Ricardo Massera — Auditing and Consulting Partnerricardo.massera@taticca.com.br Insights about Guangzhou, Shenzhen, and Shanghai Since the beginning of diplomatic relations 50 years ago, the economic relationship between Brazil and China has intensified significantly, consolidating China as Brazil's main trading partner. This exchange is not only limited to the export of Brazilian commodities and the import of Chinese manufactured products, but also extends to strategic sectors, such as innovation, technology, and services, creating fertile ground for long-term partnerships and extensive business opportunities.
During the visits to the cities of Guangzhou, Shenzhen and Shanghai, we were able to see the robustness and diversity of the Chinese economic ecosystem, which offers valuable opportunities for Brazilian companies interested in expanding their presence in the Chinese market. Chinese cities with strong economic growth and sophisticated infrastructure, such as those mentioned, represent different aspects of business dynamics in the country, such as trade, technological innovation and financial access, all fundamental factors for the entry of Brazilian companies, in addition to the huge consumer market.
Guangzhou is a strategic gateway for Brazilian companies, especially in the agribusiness and food sector. The Chinese market, with its vast demand for quality products, represents an opportunity for Brazilian producers of soybeans, meat and other food products seeking a robust and expanding consumer audience. In addition, Guangzhou's proximity to distribution centers allows for efficient logistics that facilitate access to other Chinese regions, expanding the reach of Brazilian products and services. Because we visited the Port of Guangzhou, the bold and technological logistical capacity and the strategic position of the city on a global scale were evident.
On the other hand, Shenzhen offers a vibrant ecosystem for technology companies. “China's Silicon Valley” attracts high-tech companies, such as Kingdee, which develops ERP solutions for large corporations and small businesses and has the power to confront giants like SAP and Oracle, yet may have an advantage in terms of pricing. This innovation environment represents great potential for Brazilian companies in the technology sector that seek partnerships for the development of new solutions and products, especially those focused on strategic areas.
Shanghai, for its part, is a financial and commercial center that serves as a base for multinationals from various sectors and renowned financial institutions. For Brazilian companies, Shanghai offers a structured environment for the development of export and import businesses, in addition to being a hub of networking for international companies that want to establish connections and partnerships in Asia. The presence of institutions such as AmCham Shanghai facilitates contact with organizations that support the entry of companies into the Chinese market, providing valuable insights and promoting adaptation to a complex and dynamic market.
In the context of business opportunities between Brazil and China, sectors such as agribusiness, technology, automotive and electronic industries show great potential for collaboration. Companies we visited, such as Jidu, which belongs to the Geely group and innovates in the electric vehicle sector, represent interesting possibilities for China, which already dominates the market and shows an appetite for further expansion, and also for Brazil, which seeks to expand the use of renewable energies and new sustainable technologies. These synergies reinforce the importance of innovation and technology transfer as a fundamental part of the Brazil-China partnership, aligning common interests and generating mutual benefits for countries.
Having adequate support is crucial for the success of internationalization initiatives between Brazil and China. For Brazilian companies, the challenge of understanding Chinese regulations, adapting to local cultural practices, and establishing solid partnerships requires specialized support, not to mention the language barrier. International support also makes it possible to adapt products and services to the local context, identifying cultural and economic factors that may be crucial to the company's success.
The Brazilian market, with its regulatory, fiscal and logistical specificities, requires in-depth knowledge of the local context, and companies need support in adapting their strategies, helping them to understand Brazilian consumer behavior, to adjust to local regulations and to identify partners and suppliers that can strengthen their operations in the country.
With the increase in interdependence between Brazil and China, there is a growing need for specialized support to align interests and exploit to the maximum the potential for cooperation between the two markets. The development of integrated strategies and a deep understanding of each country's regulations and preferences are determining factors for the success of these operations. In this context, TATICCA Allinial Global can be your fundamental partner, acting as a bridge and strengthening the link between the two economies on a global scale.
Luiz Carlos Benner — TAX Partnerluiz.benner@taticca.com.br An overview of the tax landscape in relations between China and Brazil The strengthening of diplomatic and commercial relations between Brazil and China in recent decades has made Brazil the destination of almost 50% of Chinese investments in South America. This is a natural process, considering that, in addition to this good relationship between the two countries, we have a vast territorial extension, abundant natural resources, the absence of geopolitical conflicts and a consumer market that cannot be overlooked. In this context, it is essential to involve tax and legal specialists, both from Asia and Brazil, who are connected and can act as a team.
Our participation of Asia Pacific Roadshow 2024 Doing Business in Brazil , including comments about our tax system, legislative changes, tax reform, and future scenarios, both tax and business opportunities, we had the opportunity to hear and learn more about a country with so many charms. Not only cultural differences, but also differences in taxation and corporate structures in each country were evident. In common, synergy and willingness to do business.
Every creation of a new business, investment, or a Joint Venture it has legal and tax obligations that must be observed since its constitution and that will accompany this structure until the end, both in Brazil and in any other country. In the investment scenario between Brazil and China, the importance of closer rapprochement and greater collaboration between Brazilian and Chinese tax specialists and legal advisors for a more assertive assessment and orientation stands out.
Despite the impact that taxes have on a business, whether in China or Brazil, added to their relevance when evaluating a new investment, we cannot consider taxation as a basis for decision-making. No intention of diminishing its importance, but tributes are just tributes. Taxation is a consequence of the operations of any organization. Long before we talk about taxation, we need to talk about business. If the objective, when playing the role of advisors involved in an international investment process, is to add value and make a difference for these investors, we need to listen to them first, understand their business, strategy and objectives. This is about business and not taxes.
After knowing the entire business context, the investor's strategies and objectives, we will be able to assist you in understanding our tax system, simulating the effects of the tax reform, dealing with the effects of Transfer pricing , including seeking alternative tax incentives that are available and applicable to each investment, as well as suggesting the best structure that will help that investor achieve their objectives.
Within this scenario, special attention should be paid to Transfer pricing , which in 2023 began to adopt the principle”Arm's Length ”, in line with international standards and guidelines from the Organization for Economic Cooperation and Development (OECD) and tax reform. With effect from 2025 and fully completed in 2033, this is the largest tax reform we have ever experienced and it certainly challenges us, not only in relation to understanding all changes in the legislation, but also in how to simulate and anticipate their effects on the operations of Organizations. If understanding the entire tax reform scenario is a challenge for Brazilians, it is even greater for the Chinese.
Being directly connected and aligned with expert professionals from the Asian region, regardless of cultural differences and language barriers, will make a difference in this process of advising investors. Mutual cooperation will bring benefit and knowledge to both. TATICCA built this connection and cooperation, with the participation of Asia Pacific Roadshow 2024
In just two weeks, we built and strengthened a solid relationship with the partner firms, members of Allinial Global, which, in a regular scenario of distance and the exchange of emails and remote meetings, would take years to build. Today we are prepared and aligned with partner firms in Asia to assist any company that wants to invest in Brazil, as well as to assist Brazilian companies that want to invest in Asia.
