International debt recovery in BRICS countries

Over the past five years, the BRICS countries have seen a significant increase in their global economic clout, led mainly by China and India. These countries now account for more than 32% of the world’s GDP, surpassing the G7.

Let’s see together what the implications of this growth are for exporters and, in particular, what actions the CFO must plan to optimize the management of credit and – in particular – of corporate defaults.

With regard to China, with its exports reaching $3.6 trillion in 2023, the extreme relevance in the world market clearly emerges: China continues to dominate thanks to the strong demand for electronic equipment and machinery. However, despite recent reforms[1], critical issues related to the transparency and independence of the judiciary persist. Trade disputes can be influenced by the government, creating uncertainty for foreign investors.

India has accelerated its economic growth, with exports surpassing $750 billion in 2023. The country has improved its judicial system, but the bureaucracy and the great slowness of the proceedings (unfortunately I know the operators in the sector very well) remain objectively problematic.

 Russia, on the other hand, has been heavily affected by international sanctions, with exports falling to $400 billion in 2023. The Russian judicial system, already characterized by critical issues, is now strongly influenced by the serious international scenario and the ongoing conflict. New laws on currency restrictions and export controls further increase serious issues in international trade relations.

In Brazil, exports reached $300 billion in 2023. The judicial system, although developed, is inefficient and slow, negatively affecting commercial reliability. Finally, South Africa has seen its exports reach $100 billion, but challenges related to corruption and the efficiency of the justice system persist.

How do these countries compare to the EU market? EU exports reached $6 trillion in 2023, offering a stable business environment with a well-developed and independent judicial system. Strict regulations and enforcement of trade and intellectual property laws provide greater security for exporters.

Parameterizing these two very different markets shows that – alongside really rapid and macroscopic growth prospects – the level of risk is objectively much higher, both from a legal and operational-economic point of view. In such an unstable and critical scenario, the exporting company – and the CFO – have the duty to implement a particularly accurate management strategy, with a very advanced accountability logic. Any late payment must be managed immediately and accurately, involving specialized structures and operators, without any confusion or conflict of interest between the commercial and managerial/legal parties, and without leaving to chance the analysis of credit risk, the preparation of the contractual structure or the issue of exchange rate risk.

For this reason, Invenium Legaltech supports exporters – large and small – operating both within the European Union and in areas and markets characterized by strong opportunities but also strong criticalities. We structure management activities that are time-consuming for the company, involving strong legal skills, aiming for fast recovery times or, in any case, extremely faster than a judicial process: we bring an industrial and structured logic to an area that has been unjustly underestimated for too long and that – also in the light of the new Crisis Code – requires precise and qualified interventions.

For any information, contact us or write to info@invenium-legaltech.it