general and British products/services in particularly vary across these countries, in general British people and the goods and services that they design and manufacture are highly regarded. British people are almost unanimously seen as honest and reliable. Be proud of this, but also recognise it as a great responsibility, since British businesses are ambassadors for their country.
In November 2010, William Hague gave a speech at Canning House that summed up the commercial relationships between Latin America and the United Kingdom. Some of his words included:
“…history teaches us that Britain has a track record of underestimating Latin America and neglecting its opportunities.”
“We export over three times more to Ireland than we do to the whole of Latin America – a region of 576 million people and 20 sovereign republics.”
Our trade with Brazil – a country of almost 200 million people – is less than half our trade with Denmark...”
“Chile and Argentina are only our 43rd and 49th largest export markets respectively.
“Germany now exports nearly four times as much to Latin America as we do. France and Italy have also left us behind in this respect over the last 20 years.”
In other words, it is clear that Britain hasn’t, until now, made the most of the opportunities that Latin America offers. However, businesses and governments are becoming more familiar with Latin America as a trading partner. I will explore why in the next section.
2. Why you should be looking at Latin America
If you think back ten years, Latin America was hardly mentioned in the UK. This is not only due to the (often unfair) UK media coverage of Latin America and the lack of understanding of the region by politicians and policy-makers; Latin America just wasn’t attractive as a business destination.
Now things are different. UKTI organises regular trade missions to most countries in Latin America. The press now talks about Brazil and Mexico more often. Business owners are now starting to ask about this region and British businesses are starting to see the potential. So why now?
Looking at a quote from William Hague once again, he said in 2010:
“Latin American countries are one of the undisputed engines of the international economy. The combined GDP of Latin America is over $5 trillion and is still growing. Brazil is on track to be the fifth largest economy in the world by 2025. The combined GDP of Mexico and Argentina equals that of India. Three of the G20 economies are Latin American.”
These powerful facts are the basis for why you should be looking at Latin America. Let’s expand on this and look at some other key reasons.
1. Stagnation of traditional export markets
I personally wouldn’t rule out more traditional trading partners such as the rest of the EU and the US (plus Australia, New Zealand, Canada, South Africa, etc.). After all, this might be where your quick wins are.
However, we all recognise that we cannot put all our eggs into one basket. If the economic downturn continues in these countries, you will need to look further afield in order to grow your business. You will consider Russia, India and China – and Latin America should also come at this stage.
2. Your competitors will
I often hear the comment, particularly from SMEs, that they can’t afford to look into these markets or that they just don’t care about them. This quickly turns into genuine interest when I point out how many of their UK and US competitors (and competitors from other areas) are actually operating or starting to operate in these markets. If you are not looking at Latin America, the chances are that your competitors will be. Can you afford not to at least consider these markets?
3. Your competitors will not
I highlighted above the presently weak trade links between Latin America and the UK. If other British businesses have been slow to react (and many still are), that could be a great advantage for you.
4. Economic growth
Despite the global economic downturn, the GDP growth of Latin America in 2013 is forecast by Standard & Poor’s to be 3.5% on average, with 5% for Chile and 6.8% for Panama.
Latin America has recently experienced a considerable period of economic growth. It is beyond the scope of this book to analyse where this growth has come from or to forecast future growth, but what is clear is that economies have been growing year on year, even at rates over 10% per year. We are all used to the doom and gloom in the UK in the last five years or so. The situation is not like that in Latin America, where economies have been buoyant.
Growth means not only that there is more money to spend (from governments, businesses and individuals) but there is also greater optimism (hence more willingness to spend, risk and invest). Millions of people across the region have been lifted out of poverty and are now becoming avid consumers. Governments have realised that inequality is not only a moral and political issue but also an economic one: economies cannot increase productivity or consumption and hence growth if half of their people are living in poverty. They are investing heavily not only in infrastructure (such as roads, airports and telecoms) to respond to the growth, but also in programmes to reduce poverty, increase education and improve welfare (all areas in which the UK is a world leader).
Growth also means that more needs to be produced. Local industry needs supplies and expertise to operate, from fire safety consultants to industrial lubricants, from heavy machinery to lean manufacturing expertise. Local industry just can’t cope, hence many goods need to be imported.
5. Macroeconomic and political stability
Latin America has long been an unstable region. The 1970s and 1980s – with their plethora of dictatorships across the region and serious economic decline, social unrest and civil wars – are still in the minds of many.
However, most Latin American countries are now out of this cycle. Most went back to full democracy in the mid-1980s and have remained democratic since then. Economic instability continued for some time, and the region was particularly effected by the 1998 crisis.
Since then, most Latin American countries (although not all) have had solid governments that have delivered strong macroeconomic policies. I summarise just some of the economic praise for Latin America’s countries in the box below.
“Chile and Mexico amongst the best performing members of OECD in next two years.” 28 November 2012, Mercopress (en.mercopress.com/2012/11/28/chile-and-mexico-among-the-best-performing-members-of-oecd-in-next-two-years)
“IMF praises Uruguayan economic management.” 2 November 2012, Guardian (www.guardian.co.uk/world/feedarticle/10512428)
“Peru posts fastest growth in 11 months on construction boom.” 15 September 2012 Bloomberg (www.bloomberg.com/news/2012-09-15/peru-posts-fastest-growth-in-11-months-on-construction-boom.html)
“Mexico
