According to statistics from 2015, the total economy of Latin America is roughly US$5 trillion- a remarkably high figure for a region traditionally neglected by global superpowers in favour of other regions. However, this negligence of Latin America is to the detriment of many investors.
Put simply, the opportunities available are endless, from the mining industries in Peru and Chile to the booming fintech sector in Mexico, any entrepreneur will be able to find a new home for their business.
The following article is a brief guide to getting the hang of Latin American business culture.
1. Choose Carefully
In 2016, The World Bank Group produced a revelatory study on the ease of conducting business across the Latin American region. It shows how many countries are beginning to remove some of the bureaucratic red tape that previously made Latin America a potentially unattractive region, and are beginning to make a concerted effort to make reforms to facilitate international business.
Many countries performed particularly well in the rankings; Mexico had the highest rank at 49 globally (out of 189). Furthermore, certain countries perform exceptionally well in more specific rankings, for example in the category “Getting Credit”, Colombia was ranked #2 in the whole world!
The point is doing a bit of research into where you are going to set up your business may prove to be a real time saver and reduce the stress involved in conducting business in Latin America.
2. Speaking Spanish
If you are serious about embarking on a business adventure in Latin America, it is worth reminding you that a little goes a very long way. In addition to the fact that it is common courtesy to be able to communicate with local partners and clients in the local language, in many cases, it is a necessity. The level of English can be quite basic among many Latin Americans, meaning miscommunication is a real problem for some businessmen and women.
Many consultancy companies such as Biz Latin Hub provide bilingual support networks for clients that do not speak English. Using the services of these types of companies can be a very smart way to avoid uncomfortable situations and flamed tempers!
3. Chit Chat
The humble art of chit chat is a much revered and required tool when conducting business in Latin America. Across the region, diving straight into the technicalities and niches of contracts, deals and proceedings is considered bad manners and does not go down well with locals. It is, in my humble opinion, a very nice custom indeed. This period is crucial for building an understanding between all parties involved, as well as developing trust and getting to know everybody.
Do not underestimate the sociability of Latin Americans, it is very important to present yourself well and make a good first impression.
I sometimes like to think of it as a TED talk. A contagiously entertaining lecture from TED does not delve straight into the intricacies of whatever topic they are tackling in the presentation, but rather there is a carefully crafted introduction to the topic, before addressing the crux of the matter. The same is true when talking business in Latin America.
4. Embrace Sobremesa
It’s inevitable that business meetings may happen at a café or restaurant. Even non-business meetings may require outings or social activity during your stay in the country.
At the end of these meals is when “sobremesa” (table talk) happens – and it is an unwritten rule in Latin America to always accept coffee during this time. While coffee itself is a metaphor, the premise is clear: table talk is important in Latin America, and may help you build new relationships and secure business deals more effectively than you would be able to back at the office.
5. Utilise Unique Services
A lot of businesses in Latin America offer back office services for businesses. They handle accounting, financial reporting, accounting and management, etc. This allows you, as a business owner, to focus on other aspects of your business.
The back office, as it is comprised of administration and support personnel, does not directly deal with clients in face-to-face situations.
Doing business in Latin America does not need to be complicated for foreign investors. Of course, there are a few cultural quirks and habits that you must adapt to, however with a bit of determination, preparation and assistance, the whole experience can be a (relative) breeze.