This joint presentation with Kegler Brown, JPMorgan Chase and the Ohio Department of Development educated attendees regarding the legal and financial considerations to be considered when doing business in Brazil, Chile and Colombia. Topics addressed include Mercosur, labor, finance, trade, tax, culture, politics and the regulatory environment in South America.

2. Doing Business in Brazil, Chile
& Colombia
Presented by:
Vania Zulatto, Director of TVZ International- Brazil
Verónica Medina, COO of TradeChile S.A.- Chile & Colombia

3. Brazil in the Americas

4. Brazil in Brief
• 8.5 mi square km
• 193 million people (approx 85%
urban)
• Language: Portuguese
• Labor force: 110 million people in
2010

5. Political Environment
• President Dilma Rousseff
• Took office in 2011
• 30 years of political stability

6. Why Brazil?
• Strategic location
• Approximately 50% of South America’s GDP
• Political and economic stability
• Favorable exchange rate: U$1.00 = R$ 1,75
• Largest and most diversified industrial country in Latin
America

7. Economy
• 6th largest economy in the world
• Solid Banking System
• Inflation under control: 4.4% estimated for 2012
• GDP: US$ 2.3 trillion
• GDP per capita: US$ 8,207.00
• Growth Rate: 4% estimated for 2012
• Brazil part of a world-wide phenomenon of a swelling middle
class
• In Brazil the economy is largely domestically oriented and
consumer demand drives wage income.

8. World Cup 2014 and Olympic Games 2016
Business Opportunities
• Brazil - World Soccer Cup in 2014
• 12 cities do host the World Cup
• Investments needed in airport infrastructure
• Hotels
• Public transportation
• Stadium building / refurbishing
• Communication
• Rio de Janeiro - first-ever Olympic Games in South
America in August-September 2016
• These events will generate numerous trade and
investment opportunities in several areas

9. Market Opportunities
• State-of-the-art equipment and technologies
• Agriculture Equipment
• Aerospace and Aviation
• Airports
• Information Technologies
• Telecommunications
• Transportation
• Electrical Power
• Oil and Gas
• Safety and Security
• Environmental Technologies
• Mining
• Medical Equipment
• Architecture/ Engineering/Construction

10. Brazil Import and Export
Statistics 2011 - (US$)
Brazil Imports Statistics
Commodity: Total
World 226,243,408,907
1. United States 33,962,382,474
2. China 32,788,424,507
3. Argentina 16,906,099,483
4. Germany 15,212,859,089
5. Korea South 10,096,972,279
Brazil Exports Statistics
Commodity: Total
World 256,039,574,768
1. China 44,314,595,336
2. United States 25,804,628,156
3. Argentina 22,709,344,431
4. Netherlands 13,639,692,908
5. Japan 9,473,095,520

11. Source: Ministério do Desenvolvimento
Brazilian Imports – 2011
Imports by Use Categories - % Share

12. Market Challenges Advantages
• Growing consumer market
• Diversified/sophisticated industry
• Geographical proximity / US
• Brazilians receptive to US
culture/products
• Favorable exchange rate
• High import tariffs (0-15%)
• Informal economy
• Burdensome regulations
• Slow/bureaucratic customs
system
• European /Asian competition

13. How to Enter the Market
• Agents & Distributors
• Licensing Agreements
• Joint Ventures
• Local Office
• Government Sales

14. Strategies for Success in Brazil
• keep in touch and informed on the market, THE TIME IS NOW!
• take advantage of the favorable exchange rate.
• visit the market (Major Trade Shows/Trade Missions)
• learn local business practices
• reestablish contact with former clients
• personal relationships are important
• be flexible and innovative with your negotiations
• Meet partners face to face
• Be fast on your follow-up / give support to your rep
• Provide after sales and technical assistance
• Translate your catalogs into Portuguese
• Be patient
• Try to understand the complex tax regime

15. Contact Us!
Obrigada!
Thank You!
Ohio Department of Development
Global Markets Division
(614) 466-5017
Vania Zulatto
São Paulo, SP - Brazil
(55 11) 3384-9051
vzulatto@tvzinternational.com.br
www.tvzinternational.com.br

16. Copyright 2012© TradeChile
Chile and Colombia:
the Places to Be!

17. Copyright 2012© TradeChile
 Area: 293,000 m2
 Population – 17.2 M (Growth rate: 1.02%)
 Language: Spanish
 Capital: Santiago 6.5 M
 Other Urban Centers:
 Valparaiso 1M
 Concepcion 1M
 Workforce - 7.2 M (~38.7% women)
 Life expectancy – 79.2 yrs
Chile at a Glance

18. Copyright 2012© TradeChile
Why Chile?
1. Highly competitive, dynamic and globally integrated
economy: among the highest growth rate economies in the world
2. Institutional and financial strength: low country risk
3. Tax friendly economy: Chile's corporate income tax rate is 17%, one of the
lowest corporate income tax rates worldwide
4. High transparency: #1 in Latin America, 21st place among 174 countries
worldwide
5. Great business environment and economic freedom: #1 in Latin
America, 10th place among 174 countries worldwide
6. Highly skilled and competitive human resources: labor costs in
Chile are competitive as compared to the USA and European countries.
7. Excellent transport infrastructure and connectivity to the
world

