Getting paid by your Latin-American buyer

Latin America and the Caribbean is a large and natural market for US exporters due to the region’s geographic proximity. The region has a total population of 546 million people and a Gross Domestic Product (GDP) of nearly $2.5 trillion. The region is also home to two of the world’s largest economies, Brazil and Mexico, whose combined GDP is over $1.5 trillion. Despite the sheer size of this market, many US exporters are unsuccessful in selling to Latin America or increasing their exports to Latin American buyers. Frequently, US exporters lose sales due to the payment terms they demand of their Latin American buyers. US exporters should be aware of the fact that Latin American lending rates are far higher than those faced by companies in the US. For example, Brazilian lending rates range from 20% to 30% per year and Mexican lending rates range from 9% to 14% per year (as of January 2007). US exporters are losing sales to Latin American buyers because they are frequently demanding payment either by Confirmed Letter of Credit or Cash In Advance. This can result in the following situations: 1. US exporter fails to win new sales contracts or loses existing Latin American clients because other foreign competitors are willing to provide the Latin American buyer with open account terms. Some Latin American companies pay more just to get 30 or 60-day open account terms. 2. US exporter sells less to a Latin American client. One Latin American company interviewed stated that it would purchase 4 times as much from its US supplier if it was given 90-day terms rather than having to pay cash in advance. 3. US exporter loses medium term sales contract, because a foreign competitor assists the Latin American buyer in achieving better financing terms. While it is prudent for US exporters to insist on secure payment terms, it pays for them to consider the broad variety of payment terms available to them in order to become as competitive as possible. The purpose of this guide is to identify the main financing and payment mechanisms available to support US exporters selling to Latin America in general and to understand the costs, advantages, and disadvantages of each mechanism. This guide is an introduction and the reader is encouraged to use it as a starting point in order to become more familiar with the subject. In many instances, the use of expert help is recommended. To that end, the following mechanisms will be examined in this report: 1. Cash In Advance; 2. Confirmed Letter of Credit; 3. Open Account Terms; 4. Open Account Terms with Export Credit Insurance; 5. Documents Against Payment (D/P) & Documents Against Acceptance (D/A); 6. Export Finance by a US Commercial Bank (US$ denominated); 7. Import Finance by a Latin American Bank (Foreign Currency denominated); 8. Lines of Credit Available from Latin American-based Development Banks; 9. Sales to foreign public sector buyers with foreign Central Bank Guarantees are also addressed. If you sell to a country that has high interest rates and you demand cash in advance or a letter of credit from your buyer, you will likely sell less and may even lose the sale to a competitor who is willing to provide better payment terms. Why? Simply put, when a company, any company, is faced with high interest rates, they will do everything they can to avoid borrowing money. This includes: 1. Buying less. 2. Not buying at all. 3. Paying more to buy on open account terms. 4. Buying inferior product if it is being sold on open account terms. The following example highlights what many Latin American Companies face when trying to decide what and how much to import: Imagine that you are a buyer in Latin America and you want to purchase $100,000 worth of widgets from a US exporter to stock your warehouse. It will take approximately 30 days for the widgets to arrive and then it will take another 90 days to sell the widgets. In addition, your local client will demand 90 days to pay you. In total, then, you will only be paid for the product you purchased from your US supplier 7 months (210 days) after you purchased it. • In Brazil, if you took a line of credit where interest rates are approximately 2.2% per month, you will pay your bank $16,454 in interest (compounded monthly). • In Mexico, if you took a line of credit where interest rates are approximately 1.1% per month, you will pay your bank $6,784 in interest (compounded monthly). If you are interested in pursuing any financing options, or are interested in learning more about export opportunities to Latin America you may visit www.buyusa.gov/tradeamericas/

Costa Rica Packaging Industry Overview (2013)

The import market for food processing and packaging equipment in Costa Rica has been contracting during the last several years, going down from $41.0 million in 2007 to a total of imported equipment of $24.4 million in 2010. Although total imports increased by 12.5% from 2009 to 2010, imports from the U.S. decreased by 0.4%, but it is expected to start increasing during 2011-2013, mainly because of the world economic crisis that stopped the private sector from investing in new equipment. Representatives of the private sector expect to invest in equipment in the next three years. Based on the total imports for the last three years (2008-2010), the average import market for food processing and packaging equipment in Costa Rica is $24.3 million per year. In the last three years, the U.S has been the largest supplier of food processing and packaging equipment for the Costa Rican market, accounting for 38.8% of total imports in 2008, for 38.0% in 2009 and for 33.7% in 2010. Other major countries competing in the market are mostly European countries, such as Italy, Germany, and Spain. There is also a good participation in the market of other countries, such as Argentina, China and Brazil. All these competitors have a good portion of the market mainly because they manufacture smaller equipment that adjusts better to Costa Rican industry than the larger equipment made by U.S. companies. European companies have improved their market position by using more dynamic and personalized marketing strategies. In addition, they possess the latest technology in several segments of the industrial food sector, such as production of pastas and macaroni, chocolate and confectionery (Italy), and sausages and beer (Germany), among others. However, a strong preference has arisen for the U.S. equipment, attributed to the excellent quality of the equipment, the exchange rate of the Euro and the proximity of Costa Rica to the United States. Domestic production of food processing and packaging equipment is not significant and does not represent much competition to imported equipment. Most local production is based on the free trade zone production that is nationalized and sold in Costa Rican territory. Domestic production is limited to small cooking pots (kettles), steel metal tables for production lines, molds for bakery production, metal frames for conveyor lines, small ovens and furnaces for bakery production, small storage steel tanks, and other small equipment that requires very little technology. Domestic production of this type of equipment is estimated to be about less than 2% of total market demand. The lack of technology and adequate infrastructure in the local metal-working industry will continue to limit domestic production of food equipment in future years. Exports of this type of equipment reflected in statistics provided by the Costa Rican Customs Directorate correspond basically to equipment that was originally imported into the country and later re-exported to other countries in Central America. Therefore, the total market size for food processing and packaging equipment in Costa Rica is reality very similar to the import market. Best Products/Services: Based on an interview with the Costa Rican Chamber of the Food Industry (CACIA), the Costa Rican industrial food sector is one of the country’s most stable sectors. Before 2008, the food sector traditionally experienced an annual growth rate from 3 to 4%, similar to the growth of the country’s GDP. This sector is expected to have an annual growth of 2-3% for 2011-2012. The sector is comprised of approximately 1,218 companies, of which more than 94% are considered medium -and small- sized companies (less than 100 employees). These companies are split among the many segments of the country’s industrial food sector. Only 6% of the companies are considered large. The chamber of food companies called Costa Rican Chamber of Food Industry (CACIA) groups has approximately 385 members and includes companies from the different segments of this sector. The local food industrial sector is quite diverse and includes many important segments such as dairy products, meat and sausages, poultry, bakery and bread, chocolate and confectionery, and beverages. Therefore, the type of equipment in high demand for the next three to four years is also very diverse. U.S. companies should be alert to the needs of the local food producers for new and used refurbished equipment. Automated food processing and packaging equipment currently in use in the entire sector is considered to represent around 40% of the market, while the other 60% is mixed with automated and hand-driven equipment. Some medium and small food producers purchase equipment from China and Taiwan due mainly to price, although the equipment from these countries generally does not meet the standards of high quality and reliability as those from the United States and European countries. Opportunities: U.S. manufacturers and distributors of food equipment should make efforts to be more adaptable to local market conditions, mainly as to the size of the equipment offered to this sector. Costa Rican food producers respond to a more personal approach, requiring equipment manufacturers to maintain direct contact with the local client through periodic visits, to provide quick and satisfactory responses to their requests, to provide good prices and flexible payment terms, reliable after-sale technical assistant and training, and to ensure availability of spare parts for maintenance and repair services. It is also expected that with the implementation of the CAFTA-DR agreement in 2009, local food producers will need to replace and upgrade existing equipment with more advanced and automated equipment, both for processing and for packaging, if they intend to survive and strengthen their position in the local market. Another benefit from CAFTA-DR agreement is the reduction on import duties for some equipment manufactured in the United States from 10% to 0% in ten years. Therefore, food processing equipment and machinery contained under the following HS Codes will pay an import duty of only 5.8% during 2011: • 841720: Bakery ovens. • 843710: Machines for cleaning/sorting/grading seeds/grains. • 843780: Flour and grain mill machines. • 843860: Machinery for the preparation of fruits and vegetables. • 842240: Packaging equipment-cardboard, plastic containers and bags or glass packaging. In other cases, such as cream separator equipment, HS Code No. 842111, the reduction went immediately to 0% import duties after the implementation of the CAFTA-DR agreement. There are no special requirements or impediments for the import of food processing and packaging equipment into Costa Rica. The market is free and open to any brand and technology. U.S. companies should also consider taking advantage of the openness of the Costa Rican market toward used refurbished equipment, especially for small to medium size companies. Resources: • Commercial Specialist: Victor.Cambronero@trade.gov • Costa Rican Customs Directorate: www.hacienda.go.cr • Cámara Costarricense de la Industria Alimenticia: www.cacia.org • Promotora de Comercio Exterior: www.procomer.com • Arancel Tica: www.hacienda.go.cr/tica/consultas/

