Posted: Wed 13th Mar 2013
Economic growth, burgeoning markets and growing export opportunities for small UK firms - there are opportunities aplenty in Latin America, says Gabriela Castro-Fontoura, author of the newly-published Doing Business with Latin America.
If you think back ten years, Latin America was hardly mentioned in the UK, writes Gabriela (left). This is not only due to the (often unfair) UK media coverage of Latin America and the lack of understanding of the region by politicians and policymakers; Latin America just wasn't attractive as a business destination.
Now things are different. UKTI organises regular trade missions to most countries in Latin America. The press now talks about Brazil and Mexico more often. Business owners are now starting to ask about this region and British businesses are starting to see the potential. So why now?
1. Stagnation of traditional export markets
I personally wouldn't rule out more traditional trading partners such as the rest of the EU and the US. After all, this might be where your quick wins are. However, we all recognise that we cannot put all our eggs into one basket. If the economic downturn continues in these countries, you will need to look further afield in order to grow your business. You might consider Russia, India and China - and Latin America should also come at this stage.
2. Your competitors will
I often hear the comment, particularly from small enterprises, that they can't afford to look into these markets or that they just don't care about them. This quickly turns into genuine interest when I point out how many of their UK and US competitors (and competitors from other areas) are actually operating or starting to operate in these markets. If you are not looking at Latin America, the chances are that your competitors will be. Can you afford not to at least consider these markets?
3. Your competitors will not
I highlighted above the presently weak trade links between Latin America and the UK. If other British businesses have been slow to react (and many still are), that could be a great advantage for you.
4. Economic growth
Despite the global economic downturn, the GDP growth of Latin America in 2013 is forecast to be 3.5 per cent on average. Latin America has recently experienced considerable economic growth - not only is there more money to spend, but there is also greater optimism. Millions of people across the region have been lifted out of poverty and are now becoming avid consumers, while governments are investing heavily in infrastructure and social improvement. Growth also means that more needs to be produced. Local industry needs supplies and expertise to operate and hence many goods need to be imported.
5. Macroeconomic and political stability
Latin America has long been an unstable region. The 1970s and 1980s are still in the minds of many. However, most Latin American countries went back to full democracy in the mid-1980s and have remained democratic since then. Since 1998, most Latin American countries (although not all) have had solid governments that have delivered strong macroeconomic policies. You are more likely now than ever before to enter these markets at a time of economic boom and political stability, where local businesses and consumers are more likely to be willing to spend money and where your rights are more likely to be respected.
6. Pound depreciation
The depreciation of the pound against local currencies, the US dollar and the Euro means that UK exports in Sterling will be comparatively cheaper today to Latin American importers than they were a few years ago. An interesting aspect of this is that Latin Americans in the UK are finding that it's relatively cheap. Many Brazilians have told me, for example, that buying clothes in London is cheaper than in Sao Paulo and that it is cheaper to dine in London Â than in Rio. Remember that those foreign nationals buying from you in the UK make you an exporter. One great way of thinking laterally about these markets is to target Latin American consumers in your own country - you will be helping the UK economy and your own business, and you also have the fantastic opportunity to conduct some market research in your own back garden.
7. Major events
Without doubt, one of the main reasons why the world is looking at Latin America is that many businesses have their eyes set on the FIFA World Cup in 2014 and the Olympic Games in 2016, both in Brazil. However, these are not the only two events Latin America will be seeing in the next four years. Any regional event, such as the Copa Libertadores, in a continent of more than 600 million people, is likely to attract plenty of attention. Formula One and tennis also attract large audiences and there are other major events, too, such as the annual fashion week in Sao Paulo and lots of specialist trade shows. How can you tap into all of this activity and opportunity? Gabriela Castro-Fontoura is the founder of Sunny Sky Solutions, which supports small businesses to do business with Latin America.