Doing business in Brazil as foreigner - Anheuser-Busch INBEV AMBEV

 

Doing business in Brazil as a Foreigner

The Amercian companies in Brazil saga - Part 1

Anheuser-Busch INBEV - AMBEV

This is the first part in some experiences and stories I have of USA business´s starting up or doing business in Brazil and great references to what needs to be considered to avoid losses.

Dealing with Anheuser-Busch INBEV that was then just AMBEV in Brazil I learnt some valuable lessons. 

Working for a large German multinational we were doing a business meetings with group level engineers in 2006. I remember 2 things that really stuck out at the time in our meetings involving water treatment at different factories across the group - they have 33 factories in Brazil. 

1-We were asked if our automation systems had been ´´tropicalised´´? This question confused me as I had grown up and worked in South Africa and although not in the tropics (higher levels of humidity) I had never been asked this question before. This question would appear numeros times over the next few years in different industries and even other segments. It was not about just humidity. It was about using automation and systems with local supply and maintenance options. It was about having cheaper components compared to components used in Europe for instance. It was about being simple to use as staff were not as highly trained. And it was about the local energy fluctuations and frequencies that are different to other countries. 

2-Across a period of about 2 months I had several meetings with the main responsible engineer for maintenance across various factories. In one particular meeting the physical tiredness of this engineer was very apparent and he was difficulty in maintening concentration. We questionend him directly about setting the meeting for another day. In our next meeting I broached his tiredness. He had been working near 24 hours periods with emergencies in maintenance. His boss was busy in meetings and he had to deal with the realities of maintenance problems across the day for a business spanning a continent. At the time I queried and found out he was earning less than US$1000. Young hard working professionals are often found trying to gain experience at a multi-nationals earning very little while their bosses earn up to 5 to 10 times more to sit in on a few meetings a week and do the political game to keep themselves in the job. Todate this is still found across most multinationals. A young very committed workforce with little experience managed by mostly old senior staff that have excellent political game play in these companies. 

A few years later in 2009 we were having a meeting again with INBEV - AMBEV and were negotiating a large lubrification contract again across a few sites. The product would replace a water based lubrificant with a dry lubrificant. This would mean huge water, cleaning savings and faster lines. At a critical head office meeting everybody waited patiently the top-dog arrive. Technical, purchasing and production people were present. Nobody did nothing until he arrived. I remember this senior staff member coming in and saying he was not only responsible for commodities like sugar but also all major decisions like the lubrificant under discussion. His starting gambit was ´´before we can starting talking you need to understand we only pay 120 days minimum´´! The room was silent. My local director didnt say a word. My response was clear, we had to be in the wrong meeting because we were there to talk about company wide lubrification and not financing for a company like AMBEV. This unfortuntely is common place in doing business in Brazil. Large companies EXPECT 10% to 20% discounts and lengthy payment terms before they even start talking about closing arguments. Mostly if you come prepared you can avoid doing business for free. 

Also when doing business with companies in Brazil expect taking 6 months to 18 months to establish who the right decision makers are for your business negotiations. Most local companies are extremely sceptical of new suppliers and products, as a result of having suffered with quick solutions sold by fast talking sales people.

So in brief when getting started in Brazil:

1-Tropicalise your solution.

2-Understand that most people you talk involved with making decisions are young professionals that are under paid. But willing to please. 

3-Have your numbers well thought out and expect to get pressurized for large discounts and long payment terms. 

4-Having a great product with excellent benefits has been heard repeatedly. Prove it.