Exporting to Argentina from the UK: yes, maybe or absolutely not?

 

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 companies from a range of sectors (from prams to cable cleats, from beer to confectionery) understand and make the most of opportunities in her native Latin America. Here, she debates about the advantages and disadvantages of exporting to Argentina from the UK.

Now, I’m aware that this is one contentious topic that inspires all sorts of patriotic feelings from both sides. So before going any further, let me share with you a personal opinion that, from experience, I know that the vast majority of business people who have operated in both the UK and in Argentina share: the Falklands/Malvinas issue has very little to do with business between the UK and Argentina. It is, in my opinion, a political and diplomatic issue and, unless you are in specific sectors such as defence, it is unlikely to affect you at all.

Argentines are welcoming and open people, and Brits who live there (lots of expats in Buenos Aires, and growing, and plenty of expats in the South of Argentina, too, thought from a different immigration wave) can testify that. The anti-British feeling the media portrays is highly confined to some very few and you will be welcomed in Argentina like so many other Brits have been before.

And, actually, here’s a tip for you: Argentines actually quite like doing business with British people. They tend to find them honest and trustworthy. They are in love with Britain on many levels, from the language and literature, to the music (mention The Beatles and you will get them started) and they are particularly fans of the English Premiership. They will also have a strong affinity to Scots and love the charm of Scotland as well as that of Wales (and Ireland, by the way, Argentines love Ireland).

So know that we know this is no hostile country for Brits (exactly the opposite), does it make sense to export to Argentina? Well, that will depend on what you are exporting, how (franchising, ecommerce, distributor, licensing, joint venture, etc, etc), what your experience is and what your resources are. It will depend on your strategic long-term vision and in the way you conduct business.

I have advised companies to absolutely try exporting to Argentina and I have advised others to absolutely not even bother. I have heard opinions from “yes, you must!” to “keep out!”. Similarly to what happens in Brazil, Argentina does that to exporters: it confuses them and poses huge dilemmas. So here I will share three cases that illustrate the “yes, maybe and absolutely not” scenarios, and then you can judge for yourself...

1.    YES

Argentina is a huge country (the second largest in South America) and a commodity powerhouse, being the world’s largest producer of biodiesel and lemons, to name just two. If you are in agribusiness, this will be a difficult country to ignore.

Argentina has experienced some considerably economic growth in recent years (the origin of it and its management, as well as the distribution of the growth, are questionable, but the country did grow). Infrastructure pressures are huge and if you work in construction, machinery and engineering, for example, you will probably have thought of Argentina before.

And, as we said, Argentines love Britain. I saw a Gola megastore in Buenos Aires last April with huge posters of the Houses of Parliament, London taxis and double-decker buses... so British sells. Twinning’s, Cadbury, Walkers shortbread are now household names (ok, they are not all British-owned but consumers would regard  them as British brands, and that perception is what sells). English (and Irish) pubs open often, and Scottish whisky is hugely regarded. Same for language schools and British education...

So can see the reasons behind exporting to Argentina...

2.    MAYBE

Ok, it is not all good news, so here we go...

Argentina’s ranking in terms of corruption (see Transparency International’s website at http://www.transparency.org/) shows how endemic corruption is. Even if you are dealing with private businesses, you will need  the public sector for issues such as registrations or customs, so beware... And remember that as a UK company you abide by the UK Anti Bribery law.

Corruption aside, bureaucracy, particularly if you have always exported only within the EU, can be painfully frustrating. Even if you gather a list of procedures you need to follow, things change at short notice and are much to personal interpretation... Exporters tell me this is similar to exporting to India or Russia, so if you have experience in these countries, you will know what I mean and can judge if you are prepared to go through it again!

And now, the biggest hurdle: Argentina is one of the most protectionist countries on the planet. It will raise as many barriers as it possibly can to prevent foreign goods (with services is slightly easier) to enter the country. Import duties are high, non-tariff barriers are even worse (search online for “non automatic licences”). What is worse, is that the barriers change over time at a fast rate and totally unpredictably. So even if you work it all out, the goal posts change and you are left with a full container outside Buenos Aires for weeks (paying all the charges) because you missed one form you had no chance of knowing anything about...

3.     ABSOLUTELY NOT

If the above hasn’t deterred you and you are still in the “maybe” camp, let’s add some more things to the pot...

I think you “absolutely should not” export to Argentina (which in technical speech means “you should not prioritise Argentina as a key market for international expansion” rather than “never ever think about it”) if:

  • You are looking for quick wins. Argentina is a bureaucratic country that requires a lot of time and a long term vision. Samples can be in a port for months, paperwork can take years...
  • You are looking for an easy life. Argentina is bureaucratic, with high levels of corruption, unpredictable and ever-changing rules, huge delays and inexplicable barriers. It won’t be plain sailing. Depending on the scale of your operations, you will almost need an exclusive resource to deal with Argentina. And if you are taking on Brazil at the same time, think about it... unless you are big enough, prepared and patient enough, and have a very healthy cashflow...
  • You don’t like talking. All business in Latin America is personal, but in Argentina, things require an awful lot of coming and going, talking, negotiation, renegotiation, and so on. Communication is key and you need to be in touch regularly (and preferably travelling often or having a presence in-country) if you want to get things done. Otherwise, your business will go down to the bottom of the pile of your partner, client or government official who is dealing with it...

In a colourful way yet with plenty of evidence and experience behind, I hope I have given you a flavour of what it is like to export to Argentina. It is just a “flavour” and you will have your own view and opinion if you have already done it (in which case, we’d love to hear from you!) and your many questions if you are thinking about it. Please use this article as a starting point to gather more information and as prompts in your discussions with colleagues and experts.

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

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