Colombia Packaging Industry Overview (2013)

The Republic of Colombia is the fifth largest economy in Latin America with the third largest population of approximately 46 million inhabitants. Aided by major security improvements, steady economic growth and moderate inflation, Colombia has become a free market economy with major commercial and investment ties to the United States, Europe, Asia and Latin America. The Colombian Processed Food and Packaging Equipment market caters to an industry that produces approximately US$ 22 billion in revenue per year. The food industry is comprised of 10 sub sectors: Sugar mills, rice mill, cereal mills, oils and fats, dairy products, chocolates and candy, meat products, animal food products, bread and pasta and others. The beverage industry is also comprised of three subsectors: Beer, Carbonated Soft Drinks & Juices and spirits. In 2010 the Food Industry grew on a whole (+ 6.31% from ‘09) while the beverage industry decreased in sales (- 9.63%), driven in part by an unprecedented tax increase imposed on the beer market, to cover the cost of an emergency relief program. Within these industries, the Dairy, Animal Food and Carbonated Soft Drinks & Juices were the three markets highlighted as the most attractive in terms of supply machinery and equipment. To put into perspective the importance of the Food and Beverage import market, this industry accounts for 5.4% of all the Colombian imports. In other words, if Colombia imported approximately US$ 40 billion in 2010, US$ 2.16 billion is the amount of imported goods that came into the country to supply the food and beverage companies. Opportunities Of the main obstacles that the Food, Beverage and Packaging industries face on a day-to-day basis; logistics/transportation, a cultural lack of innovation, and contraband are probably the key issues that foreign and domestic companies are challenged with. Nevertheless, the industry has been growing in average a 5 percent per year. After more than 5 years in the works, the USA legislative body (Senate and House of Representatives) has approved the USA – Colombia Free Trade Agreement (FTA). As of October 12, 2011, the US has agreed to enter a period of non-tariff trade that will come into action as soon as both governments finish the implementation phase. Over 80% of US exports of consumer and industrial products entering to Colombia will become duty free immediately (upon finished the implementation phase), with the remaining 20% of products being phased into zero tariffs over the following 10 years. With average tariffs on US industrial exports ranging from 7.4% to 14.6%, the newly signed FTA will significantly increase the competitiveness of US food machinery and packaging equipment into the Colombian market. Colombia is not a producer of this type of machinery; therefore the FTA will bring more opportunities for the US industry. Overview The Colombian manufacturing sector is divided into 61 industry groups. The food processing and packaging industry (FPP) ranks among the top 14 manufacturing groups. The industry employs about 19.3% of the domestic labor force, concentrated in the five main metropolitan areas: Bogota, Medellin, Cali, Cartagena and Barranquilla. U.S. FPP equipment enjoys an excellent reputation and wide acceptance in the domestic market. High quality, outstanding customer service, a favorable exchange rate and lower shipping costs make U.S. products stand out in this market. The total market for FPP grew consistently during 2007-2009. In 2010, the market declined 10.7% as the market value in 2010 through December is projected to reach $156.3 million. The decline is attributable to the favorable exchange rate vs. the U.S. dollar and a decline of nearly 33% of Colombian FPP equipment and products exports to Venezuela. Despite the reduced value of the total market and the import segment, imports from the U.S. grew, as December 2010 estimates for U.S. imports are $33.75 million. Conversely, imports from U.S. strongest competitors have declined, negatively affecting their market shares. In 2009 U.S. equipment represented 22.5% of total FPP imports, and the total market size increased 5% to $175.1 million, when compared to 2008, despite the global economic crisis. The 2010 forecast is positive for U.S. imports increasing by 11.2%, equivalent to 25.6% of total imports. Imports of FPP equipment from the United States increased at a rate of 11% in 2009. Despite the global economic crisis this is still one of the more robust sectors of Colombian industry, which grew well above the 2009 GDP growth rate of 0.4%%. U.S. equipment is well positioned given its high quality and excellent technical and support service. It is also the fastest growing supplier, whose total share rose from 13.4% in 2007 to 21.3% in 2008. In 2009, U.S. FPP equipment reached 22.4% of all imports, and it is expected to reach almost 26% and 28% in 2010 and 2011 respectively. The strongest U.S. competitors include: Italy, Brazil and Germany, with current market shares below 17%. During 2007-2009, production of food and beverage goods increased, mostly as a result of government support programs that encouraged technological advancement and export preparedness of small and medium companies, known as PYMES. It is expected that commercial relations with Venezuela will be re-established by 2011. Bilateral commerce with Venezuela will boost local exports and therefore the need of importing better and newer technology. Thus, PYMES remain excellent prospects to import U.S. equipment that features small/medium production capacity. Colombian food and beverage exports remain the second largest, as part of the agro industry macro sector which represented 27% of all Colombian exports in 2008 after manufactures, with 47%, as a result of government efforts and significant improvements in production and industry competitiveness. The recent floods that deeply affected some regions of the country will cause food prices to rise, given that some raw materials will be scarce and others will need to be imported, providing opportunities for U.S. and other foreign agricultural products. U.S. FPP manufacturers can also have a potential opportunity, given that equipment and machinery was damaged and needs to be replaced. Competition from local equipment producers in this sector is modest. The quality of local technology has improved for basic equipment and spare parts manufacturing. Local production is still undeveloped, when compared to the U.S. and other countries, especially in terms of competing with the latest technologies such as nanotechnology and electronic/robotics used for production/packaging lines. The prospective US-CTPA will emphasize the importance of improving the competitiveness of this sector, and will broaden sales and export opportunities for U.S. manufacturers. The US-CTPA will gradually eliminate the current 5 to 15% Colombian tariffs on U.S. products. Best Products/Services: Colombia is the third largest dairy products producer in Latin America, after Brazil and Mexico. The accelerated growth of the dairy industry has already surpassed projections for 2011. The dairy sub-sector, along with the following services and equipment offer the best market potential for U.S. exporters: • Dairy production equipment. • Bottling services (alcoholic and non-alcoholic). • Brewery equipment. • Mixing, grading and filtering apparatus • Heat exchangers. • Filling, sealing and capping. • Preserved/canned meat and fish products. • Horticulture packaging equipment. • Printing and labeling equipment. Oils and fats processing is another promising industry segment, given that Colombia produces nearly 37.7% of total regional production and is listed among the top four producers of crude palm oil in the world. The sugars and syrup segment, followed by canned meat, poultry and fish products, as well as fresh vegetable and fruit packaging, are also promising industry niches. Another key prospect is snack processing and packaging equipment. Beverages have been the fastest growing segment so much so that the National Industry Association-ANDI has recently created a Beverage Chamber, to provide assistance to companies devoted to this sector. Opportunities: In terms of production, economic impact and growth projection, the domestic food and beverage processing industry has sustained its rapid growth thanks to a larger population, a growing middle class and an increased purchasing power-as well as disposable money-to acquire higher end and value added products. Hence, it remains a promising sector for U.S. businesses, given the constant local demand for food that is processed and packaged for a longer shelf-life. Bottling and packing machines and equipment, as well as finished materials and recipients, are also products with solid market potential. Medium-term opportunities will be determined by the continued and increasing purchasing local capacity and the escalating demand for food. The sector is highly diversified. End-users of equipment and technology in most of the subsectors vary widely in terms of revenues and production. Market opportunities for U.S. manufacturers also vary broadly, determined by equipment size and production capacity. Although there are a significant number of large food processors capable of handling large production capacity (such as SAB Miller-Bavaria, Nacional de Chocolates, Colombina, Postobon and Frito Lay), the largest segment with the highest purchasing potential is the PYME group, which requires less installed capacity. The prospective U.S.-CTPA will also make newer and better technology more available and affordable to local food manufacturers, which permanently seek to improve their production systems and build a distinctive domestic and international reputation. At the same time, the TPA allows re-manufactured equipment to enter the market which will lower costs, especially for smaller companies. . In addition, a stronger Colombian peso combined with lower or no tariffs will make U.S. exports more attractive. Finally, Colombia’s implementation of Free Trade Agreements (FTAs) with Europe, and Canada will increase competition for U.S. manufacturers. Resources: • Alejandra Henao, Commercial Specialist. Email: Alejandra.Henao@trade.gov • Alimentos magazine, Axioma Comunicaciones Ltda.: www.revistalabarra.com • Banco de la República (Central Bank): www.banrep.gov.co • Bancoldex (Foreign Trade Bank): www.bancoldex.com • Colombian Customs and Income Tax Offices (DIAN): www.dian.gov.co • Colombian Export Promotion Bureau: www.proexport.gov.co • Colombian Government: www.gobiernoenlinea.gov.co • Economic Commission for Latin America and the Caribbean-ECLAC: www.eclac.org/estadisticas/ • GEBIA-Grupo Estudios Biotecnología de Alimentos: http://soebi.wordpress.com/ • International Packaging Exhibition, 2007, Bogota-Colombia: www.andinapack.com • Merchants Association (FENALCO): www.fenalco.com.co • National Industries Association (ANDI): www.andi.com.co • Noticias colombianas blogspot: http://noticiascolombianas.blogspot.com/2008/07/laindustria- de-alimentos-y-bebidas.html

