Presentation on theme: "Doing Business in Latin America An overview of the economies and top products in demand in Colombia, Costa Rica, Panama, and Peru. March 24, 2010 Eduardo."— Presentation transcript:
Doing Business in Latin America 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 diversification. 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 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 (Not like this…)
It can be a long road from here to market success…
Market Development Challenges 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 obstacles –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 me? 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
Colombia 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 equipment Other prospects include: –travel and tourism services, hotel and restaurant equipment, and construction equipment sectors
Panama Best prospects by sector include: –Wholesaling, Warehousing: clothing, consumer electronics, and shoes. –Building products: gypsum board, lighting, and roofing/flooring products. –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.
Peru The Best Prospects for U.S. exports of non-agricultural products to Peru include the following sectors: The Best Prospects for U.S. agricultural products include: –hard wheat; cotton; yellow corn; soybean meal; dairy products (whey and cheese); and beef and offal. Mining Industry EquipmentPumps, Valves, and Compressors Plastic Materials and ResinsPollution Control Equipment Construction EquipmentAir Conditioning and Refrigeration Equipment Industrial ChemicalsComputers and Peripherals Oil and Gas Field MachinerySecurity and Safety Equipment
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 ITAR” 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: Web: