Richardson
Unit 3501APO, AA 34030-3501
• Expect a 4-6 month lag time for initial responses.
Phase I continued
• June 30 –first wave of CS promotions in Brazil through Commercial Association using samples and catalogs.
• June-August retailer selection and negotiation with US companies for Phase II.
• NOTE: NOT ALL products will be selected For Phase II.
• GKS/IPS option
Phase II: Product Shipments for In store Promotions
• 8/15/06 consolidated shipment leaves the US via Fedex.
• 9/1/06 products arrive in Brazil and clear customs. Products distributed throughout Brazil by Fedex.
• Late September products promoted to Feira de Providencia in Rio.
Market Test Phases II& III
• October 2006: first in-store promotion programs with Brazilian retailers throughout Brazil
• December 2006 Feira de Providencia in Rio.
• Christmas promotions at other posts.
• January-March 2007 Test Market Phase III: CSB offices follow up to harvest success stories/share results with USEACs
How you can participate
• Register online at: http://www.buyusa.gov/tradeamericas/retailbrazil.html
• Product consulation city selections, and payment.
• For more info on Brazil visit:http://export.gov/comm_svc/press_room/marketofthemonth/Brazil/011006brazil.html
• US$500 to participate
Other CS Products
• Gold Key Service: Customized business appointments
• International Partner Search: List of pre-screened distributors
• Customized Contact Lists
• International Company Profile
After Retail Brazil
• Goal I: Feedback: Phases 1,2,3• Goal II: Establish agreements with
Retailers or distributors– CS business counseling– Visits to Brazil (GKS, IPS)
• Goal III: Shipments to Brazil to sell products
Shipping and Import Costs
• Imports are subject to a number of taxes and fees, usually paid during the customs clearance process.
• (1) Import Duty itself (aka "II")• (2) Industrialized Product tax (aka "IPI"), • (3) Merchandise and Service Circulation
tax (aka "ICMS"), • (4) Social Integration Contribution (aka
“PIS”) (5) Social Security Financing Contribution (aka “COFINS”).
Shipping and Import Costs• Additional Miscellaneous Taxes and Fees
- Warehouse Tax: 0.65% of CIF for a 15 day period• - Typical Terminal Handling Charges at Santos' • port: US$100 per container• - Merchant Marine Tax: 25% of ocean freight • charges (does not apply to air freight)• - Mandatory Contribution to Custom Broker's • union: 2.2% of CIF with a minimum contribution • of US$71 and a ceiling set at US$160• - SISCOMEX usage fee: US$30• - Typical Cargo Transportation Fee: US$35
Hypothetical Cost Buildup for an Imported Machine in US Dollar
FOB price of Product . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . .. . . 100,000Freight . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,400Insurance (1%) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,000
CIF Price of Product. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103,400Import Duty Rate: 19% -- applied to CIF. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,646IPI: 5% -- applied to CIF + import duty. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,152ICMS: 18% -- applied to CIF + import duty + IPI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23,256Merchant Marine Tax: 25% of ocean freight cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . 600Warehouse: 0.65% of CIF; or min. US$ 170, max US$ 235. . . . . . . . . . . . . . . . . . . . 235Terminal Handling Charges: average US$ 100 per container . . . . . . . . . . . . . . . . . . 100Contribution to Custom Broker's union 2.2% CIF; or min of US$ 71, max US$ 160 . 160Custom Brokerage Fee: average 0.65% of CIF or min US$ 170, max US$ 450 . . . . 450SISCOMEX Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30Typical Cargo Transportation charge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35Typical Bank Costs: 2% of FOB . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,000
FINAL COST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 156,064
Payment Terms
• It is unwise to sell on unsecured open account terms to new clients.• However, US Exporters do lose sales because competitors offer
open account terms.• Brazilian buyers will negotiate hard for open account terms,
particularly because Brazilian lending rates are 25% to 30% per year.
• Accordingly, US Exporters need to consider the full range of sales and export finance options.
• Visit the following USCS publication entitled “Getting Paid by your Brazilian Buyer” in order to learn more about possible payment / export finance mechanisms:
http://www.buyusainfo.net/docs/x_4677546.pdf
Overview of Main Payment Terms
* Short-Term: up to 6 months, Medium-Term: 6 months to 5 years.** Costs are estimates and will depend on transaction characteristics, particularly the Brazilian Buyer’s creditworthiness.
Cash in Advance
Confirmed Letter of Credit
Open Account
Open Account with Export Credit Insurance
Export Finance by US Bank
Export Finance with US Ex-Im Bank Guarantee
Import Finance by Brazilian Bank
Term* Short and Medium
Short and Medium
Short Short Medium Medium Medium
Size Generally Smaller
Small to Large
Generally Smaller
Generally Smaller
Small to Large
Small to Large
Small to Large
Cost** None 4% per year None 0.08% to 1.5% of Sales Covered
4% to 8% per year of Amount Financed
6% to 12% per year of Amount Financed
25% to 40% per year of Amount Financed
Cost paid by:
N.A. Brazilian Buyer
N.A. US Exporter Brazilian Buyer
Brazilian Buyer
Brazilian Buyer
Doing Business in Brazil
• Will require patience, dedication and teamwork.
• We look forward to working with all of you to explore your market potential!
• www2.focusbrazil.org.br/siteUSA/index.htm
Points of Contact
– Rio: [email protected]– [email protected]
– São Paulo: [email protected]– [email protected]
– Belo: [email protected]– [email protected]
– Porto Alegre: [email protected]