Chile Packaging Industry Overview (2013)

Chile remains one of the most stable and prosperous developing nations and consistently ranks high on international indices relating to economic freedom, transparency, and competitiveness. It also fares very well in terms of democratic development, gross domestic product per capita, freedom of the press, and was the highest ranked country in Latin America in terms of competitiveness. Chile continues to pursue market-oriented strategies, expand global commercial ties, and actively participate in international issues and hemispheric free trade. Macroeconomic stability and growing integration with international capital markets has earned Chile an A+ credit rating, the highest in Latin America. With Free Trade Agreements with Europe, China, India, and North America, Chile has given its nearly 17 million citizens unprecedented access to the world’s products and services. This offers a unique opportunity for exporters interested in expanding their businesses in arguably the most open and stable market in Latin America. Chile is number 15 among the world's food suppliers. Projections place Chile among the top ten countries in food exports by 2015, with annual exports expected to reach between USD 15 and USD 17 billion. Chile is a large producer of fish and seafood products, as well as wine, dairy and meat products and by-products. The Chilean food industry is the second largest export sector in the country, after copper. Food exports have doubled in the last 10 years. Chilean agricultural exports accounted for 10% of the country's GDP in 2009. During 2008, Chile exported approximately $11 billion of agro-industrial products, making Chile 17th among the world's food suppliers. Projections place Chile among the top ten countries in food exports by 2015, with annual exports expected to reach $15-17 billion. The country's agro-industrial industry should continue to grow based on the excellent growing conditions and good local management. The market for food processing and packaging equipment and machinery grew from $47 million in 2009 to approximately $70 million in 2010, representing an impressive 37%, mainly due to specific one-time expansion projects. Conservative projections estimate annual growth of about 10% -12% for the next five years. Chile’s Mediterranean climate and favourable geography make it qualified to produce a wide range of food products. In addition, the country is effectively a phytosanitary island which, together with strict government policies, maintain Chile free of most pests and diseases. A major advantage as a southern hemisphere producer is the ability to do counter seasonal exports to the northern hemisphere. Market Challenges Perhaps the greatest challenges to a UK firm seeking to export to Chile are the high degree of competition and the relative market size. Even though Chile is a relatively small market (17 million people), its open trade and investment policy has attracted the attention of many foreign firms. At the same time, the small market size has led some companies to overlook Chile, leaving interesting niche markets and solid opportunities for exports. Despite Chile’s openness to new products and technology, Chilean business people are astute but tend to be more conservative and cautious than the average UK business person. UK companies should consider this when entering the market and adjust sales expectations accordingly. While the Chilean government is committed to trying to streamline certain processes such as the time it takes to open a business or close a banking account, UK companies will find that operating in Chile requires patience and a tolerance for delays associated with doing paperwork and obtaining approvals. A key to competing is finding the right in-country partner. A good agent or distributor can use their business and/or social connections to open doors and overcome regulatory, as well as cultural and language barriers. UK companies doing business in Chile should be aware that a relatively small number of individuals and families control a large percentage of Chilean businesses. The limited competition in many sectors provides greater opportunities for collusion among Chilean economic actors. Market Demand CHILE IMPORTS Harmonized System Code 8443 Printing machinery used for printing by means of plates, cylinders and other printing components of heading Year Value 2007 $277,135,143 2008 $305,590,660 2009 $272,008,889 2010 $316,487,751 2011 $386,279,003 Source: http://comtrade.un.org CHILE IMPORTS Harmonized System Code 842230 Machinery for filling/closing/sealing/labelling bottles/cans/boxes/bags/other containers; machinery for capsuling bottles, jars, tubes & similar containers; machinery for aerating beverages Year Value 2007 $39,479,112 2008 $47,410,908 2009 $34,072,978 2010 $37,044,162 2011 $46,000,598 Source: http://comtrade.un.org Market entry strategy In general, foreign suppliers enter the Chilean market by appointing an agent, distributor or wholesaler. Most are small-to-medium size firms. Several large firms handle different product lines and operate as wholesalers. Almost all the firms have their main offices in Santiago. The larger ones have branch offices throughout the country, including the free-trade zones of Iquique and Punta Arenas. Agent/representative commissions normally range from 5 to 10 percent, depending on the product. Chile is a relatively small market where relationships in the business community are a key to success. The selection of a Chilean agent or representative is an extremely important decision for Sauven, and merits a thorough review of possible candidates, their qualifications and capabilities. Depending on the product or service, price can be the key sales factor in Chile. Price-competitive products from places such as Taiwan, China, India or South Korea often outsell more expensive European or North American products, especially in consumer product categories such as electronics and appliances. Where dependability becomes more important, products such as advanced electronics or heavy machinery; Chilean customers often prefer more expensive U.S. or European products. While price remains a factor in purchasing decisions, considerations of quality, durability, technology, customer support and availability of service will also influence the purchasing decision. All sales materials should be in Spanish. Intellectual Property Several general principles are important for effective management of intellectual property (IP) rights in Chile. First, it is important to have an overall strategy to protect your IP. Second, IP is protected differently in Chile than in the UK. Third, rights must be registered and enforced in Chile, under local laws. Sauven’s UK trademark and patent registrations will not protect you in Chile. There is no such thing as an “international copyright” that will automatically protect an author’s writings throughout the entire world. Protection against unauthorized use in a particular country depends, basically, on the national laws of that country. However, most countries do offer copyright protection to foreign works under certain conditions, and these conditions have been greatly simplified by international copyright treaties and conventions. Registration of patents and trademarks is on a first-in-time, first-in-right basis, so you should consider applying for trademark and patent protection even before selling your products or services in the Chilean market. It is vital that companies understand that intellectual property is primarily a private right and that the UK government generally cannot enforce rights for private individuals in Chile. It is the responsibility of the rights' holders to register, protect, and enforce their rights where relevant, retaining their own counsel and advisors. Sauven may wish to seek advice from local attorneys or IP consultants who are experts in Chilean law. Business Opportunities In the coding and marking niche, the “Continuous Inkjet” technology is the one more used for Chilean companies and "Drop and Demand" is the secondary technology. In the last years had been increasing the demand of Piezo Technology. Many Chilean companies are improving the traceability of their products and are in need to add barcodes to their products. Chilean wine, salmon, trout, and fresh fruit are well recognized internationally, and even though still growing, have reached maturity as sub-industries. Strong growth products include meats (beef, poultry, pork and exotic meats), olive oil, aquaculture products (mussels, abalone, scallops, tilapia, oysters, catfish, etc.), and dairy products. As a result, great opportunities exist for new technologies, food processing and packaging machinery, and equipment that allow for improved quality, efficiency and greater production of processed food items. Chile is moving from exporting raw material and commodities, to value added products, which require more processing equipment as well as packaging equipment. The dairy industry continues to grow its production and exports. However, this sub-sector uses mainly machinery and equipment of European origin, especially from Denmark, Finland, Holland, Spain and Germany. Companies in the food and packaging industry are fully aware of the need to remain competitive with up-to date technology, as well as highly efficient production processes. Advanced technology such as automated systems, quality control, and environment-friendly equipment could provide opportunities for UK companies. The two largest dairy companies, Nestle and Soprole, announced their intention to merge, which would have an impact on the local market and provide additional requirements for machinery and equipment. Good opportunities exist for the export to Chile of new technologies, food processing and packaging machinery, and equipment that allow for improved quality, energy efficiency and increased production. Chilean producers are constantly on the look for environmentally friendly machinery, equipment and supplies to comply with requirements from destination countries and importers. Chile has generally recovered from the international financial and economic woes of 2008-2009 as well as the February 2010 earthquake that severely affected the economy in the southern part of the country. The housing market has rebounded, led by earthquake reconstruction projects and a housing boom in the Santiago Metro area. Energy costs continue to be the highest in South America and Chile is searching for all available technology and capital to increase supply through new power plants and promote energy efficiency. Labelling and Marking Requirements Chile has fairly common labelling requirements for imported products. Among the most important requirements for UK exporters is that labelling must be in Spanish and measurements must be in the metric system. In addition, consumer products must display the country of origin before being sold in Chile. Packaged goods must be marked to show the quality, purity, ingredients or mixtures, and the net weight or measure of the contents. There are also specific requirements for canned food, shoes, foods, electric machinery, liquid and compressed natural gas equipment (LNG and CNG), plastics, wines and alcoholic beverages, textiles and apparel, wheat flour, detergents and insecticides for agricultural use. Canned or packaged foodstuffs imported into Chile must bear labels in Spanish for all ingredients, including additives, manufacturing and expiration dates of the products, and the name of the producer or importer. All sizes and weights of the net contents also must be converted to the metric system. Goods not complying with these requirements may be imported but not sold to consumers until conversion is made. Thus, foodstuffs labelled in English can be re-labelled in Chile before they can be sold. For information on Chile’s labelling requirements for food, see the Foreign Agricultural Service’s Food and Agricultural Import Regulations at www.usdachile.cl. Methods of Payment In Chile, payment to foreign suppliers is often made via an irrevocable letter of credit from a Chilean commercial bank. This is relatively fast and simple, with no lengthy delays in the remittance of foreign currency. Payments are made upon receipt of notice of shipment of goods. Other methods of payment to suppliers include cash against documents and open account. Suppliers willing to offer an open account generally do so only after developing a long-standing relationship with the buyer. Trade Exhibitions The following trade shows provide an excellent opportunity to enter the Chilean market: • Vinitech (wine industry trade show), July 2013, Santiago: www.vinitech.cl • Agrotech (agriculture machinery and equipment trade fair), June, 2013, Santiago: www.agrotech.cl • FruitTrade (related to fruit production and exporting), October 8-9, 2012, Santiago: www.fedefruta.cl • Pesca Sur (commercial fishing equipment trade fair), www.pesca-sur.cl • Aqua Sur, (aquaculture fair), Oct. 10-13, 2012, Puerto Montt, Chile: www.aqua-sur.cl Resources • Chile Alimentos, Chilean Food Producers Association: www.chilealimentos.cl • SalmonChile, Chilean Association of Salmon Industry: www.salmonchile.cl • APA, Chilean Association of Poultry Producers: www.apa.cl • ASPROCER, Chilean Association of Pork Producers: www.asprocer.cl • Wines of Chile, Association of Wine Producers and Exporters: www.winesofchile.org • Chileoliva, Chilean Association of Olive Oil Producers: www.chileoliva.cl • Fedefruta, Chilean Association of Fresh Fruit Producers: www.fedefruta.cl • ASOEX, Chilean Association of Fruit Exporters: www.asoex.cl

Argentina Packaging Industry Overview (2013)

