Getting Started
Because South America is not an easy location for doing business, the best way to get started in the region is generally to start slowly. You should incrementally increase your investment and risk exposure only as you enjoy successes and learn how to do business in an uncertain environment.
Preparing for reality
South American business competition is tough, and you may find few antitrust or competition laws to protect you as a newcomer. In practice some South American countries may permit defensive moves like collusion, copyright infringement, and predatory pricing. Volatile business conditions are another factor to consider as you get started.
Taking a staged approach
A staged approach to South America may be the best way to face the reality of the region. For example, you might export your product first, then work with a partner, then open your own manufacturing facilities. The entry strategy you choose and the pace of expansion depend on your risk tolerance and previous international experience. But be warned, South America is not an easy place for beginners in international business.
Staged entry strategies
- Import–export
Before you relocate, test your product by exporting to your target market. Both risk and investment will be low at this stage. Follow up initial success with a greater investment.
- Cooperation
Research is important, but South Americans recognize the value of “feeling” the right business move. A partner with local instincts and success will have developed this skill.
- Majority-owned joint venture
This arrangement allows you to gain local wisdom while keeping strategic control. You will be welcome if you provide funding and respect local insights.
- Distributorship agreements
Find a successful distributor in the desired channels, and have a local attorney draft a contract that protects both parties.
- Local company
Establishing a legal local entity can be tedious, but the favor you win with governments, suppliers, and distributors can be well worth the effort.
