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TRADE - November 2004
Still, with the 2003 signing of a U.S.-Chile trade agreement and the continuing rapid development of countries like Brazil and Argentina, Latin America is emerging as a market hungry for technologies that will make it look more, well, American. Take Brazil, one of the world’s fastest growing economies. In 2002, revenue in the country’s computer hardware sector alone totaled $20 billion and is generally expected to increase, according to the Electrical and Electronics Industry Association. It’s the largest Internet market in Latin America and the ninth largest in the world. “We’ve seen Internet and e-commerce growing at a very fast rate,” said Tatiana Lannelongue, an international business consultant at Covington-based Saucini LLC. “They’re just a very, very big country that’s very sparsely populated. The Internet is seen as a huge connecting tool.” If you’re still doubting the region’s promise, consider the speculation boomlet investors have seen in returns on Latin American mutual funds. At the end of the third quarter, the funds were leading all other classes. They’re an indirect measure, to be sure, and an arguably wise investment. But one thing is certain: Market watchers are eyeing a few up-and-coming Latin American economies. Beside goliaths Mexico and Brazil, most analysts agree the most promising market for the time being is Chile, where economic growth has been fueled by diverse natural resources and a stable government. Argentina could also become just as alluring as its economy recovers from the near collapse of its peso in 2001. Experts say the most promising markets in Latin America are those that cater to the upward climb of developing nations, particularly in countries rushing to comply with international environmental regulations, meet e-business standards, and upgrade home and business computers. The most successful niches for Kentucky companies have been environmental systems – air purification machines, for example – biotechnology, software and other electronics. The state’s top three exports worldwide last year were transportation equipment, chemical manufacturing and machinery manufacturing, according to Economic Development Cabinet figures. Latin America holds plenty of promise, said Carmen Lancho, assistant director for international trade at the Economic Development Cabinet. “If you look at just the population in these countries, it’s tremendous.” Even Governor Ernie Fletcher politically tipped his hat to the region’s economic viability earlier this year, when he made the first ever gubernatorial visit to Kentucky’s South American trade office in Santiago, Chile. It had already been operating for three years before Fletcher’s official opening ceremony. In the industrial sector, some of the state’s most successful trade partners with the region include Arch Environmental in Paducah, a manufacturer of conveyor belt systems, and Richmond-based Lectrodryer, which sells liquid and gas drying systems in Mexico and Brazil. While Lexington printer giant Lexmark remains the state’s primary exporter of computer hardware, Lancho said smaller companies can capture some of the demand that will be emerging in Latin American countries for computer and communication improvements. “They’re still on slower modems, a lot of them don’t have cable,” Lancho said. “As standards improve and they have more buying power, they’re going to be upgrading.” But veterans in Latin American trade caution newcomers to do their homework before investing too much capital overseas. Countries that would seem to be guarantees could be deceiving. And sometimes, the most unappealing markets could be hiding genuine potential. “Some people say that Brazil is the largest market, Mexico is the largest market, and that’s how we measure a market,” Roberto Torok, Lexmark’s vice president and general manager for small and medium business, said at a recent conference of the Bluegrass Global Affairs Association. “But they are also the toughest markets… The thing is, is that your first approach? Or are you better off focusing in the Andean countries, or in other countries?” If you’re considering moving into Latin America and are wondering where to start, the Economic Development Cabinet’s trade offices in Chile and Mexico partner with Kentucky businesses to conduct market analyses and craft business plans. And if you’re not afraid to do your own footwork, Torok recommended researching particular regions through the U.S. Department of Commerce, the State Department or the CIA.
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Copyright 1996-2004, by Kentucky Business Online. All rights reserved. Editorial content
is copyright 2004, Lane Communications Group The Lane Report is a trademark of Lane Communications Group. All other trademarks are the property of their respective owners. |
It seemed, for a while, that excitement generated by NAFTA would finally give a Free Trade Area of the Americas the final push it needed to materialize. But the Sept. 11 attacks and a stewing distrust of American economic policy in South America’s major industrial countries – particularly Brazil and Venezuela – have once again mired the troubled agreement.