As an economist, bureaucracy in Latin America fascinates me. Its causes and its consequences are so intertwined in our cultural and historical web that it has taken me years of living away from the continent to actually understand our own bureaucracy better.
As a business owner and as a consultant to businesses at different stages of expanding into Latin America, bureaucracy fascinates me a little bit less (!). It is clearly a huge obstacle for both importers and exporters. The difference being that Latin American importers will be used to it while British exporters might not.
This is one of the many reasons why I usually suggest to new exporters to target other markets before targeting Latin America. If you’ve even tried to break into Russia or India, you will probably have faced similar bureaucratic hurdles. If you’ve exported solely to the EU, or not exported at all, you’ll be in for a real shock.
Let me give you some figures:
“According to the World Bank’s 2012 annual global report “Doing Business”, which evaluates the ease of starting a business, dealing with construction permits, registering property, and paying taxes, Brazil ranked 126th this year out of 183 countries.
On average, it takes 13 procedures and 119 days of work to start a business in Brazil.
And construction permits demand an average 17 procedures and 469 days to finally get authorised.”
(BBC News http://www.bbc.co.uk/news/business-18020623)
And let me give you a few personal examples. A trusted importer in my native Uruguay told me that it has taken them three years to get approval to import premium coffee from Colombia. Yesterday I received an email regarding the requirements to register a client’s products in one South American country. It listed 19 documents, and counting. Not enough for you? A consultant specialising in medical devices I was chatting to recently told me it can take up to 3 years to register a new medical device in Brazil for importation. In case I haven’t said enough – one of my client’s samples took 9 months to get in to Argentina…
Have I totally persuaded you not to even bother with Latin America?
Bureaucracy is prevalent across all of Latin America and there is no way round that, particularly if you are a UK business and abide by UK anti-bribery legislation. However, let me share some thoughts with you that hopefully make your life easier:
– Who has to deal with this all? Is it really you? Could someone else do it for you? Should the importer/distributor worry
about it rather than you? After all, it is their market. Discuss this with your Latin American partner from the start and set out clear responsibilities not just for the paperwork but for the accompanying fees. This is a blog and not a sales pitch, but I am sure my clients will agree that I have saved them many a bureaucratic headache…
– You do need to be aware of the level of bureaucracy and the consequent costs and delays for your own products. Not because you have to worry yourself about it, but because someone else will have to. The more you listen, the more you will understand when you can start actually selling – and making a profit.
– Have clear expectations. As I say to my clients, if you expect to be selling into Latin America in 6 weeks, you are probably going to be disappointed. 6 months? Maybe, just maybe. It will vary depending on your product and the country. It could be 6 months, 12 months, 3 years, 5 years. Can you afford this? Can you afford not to try? Someone else might be trying and you might then be too late when you spot an opportunity.
– Trust – we are back to the key in international trade – you must find partners you trust. Who are you giving commercially sensitive information to? Are they being honest about timescales or lazy – or over-ambitious? Are they making up charges or are those government fees real? Trust is key – having open honest conversations from the start do pay off. If you find someone you trust who really, really understands not only the market but also the bureaucracy around the import process (and then the sales process, too), they are worth their weight in gold. Value them and look after them. Believe me, they are pretty precious.
PS I always see an opportunity where most see a problem… Think… consultancy services for public sector (a.k.a. bureaucracy HQ) management? OK, Tony Blair has tried that one. Software applications that would make processes easier? UK companies are so perfectly placed for this. Oh, and if you sell ink, stamps and staples – go for it! 😉