19. Copyright 2012© TradeChile
And what about Colombia?
 Area: 1,147,748 m2
 Population – 47.5 M (Growth rate:
1.377%)
 Language: Spanish
 Capital: Bogotá 6.8 M
 Other Urban Centers:
 Medellin 2.2 M
 Cali 2.1 M
 Workforce - 18.9 M
 Life expectancy – 78.5 yrs

20. Copyright 2012© TradeChile
Why Colombia?
1. Excellent economic supported perfomance: GDP per capita has
doubled in the last six years (US$2,803.95 in 2004, US$6,273.37 in 2010)
2. Attractive domestic market: 47.5 million inhabitants, fourth in Latin
America and the second largest Spanish-speaking country in the world.
3. Strategic location: international hub, center of 5 hourly zones
4. Public commitment with investment: second in Latin America under
terms of personal safety and suitable protection of private property.
5. Qualified workforce: second most available qualified workforce in South
America (IMD, Switzerland); most productive (PriceWaterHouseCoopers 2009)
6. Good quality of life and flexible culture

21. Copyright 2012© TradeChile
Political background
 Colombia, a presidential representative
democratic republic, one of the oldest in Latin
America
Juan Manuel Santos, Colombia´s president since
7th August 2010
 Colombia Primero (Colombia First), a liberal
party leading the country
 Chile embraced a successful democratic system
in 1981, the most transparent in Latin America
Sebastián Piñera, elected Chile´s president on
17th January 2010
Coalición por el Cambio (Coalition for Change),
the right-wing alliance in power

22. Copyright 2012© TradeChile
Country Facts
*PPP = Purchasing Power Parity
Chile Colombia
GDP growth 2011 (est.) 5.9% 4.6%
GDP growth 2012 (est.) 4.9% 4.5%
GDP (PPP*) US$276.05 billion US$460.05 billion
GDP per capita (PPP*) US$15,866 US$9,970.6
Population 17.2 million 47.5 million
Inflation 2012 (est.) 3.2% 3.1%
Unemployment rate 2011 7.1% 11.5%
Total trade 2010 US$118.51 billion US$76.5 billion
Trade balance 2010 +US$10.05 billion +US$3.98 billion
Main trade partners
United States, China,
Japan, Argentina,
Brasil
United States, China,
European Union,
Mexico
Imports from USA
US$9.25 billion
(25.5%)
US$11.81 billion
(21.77%)

23. Copyright 2012© TradeChile
Country Ratings & RankingsChile Colombia
S&P 2011 A+ BBB-
Fitch 2011 A+ BB+
Moody's 2011 Aa3 Ba1
Global Competitiveness
Index 2011-2012
(out of 133 countries)
World Economic Forum
31st
(#1 in Latin
America)
68th
Doing Business 2012
(out of 183 countries)
World Bank
39th
(+2 from 2011)
42th
(+5 from 2011)
Number of days
for starting a business
9 days 26 days
Cost to import (US$ per container) 795 2,830
Enforcing contracts
67th
480 days
149th
1,346 days

24. Copyright 2012© TradeChile
Global Competitiveness Index*
2011-2012
* World Economic Forum

25. Copyright 2012© TradeChile
Sustained Economic Growth
(GDP rate)

26. Copyright 2012© TradeChile
Declining Poverty Rates
(as percentage of population)

27. Copyright 2012© TradeChile
Inflation Comparison
Chile and Colombia have had the lowest inflation rates among the major LA economies
Source: Business Monitor International 2012

28. Copyright 2012© TradeChile
Chile and Colombia,
open economies to the world
Chile enjoys Free Trade Agreements
with 58 countries and numerous
Double Taxation Agreements
including Canada and USA.
 Duty-free access to 86% of the
world’s GDP; 4.2B inhabitants
1st SA country to join OECD (2010)
Colombia has recently ratified
a FTA with the United States,
in addition to those already signed with
other countries in the region.
Access to 1.3B inhabitants

29. Copyright 2012© TradeChile
Healthcare
Mining
 Safety and security
 Consumer-Oriented
products for the retail
sector
Business
Opportunities
Agriculture
machinery &
Equipment
Construction
Energy
Food
processing
&
packaging
Franchising

30. Copyright 2012© TradeChile
Business
Opportunities
Oil & Gas
Machinery &
Svcs
Plastic
Materials and
Resins
Telecom
equipment &
Svcs
Information
Technology
Safety &
Security
Automotive parts and
accessories
 Electrical power systems
Travel and Tourism
Building materials
Food beverage processing
/ Packaging equipment
 Medical Equipment
 Pollution control
equipment

31. Copyright 2012© TradeChile
Recommendations
 Have a clear objective and projected vision
 Visit and be committed to the market
 Define what format of business activities would be viable for the
Chilean/Colombian market; it differs by company and product type
 Define type of product/service with value-added characteristics that could be of
interest for Chilean/Colombian clients
 In the case of Chile, it is a very price-sensitive market. Develop a thorough and
aggressive marketing campaign and pricing strategy appropriate for the local
market
 Be proactive in communications and follow-up activities with interested
companies
 Provide strong support to the local counterpart (ie. after sales)
Oxford Univ. study in 2009 showed that every US$1 spent on
international travel, companies gain US$3.60 in profit

