Chile's Import And Export example essay topic

Chile is one of the Latin American regions most dynamic and promising markets. This is not only due to its size and population but in the transparency in its regulations and the predictability of its decision-makers. The Chilean government ha a welcoming attitude towards foreign investors. The Santiago stock market is dynamic and has attracted substantial international investment, which has been made possible by an effective regulatory system.

An increasingly diversified economy and strengthening ties with suppliers and buyers in Europe, Asia, and the Americas has given Chile a wider range of options for further growth and prosperity. Also Chiles policy-making has secured long-term stability, unlike other Latin American countries. Chile enjoys both budget and balance of payments surpluses, and has sufficient funding to finance growth, it has the highest rate of internal savings in the Western Hemisphere, almost 24 percent. In 1990 Chile emerged form seventeen years of military government, there is still occasional friction in otherwise good civil-military relations, allowing Chile a smooth transition to democracy. Chile has a promising market for high technology and infrastructure-type products. Including electricity generation, pollution control equipment, telecommunications equipment, computers and peripherals, mining and construction industry equipment, building materials, medical equipment, port equipment, air conditioning and refrigeration equipment, and security equipment.

There are also great opportunities in consumer products and services such as tourism. Exporters to Chile encounter few problems in financing there customers, as there are sufficient Chilean, U. S, and third-country banks operating in Chile, which enjoy all the trade credit they need to conduct internation la transactions. Although there is solid opportunities for products in Chile, competition is stiff, especially from countries with which Chile has negotiated free trade agreements with. The U. S is Chile's largest single supplier, and Europe and Asian competition is strong. It is crucial to establish an effective and efficient presence. Many foreign companies have subsidiaries or branch offices in Chile, while others utilize distributors or representatives.

Although the 40 percent of Chile's population resident in the Santiago region, Chile's unusual geography makes it sometimes difficult to cover other population centers, this makes knowledge and well-connected Chilean representatives very important. Although 80 percent of Chile's economy is controlled from Santiago. Chile has one of the simplest and most transparent regulatory systems in the region to deal with trade and business activities. A careful review of these regulations and full compliance with its guidelines will guarantee more successful and trouble-free operations in the Chilean market. Chile's import and export licensing requirements are more for statistical purposes rather than control. For anything except agricultural products and a few other sensitive items, mostly anyone is free to import anything.

It is not a hard venture for foreign business persons to operate in Chile, which is important as personal contact is essential in doing business. Chile's economy has expanded for the last fifteen years, by a boom in exports which has been sparked in recent years by soaring investment, both foreign and domestic. This has led to a large job creation and a slow decline of unemployment, and inflation. Chile's credit rating is the best in Latin America. Since Chile first received an investment-grade rating in 1992, Chilean firms have raised funds abroad-through borrowing, selling bonds, and stock issues-to finance investment. There were short-term effects on Chile with a decline in international investor confidence in Latin America after the 1994 mexican currency devaluation.

Chile's high domestic savings rate contribute to its independence of short-term foreign capital to finance its investments. As most foreign investment in Chile is direct investment, it is not likely to flee the country in response to temporary bad news. Production is likely to continue growing rapidly due to Chile's high rate of investment. Chile has a reliance on exports and its desire for market diversification has led it to seek opportunities to further open several current or potential markets. It has joint the Asia Pacific Economic Cooperation organization in 1994, it has signed trade-liberalization agreements with a variety of Latin American nations, and free trade agreement with Canada.

Chile's businesses are predominantly owned and controlled by private interests. Prices, with the exemption of regulated utilities, are set freely. The public sector budget is approximately 26 percent of GDP. Important sources of tax revenue are 18 percent value added tax, personal income taxes, corporate taxes, and import tariffs. The government generally runs budget surpluses of around two percent of GDP, they are somewhat balanced by losses of the independent central bank. There are adequate roads in many areas, but many secondary highways are unpaved, and there are some serious bottlenecks, particularly in urban areas.

Many international airlines operate from Santiago airport, linking Chile with the United States and Europe. There are a number of airports located throughout the country. Major ports are located on the Pacific Ocean, the main one being Valparaiso, located 210 kilometers from Santiago. Others are arica, Iquique, Antofagasta, San Antonio, Talcahuano, and Punta arenas.

Foreign and local shipping lines cover the international traffic, but the coastal traffic is handled by several local companies. Telecommunications are excellent in Chile, it has one of the best networks in the hemisphere. The phone system is completely digital. Several Internet service providers supply the ever growing demand that has positioned Chile with one of Latin Americas fastest Internet growth rate. Chile's railroad system, is the fourth largest rail network in Latin america, but needs to be urgently upgraded and expanded. There are two railroads connecting with Bolivia, one is privately owned.

