An American's Guide to Doing Business in Latin America : Negotiating contracts and agreements. Understanding culture and customs. Marketing products and services

218 Pages·2010·2.22 MB·English

by  Lawrence W Tuller

ALSO BY LAWRENCE W. TULLER
Exporting, Importing, and Beyond
Mastering Markets in South America
Strategic Marketing in the Caribbean
Strategic Marketing in Central America
Strategic Marketing in South America
Doing Business in Latin America and the Caribbean
The World Markets Desk Book
The McGraw-Hill Handbook of Global Trade
and Investment Financing
Going Global: New Opportunities for Global
Companies to Compete in World Markets
• Negotiating contracts
and agreements
• Understanding culture
and customs
• Marketing products
and services
An American’s Guide
to Doing Business in
Latin America
Lawrence W. Tuller
CONTENTS
CHAPTER 1: THE NEW LATIN AMERICA
The Lost Decade
Relationship Between Washington and Latin America
Promises of the Summit of the Americas
Trade Pact Fever
Opportunities Abound
Deficiencies That Still Remain
Intra-regional Cultural and Business Differences
CHAPTER 2: LATIN A MERICA’S UNIVERSAL ISSUES
Competitiveness in Latin America
A Wasting Environment
Violent Crime
Insidious Corruption
Selling With E-Commerce
CHAPTER 3: LATIN AMERICA’S SOCIAL ISSUES
Education Shortfalls
The Gender Gap
The Evils of Joblessness
Extreme Poverty and the Spreading Wealth Gap
Broken Health-Care Systems
Trafficking in Persons
Summary
CHAPTER 4: MAJOR MARKET OPPORTUNITIES
Varied Market Strategies
Argentina
Brazil
Chile
Colombia
Costa Rica
Mexico
Conclusion
CHAPTER 5: LATIN TRAITS THAT BAFFLE AMERICANS
Family Values
Easy-Going Lifestyle
A Live-And-Let-Live Attitude
Respect for Age
Community Involvement
Class Separation
Gender Class Difference
Power of the Church
Racial Bias
National Pride
CHAPTER 6: MARKET RESEARCH: PERFORMING A COUNTRY SURVEY
Business Structure
Audit, Tax, Legal, and Licensing Requirements
Communications Bottlenecks
Insurance
Political and Economic Environment
Market-Specific Business Conditions
Government Subsidies
Transport, Licenses, Security, and Labor
Infrastructures and Free-Trade Zones
Personnel Matters
Exchange Controls
Summary
CHAPTER 7: COUNTRY RISK ASSESSMENT
Country Risks
Defining Market-Entry Options and Risks External to a Company’s
Authority
Quantifying the Impact of External Risks
A Case Study: U.S. Fabrisource and Avionics Corporation
CHAPTER 8: MARKETING CHANNELS
Commissioned Agents of Latin American Governments and Companies
Export Management Companies
Export Trading Companies
Captive Export Trading Companies
Foreign Trading Companies
Direct Selling
Distributors
CHAPTER 9: ADVERTISING
Cultural Sensitivity
Alternative Media
Internet Advertising
Trade Shows
CHAPTER 10: TRADE FINANCE
Short-Term Strategies
Variations on Documentary Letters of Credit
Documentary Banker’s Acceptances
Getting Paid
Intermediate-Term Strategies
Small Business Administration (SBA)
Long-Term Strategies
Countertrade Strategies
CHAPTER 11: INFRASTRUCTURE DEVELOPMENT AND PROJECT FINANCE
Private Participation in Infrastructure Development
Foreign Direct Investment from U.S. Companies
Future Opportunities for U.S. Companies
Financing Infrastructure Projects
Global Project Finance Banks
Development Banks
Overseas Private Investment Corporation
U.S. Trade and Development Agency
United Nations Programs
Appendix A: Export Assistance Centers
Appendix B: Small Business Administration Regional Offices
Appendix C: Latin American Trade Associations in the United States
Appendix D: American Chamber of Commerce Offices in Latin America
Appendix E: Bi-National Chambers of Commerce in Florida
Appendix F: Internet Addresses
Map of Latin America
Chapter 1
The New Latin America
Get out of the way, India. Move over, China. Stand back, Southeast Asia. Here
comes the new kid on the block, a reborn Latin America. Bursting with
enthusiasm. Ready to erupt with a dynamism unseen in the Western Hemisphere
since the Industrial Revolution. Latin America, exuding an economic exuberance
that is sure to be the envy of the developing world. And U.S. exporters have seen
this coming. Last year alone they shipped four-and-a-half times as much product
to this region as they did to China, twenty-four times the amount they shipped to
India, and twice as much as they shipped to the United Kingdom, Germany, and
France combined.
