Market Entry in Latin America
Several companies want to expand their businesses by exporting their products or services to different countries. When making the business decision to enter a new market they find themselves with a variety of questions. Where to export to and where not to? Which countries should I do business in? Should I form international business partnerships and with whom? When considering a certain region, like Latin America, these questions narrow down even more based upon the way that region does business.
No matter what the region is, when exporting to a different country, some important factors have to be kept in mind in order to minimize risk. For instance, it is also important to know which countries you should not export to. Below we provide a list of factors about countries that SME’s should not export to.
SME’s should not export to countries that:
- Have a low national income per person, which indicates lower purchasing power
- Have a low number of inhabitants, unless they are wealthy
- Rank lower than 100 on the ‘ease of doing business’ list from the World Bank
- Show low logistic performance
- Are boycotted or have an unpredictable law system
This is a basic guideline in order to ensure market success in the country you decide to do business in. However, having inside experts on the country and region can massively change your potential in a market in Latin America. There are several other factors you want to keep in mind when doing business in the region that would need some market research to help you decide if you should enter another market. We continue with our guide below.
The Importance of Conducting Market Research
Since entering a new market usually requires high investments, when forming a company in a new market it is vital to conduct market research Therefore, it is imperative you get to know the industry in the country of your choosing. If you don’t have knowledge or previous experiences in the country, contract somebody who you can trust and let them help you with getting a better insight on the possibility of exporting your product or service internationally.Conducting market research, before moving a business into a new country, will increase the chances of a company’s success abroad.
Now that you have been briefed on the importance of understanding a market before diving into it, we will discuss the steps for entering the market in Latin America.
3 Steps for Market Entry in Latin America
- Focus on your partner’s business strategy
Partnerships in general are used to develop new innovative products, establish new customer channels, or to produce an economies of scale. Therefore in order for the partnership to work, both have to follow the same goal and strategy, and need to have clear partnership agreements.
- Be attractive
A company has to be attractive to other companies, in order to be able to form partnerships. Therefore clearly formulate the company’s strengths, ambitions, strategies and focus on a clear business structure.
- Look for strategic business partners
Actively look for possible business partners, don’t just collaborate with the first company coming along your way. Do research, look for future business partners, having the same or similar business strategies. Also think of your clients and what partnership would be beneficial for them. In case you are looking for an international partnership ask for help at local intermediaries.
So what support is available to me?
If you are planning on forming a company in Latin America and want advice on how to do so, please get in touch with our Market Entry director, Andrew Wright at here.