Breaking Through 100 Billion Dollars! With A Large Population That Also Loves To Buy, The Country May Become The Next Foreign Trade Windfall!

From January to August this year, the total bilateral trade between China and Brazil exceeded 100 billion dollars. Brazil has been pinned with high hopes of becoming the next emerging development country with global influence.

 

China-Pakistan bilateral trade reaches a 97-year high.

 

Since 2009, China has been Brazil's main exporter and importer of Brazilian products. China mainly exports industrial manufacturing, while Brazil mainly exports agricultural, energy, and mineral products.

 

Despite the current uncertainties in the world market, bilateral trade between China and Brazil reached US$102.618 billion from January to August 2023, the highest in the same period since 1997, when relevant statistics were available.

 

Brazil's exports to China totaled $67.883 billion, up 6% year-on-year, while Brazil's imports from China totaled $34.735 billion, down 12.6% year-on-year.

 

Why choose Brazil?

 

First, Brazil has enabled RMB settlement, which can reduce trade costs.

 

In March of this year, the Central Bank of Brazil announced that the RMB had overtaken the euro as the country's second-largest international reserve currency.

 

According to a report released by the Central Bank of Brazil, the RMB appeared among Brazil's international reserve currencies for the first time in 2019. By the end of 2022, the yuan's share of Brazil's international reserves had reached 5.37%, surpassing the euro's 4.74%.

 

A statement from the Brazilian Trade and Investment Promotion Agency announced that Brazil has reached an agreement with China to allow bilateral trade transactions to be carried out in their national currencies. China and Brazil can bypass the U.S. dollar as an intermediary currency when conducting large-scale trade and financial transactions by directly exchanging the yuan and real with each other.

 

For bilateral trade, the agreement on local currency settlement will reduce the cost of trade services and improve trade facilitation. In May this year, China and Brazil have already announced that they will no longer use the U.S. dollar as an intermediate currency and have completed their first cross-border RMB settlement operation.

 

 

Secondly, Brazil has a relatively low risk of delinquency. The problem of buyer's payment arrears has always been the pain of export enterprises, but from the data, exports to Brazil will pose a relatively small risk compared to other countries.

 

In the China ECIC SMERI index, the overall credit risk of MSMEs in transactions with Brazilian companies is rated as "medium", and shows a decreasing trend year by year.

 

According to the research, Brazil's demand for Chinese imports of goods and services may grow; the degree of standardization of trade laws and regulations may increase; the level of tariffs on Chinese exports of goods to the country may remain unchanged; the strength of anti-dumping and countervailing measures on Chinese exports may remain the status quo; and the strength of implicit barriers to trade on Chinese exports may not change significantly.

 

As early as 2008, the Standard & Poor's rating agency also rated Brazil as a "reliable investment" for the first time. Brazil has thus entered the ranks of reliable countries for foreign investment without the risk of default.

 

The Latin American market is in the demographic dividend period; now the total population of 660 million people, of which Brazil accounts for 212 million people, is the most populous country in Latin America. It is a relatively promising market and a place where our foreign trade companies and independent foreign traders cluster.

 

Despite the poor overall economic conditions in Brazil in recent years, the Brazilian e-commerce market has broken through a downturn in the market environment, bucking the trend all the way up by 13%.

 

Brazil has excellent innate conditions for e-commerce, with a large group of online shoppers and 130 million Internet users, accounting for 61% of the total population. As the world's 9th largest e-commerce body, its e-commerce retail accounts for only 5% of the retail market, so the potential to be tapped should not be ignored.

 

Export recommendations to Brazil

 

1. Familiarize yourself with Brazilian customs clearance rules. The Brazilian government requires import licenses (automatic and non-automatic import licenses) for all imports.

 

2. Brazil is one of the countries in the world that imposes the most trade barriers. One of them is tariffs; the other is anti-dumping, countervailing, and other restrictive measures; and the third is other trade protection measures.

 

3. Brazilian law is different from common law and civil law, which is a mixture of Portuguese law and Napoleonic civil law, and there is no civil or commercial mutual legal assistance treaty between China and Brazil as a basis for enforcing litigation decisions.

 

If a foreign creditor files a lawsuit in Brazil, it is best to locate it in a larger international city, where the judges usually have more extensive commercial experience.