32. Copyright 2012© TradeChile
Verónica Medina
COO
TradeChile S.A.
Tel.: +(56-2) 2442435
Fax.: +(56-2) 2442436
E-mail: vmedina@tradechile.cl

33. www.keglerbrownGlobal.com
@KeglerGlobal
Luis Alcalde & David M. Wilson, Kegler
Brown
PREPARING FOR
SUCCESS IN BRAZIL,
COLOMBIA & CHILE
Methods of
Entry
Import / Export
Agency,
Distributorships
& Labor

34. 3 Issues that can Make or Break
Your Latin America Business
Strategy
Agency, Distributorships &
Labor
-Creation
-Termination
3. Labor
Methods of Entry
-Strategic Considerations
-Available Organizational &
Entity Structures
-Features
1. Entry Method &
Organizational
Structure
Import/Export
-Process
-Taxes
-Free Trade Zones &
Treaties
2. Regulation & Tax
Methods of
Entry
Import / Export
Agency,
Distributorships
& Labor

35. Entry Method & Organizational
Structure
 Strategic Considerations
 Available Organizational & Entity Structures
 Features
Methods of
Entry
Import / Export
Agency,
Distributorships
& Labor

36. Entry Method & Organizational
Structure
 Political
 The ability of government to respond to and NOT create political
risk
 Economic
 Macro trends, Currency risks
 Social
 The ability of stakeholders to identify vulnerabilities & apply
pressure to the company to change its behavior
 Technological
 Infrastructure, IP Protection, Government Incentives
P E S T
What are the Political, Economic, Social and Technological
reasons to enter Brazil, Colombia or Chile?
export, manufacture, distribute, design . . .
Methods of
Entry
Import / Export
Agency,
Distributorships
& Labor

37. Entry Method & Organizational
Structure P E S T
Methods of
Entry
Import / Export
Agency,
Distributorships
& Labor
0
10
20
30
40
50
60
70
80
90
100
PDI IDV MAS UAI LTO
Chile
Chile
0
10
20
30
40
50
60
70
80
PDI IDV MAS UAI LTO
Brazil
Brazil
 Geert Hofstede’s Cultural
Dimensions
 Power Distance
 Individualism
 Masculinity
 Uncertainty Avoidance
 Long-Term Orientation
 www.geert-hofstede.com
0
10
20
30
40
50
60
70
80
90
PDI IDV MAS UAI LTO
Colombia
Colombia

38. 0
10
20
30
40
50
60
70
80
90
PDI IDV MAS UAI LTO
Latin America
Latin America
Entry Method & Organizational
Structure P E S T
 Geert Hofstede’s Cultural
Dimensions
 Power Distance
 Individualism
 Masculinity
 Uncertainty Avoidance
 Long-Term Orientation
 www.geert-hofstede.com
Methods of
Entry
Import / Export
Agency,
Distributorships
& Labor
0
10
20
30
40
50
60
70
80
90
100
PDI IDV MAS UAI LTO
US
Brazil
Colombia
Chile
Latin America
0
10
20
30
40
50
60
70
80
PDI IDV MAS UAI LTO
Brazil
Brazil

39. Entry Method & Organizational
Structure
 Direct sale from US using freight forwarder
 Non-Equity Alliance
 Distribution agreements
 Licensing agreements
 Franchising agreements
 Supply agreements
 Joint venture
 Equity Alliance
 Joint venture
 Joint company
 Wholly Owned Subsidiaries
 Greenfield operations
Methods of
Entry
Import / Export
Agency,
Distributorships
& Labor
May also require
a small wholly
owned subsidiary
holding company
presence in
country

40. Entry Method & Organizational
Structure
 Joint Venture
 May be created with or without a full joint company
 Contractual joint ventures between subsidiary company and
a partner company
 Low cost entry and exit to new markets, industries and
industry segments
 Opportunity for learning
 Provides a “contractual” framework for operations without
generating many issues associated with an agency
relationship
 Enables each party to take full responsibility for its
contribution to the venture while minimizing the issues
associated with exclusivity
 Enables low cost entry and exit
 May later evolve into full equity alliance
Methods of
Entry
Import / Export
Agency,
Distributorships
& Labor

41. Entry Method & Organizational
Structure
Methods of
Entry
Import / Export
Agency,
Distributorships
& Labor
Similar to US
LLC
Similar to US
Corporation
Sociedade Limitada
(LTDA)
Sociedade Anônima
(SA)
Sociedad por Acciones
Simplificada
(SAS)
Sociedad Anónima
(SA)
Sociedades de
Responsabilidad
Limitada (SRL)
Sociedades
Anónima (SA)

42. Entry Method & Organizational
Structure
Methods of
Entry
Import / Export
Agency,
Distributorships
& Labor
-No restrictions on foreign ownership*
-No minimum or maximum capital
requirements*
-Partner & parent company liability
limited to capital contributions
-Product Liability: Yes
-No restrictions on foreign ownership*
-No minimum or maximum capital
requirements*
-Partner and parent company liability is
limited to capital contributions ** In
insolvency PC is responsible for
subsidiary liabilities if PC caused the
subsidiary’s liquidation
-Product Liability: Yes
-No restrictions on foreign ownership*
-No minimum or maximum capital
requirements*
-Partner and parent company liability is
limited to capital contributions
-Product Liability: Yes
LTDA / SAS / SRL
&
SA Common Features

