Nearshoring in El Salvador: What are the benefits?

With a global shift towards considering the viability of trade routes and ensuring logistical supply lines, more countries are seeking friendly ports. Nearshoring in El Salvador offers just this for especially North American businesses.

Nearshoring in El Salvador has many benefits for North-American based countries. It is on a similar time zone, is easily accessible from the West Coast and is linked directly to the Panamerican Highway. With a friendly government firmly in place and cultural similarities, it is not hard to see the appeal.

Biz Latin Hub can help you with nearshoring in El Salvador or elsewhere in the region. We are experts in Latin America and the Caribbean, so we know the country inside out. We can guide you through the processes of company formation or commercial links with the county. With our range of back office services, we also offer ongoing business support.

Why invest in the country?

Despite an often troubled past, nearshoring in El Salvador now means moving into a country with a bright future. The country has taken great strides in recent years to combat many of the problems that it faced. This means that the country is in a great position for FDI right now.

Combine this with a global situation in which logistics and trade routes are increasingly coming under scrutiny and El Salvador offers an easy way to transport goods and trade through friendly territory. The country is extremely internationally minded, even offering the official use of Bitcoin.

Oversight and control are also key concerns for companies working in foreign countries. By nearshoring in El Salvador you will be able to minimize both those risks as the country is not just physically close to North America but also culturally close.

Nearshoring in El Salvador: 5 key benefits

When considering Nearshoring in El Salvador, here are 5 key benefits:

Time Zone.
Connections.
The US dollar.
Stable government.
Competitive labor costs.

1. Time zone

El Salvador is situated at UTC-6, which places it roughly in line with CST in the USA and Canada. It also matches up with Mexico. Any business dealings you have with Salvadorean partners should take place at a reasonable time of day. However, it is important to remember that the country does not observe daylight saving time.

Nearshoring in El Salvador: 5 key benefits

2. Connections

The country is located on the Pacific coast of the Central American isthmus. This means it can receive or send cargo shipping from or to either the West coast of the US or Asia easily. On top of that, the country has trade agreements with its neighbors and is on the Panamerican Highway for overland connections to North America. This makes nearshoring in El Salvador excellent for onward travel.

3. The US dollar

As a fully dollarized country, you won’t have any problems with currency conversion or international transactions when nearshoring in El Salvador. Using the dollar also means that the country has stable finances and is blocked from taking unwise monetary policy decisions.

4. Stable government

The current government has been particularly effective in its initiatives to fight crime. This makes El Salvador safe not just on a regional level but on a global scale. Institutions are strong and there is solid protection for commercial interests.

5. Competitive labor costs

Although you might be using the US dollar, you certainly will not be paying American wages. However, that doesn’t mean a loss in quality. Nearshoring in El Salvador involves competent and qualified workers who are often highly educated and professional.

FAQs When Nearshoring in El Salvador

1. What is nearshoring in El Salvador?

Nearshoring in El Salvador refers to the practice of outsourcing business operations to a nearby country, in this case, Chile.

2. What are the advantages and disadvantages of nearshoring in El Salvador?

The advantages of nearshoring include less expensive labor costs, avoidance of language barriers, cultural alignment, geographical proximity, and a similar time zone. However, there are also disadvantages. For instance, developing and qualifying a new strategic supplier entails high costs.

3. How to take advantage of nearshoring in El Salvador?

To take advantage of nearshoring, businesses can focus on the following aspects:

Selecting the Right Location: Choose a country that offers a skilled workforce, cultural and language similarities, and a favorable business environment.
Building strong relationships: Build strong working relationships with the nearshore team to streamline communication and collaboration.
Leveraging Cost Benefits: Take advantage of the cost-effectiveness of nearshoring by outsourcing operations at a lower cost.
Ensuring Quick Response Time: Utilize the similar time zones to ensure quick communication and problem-solving.
Utilizing Local Expertise: Leverage the skills and expertise of the local workforce to enhance business operations.

Biz Latin Hub can assist you with nearshoring in El Salvador

At Biz Latin Hub, we provide integrated market entry and back office support to investors throughout Latin America and the Caribbean, with offices in more than a dozen countries around the region and trusted partners in many more.

That unrivaled reach means we are ideally placed to support multi-jurisdiction market entries and cross-border operations. For example, we know all about nearshoring in El Salvador.

Our portfolio of services includes company formation, accounting & taxation, legal services, bank account opening, and hiring & PEO.

If you found this article on nearshoring in El Salvador of interest, check out the rest of our coverage from across the region. Or read about our team and expert authors.