In June 2020, the Biz Latin Hub team launched a survey asking for information about individuals’ perceptions about doing business in Latin America.
We received a range of responses from 75 business owners, executives, government officials and other specialists operating in over 40 countries worldwide. 57.3% of respondents are considering expanding into the region in the future, with many expressing cautious optimism at economies’ abilities to bounce back after the COVID-19 pandemic.
Find out what the key takeaways from our survey indicate about people’s perceptions on doing business in Latin America.
Perceptions on doing business in Latin America: who took part?
75 people responded to the Doing Business in Latin America survey. Of our respondents, nearly half (48%) were business owners, operating in Latin America and across other regions of the world, including the United States, Europe, Asia, the South Pacific, and the Middle East. 29 respondents (38.6% overall) were business owners operating in Latin America.
Many survey participants were operating across more than one country. Of all respondents, 66 people (88%) noted they were working or operating their business within Latin America, and 39 respondents (52%) were operating outside of the region. A third of all respondents were running or working in a company that operates in 5 or more countries, and 16% of all respondents claimed to be operating across 10 or more countries. These were often a mix of countries based inside and outside of the Latin American region.
Countries of respondents’ operations
|Costa Rica||Cuba||Dominican Republic|
|Sweden||United Kingdom||United States|
Cautiously optimistic for future economic outlook
Qualitative responses indicate uncertainty and concern for the short and medium-term impacts of COVID-19 on local economies.
However, a greater proportion of respondents show a more positive outlook for the economic future of their country/countries. When asked to rank their perception of the current and future state of the economies they operate in from 1-5 (with 1 being negative and 5 being positive), respondents gave the following responses:
While some working or managing a business in areas such as retail and natural resources showed concern for their governments’ abilities to lead their countries through the pandemic and resulting economic struggles, others identified opportunity for companies and economies in the long term.
In particular, respondents working in areas adaptable to the online world, such as professional services, IT and communications, risk management, and network marketing, expressed positivity at how their industry has remained strong during this time. One respondent working in IT and communications noted that the pandemic may drive “changes that will favor our company in the medium term.”* One business owner in Latin America noted the network marketing industry “is the solution to the current problem.”*
“There is a lot of uncertainty as to what will happen”
56% of respondents mentioned COVID-19 as a current concern influencing their perception of the current state of their economy/economies. Only 24% of all respondents indicated COVID-19 influenced their perception of the future economic outlook.
As a result of the COVID-19 pandemic, 13 respondents (17.3%) expect “slow recovery” of the economy, or for the market to be “greatly impacted.” This was felt within and outside of Latin America from private and public sector operators in retail, trade, consulting and professional services, manufacturing, and construction. During this time, respondents expect “significant readjustments to LatAm economies,” including in currency, tax, and trading activities.
“Service providers… will lose market share to Latin American businesses”
Despite the uncertainty, 77.3% of respondents indicated neutral or positive attitudes towards the future of their economies. Some went as far as to say they believe Latin American businesses may become more competitive in the future:
“I think service providers in traditional, more ‘established’ economies will lose market share to Latin American businesses and others based in the developing world. Not just in terms of costs but in terms of outlook, attitude, and ability.”Respondent operating in Canada, UK, US, and the European Union.
People and businesses may have adapted to the current global pandemic by moving their services online and operating with a more digital business model. This method of providing greater access to services may have in turn placed providers previously geographically segmented in a position to compete with each other.
Others note the potential for countries to look for alternative partners to China, for which Latin American countries may be considered.
Latin American countries demonstrate “long term growth prospects”
57.3% of respondents are considering expanding into Latin America in the future. Though only 32% of respondents plan to hire staff for their business in 2020, in 2021 this number increases to 46.6%.
In key markets in Latin America, optimism for the future pointed towards countries’ receptive business environments, fast adoption rates and innovative solutions. “Many LatAm countries [are] showing long term growth prospects,” commented one respondent, with another noting “most LATAM countries forecast economic growth in 2021.”* There was some cautious optimism for markets such as Mexico, Brazil, Panama, Ecuador and Chile, whereby some expect to see economic progress and new opportunities once countries grasped a greater level of control over the pandemic.
Chile and Colombia were referred to as growing economies that were “very receptive in terms of business tradings,” with the latter flagged by several respondents as being in a position for a strong economic recovery from COVID-19. Colombia was considered by some as one of the more stable countries in the region, with a tendency to adapt to new trends quickly.
One respondent suggested “Colombia needs to focus on the sectors with growth potential and job creation (services, IT and software, etc).”
Costa Rica, a country heralded for its response to COVID-19, was another common denominator in many of the responses that indicated a positive future economic outlook. One respondent considered the Central American country to be “very stable and overall attractive for outside investment with a highly skilled labor force.” Likewise, neighbouring Panama and El Salvador were noted for their potential to connect Northern and Southern markets as trade hubs and to continue attracting foreign investment, as they offer the “opportunity to explore new economic sectors.”*
Insights from Australasia
13% of respondents operate in Australia and/or New Zealand. All except one operated in markets across both Latin America and Australasia.
Similar sentiments to those mentioned above are echoed in Australasia. In terms of current attitudes towards business in Australia, New Zealand and Latin America, respondents note that “business is globally unstable right now” and that it is “hard to speculate” the outcome of the global pandemic on their local economies. Others note Australia’s state of being in a technical recession. Again, however, future economic outlook appeared more positive.
One respondent suggested that Australia may consider Latin America as an alternate supply chain and source of skilled labour to economic giant China:
Australia may look to other countries including Latin America as an alternate supply chain to China. Australia will look to other countries for skilled labour for both infrastructure projects and high end manufacturing. Australian universities and colleges will be looking to other countries to supply international students to replace the students from China and possibly Brazil.Respondent doing business in Australia.
* Quote translated from Spanish.
Expand into Latin America with the help of trusted legal providers
At Biz Latin Hub, we aim to not only understand your pain points when expanding into Latin America, but to also offer tailor-made support to ease your administrative burdens and make your journey as successful as possible.
With our full range of market entry and back office services, our local and expatriate professionals can support you with your hiring, company formation, trademark, accounting, commercial representation, visa, due diligence and other market entry and compliance needs.
Reach out to our team for more information and a personalized quote.