Argentina is an important regional export market with a population of 40 million people. It is the second largest economy in South America and the fourth most populous country in Latin America. Exports to Argentina are mostly industrial inputs, intermediate goods, and capital goods, destined for such industries as computers, industrial and agricultural chemicals, agricultural and transportation equipment, machine tools, parts for oil field rigs, and refined fuel oil. Argentine, in turn, enjoys a very strong surplus in terms of bilateral agricultural trade, along with goods such as wine, fruit juices, crude oil, and intermediate goods such as seamless pipes, tubes, and other iron and steel products. The population and economic activity are highly concentrated in the Greater Buenos Aires area. The population is of largely European descent and continues to have strong ethnic, cultural, and business ties with Europe. In some respects, consumer preferences resemble those of Europeans more than those of other Latin America nationals. However, revenues are highly dependent on MERCOSUR trade, especially with Brazil. The packaging equipment market in Argentina relies heavily on imports by large domestic food processing companies and food exporters. Market growth is largely tied to investment in technology and the expansion strategies of these companies. U.S. and European products are highly regarded, particularly in the higher-end technology segment. Scarce financing available at the local market is an issue. Market Challenges The primary market challenges arise from slowing economic growth, inflationary pressures, and a host of import and foreign exchange restrictions imposed by the Argentine Government in late 2011 and early 2012. The Argentine economy is expected to slow somewhat in 2013 compared with 2012, with GDP growth of 3% in 2013. This reduction in forecasted growth is due to lower growth in neighbouring Brazil which is Argentina’s primary trading partner, anticipated lower revenue from soybean exports, and disruptions to local production caused by import and foreign exchange restrictions. Strong commodity prices and automobile exports to Brazil have been key factors in Argentina’s rapid growth over the past several years as has growth in government spending. An increased focus on maintaining Central Bank reserves in the face of a diminishing trade surplus together with an import substitution model have led Argentina to increase its use of non-tariff trade barriers. The expansion of the list of items requiring non-automatic import licenses (NAILs) to import was expanded from 400 to 598 HS codes in 2011 and controls on access to foreign exchange were also implemented. The imposition of foreign exchange controls on October 28, 2011 added yet more complexity for both importers and exporters of goods to and from Argentine. Furthermore, the Argentine Government implemented a regime on February 1, 2012 whereby all importers are required to request approval from the Argentine Tax and Customs Authority (AFIP) prior to making purchases from abroad. Reports of production slow-downs and bottlenecks resulting from delays in the granting import licenses under the NAILs regime began to appear in the latter half of 2011. The addition of the pre-approval requirement for all imports from AFIP has added to the general level of uncertainty in the business community. As a result of the aforementioned government controls on trade and access to foreign exchange, and slower domestic growth, many firms in Argentina are putting on hold or delaying plans for expansion or the adoption of new product lines until both the economic climate and regulatory regime become clearer and more predictable. Most printing capital products in the HS 8443 categories (Mercosur Harmonized System Code) are exempted from import duties and pay a reduced VAT (IVA) of 10.5 percent. Market Demand (Packaging Industry) The overall Argentine packaging business in Argentina is comprised of about 10,000 companies which, as a reference, had a total production of US$ 9.8 billion of packaging, (or 1.5 million tons) in 2010, representing approximately 1.5 percent of the Argentine GDP. The local packaging manufacturing industry has been experiencing increased volume levels and quickly turned its attention to export markets as the devaluation of the peso led to a more competitive position abroad for domestic producers. Packaging equipment imports dominate the highest complexity technology market. These imports are mainly from Europe and the U.S. However, there is a growing local production market. Local companies also import parts and assemble equipment locally. After a significant drop in 2010, imports started to pick up in 2011 reaching US$62.9 million and regaining previous import levels. Food exporting companies continued to invest in equipment to create new types of packaging and improve and increase production. This growth has been powered by strong commodity prices and increased exports of food companies. However, since food commodities international price is at its historical record, there may be quotas and further restrictions for exports of grains, beef, milk and other products to guarantee food product availability for the Argentine local market. Nonetheless, imports of equipment are expected to continue growing at moderate rates during 2013 and beyond. Argentina’s strength in agricultural and food products continues to present opportunities for exporters of food processing and packaging equipment (FPPE) in niche markets. While local production figures are almost non-existent, imports have traditionally been estimated to account for 70 to 85% of the total market. Imports of packaging equipment (HS842230) reached an exceptional peak in 2011, triggered by a large purchase of equipment for wineries and vegetable oil extraction and processing. ARGENTINA IMPORTS Harmonized System Code 842230 MACHINERY FOR FILLING, CLOSING, SEALING, CAPSULING OR LABELING BOXES, BOTTLES, BAGS OR SIMILAR CONTAINERS Year Trade Value 2007 $46,538,937 2008 $60,554,583 2009 $54,547,200 2010 $46,542,741 2011 $62,994,098 Source: http://comtrade.un.org Italy has traditionally been the market leader, and accounted for a 36% of the import market in 2011, having exported US$40.5 million of packaging equipment to Argentina. Germany ranked second with 25.4% of the import market, followed by imports from Brazil (6.3%) and Spain (6.2%). Market Demand (Printing Industry) According to the Argentine Industrial Union (UIA), the printing and graphic arts industry represents 7.3 percent of the industrial GDP and ranks third among the Argentine industrial sectors. This industry is comprised of approximately 6,400 companies, 81 percent of which are small and medium-sized companies, employing approximately 50,000 people in total. Following the crisis of 2001, almost half of the graphic industry capacity was idled, and had to cope with the rapidly rising costs of imported inputs. However, consumption of graphic arts material and investment in equipment started recovering in 2003, triggered by a stronger local demand and the increased export activity of the local manufacturing industries. Local printing companies needed to expand capacity, reduce costs and update technology to satisfy this demand. They invested in new equipment, such as the modernization of the pre-press and the finishing sectors. Between 2010 and 2011, local companies imported equipment worth US$ 887 million. Given the fact that equipment has an average life cycle of 5-10 years, and that technological updates play an important role in business performance, companies can be grouped according to the age of their equipment as follows: companies with relatively modern equipment (65%); companies with leading- edge equipment (22%); and companies with outdated equipment (13%). Since most of the investment in technology is financed with the companies’ own resources, purchases of cutting-edge technology are often postponed, due to a lack of adequate credit, among other factors. Demand is increasing for refurbished equipment and parts. The recent approval of an import duty exemption for used printing equipment that cannot be supplied by Argentine manufacturers allows many local SMEs to access imported technology. Two of the leading sub-sectors accounting for the recovery of the Argentine printing industry were flexible packaging for food products and self-adhesive labels, both triggered by the increase in domestic consumption and exports of packaged foods. Packaging is one of the most dynamic sectors related to the printing business, since it has been expanding rapidly and requires constant innovation. Technologies for process integration and in-line foil lamination save cost and printing times. Anti-counterfeiting and product safety technology, protecting packaging through holographs and systems such as RFID (radio frequency identification) is increasingly required by several industries. Digital printing technology is available in all the areas of the printing sector in Argentina: commercial; printing; publishing; currency; packaging; and labelling. ARGENTINA IMPORTS Harmonized System Code 8443 Printing machinery used for printing by means of plates, cylinders and other printing components of heading Year Value 2007 $347,346,765 2008 $404,968,244 2009 $299,920,828 2010 $400,237,573 2011 $487,959,368 Source: http://comtrade.un.org The import market has been recovering, after reaching its lowest in 2007 with US$347 million. It grew to US$404 million in 2008, and dropped slightly in 2009, with US$ 299 million, then it recovered on 2010 with US$ 400 million. Total imports jumped to $487 million in 2011. Import market shares changed in 2007 as imports from Asian countries (China and Japan) and Brazil, jumped displacing Germany and Italy as the traditional import market leaders. The trend is expected to continue in the future. Imports from China reached 22 % market share, followed by imports from Japan with 15%, Germany with10% and Brazil with 5% Key Suppliers Italian and German equipment is highly regarded in the local market and known for excellent quality and competitive prices. Other companies competing with UK products are from France and Spain. Import market shares changed in 2007 as imports from China, Japan and Brazil jumped displacing Germany and Italy as the traditional import market leaders. Local production equipment has significantly increased driven by the surge of food exports, and increased local consumption, and taking advantage of lower costs of production and a devalued peso. Local production also caters to a stronger demand from small to medium sized companies in the interior provinces of Argentina, since many companies in these areas