August 6, 2012
After lunch at the Central Market and a visit to Cerro San
Cristobal, we went to the Ministry of Foreign Affairs to meet with Alfredo
Worner of ProChile. ProChile is a trade organization which promotes the exports
of Chilean companies. Mr. Worner stated that Chile is used as a test market for
all of South America by many foreign companies. He also emphasized that when
setting up operations in Chile, one must first study the market, and be ready
to adapt one’s marketing or products or risk business failure. For example, in
retail clothing, the sizes offered for sale must not be “copy and paste”
because the Chilean people are generally smaller than those in America or
Europe. Also, there is not a “do it yourself” culture in Chile, so businesses
such as Home Depot have found it hard to crack the market here.
ProChile makes a strong case for companies to use Chile as
their home base for global operations. Chile’s strong exporter standing (they
are a creditor nation) and regulations which make it easy to come to Chile, and
to even ship profits back to your home country, combined with the many free
trade agreements that Chile has negotiated make Chile attractive as a place to
stage a global operation. In essence, Chile has both low entry and exit
barriers, so companies can come here with less risk than is typical of most
other Latin American countries.
Chile offers a level playing field for domestic and
foreign companies, alike. Business regulations are such that every company is
treated the same, whether foreign or domestic. No special tax incentives are offered
to entice companies to Chile, for example. The stable political environment,
the strong financial institutions, and the free market policies are enough of a
lure for many companies to set up shop in Chile. A stable environment and knowing the rules today and tomorrow can be more valuable to a company than a short term incentive that may or may not be renewed.
How did Chile become so proficient in exporting? According
to Mr. Worner, a relatively small population combined with geographic isolation
(Andes to the east, desert to the North, Pacific to the west) has forced Chile
to look beyond its borders for consumers of its products and services. Unlike the
US, where domestic companies can thrive because customers are plentiful,
Chilean industry has found it necessary to cultivate customers world-wide.
Mr. Worner said that Chileans have more of a transactional approach to business
than other Latin American countries. This approach is characterized by fast and
to the point business negotiations. This is not the stereo-typical approach to
business Latin America. Most of the region is typified by relationship based
approaches in business, where a good amount of time is spent building trust
among the partners before serious business interactions commence. That is not
to imply that relationships and a sense of trust are not valued in Chile. As
our speaker from Banco Santander said this morning: “You can buy talent, but you cannot buy
trust.” Perhaps the rest of Latin America sees Chilean business as inherently trustworthy,
and therefore are able to enter into business relationships more rapidly.
