Harnessing vibrant opportunities in South America

Tue 10 Apr 2012
Posted by: International Trade News
The recent news that Brazil has overtaken the UK as the world’s sixth biggest economy reinforces that many countries in South America are flourishing after successfully shaking off the world recession.

The South American region comprises 13 countries – all of which are republics, independent, and boast their own unique and diverse culture.

When researching their potential markets, it’s critical that aspiring exporters understand potential sovereignty issues. For example, French Guiana is an overseas department of France; the Netherlands Antilles is an autonomous part of the Kingdom of the Netherlands – and the Falkland Islands is a territory of Great Britain.

As the region’s biggest country with more than 203 million people, Brazil is historically acknowledged as the most powerful – with GDP set to power to 4.5% this year. This is due to competitive exchange rates, lower interest rates, low unemployment, its ability to control inflation coupled with a high level of confidence among consumers and businesses and a strong public and private investment portfolio in the pipeline.

Another country regarded as a tempting destination for investors is Columbia, the third largest country after Brazil and Argentina with over 46 million people. In 1991 it replaced coffee with crude oil as its leading export and additional exports span coal, nickel, emeralds, clothing, bananas and cut flowers. The main illegal export is cocaine with an estimated 290 metric tonnes produced annually.

Argentina offers substantial business opportunities and boasts a large industrial base that has been boosted by factors including a favourable exchange rate. Thorough research is recommended as opportunities exist in niche industries as opposed to wide-ranging sectors.

The UK is the 4th largest investor in Chile which is hailed as the best managed economy in South America, enjoying steady growth and it is receptive to foreign investment. To support its trading links it boasts an extensive network of Free Trade Agreements and economic association agreements.

Venezuela’s significant economic potential lies in the Oil and Gas sector which dominate the market’s economy. Promising sectors for UK companies include, power generation, infrastructure, telecommunications, education and training, healthcare, alternative energy, waste management and the environment.

Selling into these markets is very complex and caution is the watchword. Companies should research thoroughly to understand not just the GDP figures and statistics – but who they are selling to. They should know the nuances of the business culture – from business cards to wearing suits, as well as understand all the factors that may impact on pricing along with duties the respective markets impose and local taxes (our equivalent of VAT).

Another priority is to establish early how many days customers take to pay, their methods of payment along with the currencies required which will allow the seller to develop a plan to mitigate any risks involved in selling with these currencies.

Digging deep to ensure these markets really need your product or offering is vital – as is a detailed knowledge of what modifications they may require before being accepted – and if the cost of the modifications might make it prohibitive to sell to this market. Another tip is to check out if the colour of the products offends or means something.

Would be exporters would also be wise to establish if they can use their trading name in its current format, check what the name  means locally – and, most importantly, if someone else is already using it. Investigate the market’s attitude to copyright, design rights and trademarks. Find ways to mitigate the risk or don’t start selling in this market; choose another.

Research the logistics of the new market and what the infrastructure is like away from the main cities – not just the road system for delivering physical product but also broadband. Ask if a lack of broadband would jeopardize delivery or support needed for customers or business partners.

Having considered all these factors and if still serious about going forward, we would also advise companies to localise their website in the knowledge that online customers are four times more likely to buy from a website in their own language.

Engaging with customers in multiple languages shows you are committed to understand their culture and language. As well as giving your sales an immediate boost, a multilingual website is excellent for testing new markets and opening new doors to international trade.