are not able to face the expenses involved in importing new technology. While, in general, it does not compete in the same niche as UK higher-end technology, local equipment has improved in quality and is increasingly being exported to neighbouring countries. The local economic scenario has allowed exports to the EU, the US and Latin America. In fact, the GAFME, Argentine consortium of packaging manufacturers and exporters, was created in November 2006 to assist in reaching international markets. Some of the main equipment produced by local manufacturers are: blister packaging machines, stand-up pouch, dossifiers of solid, powder, automatic packaging, overlap and flexible packaging equipment. The most important domestic companies that supply the Argentine market are: Manuel San Martin S.A.; Bisignano S.A.; Mainar S.A.; Edos S.A.; Tecmar S.R.L.; Emitec S.A.; Tover S.A.I.C, among others. Prospective Buyers In the coding and marking niche, the “Continuous Inkjet” technology is the one more used for Argentinean companies and "Drop and Demand" is the secondary technology. In the last years had been increasing the demand of Piezo Technology. Many Argentinean companies are improving the traceability of their products and are in need to add barcodes to their products. The main users of packaging equipment are private companies in the food and beverage sector. Approximately 80 percent of the imports are carried out by some 50 food companies. Healthcare/pharmaceutical companies are increasingly demanding packaging equipment, although figures are still relatively low in comparison to food. Other segments such as household consumer goods and cosmetics continue to follow the trend. Most of the leading importers are foreign companies established in Argentina, such as Tetra Pak, importing from Italy and other countries; Krones, from Germany, the second largest importer of food and beverage packaging equipment; Bayer (pharmaceuticals), importing mainly from Germany; Danone (dairy and beverage), importing mostly from France; and Italian companies established in Argentina, such as Della Toffola, in the Mendoza winery area, accounting for large imports of beverage packaging equipment from Italy. End users for printing equipment can be grouped according to their contribution to the total sector invoicing as follows: graphic printing and publishing (newspapers, magazines, books): 30 %; flexible packaging: 20%; labelling: 14%, commercial printing (brochures, cards, etc.): 12%, securities and authentication: (10%); cases: (10%). The rest is distributed among continuous forms (2%), envelopes (1%), and others (1%). Commercial printing houses are largely made up of small and medium sized companies. The flexible packaging, and labelling and pouches sub-sectors are dominated by 7 large companies accounting for most of the invoicing. A few international companies are present in Argentina, sometimes through associations with local players. These companies include, among others, Quad Graphics, Donnelly Cochrane, Quebecor (Canadian), Tetra Pak (Sweden) as well Aluflex and Edelpa (Chile). Market Entry Strategy Many UK firms have been very successful in this market. UK products have a strong reputation for quality and technological innovation. As in many countries, personal relationships are fundamental when doing business in Argentina. Success requires taking the time to develop a close personal relationship with the representative, agent, or distributor. Marketing Sauven printers in Argentina requires a higher level of research, preparation, and involvement. International companies typically market their products through an Argentine agent/representative or a distributor. Working with a distributor has several advantages. Distributors can provide strategic support for positioning brands in the market through promotion and advertising. Furthermore, they understand the local culture and can assist with after-sales service. This value-added service is increasingly important for customers, and contributes to a positive image of Sauven doing business abroad. It is strongly recommended that an Argentine lawyer be consulted prior to entering into any type of agreement with an Agent/Distributor and engaged prior to substantive negotiation of the terms of the agreement. No special legislation has been enacted to regulate the cancellation of agency/distribution agreements, although a company could incur additional costs associated with the cancellation of an agency agreement under Argentine labour law. Given the complexity of the legal and commercial environment, contracts are generally negotiated in writing through the exchange of reversal letters or via a basic instrument. The parties may not elect foreign laws to govern the agreement. If a contract is executed abroad to avoid Argentine law, Argentine courts will not enforce it. Some practical tips to successfully approach Argentine end users are the following: • Appoint a representative or distributor • Have Spanish language capacity • Furnish materials in Spanish • Have a long-term outlook • Personalize approach • Be consistent in attention to service and delivery • Provide credit terms • Engage with frequent communication, visits and follow-ups • Must consider Argentina’s unique economic, demographic, and cultural characteristics that distinguish it from other Latin American countries. • Visit or exhibit at local and regional trade shows • Protect trademarks and intellectual property and engage qualified local professionals and lawyers in contract negotiations. Labelling and Marking Requirements Under Argentine law 22,802/83, the Bureau of Trade Regulation (Direccion de Lealtad Comercial) of the Ministry of Economy’s Secretariat of Industry, establishes labelling requirements for products in Argentina. The law requires that product labels bear all the information that the customer needs, and that information is true and valid. The Secretariat of Industry in the Ministry of Economy ensures transparency in all business transactions and enforces the labelling regime. Law 22,802 of 1983, known as the Merchandise Marking Act, supersedes Law 11,275 of 1923. The current law states the general and basic labelling requirements for domestic or imported products, as follows: Article 1: - All packaged products sold in Argentina will bear the following information on a printed label in a visible manner on the package or container: a) Name (description of product) b) Country of origin c) Quality, purity, or blending description d) Net weight All non-packaged products commercialized in country will have to comply with requirements a), b) and c), as stated above. Methods of Payment Letters of credit (L/Cs) may be used to pay for UK exports to Argentina. A number of banks in Argentina open letters of credit once the bank has approved a line of credit for the Argentine company. Multinationals, large and medium sized firms are still the main users of L/Cs. However, to a lesser degree, L/Cs are also used by small firms. Another payment option may be direct payment from Argentine importers’ overseas bank accounts. Bank drafts and documentary collections are also of common use. While they do help safeguard the exporter's title to goods until payment has been received, all credit and country risk remains with the exporter. There is no obligation for the bank to cover these risks. However, documentary collections are less costly than letters of credit and, where the exporter is comfortable with these risks, they offer a practical and efficient solution. According to local sources, the majority of sales to Argentine importers are currently taking place on open account. Small- and medium-sized Argentine companies in key sectors continue to have liquidity, favouring technological upgrades in production lines. As a result, open account sales generally take place between small- and medium-sized firms. Sauven should consider open account payment terms only if they have a great deal of trust in the local importer and feel confident in the client's ability and willingness to pay. Trade Events Envase-Alimentek 2013 Date: August 6-9, 2013 Location: Costa Salguero Exhibition Center, Buenos Aires, Argentina Website: www.envase.org Tecnofidta 2014 Date: Sept. 16-19, 2014. Location: Costa Salguero Exhibition Center, Buenos Aires, Argentina Website: www.tecnofidta.com International Exhibition of the Graphics Arts Industries and Suppliers Date: Location: La Rural, Buenos Aires, Argentina Website: http://www.argentinagrafica.com/ Organizer: FAIGA – Argentine Federation of the Graphic Industry Website: http://www.faiga.com/ Ramón L.Falcón 1657 - (C1406GNG) Buenos Aires - Argentina T.E.: (54-11) 4-631-5120 Fax: (54-11) 4-633-7327 Expo Grafica Date: Location: Estadio Polideportivo Islas Malvinas, Mar del Plata, Argentina Organizer: Talamo Address: Sgo. Del Estero 3043, Mar del Plata Phone: (54-223) 495-1385 E-mail: info@agenciatalamo.com.ar Website: www.expografica2008.com.ar Feria Internacional de Rubros Graficos y Afines Date: Location: Forja Parque Ferial, Córdoba Organizer: Doble C Address: La Mancha 2406 (X5014JOB) Cordoba, Argentina Phone: (54-351)457-5008 E-mail: info@expoimpresion.com.ar Website: www.expoimpresion.com.ar Resources For additional information and useful links please visit the following web sites: • Directorate General of Copyright, Argentina: http://www.jus.gov.ar/derecho-de-autor.aspx • National Institute of Industrial Property, Argentina: http://www.inpi.gov.ar • Argentine Chamber of Commerce (Cámara Argentina de Comercio): http://www.cac.com.ar/ • Coordinator for Food and Beverage Industries (COPAL) http://www.copal.com.ar •Asociación de Proveedores de la Industria de la Alimentación (ADEPIA) http://www.adepia.org Associations and Chambers FAIGA – Argentine Federation of the Graphics Industry Address: Ramon L. Falcon 1657 (C1406GNC) Buenos Aires Phone: (54-11) 4631-5120 Fax: (54-11) 4-633-7327 E-mail: contacto@faiga.com Website: http://www.argentinagrafica.com/ ASOCIACION DE IMPORTADORES Y EXPORTADORES DE LA REPUBLICA ARGENTINA (AIERA) (Association of Argentine Importers and Exporters) Mr. Daniel Solda, President Mr. Adriano A. De Fina, Manager Email: aiera@aiera.org.ar Internet: http://www.aiera.org/ Telephone: +54 11 4342-0010 CAMARA DE COMERCIO EXTERIOR DE CORDOBA (Chamber of Foreign Trade of Cordoba) Ing. Néstor Haag, President Lic. Carlos Pelliza, General Manager Email: cacec@cacec.com.ar; gerencia@cacec.com.ar Internet: http://www.cacec.com.ar/ Telephone: +54 - 351 – 4214804 CAMARA DE IMPORTADORES DE LA REPUBLICA ARGENTINA (Argentine Chamber of Importers) Mr. Diego Antonio Perez Santisteban, President Email: cira@cira.org.ar; gg@cira.org.ar Internet: http://www.cira.org.ar/ Telephone: (5411) 4342-1101

