Central and South America can be logical expansion markets for small businesses just getting into the exporting game.
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But geographic proximity doesn't necessarily translate into easy access. You'll need a little know-how and a lot of help before you're ready to sell south of the border.
The last thirty years have brought sweeping political, social, and economic changes to many South American countries. Harsh dictatorships have given way to more democratic forms of government, clearing a path for free market influences and foreign trade. Although issues like NAFTA and illegal immigration monopolize the media spotlight, there is a growing awareness among small business owners that South American markets are prime territory for U.S. exports.
Trade barriers represent a significant obstacle in exporting to South America. South American countries are acutely aware of the disparity in trade relationships with the U.S. and other economic powerhouses. To protect themselves, they have formed trading blocks and established other trade barriers to protect their markets from outside competition. MERCOSUR, the Group of Three (Colombia, Venezuela, Mexico), and the Association of Caribbean States are just some of the trading groups exporters need to contend with in the region.
The Role of Export Consultants
The upside of exporting to South America is that there is no shortage of consultants willing to help new exporters navigate the complexities of trade. An effective consultant should be highly knowledgeable about South American trade restrictions, conversant in South American customs, and capable of strategizing methods for inexperienced business owners to gain entry into otherwise closed markets.
However, an effective export consultant should also have his finger on the economic pulse of the region and be able to suggest the best markets for your company's products and services. Ideally, he will have an extensive background in several South American countries as well as the skills to locate and evaluate potential trade partners on your behalf.
Despite the challenges of exporting to South America, there are several emerging markets worth considering. For example, Chile is a market that has recently experienced a tremendous growth in imports. In the past three years, Chile's U.S. imports have grown by 150% from $2.72 billion to $6.79 billion. The U.S. industries that have benefited from this expansion cover a broad range of market sectors including construction, IT, healthcare, financial services, telecommunications, and more.
Although trade restrictions in Chile are minimal, the boom in Chilean imports has not gone unnoticed. Competition is fierce and the market is saturated with foreign exporters eager to sell their wares to Chile's 16+ million consumers. The best (and maybe only) way to gain access in Chile is to establish a relationship with a reputable Chilean agent or representative. In some cases, it may also be helpful to establish a local subsidiary in Chile to maintain a constant presence for potential buyers.