In São Paulo, Brazil, a group of Chinese businessmen from China are writing their business legends in this distant land. How can they legally avoid taxes in Brazil, the “land of all taxes”? How to quickly adjust asset allocation under the impact of the epidemic? And why are you always curious about new things? These stories may provide us with some inspiration about wealth accumulation and business wisdom.
In recent weeks, as a representative of the company’s product technicians, I went to São Paulo, Brazil to visit more than a dozen local Chinese foreign trade customers.
In fact, the purpose of this visit is mainly to collect customer problems and potential needs for our cross-border financial products to further optimize the product experience.
“Exotic style” from the other side of the world
If we want to understand this part of Chinese businessmen, we must first understand the birthplace of the wealth behind them [Brazil].
Brazil is located in South America, far away from China, at opposite ends of the world, even such a long distance, can not stop the Chinese pursuit of wealth opportunities, according to the statistics of the Brazilian Chinese Association, there are currently more than 300,000 overseas Chinese in Brazil, most of whom live in the state of São Paulo.
São Paulo is a culturally diverse city of heavy immigrants, as Brazil’s industrial, industrial, financial and transportation center, its status can be regarded as Brazil’s “Shanghai”, the local residents are mainly composed of immigrants from Europe, Africa and Native Americans, according to official Brazilian statistics, there are five skin colors in São Paulo, of which the yellow-skinned people are mainly our Chinese compatriots.
Walking through the streets of Brás in São Paulo, we will see a wide variety of shops.
Some of the counters are mainly taken care of by Brazilian locals, but if you continue to walk deeper into the store, you may find a few Chinese owners sitting inside drinking afternoon tea.
Of course, these retail stalls are only the tip of the iceberg of Chinese businessmen in São Paulo, and there are huge warehouses in São Paulo Canindé, Do Campo and other places, where many Brazilians are busy sorting goods, packing packages, affixing logistics delivery notes, and then putting them into the logistics shipping boxes marked with the corresponding e-commerce platforms, waiting for the logistics company to pick them up.
The Chinese bosses or managers behind the warehouse may inspect the sorting of goods in the warehouse, or sit in the office and use other ERP software to monitor and manage the data resources of each platform.
These Chinese business bosses have only come to Brazil in recent years to do business, some have been doing business in Brazil for twenty or thirty years, and even the second/third generation of Brazilians who have been doing business in Brazil since their fathers and grandparents, and some bosses are doing business in Africa, Brazil, Indonesia, Argentina, Colombia and other places at the same time, with an annual turnover of millions or hundreds of millions.
Most of these Chinese business bosses are from Fujian, Guangdong, and Zhejiang, perhaps because of the characteristics of businessmen, and they are more enthusiastic about the reception of us external service providers.
In the process of talking with these 19 Chinese business owners, I found the following three important trait information:
The first piece of information is to focus on “taxation”.
Brazil itself is a “country of all taxes”, with tax revenue accounting for 33.9% of Brazil’s total GDP in 2024, much higher than the average of 21.5% in other Latin American countries, and the country with the highest tax burden among the 26 Latin American economies.
From May 25, Brazil will raise the IOF tax rate for enterprises that purchase foreign currency cash and remit overseas from 0.38% to 3.5%, and in addition, short-term overseas borrowings and remittances related to overseas capital investment will also be changed from tax exemption to 3.5%.
For overseas imported products, a 20% tariff is levied on imported goods worth less than $50, a 60% tariff is levied on more than $50 value, and the customs duty on imported electronic 3C products such as mobile phones will be as high as more than 89%.
Therefore, in order to do business and obtain profits, these Chinese business bosses can be described as working hard, usually using some gray means to declare customs, and then sell to the Brazilian market at a low price, and finally return the foreign exchange earned from the Brazilian market to China through overseas accounts, and will also give tax rebates after meeting a certain overseas trade policy.
The second point of information is to seize the opportunity point of “liability” and “asset” transformation.
According to CNC data, Brazil’s household debt ratio will be as high as 78.6% in 2024, and the long-term uneven income distribution and fragile job market have created riot police cars and bankrupt homeless people everywhere in São Paulo.
According to the consumption data released by Brazil, 79% of Brazilian consumers usually use installment payment to shop, credit cards are one of their most commonly used payment tools, and even a pair of shoes and lipstick can support 90 installments.
For Chinese business owners, this has become an opportunity, an opportunity to transform the “liabilities” of Brazilians into “assets” of Chinese businessmen.
