Editor’s note: “International Business Corner” is a weekly column written by Joan Keston that provides information for people involved in or considering international operations. Keston is an international business consultant. Over the next several months she will be writing about important issues that international businesses face as they compete in the 21st century global business environment.
This article is the third in a five-part series addressing business relationships in the global business environment. This article discusses business relationships in Brazil.
RALEIGH, N.C. – There is an expression in Brazil that embodies the importance of relationships in business. “Para os amigos, tudo; para os inimigos, a lei.” (For our friends, everything; for our enemies, the law.)
Basically this means that people will do what is necessary to help, support or protect those they consider to be friends or family. This is also applicable in business dealings. They will however resort to the law and enforce it, when they want to hurt an opponent and have the necessary relationships to do so.
Legal and Governmental Tradition
Brazil has a long legal tradition mostly inherited from its colonial past. The bureaucracy involved in doing business is often prohibitive and the obstacles frequently appear to be insurmountable. There are ways to simplify the processes or work around them, but this depends on relationships that you have with governmental authorities or politicians.
There are two expressions that are somewhat humoristic but describe what is needed to do business in Brazil: “jogo de cintura” (game of the waist) and “dar un jeito” (to manage). The waist game implies that one must be flexible to navigate around the obstacles. To manage something basically means to find solutions to break through the excessive bureaucracy or bend the rules a bit to accomplish the desired result. Both processes have developed in order to work around the myriad of rules and prohibitions that are still on the books and are the vestiges of a colonial and paternalistic structure. Both require a network of relationships that have evolved from family ties or friendships, and a history of the exchange of favors and payments. “Jeito” is almost a way of life in Brazil.
There is an abundance of legislation in Brazil. The enforcement of that legislation is often precarious and inequitable. Judicial decisions are not always based on precedent or legislation, and are much more subject to the personal decision of a particular judge.
A Word about Contracts
Brazil is not a contract-based country as is the US. Contracts are often intentionally ambiguous or written to collapse if certain events occur. Contracts in the US are written to be simplistic and understood by non-lawyers. This is not the case in Brazil. In a country that has suffered extreme economic and political instability, impossibility of performance is used to cancel a contract much more frequently than is acceptable in the US. Contract enforcement may depend exclusively on who you know, rendering its form as a legal document less important.
The role of attorneys in the transactional process is very different from that in the US. Attorneys are often seen as encumbering a transaction and thus brought in late in the negotiations.
Although many of these characteristics are changing as Brazil becomes an important player in the global economy, the relationship is a very important aspect of doing business. Business is often conducted between friends and family members, and personal reputation is critical. An investment of time and resources to build relationships is critical for the long terms success of your business.
About the Author: Joan Keston is the Managing Principal of Keston & Associates, Ltd., an international business consulting firm located in Raleigh, NC, and a Partner at Paladin and Associates, Inc. She has 25 twenty-five years of experience with mature as well as entrepreneurial companies, domestically and internationally, coupled with an executive managerial and legal background. Her firm facilitates international business transactions, and assists companies establish, grow and integrate their international operations. She can be reached at (919) 881-7764 and firstname.lastname@example.org.