43. Import / Export
 Import Export Process
 Associated Taxes & Duties
 Free Trade Zones & Treaties
Methods of
Entry
Import / Export
Agency,
Distributorships
& Labor

44. Import / Export
Methods of
Entry
Import / Export
Agency,
Distributorships
& Labor
17 Days
-Document Preparation (8
days)
-Customs clearance and
technical control (4 days)
-Ports and terminal handling (3
days)
-Inland transportation and
handling (2 days)
13 Days
-Document Preparation (6
days)
-Customs clearance and
technical control (2 days)
-Ports and terminal handling (2
days)
-Inland transportation and
handling (3 days)
20 Days
-Document Preparation (12
days)
-Customs clearance and
technical control (2 days)
-Ports and terminal handling (4
days)
-Inland transportation and
handling (2 days)
General Import Process
& Timeline
Source: World Bank, Doing Business
2012
Importing a container of
goods to Brazil requires 8
documents, takes 17 days
and costs $2,275
Importing a container of
goods to Colombia requires
6 documents, takes 13 days
and costs $2,830
Importing a container of goods
to Chile requires 6 documents,
takes 20 days and costs $795
Baseline:
-medium size business
-ship to economy’s
largest business city
-private, LLC
-non hazardous goods
-dry cargo, 20-foot full
container
* All US exports are also subject to US export
controls *

45. Import / Export
Methods of
Entry
Import / Export
Agency,
Distributorships
& Labor
Associated Taxes &
Duties
II-Import Duty
varies based on product &
Country of origin (CNM,
HS)
0-35% Import Duty
0-5% raw materials,
20% finished consumer
goods, 35% autos and
luxury items
0-35%
12%
avg
Import Duty 6%
IPI-Industrial Product
Tax
Varies based on product
(CNM)
20%
avg
VAT 16% VAT 19%
PIS-Social Integration
Program Contribution
1.65%
COFINS-Social
Security Financing
Contribution
7.6%
ICMS-State Tax
SP 18%
7–
25%

46. Import / Export
Methods of
Entry
Import / Export
Agency,
Distributorships
& Labor
-Importer must register with
Brazilian Ministry of Development,
Industry and Commerce
-No payment for the product may
be made by a Brazilian entity
-Exemption from II (Import Duty)
-No license required for samples &
promotional products outside of
prior license list
-Maximum of 10 samples
-Max value of US $50 per sample
-If over 10 samples but less than
US $1,000 value packing must
state “merchandize with no
commercial value"
-Subject to applicable custom
duties
-Under the terms of the US / Chile
FTA
-Professional equipment
necessary for carrying out
business may receive temporary
duty-free admission
-This is intended for display or
demonstration of commercial
samples
-Temporary admission of food
samples require additional
consideration
Samples / Tradeshow
exceptions

47. Import / Export
Methods of
Entry
Import / Export
Agency,
Distributorships
& Labor
Additional Tax
Considerations
Corporate Tax
Plus 10% on taxable
income over R$240,000
15% Corporate Tax 33% Corporate Tax 17%
Transfer Price
Considerations
Yes Transfer Price
Considerations
Yes Transfer Price
Considerations
Yes
On average, firms make 9
tax payments per year and
spend 2600 hours per year
filing, preparing and paying
taxes and pay total taxes
amounting to 22.4% of profit
On average, firms make 9
tax payments per year and
spend 193 hours per year
filing, preparing and paying
taxes and pay total taxes
amounting to 18.9% of
profit
On average, firms make 9
tax payments per year and
spend 316 hours per year
filing, preparing and paying
taxes and pay total taxes
amounting to 18% of profit
Baseline:
-medium size business
-began operations 1/1/2009
-taxes & mandatory
contributions are measured
at all levels of government
-a range of standard
deductions & exemptions is
also factored
Source: World Bank, Doing Business
2012

48. Import / Export
Methods of
Entry
Import / Export
Agency,
Distributorships
& Labor
Free Trade Agreements
and Memberships
Double Tax Treaties
US
Colombia
Chile
NO
NO
YES
Double Tax Treaties
US
Brazil
Chile
YES
NO
YES
Double Tax Treaties
US
Brazil
Colombia
YES
YES
YES
Membership
Mercosur (Argentina,
Uruguay, Paraguay,
Bolivia, Chile, Colombia,
Ecuador, Peru)
Latin American
Integration Association
LAIA (Argentina, Brazil,
Mexico, Chile, Paraguay,
Uruguay, El Salvador,
Costa Rica,
Guatemala, Nicaragua,
Honduras, Cuba)
Membership
Mercosur
Latin American
Integration Association
LAIA
Andean Community of
Nations CAN (Ecuador,
Bolivia, Venezuela – Peru
withdrew)
G-3 (Mexico, Venezuela)
Membership
Mercosur
Latin American
Integration Association
LAIA

49. Import / Export
Methods of
Entry
Import / Export
Agency,
Distributorships
& Labor
-Manaus ZFM
-Areas de livre
Comercio ALC (4)
-Amazonia Ocidental
-Permanent Free
Trade Zones (23)
-Special Enterprise
Free Trade Zones
(40)
-Transitory Free
Trade Zones
-Inquique
-Punta Arenas
Free Trade Zones: The
basics
Reduced/Exempte
d
II, PIS & COFINS
Reduced/Exempt
ed
II & VAT
Reduced/Exempt
ed
II & VAT

