Researching Latin American markets: six smart tips to get you started

Based in Uruguay but with over 10 years experience in the UK, Gabriela Castro-Fontoura specialises in making it easier for British businesses to do business with Latin America. Since she founded Sunny Sky Solutions (www.sunnyskysolutions.co.uk) two years ago, Gabriela has helped many UK companies from a range of sectors (from prams to cable cleats, from beer to confectionery) understand and make the most of opportunities in her native Latin America. Here, she gives us six smart tips to get you started in researching markets across Latin America... Accidental exporting happens, and isn’t it great when it does? Luck plays a part in business but would you leave it all to luck?... If you are already an experienced exporter you will know that an export strategy will no doubt have a strong tool in it: market research. If you haven’t exported before, that is the place to start. Without going into much detail, since what I want here is to give you some tips to get you started, it is important to understand why we bother with market research at all. I think it all comes down to risk. Exporting is risky because it involves resources. And I don’t just mean cash (or credit), I mean plenty of time. Now, as a business owner, if I am going to invest my money, my time, my people in something that is inherently risky, I will want to do whatever I can to minimise those risks. And that is where market research comes in. It won’t insure you against the risk, but it will certainly do lots to minimise it. There are other arguments in favour of researching your market. For example, it gives you an incredibly strong starting point for negotiating with potential partners and with potential clients. It shows you know and you care, and you will be taken more seriously. Apart from that, it can be advantageous when applying for finance or when applying for registrations abroad. There are common denominators for researching whatever market you are researching anywhere in the world, so let me make these tips relevant to Latin America, although they can also be adapted and applied elsewhere. 1. Take a step back Before taking the time (or paying someone like me!) to research these markets, take a step back and think... why do you want to export to Latin America? Is it because it is the only region in the world that is missing from your corporate map? Is it because you have a feeling there is potential here? More importantly, what do you want to achieve from exporting to Latin America? The process will be complex, so focus is key. Similarly, what resources  can you commit to this process? What timescales are you working with? Business in Latin America takes time, so even if the market research shows there is potential, things are unlikely to happen overnight... 2.     Are you ready for Latin America? If the research points out that there is a market for what you offer, are you ready for it? Or are you willing to get ready? I recently was contacted by a brand that was keen to expand into South America. They found there was a market and, surprisingly enough (this doesn’t always happen so quickly) we found a partner eager to buy the products almost straightaway. The company pulled out. It just wasn’t ready to cope with what exporting to a continent of 600 million people involves... Now that they are ready for it, the potential partner has very little interest. Timing is key. It is, of course, absolutely fine to “scope” a market and then decide you are not ready for it. But if you are going to invest in researching a market thoroughly and seriously, you should know what you want the research for and how you want to take it forward. In my opinion, the success rate of a British business in Latin America is much higher if this business has already exported not only to the rest of the EU but also overseas to more familiar countries like Australia or the US (or at least attempted to). This is because the company will be used to exporting as a process, will have the knowledge and the skills, and will have got it wrong enough times before to learn from it! There are some exceptions, but most times I would discourage British companies that haven’t exported at all to start by researching Latin America. It is just not a market for beginners... 3.    Correct me, please Did I just say “Latin America is a not a market for beginners”? I hope you have corrected me. That is the first thing you need to know about market research in Latin America: it is NOT by ANY means a one market! Understanding the huge differences across Latin America, from  Mexico to Argentina, from Honduras to Uruguay, is crucial. Never take it as a unit because it is not. Latin American countries vary hugely in almost every variable: political stability, economic indicators, consumer preferences, purchasing power, corruption indexes and so on. 4.     You’ve got to start somewhere... Because countries are so diverse, as we have just discussed, you will have to focus your research. If you are lucky enough to be able to afford researching 20 countries, then that’s ok, but most companies start with 3-8 and narrow it down from there. How do they choose those first ones to start with? I have advised companies based on my knowledge and experience, because I know about factors such as economic performance, free trade agreements or political stability. But if you don’t know, you will almost surely have a preference, maybe because you already get orders from a country or because a member of staff particularly knows a region well. Maybe you read the papers and can work out which countries to avoid, or you have been to a UKTI seminar or roadshow that highlighted some specific countries (do bear in mind that UKTI has a government agenda behind it...). Or check out what your competition (not just from the UK but from the US and Spain, which are always good comparators) are doing. Are they are heading off to Chile? Are they all avoiding Nicaragua? No competition in a country might mean a lovely gap for you to fill, or a complete lack of demand, so watch out! Same happens with plenty of competition, it either highlights huge opportunities or a saturated market. But you will only know this with time. Also, check not only the “stock” of your competition in these countries but the “flow”: are companies still entering a specific market or is it fairly stable? More interestingly, are they pulling out?... From then on, the process is easier since you can “eliminate” or “add” countries to your list as the research goes on... 5.     Narrow it down We have been talking about countries as markets. That is always not the case. For a country like Brazil, for example, with 200 million people, your market might be just Rio de Janeiro, or just Sao Paulo, or just Bahia, depending on what you offer. Or it might even be a neighbourhood of those cities. Narrowing it down can really help focus. You can always then grow from there... 6.     Mind your language Right, so now you have thought about Latin America in detail, decided you want to start exploring these markets, have chosen a few at least for now, have narrowed them down geographically, so what next? Before you go any further, mind your language. Latin America is still hugely Spanish-speaking and any research of some depth needs to be in that language. You will explore the markets much quicker (online or during a visit) and accurately if you speak the language. If you are asking yourself how you get this resource, then that is one important question to address company-wise (even if there’s just 2 of you!) right now, with a vision to succeeding in these markets. Even if you commission some research (to someone like me, who is a native speaker), managing orders, conversations, negotiations and, more importantly, relationships, will force you at some point in the future to think about language resources, so you might as well start thinking now...  You can outsource that resource or bring it into your company, but you will need it at some point (and to some extent). The one exception to Spanish-speaking dominance is Brazil, where Brazilian Portuguese is a must. Mainland Portuguese and Spanish speakers will be able to carry out some level of research but also remember that if things move forward, you will need some language capability here. How much will depend on what you offer, your people, your business set up, and your experience and contacts, so it will be unique to each business. You will almost undoubtedly need at least a translator for your marketing materials, which will be considerably better received if you send them in Brazilian (yes, Brazilian, I insist!) Portuguese. We hope these six tips have given you an idea to get you ready to start researching markets across Latin America. How you move on from here will depend on the nature of the goods or services you offer, what decisions you make, your priorities, your vision and strategy and the resources you have. Keep coming back to read more about exporting to Latin America and send us your feedback!