Best Latin America Export Markets for the Packaging Industry (March 2013)

This Market Brief provides an overview of the world market for Packaging Equipment products in the HS 8422 category, based on the latest trade statistics of the U.S. Census Bureau and the United Nations Statistics Division and market research prepared by the U.S. Department of Commerce. Export growth: U.S. exports of HS 842230 products rose from $1.113 billion in 2007 to $1.127 billion in 2010, an increase of 1.31% over the four-year period. Leading Export Markets: Canada is by far the leading market for U.S. exports of HS 8422 products ($431.6 million in 2010, or 38.3% of total). Other top markets (all valued above $30 million) were: Mexico (11.5%), Germany (4.2%), United Kingdom (3.5%), China (2.7%), Australia (2.55%), Brazil (2.53%) and Italy (2.34%). Fastest Growing Export Markets: The leading markets with both high and sustained growth rates for U.S. exports of HS 842230 products over 2007-2010 were: China and Brazil. Other significant growth markets in the top 30 over the 2009-2010 periods were: Belgium, Saudi Arabia, Malaysia, Dominican Republic, Chile, Luxembourg and Ecuador. Leading and Fastest Growing Importing Countries: The top foreign importers of HS 8422 products in 2010 (all above $1.3 billion) were China ($1.75 billion or 7.9% of total), France (6.2%) and Germany (5.9%). Other significant importers (all above $500 million) were United Kingdom (3.6%), Russia (3.4%), Italy (3.1%), Canada (2.9%), Spain (2.5%) and Switzerland (2.4%). The leading importers with both high and sustained import growth rates for HS 8422 products over the latest four years (2007-2010) and continuing in 2009-2010 were China, Austria, Brazil, India, Australia, Indonesia and Thailand. Other significant growth markets in the top 25 over the 2007-2010 period were France, Italy, Belgium, Turkey and Japan. World Market Size & U.S. Share: Total world exports of HS 8422 products by all countries reached $23 billion in 2010. The U.S. had a 4.9% share of the total world market in 2010, topped only by Germany (27.9%) and Italy (24.4%). Other world suppliers with significant market shares were China (4.9%), Sweden (3.6%), Switzerland (3.3%), France (3.1%) and Poland (3.1%). Best Market Prospects: The following markets appear particularly promising for exports of Packaging Machinery products: Afghanistan, Argentina, Cambodia, Chile, Colombia, Costa Rica, Egypt, El Salvador, India, Mozambique, Nicaragua, Swaziland, Tanzania and Thailand.

Doing Business in Colombia (2013)

The Republic of Colombia is the fifth largest economy in Latin America with the third largest population of approximately 46 million inhabitants. Aided by major security improvements, steady economic growth and moderate inflation, Colombia has become a free market economy with major commercial and investment ties to the United States, Europe, Asia and Latin America. The Colombian manufacturing sector is divided into 61 industry groups. The food processing and packaging industry (FPP) ranks among the top 14 manufacturing groups. The industry employs about 19.3% of the domestic labour force, concentrated in the five main metropolitan areas: Bogota, Medellin, Cali, Cartagena and Barranquilla. The Colombian Processed Food and Packaging Equipment market caters to an industry that produces approximately US$ 22 billion in revenue per year. The food industry is comprised of 10 sub sectors: Sugar mills, rice mill, cereal mills, oils and fats, dairy products, chocolates and candy, meat products, animal food products, bread and pasta and others. The beverage industry is also comprised of three subsectors: Beer, Carbonated Soft Drinks & Juices and spirits. In 2010 the Food Industry grew on a whole (+ 6.31% from ‘09) while the beverage industry decreased in sales (- 9.63%), driven in part by an unprecedented tax increase imposed on the beer market, to cover the cost of an emergency relief program. Within these industries, the Dairy, Animal Food and Carbonated Soft Drinks & Juices were the three markets highlighted as the most attractive in terms of supply machinery and equipment. To put into perspective the importance of the Food and Beverage import market, this industry accounts for 5.4% of all the Colombian imports. In other words, if Colombia imported approximately US$ 40 billion in 2010, US$ 2.16 billion is the amount of imported goods that came into the country to supply the food and beverage companies. Market Challenges The main obstacles that the Food, Beverage and Packaging industries face on a day-to-day basis are the poor logistics/transportation infrastructure, a cultural lack of innovation, and contraband. These are probably the key issues that foreign and domestic companies are challenged with. Nevertheless, the industry has been growing in average a 5 percent per year. Colombia’s implementation of Free Trade Agreements (FTAs) with United States, Europe and Canada will increase competition for UK manufacturers. The Free Trade Agreement between Colombia and the United States will significantly increase the competitiveness of US food machinery and packaging equipment into the Colombian market. Colombia is not a producer of this type of machinery; therefore the FTA will bring more opportunities for the US industry. Imports of FPP equipment from the United States are increasing despite the global economic crisis and are still one of the more robust sectors of Colombian industry. U.S. equipment is well positioned given its high quality and excellent technical and support service. It is also the fastest growing supplier, whose total share reached 30% of all imports in 2013. The strongest U.S. competitors include: Italy, Brazil and Germany. Market Opportunities The production of food and beverage goods have increased, mostly as a result of government support programs that encouraged technological advancement and export preparedness of small and medium companies, known as PYMES. It is expected that commercial relations with Venezuela will be re-established and will boost local exports and therefore the need of importing better and newer technology. Thus, PYMES remain excellent prospects to import Sauven printers that feature small/medium/large production capacity. Colombian food and beverage exports remain the second largest, as part of the agro industry macro sector which represented 30% of all Colombian exports as a result of government efforts and significant improvements in production and industry competitiveness. Competition from local equipment producers in this sector is modest. The quality of local technology has improved for basic equipment and spare parts manufacturing. Local production is still undeveloped, when compared to the UK and other countries, especially in terms of competing with the latest technologies such as nanotechnology and electronic/robotics used for production/packaging lines. Colombia is the third largest dairy products producer in Latin America, after Brazil and Mexico. The accelerated growth of the dairy industry has already surpassed projections for 2012. The dairy sub-sector offers the best market potential for exporters of printing and labelling equipment. Oils and fats processing is another promising industry segment, given that Colombia produces nearly 40% of total regional production and is listed among the top four producers of crude palm oil in the world. The sugars and syrup segment, followed by canned meat, poultry and fish products, as well as fresh vegetable and fruit packaging, are also promising industry niches for printing and labelling equipment. Other key prospects are the beverages and snack processing industries.