50. Import / Export
 US / Colombia Free Trade Agreement
 18 to 24 months to implement
 Will Reduce tariffs on 80% of US imports
 Other tariffs reduced over 10 years
 Colombia to implement new domestic legislation in a
number of areas:
 sales agents, intellectual property, provide greater access
to several sectors in financial services and
telecommunications investments
Methods of
Entry
Import / Export
Agency,
Distributorships
& Labor

51. Agency, Distributorships &
Labor
 Agency, Distributorships & Labor
 Creation
 Termination
Methods of
Entry
Import / Export
Agency,
Distributorships
& Labor

52. Agency, Distributorships &
Labor
Methods of
Entry
Import / Export
Agency,
Distributorships
& Labor
General Labor
Considerations
-Labor law is rooted deeply
-Written contract not required, employment relationship
may be implied
-Termination without cause will likely require provision of
wages, holiday compensation and other benefits

53. Agency, Distributorships &
Labor
Methods of
Entry
Import / Export
Agency,
Distributorships
& Labor
Creation:
-If written contract does not exist, one may be implied
-Contract should contain limitations, termination events, territory,
products or goods, commission structure and time of payment
-Exclusivity is not presumed
Termination:
Upon termination, without cause, agent entitled to:
-1/12 of the total compensation during the time of agency
-If a specific agency term , then the average monthly
compensation for half of the months remaining in the contract. If
$3,000 per month and 12 months into a 36 month contract, then
agent would receive $3,000 x 12 = $36,000
-Expenses related to promoting the brand and opening the
market
Creation:
-Written registered contract subject to Colombian law
-Contract should contain limitations, termination events &
territory
Termination:
-Upon termination agent entitled to 1/12 of the average
commission of the last three years
-Without cause termination agent entitled to damages for
opening market & promoting product
Creation:
-In Chile, agency, distribution and franchise agreements are not
specifically regulated. However, case law has provided some
useful guidance
-Their validity, binding nature and enforceability has been
recognized by the civil and anti-trust courts
-Relationship is contractual
Termination:
-Chilean civil and anti-trust courts provide precedents for
termination and have established circumstances in which they
are null and void
-Relationship is contractual
-Contract subject to anti-trust, consumer and general
commercial contract law principals
Sales Agent / Distributor
Creation & Termination

54. www.keglerbrownGlobal.com
@KeglerGlobal
Luis Alcalde & David M. Wilson, Kegler
Brown
PREPARING FOR
SUCCESS IN BRAZIL,
COLOMBIA & CHILE
Methods of
Entry
Import / Export
Agency,
Distributorships
& Labor

55. Additional Sources
 Doing Business 2012, Doing Business in a More Transparent World, World Bank
Report, October 20, 2011
 UBS Investment Research: Emerging Economic Focus, UBS, August 29, 2011
 A Closer Look at Brazil’s Credit Boom, Deutsche Bank EM Special Publication, July
22, 2011
 Anchoring, De-Anchoring, Re-Anchoring, Bradesco Corretora Economics BBI Equity
Research, September 6, 2011
 Economic Outlook: Brazil, BBVA, Third Quarter 2011
 Brazil Auctions Rights to Airport, WSJ, August 23, 2011
 The Geopolitics of Brazil: An Emergent Power’s Struggle with Geography,
STRATFOR, July 14, 2011
 The Aging World, Ned Davis Research Inc, July 21, 2011
 Japanese Dump Real Funds at Fastest Pace Since Earthquake: Brazil Credit,
Bloomberg, September, 30, 2011
 First they went for the currency, now for the land, The Economist, September 24,
2011
 Gaining & Sustaining Competitive Advantage Third Edition, Jay B. Barney, 2007
 Privatization and the Distribution of Assets and Income in Brazil, Economic Reform
Project: Global Policy Program, July, 2000

57. STRICTLYPRIVATEANDCONFIDENTIAL
© 2010 J.P.Morgan Chase and Co. All rights reserved.
Financing Your Future in Brazil, Colombia and Chile
JPMorgan Chase Bank, N.A. Member FDIC

