Big profits could be unearthed in Chile

Chile is an excellent market for UK and Irish businesses

 Chile is a country that has featured prominently in the news over the last few months, firstly due to the earthquake and secondly for the amazing good news story of the rescue of the 33 miners. These events and the subsequent visit of Chile’s President Sebastian Piñera to London have dramatically raised the profile of a country that until now has been relatively overlooked in terms of UK and Irish businesses interested in expanding overseas.

I have had the good fortune to work extensively with the Chilean market and to have travelled there frequently for business. I have worked in 55 different world markets and Chile certainly rates in my top 5 favourite places to do business. I first travelled out to Chile in 1998, working for a Northern Irish company who had ambitious growth plans for Latin America. I had at this stage already been working overseas throughout Europe and South Africa, but for me Latin America was something really exotic and I didn’t quite know what to expect. I think I expected llamas and panpipes but what I got was the modern capital city Santiago which would not look out of place somewhere in Spain or Italy. There is a distinctly European feel to the cities in Chile, both in how they look and how business is conducted there – much of the population is made up of immigrants from Europe.

Chile has a long standing free trade agreement with the EU which means there are no prohibitive import duties and is cited as the best-managed economy in Latin America. It is a very open economy – in the World Audit  Index of Economic Freedom which ranks the ease of doing business in 161 countries, Chile ranks at number 11, ahead of markets like Denmark, The Netherlands, Finland and Germany. (The UK ranks 5 and Ireland 7). In corruption rankings of 180 countries Chile ranks 16 between the UK at 15 and the USA at 17.

According to the IMF the Chilean economy is forecast to grow at 6% in 2011 and at 4.6% in 2012. Chile also has the second highest GDP per capita (US$14,341) in Latin America after Argentina. Chile is still a developing nation with many people living in poverty, but the middle class accounts for around 50% of the population and President Piñera is aiming to make Chile the first developed economy in Latin America.

Importantly it also has a stable banking system.  As any exporter knows, a sale is not a sale until the money is in the bank! During the first waves of the global economic crisis, I remember watching the then President of Chile Michelle Bachelet explain how, Chile had built up financial reserves when the economy was being fuelled by high commodity prices, and how these would be used to drive their economy forward – a stark contrast to our own situation. Chile’s GDP growth rate last year was 5%.

Chile is an excellent target market for exporters, thanks to its favourable business conditions and strong business opportunities. There are significant opportunities for our local construction and service companies across all industry – education healthcare, airports, shopping malls and hotels. This construction programme was already in place before the earthquake damaged aspects of infrastructure which has resulted in further major civil engineering projects. Given that the majority of construction machinery used in Chile is imported, this also presents opportunities for many of our local companies.

Mining is a huge industry in Chile so there are prospects for companies involved in the manufacturing and sale of crushing and screening machinery, a sector where our local companies really excel. Other sectors of opportunity include Education, IT, Telecoms, retail, financial and renewable energy.

Lucrative markets like Chile can often be over-shadowed by the big headline markets like Brazil and Mexico. However Chile is still a good sized market of 17 million people, and building business in several ‘smaller’ markets in the region can also help to diversify your export business and spread risk.

Chileans are great people to do business with and a large emphasis is put on personal relationships and building trust. Chileans are interested in who they are doing business with, what kind of person you are and how you think.  In any initial meetings considerable time is spent chatting and getting to know you.

This is an important, integral part of building trust which will help lead to a successful partnership.   A country’s business culture impacts on business negotiations.  No matter where you come from or what your expectations are of how a meeting should unfold or how you want to spend your time in the export market, this will largely be dictated by the norms of that country. In order to be successful in that market, you have to adhere to their business culture.

For more information on business opportunities in Chile click here.

For further information on opportunities for your company in the Chilean market contact us and we’ll tell you more about how we can accelerate your market entry into this lucrative emerging market.