British Manufacturing in Latin America: Some Tips for International Trade

 

Based in Uruguay but with over 10 years experience in the UK, Gabriela Castro-Fontoura specialises in making it easier for British businesses to do business with Latin America. Since she founded Sunny Sky Solutions (www.sunnyskysolutions.co.uk) two years ago, Gabriela has helped many UK manufacturers (from nursery products to electrical engineering, from food and drink to marine engineering) understand and make the most of opportunities in her native Latin America. Here, she shares her tips for British manufacturers looking to export to countries such as Brazil, Chile, Colombia and other growing regional markets...

 

British manufacturing fascinates me. With its powerful economic, social, cultural and political aspects, British manufacturing can stir up a debate in the Houses of Parliament equally as well as down the pub. We all recognise manufacturing has changed dramatically but I question whoever says that Britain doesn’t produce anything anymore.

Although the importance of manufacturing for international trade has clearly decreased, British manufacturers are still some of the best in the world and manufacturing is critical to the UK economy. Still highly dependent on traditional markets, British manufacturing is looking at emerging markets. Therefore, here are our tips for British manufacturers trading with Latin America:

1-     Do your research

Critical to success and risk-management in Latin America is understanding each market in detail. A market like Venezuela differs hugely from that of neighbouring Colombia, for example. This applies to all sorts of issues, from import duties to intellectual property, from certifications to labour laws. Things can vary enormously even within a country. I was told for example by a Mexican energy expert that the varying conditions in the country, in terms of altitude, climate, soil and so on, mean that different solutions are needed across the one country. The same will apply to hugely diverse countries like Colombia, Chile or Brazil.

2-     Be patient

Manufacturing businesses in Latin America need to have a 3-5 year strategic time frame. These are not market for quick wins. Tendering processes are tedious and long. Certifications will almost undoubtedly cause you a nightmare or two. Importing into most countries is an art in itself... Be prepared to travel, which relates to our following tip...

3-     Build relationships

In Latin America, businesses, even manufacturing, is not all about balance sheets and tender processes. Business is personal and if you are going in for the long run, your best move is to invest in building relationships, particularly if you are new to these markets and are competing with foreign businesses that might have been dealing with your potential customers for years or decades.  Make sure you have local contacts and be prepared to commit to these resource-intensive markets.

4-     It’s not just all about Brazil...

Brazil has a clear appeal to British manufacturers because of its size. However, it is not an easy country to do business in and it is better to go into Latin America with an open mind and let the evidence guide where you should focus your sales efforts. As appealing as Brazil can be, there might be quicker wins somewhere else, or more profitable business in the long-term somewhere else. Brazil can be also targeted in many ways, if that is definitely the market you have decided to go for, which brings us to...

5-     Free Trade Zones

If you are thinking about setting up an office, or some level of local manufacturing (whether on a minimum level to add local content or a more developed operation), free trade zones around Latin America are worth considering not only for tax purposes but also for the ease of doing business.

6-     Be proud of British manufacturing

What always surprises me of British manufacturers when discussing exports, particularly to Latin America, is how little they play on the British origin of their goods. Recently I met a client in Newcastle who work in marine engineering and whose brochures and other marketing materials had no reference to the fact that these (amazing, by the way) products are actually made in Britain. When I asked why the “Made in Britain” logo and the Union Jack weren’t patently obvious everywhere, the MD said “I had never thought about it”. Making products in the UK is something to  be proud about, on so many levels. More practically, Latin American buyers will really value UK-made products and will even pay a premium for it. So if you manufacture in Britain, from toys to marine engines, make it obvious, without going over the top, of course. I have no doubt that the British origin of your products will put you a distinct advantage. The downside of this is that your client might not be used to dealing with Britain and you might need to do some “coaching” in terms of currency, British ports of origin, documentation, etc.

7-     Make the most of FTAs

Governments work hard to introduce Free Trade Agreements between countries, so let’s not waste their efforts and make the most of them! If you are manufacturing in the UK, you will (still!) benefit from any FTAs signed by the EU, such as those with Mexico and Chile, and some new ones coming up... Keep informed and find out how these agreements work and how you can benefit from them.

British manufacturers have huge opportunities in Latin America. I personally hope they can grasp them quick, because the usual competitors are moving much faster. However, they don’t have a Union Jack on their products, which symbolises the virtues that Britain has projected around the world, around quality and honesty. Make the most of it!

 

Written on 7th february 2013 by Gabriela Castro - Fontoura, S&H LLP Associate Director at Sunny Sky Solutions (http://sunnyskysolutions.co.uk/)

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