Join or Sign in

Register for your free membership or if you are already a member,
sign in using your preferred method below.

To check your latest product inquiries, manage newsletter preference, update personal / company profile, or download member-exclusive reports, log in to your account now!
Login asmag.comMember Registration

High taxes and economic concerns challenge Brazilian security market

High taxes and economic concerns challenge Brazilian security market
Being a developing market, Brazil presents a major opportunity for the security industry, but several challenges make doing business in the country difficult. The single main challenge that foreign manufacturers face is the country’s tax system.
“Brazil has one of the most complex tariff and tax/duties system in the world,” said Victor Merino, Vice President for LASA at Pelco by Schneider Electric. “From an offering perspective, it is the only country in Latin America where you find local manufacturing, including video surveillance, access control and alarms. Since there is no actual enforcement on most of the international standards, it is mostly a price-driven decision when it comes to selecting security systems, potentially leading certain consumers to choose price over quality.”
Jose Garcia, Marketing Director for Hikvision Latam at Hikvision Digital Technology echoed similar thoughts as he added the bureaucratic process as another challenge.
“Over the years, the main problem in Brazil has remained the same for international companies: high import taxes and long bureaucracy processes (specifically on government projects),” Garcia said.  
Sara Amorim Costa, Regional Manager at VIVOTEK, pointed out that the high tax system has encouraged the presence of a gray market and discouraged adoption of high-end technology.
“Due to Brazil’s high import taxes, electronics such as network cameras have an extremely high street price, usually twice as much as in the United States,” said Costa, giving an example of how the tax system affects the end user. “Taxation is a recurring theme when you ask Brazilians about the cost of many imported goods. For example, last year Brazil came in as the most expensive country to buy an iPhone. High taxes for imported goods is a way for Brazil to support Brazilian manufacturers and to give foreign companies an incentive to open plants in the country, however, it also increases black market and makes it difficult to sell high-end technology. For this reason, we still see a high dominance of outdated analog products installed in a vast majority of sites.”
Others agree that costs have limited the development of technology in Brazil, although some segments are seeing certain positive trends. “Due to cost issues, limited IP infrastructure, the need for greater bandwidth, storage, and other factors we believe that should take about 1 to 3 years for technologies like UHD become so popular in today's systems in Brazil,” said Felipe Arguello, Regional Sales Director – Latin America at Arecont Vision. “However, we can see and increasing demand of 180-degree / 360-degree megapixel panoramic cameras in several applications and more VMS providers supporting these cameras.”
The economic crisis has also created a credit crunch, according to Vanderlei Rigatieri Jr., CEO of the distributor WDC Networks. “It's very hard situation because we are having a lot of customers that is not paying on time,” Rigatieri said. “The Brazilian market is full of opportunities, but we are suffering with the customer delaying payments, this is a challenge for business.”
But perhaps the biggest hurdle in this market is the customers’ perception of security, according to José López Martin, Senior VP for Americas at IndigoVision. “The big challenge of the security industry is changing the perception that security is a cost, and supporting the decision makers with the right information to justify the ROI for the project.”
Overcoming the Challenges
Important factors in overcoming these challenges are creating awareness and educating the customers and localizing the sales channels as much as possible.
“We continuously provide training to our customers, educate the market, and provide pre-sales and post-sales customer support,” Costa said. “VIVOTEK is actively moving towards localization and, therefore, we hired local people that provide pre-sales support and we have a partnership with a local Brazilian company responsible for post-sales support.”
Dealing with budgetary constraints is an entirely different matter. Pelco’s Merino pointed out that manufacturers should constantly reinforce consistent value proposition to project companies, engineering and design companies and end users.
“It’s also important to enable our partners’ success through the delivery of innovative product lines that ensure customer success and open doors to new business opportunities,” Merino said. “By offering a complete portfolio of security intelligence and surveillance solutions that address both analog and IP requirements, we can face the challenge that many end users have with budgetary constraints. This also helps integrators support existing analog customers while driving them towards IP in the future.”

Share to:
Comments ( 0 )