New opportunities are coming up for new entrepreneurs. From the hand of experts in the sector in South America, Lissette Elias (InTRADE) and Germán Roca (Prochile – USA), we know the opportunities of Latin American SMEs in the US.
New opportunities in the United States for Latin American SMEs
New opportunities for the Dominican Republic
This country is doing business with the US more frequently in recent years. For instance, approximately 2004 of the small and medium enterprises have signed a contract with countries in North America to do business.
2 Important key opportunities
- The US is the first economy in the world, it has 329 million consumers who have a per capita income of $ 65,280 (in 2019). According to UNCTAD, the United States ranked second as an investment issuer (9.5% of the world total) and was the main recipient of foreign investment (15.9% of the total).
- The United States has a very technologically advanced economy, well diversified and heavily weighted in the services sector. It represents more than two-thirds of GDP, excluding the public sector.
Despite the fact that the industrial sector has been losing importance in recent years, it represents 18.2% of total production. Moreover, it covers a wide range of sectors: telecommunications, electronics and computing, chemicals, automotive, etc. terms, it is highly productive. It is worth noting the high percentage of GDP that corresponds to private consumption, 69.6% in 2019. In other words, the tech sector seems to be a good opportunity if you want to do business in the States.
What should I do if I want to export to the US?
If you want to export to the US and let’s say you do not have much experience, before entering the market for the first time you should follow some guidelines. For example, what are the long-term goals for this market and how will the company grow in this market. Another important question is: Should market areas be assigned to agents or distributors and grant them exclusivity, or set limits based on their results? How will the company protect its intellectual property?
In addition, it is also crucial to be aware of organizational and legal issues to start a business in the US. For instance, a form of a legal entity within the company; type of contract or representation agreement needed. Also, it is important to know if the organization can be modified as the market grows.
Finally, to be able to succeed with your new business in the American continent, it would be necessary to know, on the one hand, what will be considered a success; on the other hand, when can positive cash flows be expected.
Requirements to ensure the effectiveness of the international marketing plan
- Know in-depth the company and its possible exceptional advantages to sell
- Analyze and understand the export market, including competitors, company competitiveness and local distribution systems
- Perform an objective analysis of the strengths, weaknesses, opportunities and threats of the company (SWOT)
- Combine the forces, opportunities and actions necessary for success. There are computer programs that will help you in this analysis
- Modify the products or services for the export market, including the labelling, the language on the label, the documentation and the advertising material:
- Determine what the company needs to improve or export. This analysis includes: budget, staffing, agent assignment, and sales service
- Develop a market access strategy
Hint!: Franchises are the fastest way to launch an internationalization strategy.
New opportunities within the internationalization context of SMEs
Promote technical training aimed at strengthening the capacities of the staff.
- Stimulate international openness by favouring student exchanges and stays in other countries (a Latin American “Erasmus”), as well as business practices
- Encourage training that allows developing the managerial capacities and strategic vision of SME leaders as well as their intercultural and negotiation skills
- Offer spaces for the exchange of internationalization experiences that allow learning from others and overcoming the fear of “going out”
- Do not estimate efforts to report on foreign markets. For example, via digital platforms
- Communicate more and better about free trade agreements, defining elements of world trade flows and yet little known by the micro actors that are SMEs
- Make the help devices easy to use for SMEs so that they naturally resort to them and reinforce the promotion of these instruments.
Logistics solutions: New opportunities for e-commerce in the US
“The low touch economy”
In recent years there has been a change in trend in the American consumer. In the US, there are more and more people who buy things online (this new type of purchase has been accentuated due to the situation experienced by COVID-19). One example would be groceries online, as 72% of consumers have increased their online grocery shopping (alcohol consumption is also growing).
However, it should be noted that despite the fact that most states have opened their borders, in general terms, almost all Americans have the feeling that they are in a crisis. This fact could affect the final volume of online sales.
Now we have to change the way we sell to people, and we see opportunities to grow in the market from an online approach: Marketplaces: e-commerce.
The top 100 marketplaces will collectively grow faster (GMV) in 2020-2021
Today we find an online market with more and more participation from retailers and brands. For example, today the opportunity is coffee and wine. Moreover, this trend shows that large retailers will build their own marketplaces.
LOI then (letter of intent)
Stay tuned to our blog to learn more about the international business world!