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How to do business in Latin America

How to do business in Latin America

Posted by Juan Gavasa on March 11, 2015

In fact, it's hard to pin it down at all - depending on who you ask, between 20 to 30 countries make up Latin America, so planning to do business there will require some very specific homework.

There will always be good and bad places to do business, and Latin America hasn't always had the best of reputations, but with an economy in the region of $5 trillion, and around 600 million inhabitants (both depending, of course, on which interpretation of Latin America you subscribe to), a burgeoning middle class and growing inward investment, there's good business opportunities to be had - for those that are happy to do a bit of leg work.

The Latin American economy is, as you would expect, a mixed bag. Some countries (Brazil, Argentina, and Venezuela) are still struggling with recession. Others, such as Chile, Colombia and Mexico are at the 'green shoots' stage and their growth, albeit moderate, is projected to continue over the coming months. As one would expect, the global drop in oil prices has had a significant impact in Latin America as Governments cut their budgets to offset the drop in export business. There are a couple of regional stars - such as Panama and Peru, both experiencing good growth that is projected to last.

The result is that net economic activity across the region is at best lukewarm, and this is expected to continue in the same vein through the first half of 2015. So, for any business moving into the region, choosing bases will be a key factor.

And it's not just economic factors that have an impact on the performance of Latin American countries. Political scandal can also play a huge part, particularly influencing the timing of potential investment in the area. On balance however, overseas investment is coming through from Europe, South East Asia and the US, bucking the trend of contracting inward investment.

So what is the region offering that overcomes economic instability and political unpredictability? Improving institutional and business regulation and legal structures for entrepreneurs are certainly helping, as is better access to local resources - such as electricity and communications. Improving standards of education are also helping businesses that require a local workforce. Throughout the region though, the levels of focus on improving business environments varies, so again homework is a must.

The cultural similarities are significant, and a few general guidelines will be just as useful whether you are in Costa Rica or Chile, Panama or Peru. The region is largely grounded in Spanish or Portuguese speaking traditions, so incomers from these countries or businesses with established experience in Southern Europe are one step ahead.

However interesting and exotic it may be to European natives, the Latin American 'melting pot', murky political issues, US foreign policy and corruption are not topics that are up for discussion, and certainly not over business. The region is rooted in long histories of discrimination and inequality, a fact that is probably better left alone. This said; don't confuse not discussing the history of a people with asking about family - this will be a key topic of conversation with your potential customers and will help to build important personal relationships.

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