exporting to latin america

Latin America – Future Trade Opportunities?

Written by Jeff Lewis, a trainer for the Institute of Export & International Trade and Managing Director of Resultz Ltd.

This article was originally published in World Trade Matters – the quarterly journal from the Institute of Export & International Trade.

Latin America offers many opportunities for developing Cross Border Trade. Each country has its own Customs procedures and controls, but with existing and potential future preferential trade agreements, this region is one where research now will benefit UK companies.

Working with a Distributor or Agent

One way to get market access in Latin America is to work with a distributor or agent, as doing this will you to develop your products’ relevance in the market a lot quicker.

However, while finding a partner is not that difficult, finding a proactive partner who will promote your goods can be, so it is important to profile the type of partner you require. It is very easy to accept the first company who comes along, however, if they do not fit your ideal profile then this could just be a waste of time and money.

In Latin America the business culture is very much based on “face to face” interactions and you may find efforts of email marketing to be not as successful as  in other regions, hence why trade shows, trade missions or field visits will help you verify partners in this region.

A strong unique selling point (USP) in this region is to be able to supply from stock. Therefore, this should be a key factor in any potential partner profile.

What are the benefits of a partner in Latin America?

  • Knowledge of the market
  • Knowledge of the industry sector for your products
  • Knowledge of competitors
  • Existing customer base in the country – Faster route to market
  • Communication in local language
  • Better website ranking locally

You do need a plan to ensure your partner can offer the best service possible, hence things you may want to consider:

  • Do they sell other products that compliment yours?
  • Do they list products from a direct competitor? – This could be a warning sign?
  • Do they offer local product support? This is really important in Latin America.
  • Do they install products or can they repair/re-furbish products?
  • How much of the country do they cover?
  • Do they have resellers in other countries?
  • Do they have a network of national sales reps?
  • Do they hold stock or have the facility to hold stock (service levels)?
  • Do a Dun and Bradstreet check of their financial status?
  • What is the function of the people who would be in regular contact with you, for technical enquiries, placing orders?
  • What is the level of understanding of English of the staff in each department?
  • Would employing a local language speaker be beneficial?

Translation for Material/Instructions

If you need to have any marketing material and instruction manuals for Latin American customers, these need to be translated into Spanish. This would mean having it done correctly and not by Google translate. Also, any products that operate via a software system need to have the text that would be displayed to a user translated into Spanish.

When doing business in this region, the products need to be as user friendly as possible, so how to use or install them needs to be in a format that can be understood easily.

Visit the Region

If you are going to travel to the region then ideally you would need some level of competence in Spanish. You will find that a lot of the potential customers you may meet will be Spanish-only speakers. This is where having a partner is a huge advantage as this will help you communicate to potential customers.

Not being able to attempt to communicate can be viewed negatively and could hinder sales. It is not going to stop companies doing business, however, in this region it does help a lot and should be a key consideration in your long-term strategy.

Cost and Benefit Analysis

A good thing to bear in mind is that country listed import costs are based on the cost of getting the goods to the countries border for example:

  • Goods Value + Shipping Cost + Insurance = Value for Customs

So, an export pricing review per region may be worth looking at, as well as FCL (Full Container Loads) shipments rather than LCL (Less than Container Loads) to possibly reduce the percentage cost of freight and insurance per shipment.

It is also worth remembering that internal land transport is significant within regions of Latin America and can cost more than the main sea or air freight cost to the region. Although this is not a dutiable value (in most cases), it does form part of the landed cost of your product, so it is good business sense to be aware of this.

To travel to the region is a large capital expense for most companies, so to ensure that you do maximise the return on investment, do simple research before you go. This research should primarily focus on price and service, to enable you to plan a long-term sales strategy and not just a short-term fix.

Understand Latin America has a different culture, being aware of these cultural differences will benefit your efforts. Latin America is a long way from the UK, so you want to make sure you give yourself the best opportunity to get positive results from any marketing activities and visits the company undertakes.

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