Doing Business in Colombia: Four Thoughts for Foreigners

Colombia is becoming one of the most attractive destinations for trade in Latin America. The convergence of a stable government, strategic free trade agreements, sound economic policies and declining insecurity have propelled the country to the forefront of economic leadership in the Latin American region. As a result, there is growing interest among foreign investors in doing business in Colombia. With its favorable business environment and promising economic outlook, Colombia presents a wealth of opportunities for entrepreneurs and companies looking in doing business in Colombia. Whether you are exploring new markets or looking to expand your existing operations, Colombia offers an attractive prospect for growth and prosperity when doing business in Colombia.

The 4 thoughts for foreigners who are planning on doing business in Colombia are:

1. Employment Law.
2. Cash Economy.
3. Language Barrier.
4. Local Customs.

Colombia has achieved significant growth through foreign direct investment in the oil and mining sectors in recent years, as well as emerging as one of Latin America’s prime destination for start-ups and foreign entrepreneurs. A tremendous variation in investment opportunities makes thorough, industry-specific market research and in-depth analysis of the investment landscape crucial. With that in mind, many potential investors benefit from the in-depth understanding of doing business in Colombia that a locally-based partner can provide.

1. Doing Business in Colombia: Employment Law

Colombian employment laws highly favor employees regardless of the context. Full background checks should always be completed before hiring at any level, and employment contracts should be carefully structured with the advice of qualified lawyers. The Colombian welfare system does not provide unemployment benefits, and any organization that fires an employee is liable to cover their costs if a complaint about unjustified dismissal is lodged. Outsourcing the recruitment process to an employment agency is a cost-effective way of avoiding potential and unnecessary legal and financial burdens of doing business in Colombia.

2. Cash Economy

Informality remains a driving force of the Colombian economy, and a significant proportion of the population does not have a bank account or own credit cards. Meanwhile, Colombian interest rates are high, making it very expensive for Colombians to secure bank loans. Both factors should be taken into account when developing a business model. 

3. Language Barrier

Unlike some other Latin American countries, English is not widely spoken in Colombia, making a locally-based partner critical to the success of anyone who wants to invest that doesn’t speak Spanish. Because while English might be the official language for doing business in Colombia, Spanish helps build understanding and strong relationships.

4. Doing Business in Colombia: Local Customs

Colombians are known for being good negotiators and doing deals in the country often involves significant bartering and exchange, so the phrase “non-negotiable” is not always well-understood. Being aware of such quirks and customs can be essential to striking a good deal and doing business in Colombia.

Biz Latin Hub can assist you doing business in Colombia

At Biz Latin Hub, our multilingual team of corporate support specialists has the knowledge and expertise to support you doing business in Colombia. Our comprehensive portfolio of services, including company formation, accounting, tax advisory, and hiring & PEO, means we can provide tailored packages of integrated back-office solutions and be your single point of contact for doing business in Colombia, or any of the other 17 markets around Latin America and the Caribbean where we have local teams in place.

Contact us now to discuss how we can support your business.

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