You’ve probably seen the headlines from Colombia, Bolivia, Ecuador and, yes, Chile. Social unrest, and social violence, and all the memories they imply for our region, are back. We are not political analysts and we will not try to explain here what are some very complex realities. But we have been asked how this is affecting businesses in the region. We get clients asking whether they should be travelling or not, for example, or whether they should change their priorities in terms of markets, exit any or forget about entering some.
There is still too much uncertainty to reach absolute conclusions, but what we can say now is:
- What is happening in every country, even if we can find some similarities, is unique to that country. South America is not all the same. Every protest has its motives, every country a different reality. Putting them into the same bag won’t help your business. Understanding the differences is key to generating competitive advantage here. Chile is not Bolivia, Ecuador is not Colombia.
- Unrest is not affecting the whole region. Argentina has not shown any of this violence and neither has Uruguay, for example.
- The real shock here is Chile. The other countries have much weaker institutions and unrest is not uncommon.
- We are focusing here on South America, we are aware there is also unrest in Central America and in Mexico, with mix degrees of violence.
- Venezuela, unfortunately, is not a shock anymore. It’s more a humanitarian crisis there, as analysists have highlighted.
What you can do
1- Try to understand how your business can be affected: this will depend on the countries you are doing business with, your route to market, your specific sector, and so many other variables that we really can’t make generalisations here.
2- Talk to someone locally: your partners/distributors, clients, suppliers, staff. Speak to people and see if you spot any patterns.
3- We cancelled our November trip to Chile and suggested the same to a client. Not only because of the risks but also because the clients we were going to meet have their minds on something else right now and us discussing long-term projects in this context hardly shows any understanding or empathy. But that, again, depends on your specifics.
4- Don’t expect unrest to subdue overnight. These are long processes. Even Chile’s process is taking longer than expected. This is not just about cancelling trips, the consequences can be long-reached (possibly more so in Chile than in the other nations).
5- Think beyond the headlines. Bolivia is hardly ever someone’s first choice of a market in Latin America. The reasons why you are there probably hardly relate to stability, and are probably still strong enough to justify working on that market. Ecuador is similar in that way. Colombia has been relatively stable recently, particularly with the peace process, with an economy that had been improving. It has problems related to transparency and bureaucracy, and will still have them after this. If it was worth doing business for you there before the unrest, is it really time to pull out? Probably not, you’ll just need to navigate it. Chile will be the one to confuse you most, and it’s the same for those of us living here in the region. But after the dust settles, it is still a country solid enough to remain attractive for overseas companies. Taking the necessary precautions and accompanying your local partners, it shouldn’t be too hard to continue working there. There will be opportunities, sadly enough, in the reconstruction process, too.
So again, think long-term, look back at your strategy, remember why you were here (or thinking of doing business being here) in the first place, show flexibility and empathy, and remember that romantic headlines in foreign newspapers mean very little when making big decisions for your business in Latin America: speak to someone local who knows the reality and also your business well, and take it from there.
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