Doing Business in Latin America

Doing Business in Latin
An overview of the economies and top products
in demand in Colombia, Costa Rica, Panama,
and Peru.
March 24, 2010
Eduardo Torres, Director
United States Commercial Service, South Florida
US Department of Commerce
Take Home Messages
• International markets can provide an important source of revenue
• Opportunities exist for firms that can define and communicate their
market value-added and can afford a time horizon beyond a quarter.
• The US Department of Commerce is your ally
Our Aim
(Not like this…)
• To maintain and create jobs here in the US by
helping firms to identify, penetrate and build
presence in promising markets worldwide
– Our team is located in US Embassies and Consulates in
over 80 nations and across the US
It can be a long road from
here to market success…
Market Development
• Project finance
• Building an appropriate/trustworthy network
– Appropriate partners and projects
– Communication
• Competitive pricing and getting paid
– Culturally-colored perception of the value of “services”
– Value of a contract
• Different approaches to doing business
– Corruption
– Building standards
– International competition and advocacy
• Competition and existing vested relationships
Market drivers
Global urbanization
Energy and water security
Climate and environmental change
Materials demand
Market Identification
• First question: what value do we bring to the market?
Niche specialty?
Ability to bring in finance and other solution providers?
Outstanding expertise and track record?
Price advantage?
• Second question: is the market ready for us?
– New project types coming on-line that mirror your expertise?
• Third question: what are the costs of doing business in the market?
– Explicit costs: transportation, degree of operational difficulty, financial
– Hidden costs: communication (cultural) barriers, corruption, lax project
execution, etc.
Getting paid and avoiding
unforeseen challenges
Don’t do anything that you wouldn’t do in the US
Communicate your value consistently and effectively
Exercise careful due diligence on partners and clients
Make wise use of USG resources overseas
Consider ways to minimize your transaction risk, e.g., terms
of payment, letters of credit, currency management
• Identify conflict resolution procedures in contract
• Be present
• Don’t do anything that you wouldn’t do in the US
Is Latin America ready for
• Gross statistics on market size are irrelevant for an individual firm
– They tell you nothing about the costs and benefits of market
engagement for your firm
• If you go:
– Don’t rely on “guanxi”
• (you probably don’t have it)
Prospect in second-tier cities
Exercise thorough due diligence
Find a way to be present over time
Be patient, but have an exit strategy
• Fifth largest market for U.S. exports in the region, after
Mexico, Brazil, Venezuela, and Chile, and is ranked 29th as
a market for U.S. exports globally.
• Best prospects for U.S. companies are (in order of market
size/potential growth):
• Oil and gas machinery and services; Plastic materials and resins;
Automotive parts and accessories; Computers and components;
Telecommunications equipment and services; Travel and tourism;
Construction and mining equipment; Air cargo services (AVS);
Electrical power systems; Pollution control equipment; Safety and
security; Building materials; and Beverage processing and
packaging equipment.
Costa Rica
• Central America-Dominican Republic-United States Free
Trade Agreement (CAFTA-DR) opened opportunities in
the wireless telecommunications, internet, and insurance
markets that previously had not existed.
• Major prospects include:
– auto parts, audiovisual equipment, hand/power tools,
hardware, medical and dental equipment, and security
• Other prospects include:
– travel and tourism services, hotel and restaurant equipment, and
construction equipment sectors
• Best prospects by sector include:
– Wholesaling, Warehousing: clothing, consumer electronics, and
– Building products: gypsum board, lighting, and roofing/flooring
– Travel and Tourism: increase in travel for medical care in the U.S.,
religious reasons, and cruise vacations.
– Telecommunications Equipment: PABX systems, radio trunking
systems, and satellite-based telecommunications facilities.
– Computers and peripherals: personal computers, LAN equipment,
and laptops.
– Construction Equipment: earth moving machinery, hydraulic
excavators, and off road trucks.
• The Best Prospects for U.S. exports of non-agricultural
products to Peru include the following sectors:
Mining Industry Equipment
Pumps, Valves, and Compressors
Plastic Materials and Resins
Pollution Control Equipment
Construction Equipment
Air Conditioning and Refrigeration
Industrial Chemicals
Computers and Peripherals
Oil and Gas Field Machinery
Security and Safety Equipment
• The Best Prospects for U.S. agricultural products
– hard wheat; cotton; yellow corn; soybean meal; dairy products
(whey and cheese); and beef and offal.
Strategies for smaller firms
• Court larger US clients for overseas work
– Initial track record that can help you to expand your client base
• Be strategic, not opportunistic
– Apply your limited resources where they will yield the greatest return
– Generally, don’t respond to “trade leads”
• Build a reliable network for project identification and execution
– USDOC should be part of that network
• Follow the money
• Who is investing what where?
– Multilateral development banks
» Private arms (IFC, etc)
What NOT to do #1
DO NOT wait to develop international strategy until all domestic opportunities are
exhausted – or until there is a domestic downturn!
– Developing the domestic market takes time
– Developing international markets will also take time
What NOT to do #2
DO NOT dismiss going international altogether
(bad architecture)
– There may be strategic reasons to not go international, but remember…
– Your foreign competitors are in their home markets, the U.S. market, and probably
other markets, as well
– Competitors bring their international strength and know-how to the U.S. market
and use it to compete against you
• Our Customized Services
– Targeted matchmaking
• Strategic partner identification and introductions
Customized market intelligence
On the ground due diligence
Official Advocacy
Market Launch Promotional Activity
Targeted trade promotion events
Additional Resources
• US Trade and Development Agency (TDA)
– Feasibility studies, orientation visits
• Overseas Private Investment Corporation (OPIC)
– Project finance
– Political risk insurance
Upcoming Events
• April 22, 2010: Export University 301 “Understanding the
• June 8-10, 2010: Energy Ocean
• June 14-18, 2010: Trade Mission to the Dominican Republic
and Jamaica
• September 3, 2010: Export University 201 “Standards in
Exporting to Latin America”
• October 4, 2010: Doing Business in Russia Seminar
U.S. Commercial Service
Make an appointment today!
United States Department of Commerce
US Commercial Service, South Florida
Tel: 954-356-6640