As Chile sets its sights on boosting its sustainable businesses and agriculture, Luud van Duijnhoven from Biz Latin Hub had the opportunity to talk to delegates of the Embassy of the Kingdom of The Netherlands. The Netherlands is regarded as an economic powerhouse, renowned for its innovative excellence.
Luud spoke with Head of the Economic Department, Edith van Rossum, and Agricultural Trade Advisor, Paul van de Grift. The discussion offers insight into the relationship between Dutch and Chilean business. Edith and Paul touch on the opportunities between the countries, consider their economic similarities and outline gaps the two nations are yet to fill.
How do you currently view the Chilean business environment?
Edith van Rossum: Chile is a country with a lot of opportunities. It is keen on diversifying its sectors. It has traditional sectors like mining, fishing, and wine. However, the country is deliberately trying to diversify sectors and add value to its products. The attempt to do this stems from an awareness that Chile is too dependent on, for example, mining. This diversifying trend has started with for example initiatives by CORFO.
Moreover, the government is trying to boost the agricultural industry by becoming more productive (nuts, palta) and the service industry. The new government (Piñera) is looking more towards international markets and committing to economic growth. These are all very interesting opportunities for conducting business in Chile.
Paul van de Grift: To add to that, Chile is scoring very high on the doing business index. It is relatively easy to develop business in Chile. This is, of course, another incentive for international business to move towards Chile.
Edith: The ‘doing business’ environment is favorable, but there are always some bumps on the road. It takes a while before a company actually can start its business. Cultural differences, as well as differences in the legal framework from one country to another, will always be present. That’s why service companies like yours and mine are creating value in Chile.
Why do you think Dutch companies are trying to invest or expand their operations to Chile?
Edith: Chile feels far away because of the distance from the Netherlands. But actually, it is closer than Dutch companies think because the two cultures are very alike and the time difference is only four hours. When Dutch companies get over the psychological bump of Chile being so far away, I think they will be very interested and even surprised by what they will see in Chile. And why would they want to invest? Because Chile offers a lot of chances and opportunities, there are a lot of things that haven’t been discovered or mined.
However, Chilean business is very much based on relationships. This is something Dutch businesses tend to forget, as they often feel very confident about their product and want to get started right away. The relationship in Chile is very important and it is not only a cup of coffee or lunch. Chileans value the actual time spent on the relationship. Partners need more moments of contact to view you as trustworthy, this is something Dutch companies need to adjust to and invest in. When they do, a world of opportunities opens up for them.
Another challenge but also an opportunity for Dutch and Chilean business is the Dutch knowledge of innovation. The Chilean people want to exchange innovative knowledge but they like to be convinced by a pilot or demonstration and only after this the actual seal of approval will be stamped.
Paul: Sometimes there are major differences between Chile and the Netherlands, even within the same sector. Take agriculture, for example, we are very big about agricultural robotics and maximizing productivity, whereas the agricultural sector in Chile is extended farming and therefore not always ready to implement the newest Dutch technologies. They (Dutch companies investing in Chile) want to add value to products, but the latest technologies have to be compatible with the business model. There is a potentially very good match between the two, as Chile desires to become a knowledge economy as well and tries to grow its service sector, but the Dutch will have to analyze which innovation will and which innovation will not fit.
Edith: In doing business Chile scores high, but the investment in Resource and Development, Chile scores very low.
Why do you think Chile scores this low? Is it because of the same conservative nature of the business environment?
Edith: From a geographical point of view Chile has been more isolated than the rest of Latin America and has developed its economy very much on its own account. Opening its windows and doors to ‘best practices’ from other developed countries will enable Chile to keep on growing its society and economy and stay competitive in a globalized market.
I have seen that the organizational structure in many Chilean companies is almost always top-down. Usually, men with grey hair and many years of experience are the important decision makers. Innovative ideas and solutions are often born in mixed teams where younger generations can give their input. I expect that it would give a boost to Chile’s R&D if the companies would modernize its organizational structure.
Do you think Dutch business can help Chile grow out of this conservative nature?
