How to break into the Brazilian cosmetics and personal care market
Basic legal aspects for a business plan
The Brazilian market has been one of the major markets for cosmetics and personal care products and despite several big players controlling sizable market shares, it is still an attractive target for expansion of other companies from Europe, the US and Asia. Brazil’s ethnic-diversified population is an added feature, offering opportunities for a wide range of products. However, the foreign manufacturer, who plans to expand its exports to Brazil, through appointment of agents or distributors or even to go a step further, of forming a Brazilian subsidiary, should be advised as to certain aspects of Brazilian law and practice to avoid frustrated expectations. This brief article intends to give an overview of several legal aspects of which the foreign manufacturer should be mindful and to be taken into account in preparing its business plan. The article purports to call attention especially to the care needed in appointing local agents, in providing important clauses in the agency and distribution agreements, and as to other issues relating to Brazilian foreign exchange controls, protection of intellectual property and bureaucracy involved in forming a Brazilian subsidiary.
INTRODUCTION AND MARKET OVERVIEW
As the 5th largest and 5th most populous country in the world, with a population of approximately 200 million, the Federative Republic of Brazil is formed by 26 States and 1 Federal District (Brasilia) and is governed by a presidential system comprising three branches: the executive branch, the Legislative Branch (with two Chambers – Senate and House of Deputies), and the Judiciary Branch, which has the Supreme Court as its highest court, deciding on Constitutional issues.
The 1988 Federal Constitution, besides creating a strong federal government, with a large concentration of powers in the Federal Union, contains also a long list of Citizens’ Bill of Rights (Fundamental rights and guarantees) and several expressly provided “social or collective rights”.
Each State also promulgates its State Constitution and the Municipalities also enact their respective Organization Acts, to govern local affairs and administration.
Although relatively young, the Federal Constitution has already received 77 Amendments. Among those amendments, it is worth mentioning the ones enacted in 1995, which enabled t ...