Brazil constitutes a fantastic export possibility for Swedish startups. But you have to watch out for the pitfalls. That is Anders Norinder’s, Head of Brazil for payment-service Izettle, message.
This week Brazil’s president Dilma Rouseff visited Prime Minister Stefan Löfven in Sweden, to discuss economical exchange between the two countries.
At the same time, Izettle’s Brazilian manager Anders Norinder is visiting Stockholm to – among other things – meet the Brazilian president.
When Breakit meets the Izettle manager at the company’s headquarters, he is clear regarding his message: More Swedish startups should expand to Brazil.
“People in Brazil are very connected. For instance, they have completely digital election systems and smartphone penetration is very high. On top of that, Swedish products and Swedish companies are very highly regarded, in a country which has the fifth highest population in the world”, he says.
Izettle have been present in Brazil since 2012. The company started as a joint venture with the banking giant Santander, with the aim to become number one in card-payment among minor companies.
Small businesses, like hairdressers and corner stores, constitute 26 percent of Brazils BNP, the kind of companies constituting Izettle’s main clientele.
“When we entered the market we soon noticed there was a lot to be done in form of credit to small businesses. In Brazil people usually want to buy products on installment plans. It creates a tricky situation for small businesses, because they often have to pay their own suppliers within 30 days”, Anders Norinder explains.
The solution was Izettle stepping in and paying for their clients after two days, in order for them in turn to pay their suppliers on time.
“We charge approximately 2 percent in monthly interest for this. It might sound quite high with European measures. But let us remember that a common Brazilian interest is 15 percent”, the Izettle manager says.
The company has grown fast the past years in part because of that particular credit solution.
Anders Norinder does not want to reveal the turnover figures for the Brazilian branch but stresses that it is one of Izettle’s most important markets. The payment-service company reached a world wide turnover of $22.8 million during 2014.
The Izettle manager has several specific tips for other tech companies that wants to establish themselves in the country.
“Do not be intimidated by the bureaucracy. It is tough doing business in Brazil, due to the administration being sluggish, but it is easy to do business with Brazilians. With the people, that is. We are in many ways alike. Swedes and Brazilians are both rather afraid of conflict and start out from the assumption that both parties can be trusted when making business”, Anders Norinder says, who was manager of Volvo Cars in Latin America before he started at Izettle.
His advice for tech companies is to get in touch with a Brazilian expert on import regulations and VAT rates, ahead of establishment.
“Don’t try the procedures you have used in other markets. It will not work. There are different VAT rates for different states and the system is extremely complex. However, Swedish companies already have such an extensive presence in the country so there are lawyers and other experts who have specialized in assisting Swedish companies in particular”, Anders Norinder says.