For example, one of the Fujian bosses I contacted, when he first came to Brazil more than ten years ago, mainly did milk tea franchise stores, and quickly expanded to 150+ franchise stores in São Paulo in 3 years, and found that Brazil itself is a “food desert”, but the number of Chinese who go to Brazil every year is very large, and immediately invested in Chinese restaurants, which quickly won the favor of local Chinese and attracted many Brazilian consumers who admired Chinese food.
However, during the epidemic, the business of physical stores in Brazil was greatly affected, but the Fujian boss was not discouraged, but shrank and resold some of the assets that could be converted into liabilities, seized the e-commerce boom in Brazil and transformed in a timely manner, and turned to overseas e-commerce platforms such as Shopee and Shein to sell women’s clothing, cosmetics and other FMCG products.
The third point is to always be curious about new things.
At first, I was invited to dine by these bosses, and I thought it was out of the enthusiasm of businessmen, but in the process of eating and talking together, I found that they were trying to get “key information” about the domestic Internet from our mouths, such as
- how we use our delivery and algorithm capabilities to accurately target our target customers;
- how much cost and resources need to be invested to rebuild a 1688 model overseas;
- With Douyin e-commerce live broadcasts so popular, can TikTok live broadcasts bring more traffic to their businesses;
- …
After the conversation, I couldn’t help but sigh that sometimes, it is indeed difficult for people to make money outside of cognition, whether they pay attention to “tax”, whether they pay attention to “assets and liabilities”, and whether they are sensitive to “new things”, all of which affect everyone’s future asset trend.
Of course, the above is just the common information I have observed, and doing overseas business is definitely much more complicated than this, such as how to have the courage to go abroad, how to have a unique market vision, how to navigate local laws and regulations and employment costs, are all topics worth studying.
Final feelings and inspirations
The re-recommendation potential of KOLs in Chinese business groups is huge
Not only São Paulo Chinese businessmen, but also Chinese businessmen in Brazil show the characteristics of hometown (Guangzhou, Zhejiang, Fujian people), family (multiple people in the same family do business and mutual assistance), and chamber of commerce (the same industry forms a chamber of commerce to exchange resources).
- An e-commerce customer helped us promote and introduce 7 other Chinese customers through his connections in São Paulo for many years;
- There are also two customers, who serve as the president and secretary-general of the Brazilian Fujian Hometown Association, which effectively attracted the consultation and certification of other Fujian customers by publicizing the XT usage and word-of-mouth guarantee of the two people;
- A Ducamp customer, 30+ people in the family are engaged in foreign trade, distributed in Brazil, Colombia and other places, and have their own enterprises under their names, and they have established consulting contacts with our sales under the recommendation of this customer.
Based on the above characteristics, capturing KOL Chinese business customers with more voice and influence in fellow villagers, families, and chambers of commerce can bring us more effective early customer acquisition methods, effectively reducing the difficulty and customer acquisition cost of our local business.
Brazil’s overall industry Internet is 5~10 years behind China, so these Chinese customers generally show great interest in our business model, technical capabilities and domestic resource background, and actively express their expectations for long-term cooperation with us, but if you want to convert the KOLs in these customers into loyal users and channel agents of our products, I suggest:
- Provide appropriate profit concession services to key KOL customers in the early market, such as risk control pre-review and free handling fees, to ensure that KOL customers are willing to continue to use the platform;
- Regularly maintain daily relationships with KOL customers through local operations, such as giving holiday gifts, providing exclusive door-to-door operations, and customer service online services, and establishing a home-like word-of-mouth service.
- Timely meet the reasonable localization demands of customers, such as supporting Pix payment, local order creation in Baht, and cross-time zone collaborative efficiency improvement, strengthening customer experience and further forming a sense of customer dependence;
- Provide a certain degree of resource replacement and cooperation capabilities, and use existing product capabilities to provide customers with lead acquisition and independent website building services, so as to achieve long-term partner influence.
You can’t just bow your head to make products, but also look up to build a system
While dining at a restaurant run by a São Paulo owner, the owner invited us to taste his signature cucumber sparkling water, which tasted a bit good, and the owner continued to ask me how it tasted.
I can only answer tactfully, it tastes good, but I may want to try the milk tea opposite more, and the boss also said truthfully: “My drink does not taste as good as the milk tea on the opposite side, but I am more profitable than that one.” ”
He is right, because in addition to the product of cucumber sparkling water, he also has sub-products such as signature hot pot and Chinese barbecue, as well as prime location stores, street flyer advertisements and people-friendly combination pricing, which form a complete business system, which makes the milk tea shop opposite unattainable.
This is a way for Chinese businessmen to find a breakthrough in the Brazilian competitive market by exploring the business system. It is also a strategy that we should think about our own products.
