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Export opportunities in Latin America

Shrouded by the allure of Asia, the Latin American market has traditionally been overlooked by Australian exporters. However, as International Growth Specialist Joao Paulo (JP) Belfort explains, Latin America has a lot more appeal for Australian companies than perceptions portray.

Encompassing twenty countries in North America (Mexico), Central America (from Guatemala to Panama), certain islands of the Caribbean and South America, Latin America now has a collective population of over 490 million.

Latin America operates on a European based system inherited from the Spanish and Portuguese. It has historically been politically unsettled, but the climate has improved and the region is now more politically and economically stable.

Economic Growth presents opportunities for Australian Business

In 2004, the GDP of many countries in Latin America grew. Brazil experienced 5.1 percent growth, Mexico 4 percent, Chile 5.9 percent and Argentina 8.5 percent. These four countries account for 83 percent of the gross domestic product of Latin America and 90 percent of Australia's trade with the region. Their strong economic growth is creating opportunities for Australian businesses.

"Australia and countries in Latin America have a lot in common," said JP Belfort.

"The Latin American lifestyle and business culture is similar to ours, making establishing business relations comparatively easier than with our Asian counterparts. Many professionals are also able to speak English well enough to conduct business internationally.

"The economic growth has increased demand in Latin America for commodities in general. This in turn has increased demand for energy, which has created a catalyst for improved power generation technologies and environmental engineering capabilities."

Mining, Manufacturing and Agricultural Sectors

Latin America's increasing strength in mining and manufacturing is also creating opportunities, rather than competition, for Australian businesses.

"The strong mining and manufacturing economies of Chile and Brazil are of particular interest for Australian exporters. Our expertise in manufacturing mining equipment and developing technology to optimise processes has great export potential, especially in supplying Brazil's aluminium and base metals industries and the Chilean copper industry," JP explained.

Similar in climate, our agrarian sectors are also attuned. Rather than creating conflict, the similarities actually work in Australia's favour, particularly for manufacturers of agricultural machinery and technology.

"The production standards for wine and meat are often similar to Australian standards, creating a market for Australian food processing equipment and technology. The Chilean wine industry and the Argentine meat industry are two such examples. Australian companies that manufacture farm machinery and components and environmentally friendly technology and equipment to assist in fertiliser production will also benefit from this complementary trade."

JP identifies other areas of opportunity for Australian companies in Latin America. Economic growth in the region is increasing the size, and buying power, of the middle class. This sector of the population is also showing a sophistication of consumer tastes. This new area of demand creates opportunities outside the traditional strengths in mining and agriculture in the value-add consumer market, especially telecommunications, pharmaceuticals and health care, entertainment and education services.

Political Environment

Politically the region also presents opportunities for Australia.

"The new, more moderate Socialist governments in Mexico and Chile, despite Free Trade Agreements with the United States, are looking to other countries to meet their consumer needs."

This shift in focus from its biggest trading partner is being embraced by other parts of the world who are realising Latin America's potential. China is already strengthening their relationship with Brazil and there has been a lot of foreign investment in the Peruvian and Chilean copper industries.

While there are increasing opportunities for Australian exporters in Latin America, one significant barrier remains.

"Unfortunately there are no direct shipping routes to Latin America. This means that goods must go via the US, Singapore or Japan, causing the journey to take at least 55 days. Although this issue is being discussed there are no current plans to create a direct route."

Despite this setback, Latin America is flagged as a serious business partner for Australia, even for small businesses. In the last few years there have been a lot of success stories, especially for companies with a turnover between $5 to $50 million.

Advice for exporting to Latin America

"You need to research the opportunities for your product and visit the market. Australians don't know much about the region and are generally surprised how similar their major city living standards are to ours, especially in the capitals such as Santiago.

"In particular, Australian companies need to research the market entry options; directly exporting, partnering with a local distributor, setting up operations in market or outsourcing manufacturing locally to supply the market."


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Gary Dawes
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