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Published on Jun 27, 2013 in Brazil, Brazil, Featured Articles, Latin America, News

Negotiating in Brazil

When negotiating, every venue is unique. Every country is different and offers its own set of challenges. My partner Dave Dodge and I first started negotiating with Brazilian companies nearly a decade and a half ago. Since that time we’ve learned quite a bit about Brazilian negotiations and what it takes to be successful in conducting business there. Here’s a few of our insights.

Business is done among those who know each other: Business in Brazil is normally done only among those who know and trust each other. Consequently it’s necessary for outsiders to build a relationship prior to doing business there, or be introduced by someone who the other party trusts and respects. Without an existing relationship, or an introduction from someone who’s known and respected, you’re more than likely not going to close the transaction. Instead, you’ll be in a probationary holding pattern until a business relationship with trust is established. Brazilians are normally suspicious and non-committal until they have a relationship with someone based on trust and respect, and they know their character. That will take an unknown number of trips to Brazil to establish because, until you establish that relationship, your negotiations likely won’t be going anywhere.

Decisions tend to be by group consensus: Similar to Chinese decision-making, important decisions are normally made by a group. The group will then present their recommendations to the relevant person in authority. Relationships are a critical component in consensus building. Brazilians believe that building strong bonds within members of the group allow for a consensus to be made, a path to be chosen, and the closing of a transaction. As a result, Brazilian negotiating teams normally have a strong bond between one another built on mutual respect and an established relationship developed over a period of time.

Take your time: Don’t open the negotiations by immediately going to the documents under discussion. This doesn’t build rapport or a relationship between parties. In fact, it will probably be considered rude. Instead, you should probably start discussions with small talk or chit-chat. When it’s time to get down to business, the other side will let you know. Be patient. Brazilians hate meetings that go right into business and skip the social prelude to business discussions.

The first meeting is generally a throw-away: Most often, but not always, the purpose of the first meeting in a negotiation session is for the parties to get to know one another and establish a relationship. It’s an ice-breaker. Therefore, while you may discuss some business at the first meeting, you probably won’t get into anything substantive.

They don’t put all their cards on the table: Brazilians normally are stingy at sharing information. Many believe that the more information they provide, the weaker their bargaining position. Therefore, don’t expect a lot of sharing of data at the negotiating table. You’ll probably have to rely on your own resources for the information necessary to consummate the transaction.

map_of_brazilCivil law and not common law: Brazil is a civil law country which means that the law is based on statutes adopted through the legislative process. Common law, also known as case law, in contrast, is law developed by judges through decisions of courts and similar tribunals. Since Brazil is a civil law country, it has written legislation that covers almost everything. Therefore, attorneys tend to become much more involved in the negotiating process than they would in other countries. Their input is usually critical as negotiations sometimes become so complex and far-reaching that ensuring that laws aren’t violated is an important component of the negotiating process. The same can be said for accounting rules and regulations. The assistance of a CPA, with a knowledge of local and national accounting rules and regulations, is also essential in putting together a document that adheres to all pertinent rules and regulations.

The pace of negotiations vary widely by city: If you’re negotiating with a company in Sao Paulo, you can expect your Brazilian counterpart to want and negotiate and execute the agreement as quickly as possible. If you’re in Bahia or Rio de Janeiro, you can expect the pace of negotiations to be much slower. Generally, as a rule however, negotiations are not on the fast track in Brazil. In fact, most negotiations proceed at such a slow pace that many Americans become impatient and irritated. Try not to let this impatience show as many Brazilians see this as a sign of weakness and they also may find it to be rude and take offense.

In addition, our experience outside of Brazil has been that there’s few, if any, interruptions allowed while the negotiating process is going on. That’s not always true in Brazil. Brazilians seem to be fine with frequent interruptions from their staff asking for decisions or guidance on issues outside of what’s being negotiated. One reason for this, we’ve been told, is that private offices are not that common in Brazil and that interaction among employees is therefore frequent and expected.

Negotiating points: Brazilian negotiators don’t normally proceed step-by-step, and point-by-point, through the contract or similar document. Instead, they view the entire contract as being open for discussion at any time. They don’t address the document in a sequential order. They’re polychronic. They pursue multiple actions in parallel, going back and forth between the various issues. United States negotiators, on the other hand, are generally monochronic. We like to resolve one issue before going on to the next. Many Americans find the polychronic form of negotiating to be maddening and quickly lose patience. Don’t. It’s simply the way their culture approaches a negotiable document. By showing patience and resoluteness you’ll build good-will and earn the respect of the other party.

In addition, instead of objectively disagreeing with a specific provision of the contract, or proposing a new term to an existing contract, the Brazilian negotiator will often be less objective and more subjective in his decision-making. He’s more inclined to do what feels right rather than follow an analytical path. Consequently, a Brazilian negotiator will often suggest changes to the document under negotiation on the basis of “feel” rather than in accordance with a pre-arranged game plan.

Concessions: Brazil is similar to China in this respect. When you make a concession, ask for the other party to reciprocate and also make one in return. Reciprocity is a part of the Brazilian negotiating process. In addition, Brazilians can be hard negotiators. They know that Americans are short on patience and will try to bring out that impatience by sometimes slowing down the pace of negotiations for seemingly no reason. They know when they do this we’ll often make concessions that we wouldn’t normally make in an effort to move things forward. If negotiations slow, the best thing to do is to take a deep breath and remain patient. Don’t make a concession you don’t have to make in order to move negotiations forward. And, if you do make a concession, demand one in return. The Brazilian negotiator will expect this and likely speed things up once he realizes that he won’t receive any one-way concessions.

One negotiating team: Negotiations are largely concluded on the basis of the trust and rapport that’s established and maintained between the negotiating parties. Subsequently, when one or more members of your team leave and are replaced by others, this is looked upon by Brazilians as a breach in protocol. It basically says to the Brazilians on the other side of the negotiation table that you don’t trust or value the business acumen of the negotiators you currently have and therefore you want to replace them with others whose judgment you value more. If you didn’t trust them, then the Brazilians feel they shouldn’t either, and they’ll re-think what’s already been negotiated.

Be polite: Respect and honor, the Brazilian version of Chinese face, is critically important. Latin Americans in general, and Brazilians in particular, are proud. They have an ego and they’re very often thin-skinned. Americans are known for their direct, no-frills negotiating style. Therefore, tensions sometimes run high in the negotiating process and this can lead to remarks that shouldn’t have been made. Criticizing someone in public, yelling at them, belittling them, or similar acts of misconduct will likely cause so much ill-will that negotiations will, for all practical purposes, end. It’s in everyone’s best interests to be polite, non-confrontational, and objectively address the issues before them. In Brazil, rudeness and impoliteness is very likely a game-ending event.

There’s only one decision maker: Even though decisions may be arrived at by a consensus of the group, the final decision is almost always in the hands of one person. Brazil has a hierarchically-based management structure, which means that there’s one person at the top and he will ultimately make the final decision. In addition, you may not have access to this person. Only his negotiating team will be speaking with him and providing him with input from the negotiating process. Consequently, you’ll be working with the decision maker’s subordinates. Decisions by those lower on the hierarchical management chain should be thought of by you as recommendations which will be made to a higher authority, rather than as the definitive decision. However, these recommendations will more than likely strongly influence the hierarchical authority’s final decision. Therefore, maintaining a good relationship with your Brazilian negotiating counterpart will be crucial to your ultimate success.

 

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