58. © 2010 J.P.Morgan Chase and Co. All rights reserved. 58
STRICTLYPRIVATEANDCONFIDENTIAL
This presentation was prepared exclusively for the benefit and internal use of the J.P. Morgan client to whom it is directly addressed and delivered (including such
client’s subsidiaries, the “Company”) in order to assist the Company in evaluating, on a preliminary basis, the feasibility of a possible transaction or transactions
and does not carry any right of publication or disclosure, in whole or in part, to any other party. This presentation is for discussion purposes only and is incomplete
without reference to, and should be viewed solely in conjunction with, the oral briefing provided by J.P. Morgan. Neither this presentation nor any of its contents
may be disclosed or used for any other purpose without the prior written consent of J.P. Morgan.
The information in this presentation is based upon any management forecasts supplied to us and reflects prevailing conditions and our views as of this date, all of
which are accordingly subject to change. J.P. Morgan’s opinions and estimates constitute J.P. Morgan’s judgment and should be regarded as indicative, preliminary
and for illustrative purposes only. In preparing this presentation, we have relied upon and assumed, without independent verification, the accuracy and
completeness of all information available from public sources or which was provided to us by or on behalf of the Company or which was otherwise reviewed by us.
In addition, our analyses are not and do not purport to be appraisals of the assets, stock, or business of the Company or any other entity. J.P. Morgan makes no
representations as to the actual value which may be received in connection with a transaction nor the legal, tax or accounting effects of consummating a
transaction. Unless expressly contemplated hereby, the information in this presentation does not take into account the effects of a possible transaction or
transactions involving an actual or potential change of control, which may have significant valuation and other effects.
Notwithstanding anything herein to the contrary, the Company and each of its employees, representatives or other agents may disclose to any and all persons,
without limitation of any kind, the U.S. federal and state income tax treatment and the U.S. federal and state income tax structure of the transactions
contemplated hereby and all materials of any kind (including opinions or other tax analyses) that are provided to the Company relating to such tax treatment and
tax structure insofar as such treatment and/or structure relates to a U.S. federal or state income tax strategy provided to the Company by J.P. Morgan.
J.P. Morgan’s policies prohibit employees from offering, directly or indirectly, a favorable research rating or specific price target, or offering to change a rating or
price target, to a subject company as consideration or inducement for the receipt of business or for compensation. J.P. Morgan also prohibits its research analysts
from being compensated for involvement in investment banking transactions except to the extent that such participation is intended to benefit investors.
IRS Circular 230 Disclosure: J.P. Morgan Chase & Co. and its affiliates do not provide tax advice. Accordingly, any discussion of U.S. tax matters included
herein (including any attachments) is not intended or written to be used, and cannot be used, in connection with the promotion, marketing or
recommendation by anyone not affiliated with J.P. Morgan Chase & Co. of any of the matters addressed herein or for the purpose of avoiding U.S. tax-related
penalties.
J.P. Morgan is a marketing name for investment banking businesses of J.P. Morgan Chase & Co. and its subsidiaries worldwide. Securities, syndicated loan arranging,
financial advisory and other investment banking activities are performed by a combination of J.P. Morgan Securities Inc., J.P. Morgan plc, J.P. Morgan Securities
Ltd. and the appropriately licensed subsidiaries of J.P. Morgan Chase & Co. in Asia-Pacific, and lending, derivatives and other commercial banking activities are
performed by J.P. Morgan Chase Bank, N.A. J.P. Morgan deal team members may be employees of any of the foregoing entities.
This presentation does not constitute a commitment by any J.P. Morgan entity to underwrite, subscribe for or place any securities or to extend or arrange credit or
to provide any other services.

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Trade Factoids and Notes
November 2011 Trade Figures:
Bureau of Economic Analysis of the United States
Department of Commerce
 Exports of goods and services over the last twelve months totaled $2.089 trillion,
which is 32.64 percent above the level of exports in 2009. Over the last twelve
months, exports have been growing at an annualized rate of 15.9 percent when
compared to 2009, a pace greater than the 15 percent required to double exports by
2015.
 Over the last twelve months, among the major export markets (i.e., markets with at
least $6 billion in annual imports of U.S. goods), the countries with the largest
annualized increase in U.S. goods purchases, when compared to 2009, occurred in
Turkey (45.4 percent), Panama (40.6 percent), Honduras (37.0 percent), Argentina
(33.4 percent), Hong Kong (32.9 percent), Peru (30.7 percent), Chile (29.2 percent),
Brazil (29.1 percent), South Africa (28.7 percent), and Thailand (27.7 percent).

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Economic Climate – It All Swirls Together
Recent Trade Environment
 Current credit environment has resulted in liquidity and balance sheet constraints
 Market consolidation and reshaping in the current environment has limited the number of lending
institutions willing to lend at attractive rates
 Risk mitigation options such as distribution and insurance are reflecting the market volatility and
uncertainty limiting the hedging availability
 Due to market uncertainty and instability, we have seen an increase in demand for risk mitigation
instruments such as guarantees and confirmations as well as for cost efficient transactions
What We’re Seeing
 Issue – Capital goods buyers are struggling to raise capital in the debt market due to liquidity constraints
and increase in cost of funds, which consequently impacts their ability to either source new goods or
perform under their payment obligations.
 Solution – Buyers and Suppliers are working together with Export Credit Agencies and Lending Institutions to
enhance the credit risk by shifting it to sovereign risk, in order to access cost efficient capital and longer
repayment terms.
 By Product - Increased demand for US Ex-Im and Export Credit Agency financing in the market

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J.P. Morgan in Latin America
 Full branch presence in Brazil and Mexico.
 More than 100 years of operation in Mexico and 60 years in
Brazil
 Brazil in-country capabilities launched in 2009, including a
local language Brazilian Internet banking platform
 Over 1,000 employees currently in Latin America
 Global Credit - USD & local currency revolving credit, term
loans & overdrafts, as complying with in-country regulations
 Treasury services - foreign & local currency accounts,
payments and receipts,
 J.P. Morgan ACCESSSM - Web-based Global eBanking
Channel
 Foreign exchange – spot, forward, non-deliverable forward,
swaps, options, electronic FX platforms
 Trade finance – import & export letters of credit,
structured trade, bank guarantee, supply chain finance
 #1 Latin America Research Team – Institutional Investor,
2010
 Best Investment Bank – LatinFinance, 2010
 Best Debt House in Latin America – Euromoney, 2010
Latin
America
at a glance
Product
Suite
What makes
us
different?
How we are
focusing our
investments
 Technology: A single global seamless system for improved
product linkages and standardizations, new virtual
accounts and state-of-the-art liquidity processing
 New branches: 2012: Argentina and Chile ; 2013: Colombia
 New capabilities: Upgrading our systems and expanding
our product offering in Brazil and Mexico. 2011 & 2012:
Network expansion into Peru, Uruguay, Costa Rica, El
Salvador, Trinidad & Tobago, Jamaica, and Barbados.
Buenos Aires
Sao Paulo
Santiago
Lima
Caracas
Bogota
Mexico City
Monterrey
Rio de Janeiro
Branch office
Representative office
DISCUSSIONMATERIALS

