You know when the World Bank comes up with its “ease of doing business” ranking and you wonder why exactly even the highest ranked countries in Latin America just can’t make it to the top?
Well, I have a long list of things to explain why. The sort of stuff we put up with daily in Latin America, to different degrees, that tests your cardiovascular health and your Buddhist-like patience. The sort of thing that is so difficult to explain to Europeans (particularly the most efficient ones, you know who you are) or North Americans…
What am I talking about and is it really so bad?
For those you doing business in countries like Brazil, India or China, this won’t be news. But if you’ve never tried doing business in emerging markets, you’re in for a treat.
Let me give you just three examples from the past few months…
Example 1 – receiving a parcel from overseas
My lovely in-laws send us small gifts from the UK from time to time. Well, those innocent wee parcels are now diligently stopped at customs, you need to fill in a declaration form (you can do that online, Uruguay is getting much better at digital) and the parcel gets released and sent to you. Tickety-boo.
Two problems.
One, you must be at home to receive the parcel. If you aren’t, you have 7 days to pick it up from the sorting office. Which, by the way, is open 9-5. Great if you work 9-5 far from home, right? You don’t go, you lose it. So if you are on holiday for more than a week, well, tough. Unless a relative or friend can persuade the sorting office that you will really, really pick it up 7 days late. But, hang on, they would need to go through your post to know you received the delivery notice. Oh, and why can’t they just pick it up? Because you have to sign the authorisation. Doh.
Second, and this is the big one, you are only allowed five parcels a year, of a maximum CIF value of USD 50 each (postage is very expensive to this part of the world, so a parcel can easily be USD 10-25 to post, which leaves little margin). Over that value or frequency, you pay tax (more here).
And, take three deep breaths, tax is 60% of the CIF value of the goods. That can be a lot of money.
No wonder why today El Observador reported that 60,000 parcels from overseas are awaiting collection…
Bye-bye, e-commerce hopes.
It’s all fun and games, until someone has to go to the post office.
Example 2 – receiving business samples or catalogues
Catalogues and samples, I learnt recently, are also subject to a 60% tax (CIF value). And you have to go to the container terminal at the airport (in my case, at least) for collection. Sounds like jolly good fun.
Uruguay making it ever so friendly for foreign businesses that want to use us as a regional logistics hub, right? Rant over.
Example 3- product certification
The two first examples were very much about Uruguay, or Mercosur in general, since Brazil and Argentina, for example, are actually worse. So let’s leave Uruguay for a bit and talk about other countries.
I am currently in the middle of a very long, frustrating, product certification process in Colombia for a UK manufacturing client. The rules have changed throughout the process, making some of our investments pointless. Costs are never, ever clear, you never get a breakdown of exactly what each stage will cost or what it will involve. I have formally complained to the certification body’s complaints manager. I am now looking for the complaints manager’s, complaints manager, and I know I won’t get anywhere still.
I spoke to a British businessman last week at ExpoPrado in Montevideo who rolled his eyes when we started discussing “Anvisa” certifications in Brazil. They’re two years into this process and he can’t see a way out. And this is a large company with the cashflow and the human power to sustain the process. Imagine if you aren’t.
Product registrations can take years and you might have to repeat them for every state/county within a country. And yearly.
So, should you give up?
I think the key is to find out about these barriers as much as you can before you start your journey, but some of these things you just can’t predict. “Contingency” is a handy word for your Board meetings. As I discussed recently about networking, business in Latin America takes time, and these inefficiencies are partly why you need time for Latin America, resources and commitment.
If your strategy is clear, your risk management is good and your leadership is committed, go for it. Having good and trusted local resources will be of huge help, too.
And always remember, there isn’t a word in Spanish or Portuguese for “straightforward”. That says it all.