Establishing a local subsidiary or branch office gives the best guarantee that the exporter will receive efficient service and appropriate promotion of its product. Also another practical method is to appoint a agent or representative with good access to relevant markets and with a technical structure. As distances are great in Chile, representatives usually have branch offices in different regions. Although Chile's population of 14 million is very centralized; 40 percent of the inhabitants live within 100 miles of the capital in the metropolitan region.

Most of manufacturing, trade, and service activities are located in the capital Santiago. Almost all firms have their main offices in Santiago. It is wise to enter the Chilean market by appointing an agent, distributor or wholesaler, this local representative must be aggressive, knowledgeable about the product, and well connected. The representative will need to promote the products through newspapers, specialized magazines, radio and T.V. the commision for having a agent is usually between 5-10 percent, depending on the product. Direct market or catalog sales are not yet common in the market. There is a low intrest shown by Chilean consumers mainly due to mistrust towards claims and promises of after sales services.

Chilean consumers prefer to window-shop, walk and browse in shoppin malls or shoppin districts and personally choose goods rather than purchase through catalogs. This means that Chileans not accustomed to even catalog shopping are not ready for electronic commerce, even though Chile is more wired than most Latin American countries, the potential market is still quite small. Incorporating in Chile is not too time consuming and is not expensive. It has no minimum local participation requirements, the inclusion of local partners is really only guided by commercial considerations. To start doing business in Chile, a declaration of intrest to invest in Chile must be presented to Chilean consulate, stating the nature of the business and the capital to be invested, also requesting a permanent residence visa. It is important to register a trademark as soon as there is an intention of doing business in Chile.

As there is a common problem by foreign companies that their trademark may already be registered by other individuals or companies. The most important selling factor in Chile is price, this makes price competition a huge factor. But usually when it comes to advance electronics and construction machinery, the consumers prefer more expensive products, based on decision factors like, quality and durability, technology, good customer support, and a strong regional service structure, when applicable. Technological products are generally sold by visit iting salespeople rather than showrooms or retail outlets.

Some clients prefer to be visited in their offices, or sometimes live to far from a sales point so have to be visited by a salesperson. Its important to also remember bad reputations aquired by disregarding consumers are hard to get rid of. Advertising is a very important aspect of obtaining a large market. Television, radio, newspaper and magazine advertising is used heavily. Private agencies handle most advertising, most of it is done through television, closely followed by newspapers, then radio, outdoor advertising and magazines. Also cable television has rapidly covered Santiago over the past few years, and has spread to the provinces.

Chile has few barriers to import or invest. The same protection and conditions apply to local and foreign firms. The chilean tariff rate is currently 11 percent on nearly all products from most countries. But no tariffs are levied on computer products. All imports require a license, but import licenses are granted for almost all foods, the requirements are maintained largely as a statistical gathering mechanism, not as a control, this is almost the same for exports. Chile has two free trade zones, Iquique in the northern tip of Chile and Punta Arenas in the southern tip.

Chilean regulatory system tends to be very transparent, little discretion in many of their acts and very simple regulatory schemes tend to minimize discretion were it does not exist. Yet, the actual process of rule making is not transparent and generally do not include provision for public hearing or comment. Business practices in Chile are quite common to ours. The business day usually begins at 9 am and ends between 6 and 7 pm. Lunch breaks usually begin at 1 pm and are one hour long, unless business is being conducted, were two to three hour long lunches are common. Social occasions rarely begin at indicated times yet business meetings almost always do.

Many Chilean business people are well educated professionals who travel and speak English. But not all speak english therefore the ability to speak is very usefull. All areas of Santiago are effected by a high index of pollution which appears as a heavy smog in winter and and dust in summer. It is important to take into consideration the effects of the pollution on peoples health especially those who already experience respiratory, cardiovascular, allergic and asthmatic diseases, who are entering Chile for business. Chileans are in a whole warm and affectionate people. Greetings are typically a cheerful occasion involving plenty of physical touching.

When greeting a Chilean counterpart, it is important to offer a firm handshake, often women greet by quickly touching cheek to cheek and kissin the air. Chile's business environment is quite transparent and friendly than most in Latin America. Labour force is regarded as competent, productive and relatively well-educated. Its business are not largely different to ours making transition much easier. Chile is a growing country in technology it has the highest Internet rates compared to other Latin American countries.

Making the importation of computer goods an services a potential market. As seen from the information above Chile is a potential environment for business and not a difficult one at that. It is easy to enter into and to maintain with few restrictions. With good management and following the correct methods its investment has the potential to be prosperous.

Bibliography

All information in this report were obtained by the following sources; STAT-USA on the Internet US Department of commerce web web web.