Why should US companies consider expanding to Latin America?
The short answer is that it’s a huge opportunity for growth and profit. As per the US Department of Commerce more than one-half of the US’s Free Trade Agreements—also known as FTAs—are with the Spanish-speaking countries of Latin America. We’re talking about countries like Chile, Colombia, Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras, Mexico, Nicaragua, Panama and Peru. The International Monetary Fund forecasts a growth rate of 4.5 percent for these countries in 2014. These nations share a common language and similar business cultures. They have rapidly growing middle classes with a taste for US products and services. Each of the FTA countries have made commitments to open markets with the US. So far this year, US trade with Latin America is up 5.7 percent from 2013. The real question is “what are we all waiting for?”
What do US companies entering in this part of the world need to know well in advance of entering to be successful?
Business in Latin America revolves around people before transactions. It is important to make a time investments getting to know strategic industry and business leaders in addition to business partners and customers.
How time is perceived creates the biggest divides for American companies doing business in the region. Time in Latin America is cyclical and unpredictable. Punctuality is not valued as it is in the US. Plan ahead for delays. Patience and not showing frustration is key when things run off schedule as they will despite the best of intentions.
Social status, power, and money play a big role in doing business. It is important to be open minded, learn how to capitalize on the nuances of hierarchical business environments.
What are the biggest mistakes a US companies make when entering Latin America?
Jumping into business too quickly and asking invasive questions before a relationship is established. Think of relationship building-building like the appetizer before a five course meal.
Displaying impatience and frustration when things do not go as expected, such as an unforeseen meeting delay or cancellation (is not advised). Flexibility and adaptability are essential.
Taking a short term approach to business, entering a market when times are good and exiting when times are bad. Any stock broker would confirm that the time to buy or invest in stocks is during times of uncertainty. Senior industry leaders are more accessible during times of uncertainty.
Are a lot of US companies doing business in Latin America today?
Yes, and US multinational companies have been conducting business for many years. And given the regional growth rates and Free Trade Agreements (FTAs), sales are expected to grow substantially. According to the US Department of Commerce, Mexico is the Americas’ second largest export market for goods with $222.6B in trade and is up by 4.7 percent from 2013.
With more than half of all US FTAs in Latin America, new opportunities exist for SMEs in economies that are growing. Economic growth during 2014 is expected to be 7 percent for Panama, 4 percent for Colombia and 3 percent in Mexico. We do not see these rates of growth in the US, which means that looking south is fertile for sales growth and expansion
What products are in demand? What’s hot?
The list is large and includes capital goods, industrial supplies, energy infrastructure, airport infrastructure, construction, consumer goods, automotive vehicles/parts, foods, feeds, beverages, telecom, IT and wireless.
In the United States, auto parts manufacturers achieved $77.5B in exports in 2013 and more than one-third of those exports went to Mexico, which is a 9 percent increase from 2012.
The core countries to keep an eye on are those that form part of the Pacific Alliance and include Chile, Colombia, Panama, Peru and Mexico. The US has FTAs with each.
Another exciting area of opportunity is in the Energy sector. According to the US Department of Commerce's Look South Initiative, energy consumption is projected to more than double in Latin America between 2010 and 2030, and this will transform the continent's energy sector creating new opportunities for US companies.
Chile has a projected growth rate in energy consumption of more than 6 percent. Colombia is looking to expand hydro-power generation projects through 2018. Mexico's energy reform bill may open up new opportunities for US technology and services.
What does your company do? Where can readers find you?
We are a highly experienced global sales, marketing, and business development team with a 20-year track record of successfully spearheading Latin American sales expansion at Fortune 500, privately held, and early-stage companies in a variety of vertical market segments.
Our expertise is Latin American sales and channel building. We understand when to use direct selling, when to use distributors, and when to use a combination of both to maximize reach and ensure profitability. We have a proven track record of hunting and closing profitable sales opportunities for companies including Textron, Nextel, Iridium, and Advanced Semiconductor.
Our website is www.globalbusinessfluency.com and my email is firstname.lastname@example.org