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Access to Capital and Borrowing Costs
Brazil Chile Colombia USA
Overnight Rate 10.5 5% 3.25% 0.25%
 It’s important to note that the borrowing cost of an individual company depends on the
nature of financing, tenor, collateral quality, etc. Hence there may be high variation
among different companies - even in same country
 When discussing the supplier's financing cost in general, financiers tend to address the
medium tier
 When financing their receivables, companies in these markets could pursue local ECA
(Export Credit Agency) coverage when available, and the cost for that coverage is subject
to the buyer's credit rating, which is an additional cost (generally 50-100bps) on top of the
above illustrated borrowing costs

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Global Trade Finance – What’s Top of Mind
Global Trade Finance Should:
 Integrate seamlessly with cash and liquidity processes to increase the efficiency of
treasury operations
 Employ a broad range of settlement, risk mitigation and financing tools and
solutions related to the commercial transaction and flow of goods
 Recognize that individual requirements differ. Therefore in order to select the
right mix of tools and solutions, demand a consultative approach from your
provider(s)

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Global Trade Finance – Tools and Solutions
Classic Trade Solutions
 Imports
 Letters of credit (LC)
 Documentary collections
 Exports
 Letters of credit
 Documentary collections
 Standby letters of credit (SBLC)
 Bank guarantees
Specialized Trade Solutions
 Supply chain finance
 Purchase order management (open account)
Structured Trade Solutions
 Receivable and payable financing
 Export Credit Agency (ECA) backed structured
trade: Ex-Im Bank in the USA
 Pre-import/export financing structures
 Private credit insurance and political risk
insurance (PRI)
 Financing sales of capital equipment with
terms greater than one year
 Issuance of standby letters of credit to
support bid, performance and payment bonds
 Financing of export-related accounts
receivable and inventory

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Trade Cycle FinancingExport Finance Life Cycle
Shipment:
Shipping Documents
Title Transfer
Pre- Shipment:
Negotiating the Sale
and Terms of Payment
Arranging Working
Capital Financing
Post-Shipment:
Transacting the Payment
Financing the Receivable
Financing the Buyer
Working Capital Financing
Bid & Performance Standby L/Cs
Export Letters of Credit
Non-LC Solutions
Ex-Im Bank or SBA Working Capital
Guaranteed Loan Program
Foreign Buyer Financing
Letters of Credit and Bankers Acceptance
Financing (generally, up to 180 days)
Non-LC Solutions
Documentary Collections and TA Financing
A/R Credit Insurance
Discounting BAs and Foreign A/R
Ex-Im Bank: Direct Buyer Financing

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Classic Trade Solution - Documentary Letter of Credit
Letter of Credit (LC) Characteristics
 Offers the most protection to the SELLER
 Three independent “agreements” underline a letter of credit
 between BUYER and SELLER (their contract)
 between Applicant and Issuing Bank (application and
reimbursement agreement)
 between Issuing Bank and Beneficiary (the LC)
 Banks deal in documents only. BUYER’s recourse for problems
with goods is to the contract with the SELLER
 Documents presented under an LC must comply with its terms
and conditions, otherwise there is no obligation to honor
LETTEROFCREDITCYCLE

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STRICTLYPRIVATEANDCONFIDENTIAL Documentary Letter of Credit: a tool to provide
short term finance to your Buyer – Overview
 Buyer has requested extended payment terms of 90 days from date of
shipment
 Seller has countered that they will not offer such terms on Open Account
basis, but would consider if Buyer provides acceptable LC and agrees to
absorb the associated additional costs of financing
 Seller talks with their bank, to obtain indicative pricing for 3 key
credit/finance driven fees associated with this arrangement:
 Confirmation fee
 Acceptance commission
 Discount charges
 Buyer’s bank issues the LC
 Seller’s bank is the Advising and Confirming Bank
 LC is payable via a Time Draft to be drawn at 90 days from date of Ocean
Bill of Lading
LETTEROFCREDIT

