Brazil: The Internationalization Process Of Brazilian Companies - The Brazilian Multinationals

The growing process of economic globalization places the discussion about the importance of internationalization of Brazilian companies as a crucial option for corporate strategies to develop competition and national performance.

The internationalization of companies plays an important role, especially for emerging economies that formulate policies on sustainable economic growth. In theory, this process of internationalization involves two main instances: (i) serving of the foreign market through exports, and (ii) direct investments abroad, by the establishment of commercial and/or agency representations before implementing production plants.

Although the majority of transnational companies worldwide were originated in Europe, the United States and Japan, a significant change has been observed in the past three decades. In fact, there has been a significant increase in the number of companies from developing economies in the list of exporters of capital.

Experiences adopted in other countries such as (a) the Asian Tigers, the internationalization took place through a partnership between government authorities and the private sector. With small domestic markets, from the beginning, these countries bet on strategies benefitting exports. The most significant Asian model was the Japanese Zaibatsu, large industrial conglomerates. This model was imitated in South Korea, in the form of Chaebol, but Taiwan focused on the development of another type of company, of smaller sizes. In both countries, the state has encouraged the "National Champions" through incentives. On the other side, we have (b) China, the experience of the Asian Tigers served as a model for China. At first, attracting foreign investments into special economic zones and stimulating the Chinese private sector. Exports were stimulated since the beginning, but in 2002, the Chinese Government launched the "Go Global policy" with measures to promote the internationalization of companies in the country through specific actions such as (i) simplification of bureaucratic procedures, (ii) development of guides for investors (iii) conduction of business intelligence activities; (iv) execution of international agreements for promotion and protection of investments; and (v) creation of the Chinese sovereign fund to assist in the internationalization of Chinese companies. The third example is (c) India. In this country, the internationalization resulted from an initiative of the private sector, which found an important market niche in the information technology area through the rendering of IT services (data processing, telemarketing, call centers) to companies in the U.S. and Europe. India adopted the most liberal investment systems abroad as an important factor to promote the internationalization since the new rules have eliminated some of the earlier barriers.

Nowadays, many are the theories and arguments used to either defend or criticize this phenomenon. The Government role in this process is the main issue of discussion, as well as the definition of the degree of Government intervention in the economy. Basically, there are two models to be followed: (A) the Inducer Government model of internationalization, which requires an active Government Intervention towards the process of foreign investment expansion. This model is usually associated with the selection of strategic sectors and direct Government actions through instruments such as financing, tax incentives and equity participation in companies; and (B) the second model is the Facilitator Government, characterized by the elimination of barriers against internationalization of national companies. This model is guided by the creation of a regulatory environment favorable to the internationalization through reduction in, and simplification or elimination of, administrative barriers and exchange rates.

It is well known that this process is not linear and faces many obstacles. The most common problems and obstacles are: (i) lack of an international experience and management skills; (ii) lack of information on investment opportunities and conditions in the country receiving the direct investment abroad (including unfamiliarity with the legal system and regulations of the country of destination); (iii) currency, political and economic instability of some countries; (iv) limited access to financing; (v) cultural differences; (vi) high-tax environment; (vii) lack of incentives and government support programs minimizing the costs of operating abroad; and (viii) technical issues preventing the execution of double tax avoidance agreements.

Research indicates that human resources management is also a major concern for companies deciding to leave their countries. Expatriating executives from the headquarters is a common practice among companies; however, lack of organization in this process can produce negative impacts. It is essential that professionals have the ability to live and accept ideas, cultures, values and ways of working in a new market that are different from those with which they are familiar.

In Brazil, the internationalization of companies happened with almost a century of delay in relation to the European and American companies, which started their process after the First World War. However, this process has been strongly growing over the past decade mainly due to favorable economic national and international scenarios, but most of all to the (i) appreciation of the local currency, the Real, and (ii) the support of BNDES (the Brazilian Development Bank).

Government discussion about the need of implementation of public policies encouraging Brazilian companies to operate abroad started in the end of the second term of President Fernando Henrique Cardoso. In 2002, BNDES changed its By-Laws to allow the financing of projects on direct investments abroad. The first operation was approved only in 2005. It was the first financing transaction in the framework of such political line of internationalization of Brazilian companies.

The Brazilian Government also created a working group on the internationalization of companies, coordinated by the Executive Secretary of the Board of Foreign Trade (CAMEX). One of its purposes was to analyze and study, jointly with the private and academic sectors, some proposals for public policies facilitating this kind of process. In this context, such group studied the experiences of other countries and the role of the Government. It analyzed and identified the major obstacles in order to remove or mitigate the negative impact of the regulatory framework and inappropriate actions to replace the current stage of development of the Brazilian production structure. In addition, the Government implemented other instruments for financing and supporting the internationalization of Brazilian companies through the Bank of Brazil (Banco do Brasil) by supplying working capital, issuing letters of credit for imports and financing exports.

Brazilian companies were encouraged to open subsidiaries abroad and/or buy foreign companies. Until the active participation of BNDES, the cases of successful internationalization stemmed from the companies themselves and were not the result of a deliberate Government policy to support the creation of Brazilian multinationals. From 2005 to 2012, BNDES disbursed more than R$ 12 billions in internationalization projects for different sectors (capital goods, electronics, energy, engineering and construction, agribusiness).

Due to those figures, BNDES is now facing criticisms for its role of financing those Brazilian companies. The main arguments are that the loans resulted in losses of debts, export of national savings and creation of jobs abroad. The Government and BNDES are rebutting those criticisms by arguing that they have been doing this since 2005 what all developed countries have been already doing for decades, i.e., efforts to promote the opening of new markets for their local companies.

In2006, for the first time in history, the amount of direct investments made from Brazil to other countries was higher than the investments received. Brazil reached the 10th position in the ranking of the biggest investors worldwide and the third biggest foreign investor among the nations in development.

This trend is positive for the Brazilian economy. Despite this movement, the Brazilian Central Bank's data shows that investing abroad is something for large companies. Brazil currently has 2300 companies conducting international operations; however, most of the investments are made by large companies. The group of companies with resources over US$ 1 billion accounted for 66% of the investments.

Although the internationalization process has been already in place for a decade in Brazil, and the Brazilian multinationals have a shy presence worldwide compared to other competitors, this trend shows that the Brazilian companies continue to grow and seek markets abroad. Perhaps, in a first approach, they are mainly seeking their own Region (among the 20 largest companies, 10 of them concentrate their activities in Latin America), but quite likely, in a second stage, companies will get stronger nationally and expand their business towards more distant markets.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions