The region should be on your radar when considering your next destination for doing business. Doing business in Latin America offers a multitude of opportunities for entrepreneurs and corporations seeking to expand their global footprint. Firstly, doing business in Latin America provides access to a diverse and dynamic region with a combined population of over 600 million people. This vast market potential makes it an enticing prospect for companies looking to tap into new consumer bases. Moreover, doing business in Latin America means benefiting from the region’s rich natural resources, which span from mining and agriculture to renewable energy sources.
Latin America’s growing middle class, coupled with increasing urbanization, creates a burgeoning consumer market that is ripe for investment. Additionally, doing business in Latin America can be facilitated through various trade agreements and regional economic organizations, fostering international collaboration. Company formation in Latin America is generally fairly quick.
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We have put together our top six mistakes to avoid when doing business in Latin America. It could save you from committing some costly mistakes, and emphasize what areas might require more attention than you previously thought.
Latin America should be on your radar when considering your next destination for doing business. Doing business in Latin America offers a multitude of opportunities for entrepreneurs and corporations seeking to expand their global footprint. Firstly, doing business in Latin America provides access to a diverse and dynamic region with a combined population of over 600 million people. This vast market potential makes it an enticing prospect for companies looking to tap into new consumer bases. Moreover, doing business in Latin America means benefiting from the region’s rich natural resources, which span from mining and agriculture to renewable energy sources.
Latin America’s growing middle class, coupled with increasing urbanization, creates a burgeoning consumer market that is ripe for investment. Additionally, doing business in Latin America can be facilitated through various trade agreements and regional economic organizations, fostering international collaboration. In summary, doing business in Latin America presents a wealth of opportunities for growth and expansion in a region brimming with potential and possibilities.
Avoid These Six Common Mistakes when Doing Business in Latin America:
We have put together our top 6 mistakes to avoid when doing business in Latin America. It could save you from committing some costly mistakes, and emphasize what areas might require more attention than you previously thought.
- Not localizing your product and services when doing business in Latin America.
- Ignoring how your marketing material translates.
- Only distributing through large multinational retailers.
- Forgetting to protect yourself from scams and theft.
- Only accepting card payments when doing business in Latin America.
- Not partnering with a local compliance expert.
1. Not localizing your product and services when doing business in Latin America
Localization is key. What country are you planning to do business in Latin America? Be specific as you will need to research the market. Your target demographic in Colombia may be very different to its counterpart in Peru. Remember: Latin America isn’t one country, and localizing your product or service needs to reflect that. Every country has a different history, cultural norms and language. In order for your customers to feel like you’re addressing their needs, you need to understand who they are. Market research will be your best friend here.
If you’re currently operating in another market, figure out how you might need to differentiate your current business model so you can tailor your offering to address specific in-country issues. For example, health-focused startups in Brazil have addressed serious inadequacies within the Brazilian public healthcare system through innovative and accessible technology platforms. You can’t afford to oversimplify product and service adaption when expanding your business to new markets if you want local consumers to notice you.
2. Ignoring how your marketing material translates
Just because you may have had success with a marketing campaign in one country, does not mean it will work in another. There are numerous examples of multinationals blundering their market entry into a new country because of basic errors like this.
This also goes for your brand name and slogan. You may need to adapt them to make them work in a different language. Study and understand the history of the country as it’s important when trying to understand the culture and surrounding regional context when doing business in Latin America. Make sure you have someone local read over any translated content to make sure it doesn’t have a second meaning you’re unaware of.
On top of the actual content, consider the method and delivery of advertising materials. Where you previously may have had success through billboard advertising, you may now need to adapt and consider advertising underground if the dominant form of transport is the metro. You need to work out how best to reach your Latin American customers. Again, this will differ from country to country. Look to the market to see what is effective and what has the best reach. Also, look to see what’s missing and be innovative with your communication approach.
3. Only distributing through large multinational retailers
If you currently distribute your product through Walmart in the US, you might be thinking this could work for you when doing business in Latin America. In Mexico, Walmart owns 2,499 retail units. In Argentina, only 92.
Different countries are attracted to different distribution channels. Although Walmart has a huge presence in Mexico, many small towns still source their groceries from small corner shops known as abarrotes. Consumers may also distrust foreign or multinational retailers when buying goods and services. It’s a good idea to explore alternative distribution platforms and invest in local staff and customer service.
Get out there and in front of shop owners. You may find that smaller stores will want to meet you and your product face-to-face before they consider selling your goods. These first impressions are key. It’s great if you can speak the local language. If not, make an effort to learn some greetings and keywords. It will show you’re committed to creating a relationship and invested in the community. Go along with a local colleague who may have more experience negotiating in such situations.
Be creative with your presentation and do your homework. Give them a reason to listen to you and make them want to do business with you. Selling your product or service locally will build momentum and give you a chance to tweak your offering before you expand to bigger platforms and retailers.
4. Forgetting to protect yourself from scams and theft
Don’t let your firm be vulnerable. One virus has the capability to steal all your business data, as well as your customers. It’s important to take adequate fraud measures and invest in security software protection. For example, Riskified is a risk management solution that verifies and guarantees transactions. The platform even provides a 100% money-back guarantee in the event of fraud.
Insurance is also a great idea and while it may seem costly when you’re setting up, it will protect your physical assets in the long run. Consult local accountants and taxation specialists so your firm is correctly paying taxes. Some Latin American countries also require monthly tax returns so it’s important to focus on corporate compliance.
Make sure all government payments are deposited through official platforms and accounts. Paying through middlemen may end up seeing you pay more than you need to. Unfortunately, like many parts of the world, corruption is present in Latin America. Make sure you verify invoices and confirm with your local accountant that you’re being charged the right price.
5. Only accepting card payments when doing business in Latin America
Latin America has a higher unbanked population than many richer regions. You can’t afford to not offer alternative payment methods. Amazon has recently launched a new system called Amazon Cash, where Mexican consumers can deposit cash at selected convenience stores in order to obtain credit to spend on the website.
Walmart and Elektra have also installed kiosks throughout their stores that serve as a point of payment for online purchases. The result is a hybrid of online payments, which then open up an e-commerce platform to a larger consumer market.
Creating alternative and innovative ways to pay for online and in-store goods maximizes consumers’ use of technology and opens the door to new purchasing platforms.
6. Not partnering with a local compliance expert
For all the research you do, nothing can replace the input of local and experienced professionals when doing business in Latin America. There are certain things that are learnt with time so when you’re expanding your business into the region, it pays to partner with experts.
Your business will have the best chance of success when you have developed a strategy with in-country input. Local staff have the ability to leverage existing relationships and partnerships to accelerate your business growth. They can also help you create a realistic and achievable business plan, considering timelines for company incorporation and visa processing.
Do business in Latin America with Biz Latin Hub
At Biz Latin Hub we provide a full range of professional market entry and back-office services, including company formation and legal representation in Latin America. Our credible experience and demonstrated success have helped many clients successfully start and maintain their businesses throughout many Latin American countries.
Working with local partners will give your company the best chance of success when expanding to a foreign market.
Contact us now, or visit our website at bizlatinhub.com to see how you can get your business started today.
