‘FOREVER 21’ IN BRAZIL
Group 5: Melissa Soto, Zhang Yaou, Edward Kamdem, Li Xzangwen, Guru B Krishnan, Manuel Sanabria EXECUTIVE SUMMARY
The company chosen is Forever 21, which is an American chain of clothing retailers with branches in major cities in the world that offers trendy clothing and accessories for young women, men, and teen girls at low prices. Since its creation these company has been constantly growing. It began with just one store and now it has more than 500 stores in several countries. However, there is still a lot of countries where the brand is unknown so there is still a great potential for expansion of the brand. One of those countries is Brazil, which is one of the top economies in the world in terms of GDP and it has a growing economical rate higher than Europe. Furthermore, in the recent years the Brazilians are more informed and want to be part of the recent trends of the world. So, Brazil is a very attractive market where Forever 21 can invest and open a high number of stores as part of its process of growing. Brazil’s business culture relies heavily on the development of strong personal relationships and they heavily support their own products, design and industry. Greenfield investment is the best entry strategy in order to establish a WOS (Wholly Owned Subsidiary) that can allow with time and patience to establish a strong bond with Brazilians by hiring local people and also local designers that can create cloth attractive to Brazilians. Thanking into account the good position of Brazilian economy in comparison with the other Latin American countries, the prices in Forever 21 Brazil can be a little higher than the other countries nearby.
FOREVER 21 AND THE BRAZILIAN MARKET
Political and Legal Environment
The Brazilian Federation is the "indissoluble union" of three distinct political entities: the States, the Municipalities and the Federal District. The Union, the states and the Federal District, and the municipalities, are the "spheres of government." The Federation is set on five fundamental principles: sovereignty, citizenship, dignity of human beings, the social values of labor and freedom of enterprise, and political pluralism. Brazilian law is based on Roman-Germanic traditions and civil law concepts prevail over common law practice. Most of Brazilian law is codified, although non-codified statutes also represent a substantial part, playing a complementary role.
2 Import Control
It was virtually impossible to find imported products in Brazil before 1990. The Brazilian government made use of protectionist measures and extremely high taxes to discourage importing of goods.
3 How to start importing
First of all, registered at Foreign Trade Secretariat (SECEX) through a system named Sistema integrado de comércio exterior (Siscomex). This system registers, monitors and controls international trades with Brazil. Then we will be able access to Siscomex from banks, broker agencies or terminals on foreign trading related governmental agencies. It is also possible to access the system from our office if we obtain a password at Federal Revenue Secretariat. We will be registered at Siscomex as importer or exporter at Registro de Exportadores e Importadores (REI) the first time we are importing goods. The next step is to obtain an importing license if our product requires one. There are two types of license: • Automatic license: Automatic Licenses are granted to most imports into Brazil. • Non-automatic license: These are necessary for products that require approval from other ministries or agencies, such as: o National Petroleum Agency (ANP)
o Brazilian Institute of Environment (IBAMA)
o Ministry of Science and Technology (MCT)
The clothes import belong to Non-automatic license, so we should apply a license. Courier will calculate and pay the necessary taxes directly to the Federal Revenue...