Establish A Commercial Presence In Latin America. Latin America, a continent with a great diversity of the economic and social level. It involves entering a huge new market like this on the many opportunities At the same time many challenges. Edward Nicholson, partner offers and director at Mercator Limited Partnership, and the Consultative Group in Maitland, some of the ideas and visions for companies seeking to establish a presence in Latin America for the first time addresses the distinct phases in this process: planning and implementation.
A wealth of information available is available and that the good fortune of investors now that they can take advantage of this Orion Code information before they set foot on the American continent. The challenge lies in how to filter this information to answer three basic questions: What type of business and the place of residence and how they will be out? The answer to each of these questions need to if the goal is to establish a competitive and sustainable business entity.
Planning: The Importance of Preparation
The spend time planning how to deal with Latin America than the recommended steps given the region’s diversity and rapid pace of change in the economic and political conditions, as are the region enormous growth potential, it is to establish a strong foundation in the beginning an essential element will benefit later.
It provides a clear vision about the reason to enter the market can focus research focus. This vision will vary depending on the circumstances of each investor, which may range from just a geographic expansion (the same company, but a new market) a comprehensive diversity (a new company in a new market) but may take into account other considerations such as access to the production low-cost, or risk diversification political, or obtain scarce resources (mining / agriculture). It assumed that the answers to the question “What type of business” will become clear once you evaluate the goals and reasons to enter the market.
From the mistakes that often where foreign companies entering the Latin American private -obesvh Brazil-located company is the need for consistency with the market level. There are many examples of companies that entered the market were substandard and did not make any little success (because there is not linked sector that compete in it) and then was forced to withdraw because their boards of directors no longer afford.
Here are some examples of the investment flows that have been monitored recently that show multiple systems to methods of transaction:
A minority stake in listed companies: Invest “Qatar Investment Authority,” a huge amount ($ 2.7 billion) in bank Banco Santander Banco Santander)) in Brazil, which Putin Spanish family owns a large stake in it.
A dominant share in a private company: on the other side, I got LG Group Four British S (G4S) on 51% of the shares of the Brazilian group Planckh Anknerya Plantech Engenheria)) specializing in the application of security systems, with the possibility of increasing its stake over time.
Share dominant in a family of German group company and other shareholders: Got Indian group India United Vosvors Limited ((India United Phosphorus Ltd recently on 51% of the shares of DE in any company path others do Brasil company agricultural chemical products ((DVA Agro do Brasil versus 150 million dollars.
The acquisition of 100% of a private company: the acquisition of LG SK Corporation ((GSK on the Phoenix Abouriatorres company Laboratorios Phoenix)), an Argentinean company for pharmaceuticals in exchange for $ 252 million.
(State and / or city may determine the point of entry) By the nature of the activity to be undertaken by the company, especially if this activity respect to natural resources or the need to port or scarcity of potential business goals. If the situation was not the case, you may be choosing the site with the help of employees of the filter:
– Commercial – is interested in factors such as near the customers and markets, and transportation and shipping, and the availability of skilled labor, and the level of development of the capital markets. While the English language is used widely in business and trade in Latin America, but it is still not the only language in the world, and thus may be familiar in Spanish or Portuguese (Brazil) a great advantage. It may be necessary to provide a suitable education for expatriate employees.
– Legal and financial – This factor includes a predictable legal system, tax rates and exemptions, and incentives provided by the state, and the possibility of switching the currency, and stability, as well as the criteria that the distribution of dividends and re-transfer of capital to the home control. Regulatory considerations will also be important in the case of entry of a structured field – which typically includes public services such as energy, water, or strategic areas such as air transport, newspapers, radio, television and most recently agriculture (in some countries), as well as health care or banking services. Foreign demand for agricultural land has led to a review of the criteria for property in Brazil and Argentina.
While often it is determined by the location on the ground by one or two of the fundamental considerations relating to the company, but the above aspects are still important and must be taken into account.
Implementation: focus on the objectives and whether it will be achieved
Relatively few huge “green field” investments are considered and usually subject to special standards. Therefore focus on acquisitions and alliances involving corporate entities already exist or are emerging small businesses will be.
It is necessary to use consultants on a high degree of efficiency and professionalism in order to legal issues (of incorporation, contracts and due diligence) and tax and the use of an intermediary specialist (a bank or a broker or adviser) for acquisitions or alliance that will add real value, you may have people of experience who are Hired in this area better information and access to potential targets, especially if you’re seeking to know the target customers concerns. You can also make use of them as a filter in the important stages of the negotiations.
In Latin America, the importance of personal relationships represent great value and thus becomes the identification of your partner and / or the goal of the best investments. Family businesses prefer to cooperate with other family companies and prefer to deal directly on the level of presidents.
Experience has shown that it is useful and always having at least one person belongs to the country you want to start a business at home with good relations to cooperate with the company on an ongoing basis. This may help avoid and resolve potential problems with government officials, and that certainly will not be without it the appearance of some of them.
Similar to the process of implementation, in essence, than in any of the developed markets, but it is worth pointing and comment on some of its aspects:
Goal setting: Despite the lack of clarity in this aspect, as is the situation in the case of the opponent, they must use a consultant to check out potential targets.
Price: may be required to reach an agreement on the price of some patience, and be optimistic about the price of things familiar. Consider using a formula of future performance to compensate for any shortage of materials.
Investigation needed: Use the best lawyers, accountants and specialists available then the foundations of a comprehensive database of information about any family has become a partner in the future, will not this be difficult if this family of famous families.
Governance: Make sure that the system of governance, who is placed after the acquisition Ookhlal alliance Nahj-sufficient ingredients and flexibility required to work as it is supposed process. If you’ll get a minority stake, make sure there are requirements for exit or termination of contracts enforceable and ensure fair value.
In the end, be prepared to get out and be dismissed if he becomes the price is profitable or if there were real questions are not answered.
Alliances and joint ventures: an excellent method to enter the market
Many The Orion code System companies entering the Latin American market through an alliance or a joint venture, which may be due to the multiple benefits of both sides. However, it should be noted that most of the alliances the acquisition ends a party on the other over seven years. It is also necessary to accommodate the relative value added by each party in this partnership and the possibility of this change over time. Could be complicated joint ventures and strategic alliances and require a lot of care with regard to the way structured and documented. It may be useful to examine all these aspects in terms of business reasons – any contributions to the parties and the need for conditions for the protection of intellectual property legal, financial and operational requirements – such as governance and agreements go out and share value.
Latin America is a great place to make a profit just anyone who has a strategy has been developed carefully and to whom has the ability to understand and meet its challenges.