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.