Edith: Yes, we are trying. The Netherlands is very good at the ‘how?’ question.
Paul: We like to show how we have gotten this big, or been this successful.
Edith: Yes, but also involving different stakeholders in decision making. Not making the process very quick but inclusive. And move forward from there. This way we [the Dutch economy] improved a lot.
But the ‘how?’ question is hard to sell. We are trying to sell the ‘golden triangle,’ which includes the public sector, private sector, and knowledge institutions. The idea is you have to think inclusively when making decisions, instead of thinking compartmentally. This way you get the best solution for all parties involved. All sectors need each other and that’s why they need to be transparent in achieving their goal and supplementing each other. A good example of this is the Foodvalley in Wageningen.
Paul: We offer models on how to actualize these collaborations. There is a lot of interest in these models from Chilean companies and authorities because Chile likes to grow the same way the Dutch have. They see it as an example.
Edith: But new technologies are not easy to implement in another context. It is a question of a process to get there, rather than simply buying something and expecting to have a result the next day. This furthermore helps the collaboration of creating this ‘golden triangle’. Another example of this is the Chilean mobility sector trying to become more sustainable.
The Netherlands is renowned for its water-management skills and experience, and Chile has one of the longest coastlines in the world. Has there been Dutch involvement in this sector?
Edith: The problem of climate change has its effect on Chile as in the rest of the world. As Chile is trying to diversify, plenty of water will be needed for agriculture. However, climate change is reducing the amount of fresh water in the country. There are many opportunities for Dutch business to assist and develop business within this water-management problem. Through the Embassy, we are promoting the water sector, agriculture, and ports and logistics as potential business opportunities. This is where we see a huge potential adding of value from Dutch business in Chile.
Paul: We are very good at combining port logistics with hinterland (all territory that can be reached from a big distribution point) and there is a clear desire within Chile for this knowledge.
Edith: Another example is a horticultural mission that will soon make its way to Chile from The Netherlands to assess what we have to offer for needs in Chile. Along with other programs, this is how the Dutch Embassy is trying to create matches between demand and supply. The other way around we will soon invite Chilean influentials to take a look in The Netherlands and to see what we have to offer in terms of sustainable mobility.
How do you view the future of the Chilean-Dutch business relationship?
Edith: Like I said before, I think there are plenty of opportunities. We, The Netherlands, have to keep on showing the Chileans what types of innovative, sustainable, and creative solutions we have to offer to their challenges. But vice versa, we also have a task to demonstrate companies in The Netherlands which business opportunities Chile has to offer to them. Our visibility in Chile and Chile’s visibility in The Netherlands is something we are investing in.
Paul: We have a lot of different things to offer Chilean business. We just might be the ideal partner to solve actual Chilean problems at this moment. The water sector, agriculture, ports, and logistics are all top sectors in The Netherlands where we hold a lot of knowledge and innovations that could work in Chile as well. So we are a very interested partner, also for example, in the mining sector, but it is our job to keep reminding businesses of this fact. This works both ways to create the match, but in essence, the match is almost perfect.
Do you think free trade agreements have a role to play in this business relationship between Chile and Asia? And the current position with The Netherlands?
Paul: The agreements have definitely played a large role in Chile looking towards Asia right now. But the same advantage goes for the EU as well. However, the situation exists where we are competing with Asia and therefore we have to show our added value.
The advantage of this is that Chile has easy access to international markets which can be interesting for companies. For example, more exports lead to a desire to become more productive which Dutch business can play a big role in with solutions.
Edith: Chile is economically, politically, and budget wise a very stable country in
comparison to neighboring countries. These are very important conditions for foreign investors.
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Thanks to the expertise of Edith van Rossum and Paul van de Grift from the Embassy of the Kingdom of The Netherlands, it becomes clear Chile and The Netherlands have a very promising future. However, to realize this future some changes will have to be made.
Nevertheless, setting up operations overseas can be challenging without the right know-how and local support. Biz Latin Hub offers an experienced team that can assist with your global expansion. For more information, get in contact today via [email protected].