Is this the time to export to Argentina

Is this the time to export to Argentina?

Considering that we are based just across from Argentina (on the other side of the River Plate), and given the media presence of its now-not-so-new pro-business president (Mauricio Macri) after 12 years of the very mediatic Kirchner duo, it is not surprising that we get asked “what’s happening with Argentina?” very often and, more importantly “is this the right time to export to Argentina, finally?”

Argentina wasn’t the best country in South America to export to during the Kirchner administrations mainly because of their clear protectionist stance. Import duties were high and non-duty barriers insane and unpredictable. The resurgence of the Falklands issue didn’t make it much easier, either, for UK exporters, and neither did the currency controls, devaluation and inflation.

(For a quick look at the highs and lows of the 12-year Kirchners in Argentina, check out this Telegraph article)

But in December 2015 things really changed for Argentina, with the election of prominent politician and businessman, Mauricio Macri, as President. A series of reforms were quickly put into place and there were some good signs: Coca-Cola announced USD 1bn investment, Macri shook hands with Cameron at the World Economic Forum in Davos in January 2016, and earlier this year the UK Minister of State for Trade and Investment announced £1 billion export credit support for trade with Argentina.

However, it was never going to be easy for Macri to turn Argentina around. So, basically, have things really improved for UK exporters?

On the one side, yes, and Argentina is now more attractive, which lower import duties and fewer barriers. But don’t be fooled, this is not total openness but a slow break with the past. If you have a distributor in Argentina, this is the time to support them and plan for the future, at least for the next 1-2 years. If you don’t have one, this might be the time to evaluate market potential and recruit distributors to open the Argentina market for your business. But expectations shouldn’t run too high now, the country is still in trouble, even if more open and business-friendly than before.

Also, if you are thinking of investing in Argentina, be cautious. Macri seems to have the best of intentions, but this is a highly volatile country and, do we know who’s going to be in power next? Check out this government portal which lists approved investment projects by sector and country of origin… Today I see 10 projects coming from the UK and representing USD 1.6m (in comparison, Canada represents USD 5.4m).

Sorting itself out in macroeconomic terms is key for Argentina, as its addicting predictability to a chaotic economy.  There are opportunities out there, from passenger rail cars and iPhones to renewables and retail, as this article summarises. I have seen some interesting “moves” in energy and infrastructure, with companies here in Uruguay opening branches in Argentina, and expanding their operations into this vast market.

So I’d encourage you to consider Argentina again in your export strategy. You might have a 2-year window to grow your business in South America’s second largest economy. The time might just be now.

Article written by Gabriela Castro-Fontoura - Strong and Herd Associate  

For more information visit: - www.sunnyskysolutions.co.uk

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