Doing Business in Argentina (2013)

Argentina is an important regional export market with a population of 40 million people. It is the second largest economy in South America and the fourth most populous country in Latin America. Exports to Argentina are mostly industrial inputs, intermediate goods, and capital goods, destined for such industries as computers, industrial and agricultural chemicals, agricultural and transportation equipment, machine tools, parts for oil field rigs, and refined fuel oil. Argentine, in turn, enjoys a very strong surplus in terms of bilateral agricultural trade, along with goods such as wine, fruit juices, crude oil, and intermediate goods such as seamless pipes, tubes, and other iron and steel products. The population and economic activity are highly concentrated in the Greater Buenos Aires area. The population is of largely European descent and continues to have strong ethnic, cultural, and business ties with Europe. In some respects, consumer preferences resemble those of Europeans more than those of other Latin America nationals. However, revenues are highly dependent on MERCOSUR trade, especially with Brazil. The packaging equipment market in Argentina relies heavily on imports by large domestic food processing companies and food exporters. Market growth is largely tied to investment in technology and the expansion strategies of these companies. U.S. and European products are highly regarded, particularly in the higher-end technology segment. Scarce financing available at the local market is an issue. Market Challenges The primary market challenges arise from slowing economic growth, inflationary pressures, and a host of import and foreign exchange restrictions imposed by the Argentine Government in late 2011 and early 2012. The Argentine economy is expected to slow somewhat in 2013 compared with 2012, with GDP growth of 3% in 2013. This reduction in forecasted growth is due to lower growth in neighbouring Brazil which is Argentina’s primary trading partner, anticipated lower revenue from soybean exports, and disruptions to local production caused by import and foreign exchange restrictions. Strong commodity prices and automobile exports to Brazil have been key factors in Argentina’s rapid growth over the past several years as has growth in government spending. An increased focus on maintaining Central Bank reserves in the face of a diminishing trade surplus together with an import substitution model have led Argentina to increase its use of non-tariff trade barriers. The expansion of the list of items requiring non-automatic import licenses (NAILs) to import was expanded from 400 to 598 HS codes in 2011 and controls on access to foreign exchange were also implemented. The imposition of foreign exchange controls on October 28, 2011 added yet more complexity for both importers and exporters of goods to and from Argentine. Furthermore, the Argentine Government implemented a regime on February 1, 2012 whereby all importers are required to request approval from the Argentine Tax and Customs Authority (AFIP) prior to making purchases from abroad. Reports of production slow-downs and bottlenecks resulting from delays in the granting import licenses under the NAILs regime began to appear in the latter half of 2011. The addition of the pre-approval requirement for all imports from AFIP has added to the general level of uncertainty in the business community. As a result of the aforementioned government controls on trade and access to foreign exchange, and slower domestic growth, many firms in Argentina are putting on hold or delaying plans for expansion or the adoption of new product lines until both the economic climate and regulatory regime become clearer and more predictable.

Doing Business in Chile (2013)

Chile remains one of the most stable and prosperous developing nations and consistently ranks high on international indices relating to economic freedom, transparency, and competitiveness. It also fares very well in terms of democratic development, gross domestic product per capita, freedom of the press, and was the highest ranked country in Latin America in terms of competitiveness. Chile continues to pursue market-oriented strategies, expand global commercial ties, and actively participate in international issues and hemispheric free trade. Macroeconomic stability and growing integration with international capital markets has earned Chile an A+ credit rating, the highest in Latin America. With Free Trade Agreements with Europe, China, India, and North America, Chile has given its nearly 17 million citizens unprecedented access to the world’s products and services. This offers a unique opportunity for exporters interested in expanding their businesses in arguably the most open and stable market in Latin America. Chile is number 15 among the world's food suppliers. Projections place Chile among the top ten countries in food exports by 2015, with annual exports expected to reach between USD 15 and USD 17 billion. Chile is a large producer of fish and seafood products, as well as wine, dairy and meat products and by-products. The Chilean food industry is the second largest export sector in the country, after copper. Food exports have doubled in the last 10 years. Chilean agricultural exports accounted for 10% of the country's GDP in 2009. During 2008, Chile exported approximately $11 billion of agro-industrial products, making Chile 17th among the world's food suppliers. Projections place Chile among the top ten countries in food exports by 2015, with annual exports expected to reach $15-17 billion. The country's agro-industrial industry should continue to grow based on the excellent growing conditions and good local management. The market for food processing and packaging equipment and machinery grew from $47 million in 2009 to approximately $70 million in 2010, representing an impressive 37%, mainly due to specific one-time expansion projects. Conservative projections estimate annual growth of about 10% -12% for the next five years. Chile’s Mediterranean climate and favourable geography make it qualified to produce a wide range of food products. In addition, the country is effectively a phytosanitary island which, together with strict government policies, maintain Chile free of most pests and diseases. A major advantage as a southern hemisphere producer is the ability to do counter seasonal exports to the northern hemisphere. Market Challenges Perhaps the greatest challenges to exporter firms seeking to do business in Chile are the high degree of competition and the relative market size. Even though Chile is a relatively small market (17 million people), its open trade and investment policy has attracted the attention of many foreign firms. At the same time, the small market size has led some companies to overlook Chile, leaving interesting niche markets and solid opportunities for exports. Despite Chile’s openness to new products and technology, Chilean business people are astute but tend to be more conservative and cautious than the average business person. Companies should consider this when entering the market and adjust sales expectations accordingly. While the Chilean government is committed to trying to streamline certain processes such as the time it takes to open a business or close a banking account, companies will find that operating in Chile requires patience and a tolerance for delays associated with doing paperwork and obtaining approvals. A key to competing is finding the right in-country partner. A good agent or distributor can use their business and/or social connections to open doors and overcome regulatory, as well as cultural and language barriers. Companies doing business in Chile should be aware that a relatively small number of individuals and families control a large percentage of Chilean businesses. The limited competition in many sectors provides greater opportunities for collusion among Chilean economic actors.