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 Seller ships and presents documents to their bank, requesting that the
Accepted Draft be discounted.
 Documents are examined and found to be in compliance with the LC
 Time Draft is Accepted under the LC, creating a Bankers Acceptance
 Seller’s bank discounts the Bankers Acceptance, depositing funds to the
account of the Seller
 Seller’s bank collects the full amount due under the Bankers Acceptance
from the Issuing Bank at maturity
 Illustrative Fees: $300,000 sale to Chile at 90 days date of shipment
 Confirmation fee 2.0% per annum. LC expires 90 days from date of issuance: $1500
 Acceptance commission 2.5% per annum. Documents presented and Bankers Acceptance is
created10 days after shipment, leaving 80 days left until the payment due date: $1667
 Discount charges 90 day LIBOR + 2%. Bankers Acceptance is discounted with 80 days left to
maturity: $1940
 Total “financing” costs: $5107. 1.7% of the face value of the sale, or 6.8% if you multiply the
90 day cost by 4, to express it as an annualized or 360 day cost
Documentary Letter of Credit: a tool to provide
short term finance to your Buyer – The Numbers
LETTEROFCREDIT

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Access to Solutions – What is “Bankable”?
■ In a recent export finance seminar, Mike Howard, Regional Director of the Ex-Im Bank,
made the very important statement: Ex-Im’s programs are not designed to make bad
deals look good.
■ During this most recent financial recession, there has been much attention paid to credit
quality as well as compliance (OFAC, Patriot Act and Know Your Customer, for example).
■ When you’re seeking to talk with a commercial bank regarding financing to support your
global trade activity, you’ll need to present a solid case.
■ A business plan and 2 to 3 years of financial statements are a start.
■ Arrange a meeting with a commercial banker at your financial institution and explain
your complete scenario – not just the single transaction, but how that transaction fits
into your company’s overall business and business plan.
■ Be prepared to tell your story a couple of times, because export finance will almost
always involve not only your domestic banker but also the international specialist(s) at
that bank who will work with the banker.

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Structured Trade Solution - Export-Import Bank
 The Export-Import Bank of the United States (Ex-Im Bank) is the official export credit agency of the
United States. Ex-Im Bank's mission is to assist in financing the export of U.S. goods and services to
international markets.
 The agency assists exporters by guaranteeing term financing to creditworthy international buyers, both
private and public sector, for purchases of U.S. goods and services.
 Ex-Im Bank does not compete with private sector lenders but provides export financing products that fill
gaps in trade financing. They assume credit and country risks that the private sector is unable or
unwilling to accept. They also help to level the playing field for U.S. exporters by matching the financing
that other governments provide to their exporters.
 Product suite includes working capital guarantees (pre-export financing); export credit insurance; and
loan guarantees and direct loans (buyer financing). No transaction is too large or too small. On average,
85% of transactions directly benefit U.S. small businesses.
 Ex-Im Bank approved $32.7 billion in total authorizations in FY 2011 -- an all-time Ex-Im record. This total
includes more than $6 billion directly supporting small-business export sales -- also an Ex-Im record. Ex-
Im Bank's total authorizations are supporting an estimated $41 billion in U.S. export sales and
approximately 290,000 American jobs in communities across the country.

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STRICTLYPRIVATEANDCONFIDENTIAL Ex-Im Bank EWCG Program Benefits –
Expansion Of Borrowing Base
Asset Based Facility WCGP
Collateral Amount Advance Collateral
Advanc
e
Collateral
Exportable Inventory
Raw Materials $ 200,000 20% $ 40,000 75% $ 150,000
WIP $ 200,000 0% $ 0.00 75% $ 150,000
Finished Goods $ 600,000 50% $300,000 75% $ 450,000
Subtotal $1,000,000 $340,000 $ 750,000
Foreign Accounts Receivable
(A/R)
Open Account $ 400,000 0% $ 0.00 90% $ 360,000
L/C Backed A/R $ 600,000 75% $420,000 90% $ 540,000
Subtotal $1,000,000 $420,000 $ 900,000
Total Borrowing Base
$760,000 $1,650,000

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STRICTLYPRIVATEANDCONFIDENTIAL
Structured Trade Finance –
Protecting Your Accounts Receivable
THE ONLY UNINSURED ASSET
 One of the most vulnerable to a loss
 More likely to be affected by business cycles
 Provides the cash flow (lifeblood) of a business
 Represents permanent investment
 High cost to maintain (funded through bank borrowings and cost of delinquencies)
Senior
Executives
Cash
Land &
Buildings
Mach
&
Equip
Inventories
Accounts
Receivable

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STRICTLYPRIVATEANDCONFIDENTIAL Short-Term Export Credit Insurance
WHAT:
Commercial Risk of Default: Insolvency and Protracted Default
Country/Political Risk: Debt Moratorium, Trade Embargo, License Cancellations etc.
WHY:
Provides coverage against the unforeseen and unexpected
Export receivables are usually the riskiest portion of the current asset portfolio yet it is the only one
that is unprotected
WHERE:
The US Government’s Official Export Credit Agency: Ex-Im Bank
The Private Sector: Filling the “niches” and shortfalls in the programs of the ECA’s. Commercially
oriented insurance programs
WHEN:
When you want to mitigate the risk of loss and/or cap it
When you want to meet or beat the competition
When you want to tap new sources of financing for your company and your buyers

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Summary – Global Trade Finance
Key Challenges
■ Arranging financing: for you, your suppliers, your customers
■ Navigating regulations: U.S. and foreign
■ Managing counterparty risk: suppliers and customers
■ Controlling and optimizing cash: reducing DSO and extending DPO
■ Accessing expertise: local market knowledge, best practices
Contact
Martha I Gabrielse, Vice President
JP Morgan Chase Bank, NA
616-771-7410
martha.i.gabrielse@jpmchase.com