Lands of Opportunity - South America
Barry Rosenberg, Markhams Hawkes Bay Director
The idea of expanding a business into international markets during these difficult economic times may seem ludicrous, and for many impossible, however a recent Massey MBA study tour to South America provided a startling insight into business in two of the world’s largest emerging markets – Chile (population 16.6 million) and Argentina (population 40.5 million).
Markhams Hawkes Bay Director, Barry Rosenberg, went on the study tour earlier this year and discovered growing opportunities for New Zealand business in markets that are largely untapped.
Despite global trends, the economies of these two countries are growing at the rate of between seven and nine percent. Chile’s economy is driven largely by the exports of raw materials, primarily copper, whilst Argentina’s main economic contributors are exports of manufactured goods and agricultural products.
Politically, Chile is dominated by three families who hold much of Chile’s wealth. Both Chile and Argentina have presidential governments, and both have presidential elections in 2011. Argentina’s business leaders are passionately hoping for a change of government this year, as they see the current regime as being too generous socially to enable business and economic growth.
In terms of the business opportunities offered by these two countries, they are endless - however taking advantage of these opportunities is not easy. In Chile, opportunities abound for New Zealand businesses that can provide packaged services and products, particularly knowledge and technology that will help Chileans deliver their own products and services more efficiently, faster and more profitably.
As world leaders in agricultural technologies, New Zealand businesses have opportunities in Argentina in dairy farming, sheep farming, cattle farming and in processing procedures in the agriculture industry. Opportunities also exist in joint ventures with Argentinean companies.
The challenges are large however. In South America business success depends largely on the ability to overcome language and cultural barriers. Spanish is the dominant language spoken in both countries and it is the forging of relationships that mean more to the people of Chile and Argentina than the pure economic benefits to them.
It is not that difficult getting to the first level in a business relationship, but to go further up the business value chain is very challenging. Both countries also have stringent regulatory business code law to overcome; there are long lead times in waiting for VAT and income tax refunds for example. However both countries are working hard to simplify business set up. Engaging a trustworthy legal advisor is essential to success in both countries.
Whilst breaking into these markets would take a significant investment of time, money and manpower the possibilities are endless and rewards considerable. If you wish to know more, please contact Barry.
On a personal level, Barry’s trip to Chile was not all work and a special highlight was a day volunteering at an early childhood centre located in a slum area of Santiago at the foot of the Andes mountain range. This day was managed by a global volunteer organisation, VE Global.
"Our 30-strong team worked to completely clean, repaint the premises inside and out and repair the fences at what is known as a Jardin. Playing touch rugby with the children in the area who had literally nothing but the clothes they stood in, and leaving behind the rugby ball with them at the end of the day will hold lasting pleasurable memories for us all."
Published Spring 2011.