But doing business in Latin America is not easy. A constantly changing
landscape makes long-term strategies especially difficult. If there is one truism
about this region, it is that if you don’t like the way the politics, economics, and
social conditions are going now, wait ‘til tomorrow and they will change.
Latin America’s never-stopping politico-economic pendulum swings wildly to
and fro. From dictators to freely elected presidents to elected autocrats. From
liberal socialist governments to reactionary right-wing rule to populism. From
hyperinflation to modest economic growth to rapidly rising prices. From
shattered banking systems to stable financial markets to bank failures. From
protectionist trade to free trade to the nationalization of entire industries. From
isolation to open borders hungry for foreign investment to forced joint
ownership of projects with government. Such a wildly swinging pendulum
muddies the waters for trade and investment. Misunderstanding the North and
misunderstood by the North, Latin governments and their citizens continue to
ride the fringes of economic progress, unable to penetrate the psyche of either
Republican or Democratic administrations in Washington.
Part of the problem is the enormous mixture of cultures that comprises Latin
America and confuses Americans.
Mexico, the Caribbean nations, Central America, and South America—in fact,
everything south of the U.S. border— comprise what we commonly call Latin
America. Imposed by the Spanish conquerors of the sixteenth and seventeenth
centuries, the Spanish language dominates the region, but other languages are
also spoken. Portuguese is the official language in Brazil; it’s English in Guyana,
Dutch in Suriname, and French in French Guiana. In the Caribbean, English,
Dutch, French, and Creole are spoken along with Spanish. In Central America,
English is the language of Belize. Spanish is official in all other countries. One-
third of Guatemala’s population is indigenous and speaks a mixture of Mayan
dialects.
Culturally, the region is equally mixed. In countries where Spanish or
Portuguese is the official language, the Hispanic culture and Catholic religion
inherited from Spain and Portugal are predominant. In Guyana, however, more
than 50 percent of the population is descended from East Indians and practices
the Indian culture and Hindu religion. In Haiti, a combination of French and
African cultures has nurtured the Voodoo religion. The English-speaking
Caribbean mostly consists of African descendants influenced by a European
heritage, creating a unique West Indian culture that has welcomed Pentecostal
preaching. Fidel Castro’s atheism and its penetration of the Cuban culture is
unique in the region.
In Central America, Peru, Bolivia, and Ecuador, as well as in certain parts of
Brazil, mestizo is the predominant race. A mestizo is a person of mixed ancestry,
especially of mixed Spanish or Portuguese and indigenous Amerindian.
Argentina is strongly influenced by descendants of settlers from Northern and
Southern Europe, especially Italy and Spain. In the Caribbean, the United States
owns a territory (the English-speaking Virgin Islands) and a commonwealth
(Spanish-speaking Puerto Rico).
Size also matters, especially in the business world. Brazil dominates the
region, with 186 million people and a geographic size equivalent to the
continental United States. Its industrial base is very similar to that of the United
States. Manufacturing, retail, and service industries are all healthy and growing.
At the other end of the spectrum, Haiti and Nicaragua are the two poorest
countries in the region with gross domestic product (GDP) per head of $1,600
and $2,400, respectively. These two countries, along with Bolivia and Suriname,
stand in stark contrast to the sophisticated urban centers of São Paulo, Rio de
Janeiro, Buenos Aires, Santiago, Bogotá, and Mexico City.
Political upheaval and violence have characterized Latin America for
centuries. Prior to 1989, when a democratic wave washed over virtually all Latin
American countries, Peru had experienced only four years of elected
governments, Ecuador eight years, Brazil one year, and Uruguay barely four
months. Bolivia had gone through 180 presidents in 160 years. Peronist
Argentina had been little more than a police state for seventy years. Paraguay’s
iron-fisted president, Alfredo Stroessner, played host to thousands of Nazi war