Tag Archive: Jobs

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One of the automakers hardest hit by the protective measure of the Dilma administration, the increase in the IPI (Excise Tax), China’s JAC Motors accused Brazil of breaching the guidelines of the WTO (World Trade Organization) and confirmed that it has frozen its plans to open a factory in the country.

“The way in which the Brazilian government raised the tax is a serious violation of the basic principles of the WTO,” said JAC Motors, in a written response to Folha.

“The discontinuous, irrational and partial Brazilian policy strongly undermined the confidence of JAC and other automakers to invest in Brazil. Therefore JAC is forced to re-evaluate its decision to invest in Brazil,” the company said.

The Chinese automaker says that the measure did not forecast an adjustment period and cites three alleged violations of Brazil to the general guidelines of the WTO: market access, fair competition and non-discrimination.

In JAC’s judgment, Brazil adopted the measure looking to limit Chinese cars, compromising fair competition. The company says that it functions without subsidies from the Chinese government and has not been accused of dumping (charging artificially low prices).

“The Brazilian government offered special treatment to Mercosul and other countries (Mexico) to the detriment of China, breaking the principle of MFN (Most Favored Nation),” the Chinese automaker says.

MFN, taken by the WTO as one of the most important guidelines for international trade, states that in normal situations, one cannot differentiate between trading partners.

$600 MILLION FACTORY

JAC also mentions that the increase in the IPI differentiates between domestic and imported products, in violation of the principle of “national treatment” whereby imported products must have the same conditions of local competition after already entering the domestic market. The directive allows customs duties which is not the case of the IPI.

Representatives of JAC met on Tuesday with the Commerce Ministry to pressure the Chinese government to act on behalf of the company. But until yesterday there was no official statement on the issue.

At the beginning of August, JAC had announced the construction of a factory in Brazil, which would start production in 2014. The planned investment was $600 million to produce 100 thousand units per year. According to the company, this would generate 3500 jobs directly and another 10,000 indirectly.

JAC is a Chinese company that sold the most cars in Brazil this year – about 14.5 thousand.

Founded in 1964, the China Anhui Jianghuai Automobile Company is headquartered in the city of Hefei (east). Last year, it sold 460 thousand units, earning 50% more than in 2009.

 

Source: Folha.com

Sep 20

Protectionism: R$ 600.000 investment threshold for investment Visas in Brazil

Brazilian government shooting in their own foot

Brazilian government shooting in their own foot

Protectionism all over the place: Brazil is closing its doors

In another attempt protecting the labour market, Brazil has raised the minimum capital requirements for granting permanent Director’s Visas in Brazil. In the past it was possible to obtain a permanent visa for intra-company transferees to work as managers, directors, or executives with a minimum investment of US$200.000. From now on, companies have to invest at least R$ 600.000 in order to obtain a visa for its foreign directors who are coming to live in Brazil. Each additional director will require another R$600.000.

On this blog I have already given other examples of protectionism by the Brazilian government. Just a few days ago I wrote an article about the massive tax increase (+30%) on imported cars. Also the wind-energy industry is experiencing the measurements to protect the local (monopolist) steel industry.

Although the increased capital requirements and the additional option to get visa for foreign managers will provide additional revenue for Brazil government and facilitate the creation of jobs in the country, they could add further stress on the already tight labour market particularly for qualified labour and possibly discourage long term productive foreign direct investments  in Brazil vis-a-vis other similar foreign direct investment destinations with a more favourable legislation on foreign labour.

Again, this looks like another time the Brazilian government is shooting in its own foot.

So, as the Economist already mentioned in their April 2007 issue:

The Brazilian formula is to crowd out enterprise or drive it underground with excessive spending and taxation, then to harass it further with capricious, nonsensical regulation.

Source:  RESOLUÇÃO NORMATIVA Nº 95, DE 10 DE AGOSTO DE 2011

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LinkedIn looking for Brazil chief executive | Reuters.

Fri Sep 9, 2011 3:03pm EDT

* Professional social network looks to open Braziloffice

* Brazil users top 4 million, key growth market

(Reuters) – Professional social network LinkedIn (LNKD.N) said on Friday it was seeking a chief executive in Brazil for its Portugese-language service launched last year.

LinkedIn

LinkedIn opening Brazilian office

“When we find a chief executive for Brazil, he will help us open an office,” said Danielle Restivo, LinkedIn’s communications director for Canada and Brazil, in a telephone interview with Reuters.

Restivo said the move by major Brazilian companies Petrobras (PETR4.SA), Vivo VIVO4.SA and Itau Unibanco (ITUB4.SA) to open pages on the site helped it gain 4 million Brazilian users since April 2010 to reach a total 120 million users globally.

Brazil and Mexico are among LinkedIn’s fastest growing countries, LinkedIn Chief Executive Jeff Weiner wrote in a blog post in March, when the company was growing at a rate of about 1 million new members every week with more than half of its users outside the United States.