Colombia has slowly been emerging as one of the most attractive countries for trade in Latin America. A combination of a stable government, strategic free-trade agreements with neighboring countries, a reduction in crime as insecurity declines and sound economic policies have helped the country to establish itself as an economic leader in the Latin American region. This has made Colombia a popular country for foreigners looking to set up a company.
Recent statistics suggest that Colombia has achieved significant growth through foreign direct investment in the oil and mining sectors. This, in turn, has inspired a large number of foreign entrepreneurs to set up local business ventures. Investment opportunities can vary tremendously according to the business sector involved. Conducting thorough, industry-specific market research and a deep analysis of the investment opportunities available can all be extremely time-consuming processes. For this reason, many foreign companies look to a professional company who have an in-depth understanding of the local business environment.
Colombian Employment Laws
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; for this reason, any organization that fires an employee is liable to cover the costs for the concerned individual 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.
The Difficulties in Setting Up in Colombia
The parallel economy in Colombia is still a driving force, and as a result, the culture of saving money, opening bank accounts, and owning credit cards is close to non-existent. Colombian interest rates are high, which makes it very expensive for Colombians to secure bank loans. This should be taken into account in regards to your business model.
Unlike most other Latin American countries, English will not get you very far in Colombia. You will need to master Spanish or team up with local business partners in order to secure business deals. Colombians follow simple concepts – understand the local dialect and you will be treated with respect.
Colombians do not understand the meaning of non-negotiable; it is a common practice among Colombians to ask for exchange deals and discounts while purchasing commodities.
In short, understanding the local quirks and traditions is an essential factor for all foreigners who wish to start a business in Colombia. There is no doubt that there are great business opportunities in Colombia; however one needs to be aware of the challenges that are involved with doing business in Colombia, especially foreigners.
Should you require anymore information regarding doing business in Colombia, don’t hesitate to get in contact with Biz Latin Hub CEO and Founder Craig at [email protected] If you want to find out more about company formation in Colombia, check out our guide below: