From Mexico to Brazil to Panama to Colombia, companies around the world are curious about exploring Latin American markets. With such tantalizing growth rates, these markets attract business leaders from around the world who are ready to work hard to stand out.

In order to increase your chances of success when exporting to Latin America, GoExport’s team shares 8 expert tips to help you on the ground.

1. Analyze the region’s potential

Whether your company is Canadian or European, before expanding to Mexico or South America, you need to confirm that it makes sense at your company’s stage of development.

“In Latin America, the availability of capital is different. For example, interest rates are much higher,” says Mathieu Alarie, one of GoExport’s founders. Since the market situation is different from what you are familiar with, it’s in your best interest to verify if your project makes sense in this particular context.

A personalised market analysis will help you confirm whether or not it’s worth the effort.  Exporting to Latin America can be very profitable, but you have to be properly prepared. 

See our Seven Tips to Export to the United States

2. Choose the best country for your success

Before you take any concrete steps, you should focus your efforts on choosing a country or region where you want to begin. Latin America is anything but homogeneous, so consider the market potential, including the stability and size of the country you are interested in. Looking at profitability from this angle will help you decide on the right destination for you.

According to Mathieu Alarie, Chile and Colombia are amongst the easier countries to approach. Why? Their business practices greatly resemble those of Canada and the United States.

If you sell luxury goods, however, you may consider choosing areas of São Paulo,, or Mexico City, to take advantage of the local concentration of wealth.

Import taxes, which vary according to trade agreements between countries, are another factor to consider. In Peru and Colombia, Canadian goods are not subject to import taxes. However, in Brazil, it’s completely different. Consider this right from the get-go to avoid unpleasant surprises.

3. Think about compliance

No matter where you wish to export your products or services, you need to know the steps to take, especially when it comes to compliance. Requirements can change radically depending on the target market and the sector of activity.

Customs compliance

Customs compliance refers to the standards applied at a country’s border. Which products can be imported? What are the legal requirements for entry?

Regulatory compliance

This concerns the laws and regulations to respect in order to sell a given product or service in a given country. You must offer goods that comply with market regulations and obtain the permits necessary for your activities.

As Latin America is a vast territory with a variety of standards, always be on top of those which apply to your situation.

4. Expect currency fluctuations

When trying your luck in Latin America, keep in mind that there isn’t a single currency as in the European Union. With several exchange rates to consider, you could find it difficult to keep track. 

As well, this region is quite volatile. “We see more currency fluctuations than in either Canada or the United States,” says Mathieu Alarie. This could prove disastrous, for example, if there is an unfavourable value fluctuation of a currency between signing a contract and having to make payments.

Be careful! Not everyone is a born speculator. “Companies should work with their bank or a specialized company to develop a strategy that anticipates currency fluctuations and their impact on their business” recommends the Latin American export specialist.

5. Get to know your collaborators

Our experience has convinced us that building relationships with business partners based on trust is essential in Latin America.

Tips

– If possible, use your contacts to find trustworthy collaborators.

– Research your potential contacts and distributors.

– Start the relationship off on the right foot from the very first meeting.

– Emphasize the personal dimension of the professional relationship.

– Visit your partners’ local operations  (according to COVID-19 restrictions in place).

– Demonstrate interest and respect for the local culture, history and food.

– Learn a few phrases in Spanish or Portuguese (depending on the country).

We would suggest that you develop strong personal relationships with your business partners. In this way you can anticipate problems and minimize their impact over time.  Friendly business relationships can be very useful in countries where, for example, access to courts is complex.

6. Use partnerships

Depending on the target industry and country, the public sector might be both full of opportunities, and challenges.

Example

In Mexico, oil exports are managed by Pemex, a state-owned company, and all industry-related business activity must take this into account.

Working with a state-owned or semi-state-owned company can be complicated for a foreign company. In order to respond to public tenders, you will benefit from surrounding yourself with local partners who are familiar with the process. What’s more, if you are required to have local market experience, these partners can easily support you.

7. Protect your investments

Trying to crack a new market inevitably has inherent risks for a company. In our opinion, credit insurance is a very interesting tool to temper risk.

Offered by organizations such as Export Development Canada (EDC) and the Export-import Bank of the United States (EXIM Bank), this type of business insurance protects you  against payment defaults. By reimbursing you thousands or even millions of dollars, it can save your company if your clients do not make their payments.

Of course, you should also claim full payment from your customers before producing and shipping your products. No matter your choice, however, you will have peace of mind knowing that your customer account is insured.

8. Make sure your company is mature enough

“Before you start exporting to Latin America, you need to ask yourself if your company is mature enough in its local market,” says Mathieu Alarie. Latin American markets offer incredible opportunities, but first you have to make sure that you have a strong local base. Developing the Latin American market requires attention and money !

Sales cycles and processes take longer in Latin America, which requires greater financial stability than in Canadian, American or European markets.

GoExport Question

If you decide to invest $100,000 to do business in Latin America, are you convinced that it will earn you more there than in your local market?

In other words, before jumping in, you should maximize your earnings in your local market and in those close by (for example, if your company is in Quebec, look to the rest of Canada and/or the United States).

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Our team has been looking at the growing importance of Latin American markets for several years. With our support, companies such as Ver-Mac have been very successful there.

Contact our Latin American export experts and get recognized strategic support to develop your new markets.