Doing Business In Colombia

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Researching the Market

Why Colombia?

Colombia is a market of 46 million people, making it the third largest country in Latin America, after Brazil and Mexico.

UK trade with Colombia is underdeveloped. Although the Colombian economy is of a broadly similar size to that of South Africa, UK exports to Colombia are a small fraction of those to the latter market. This reflects historical factors but it is also an illustration of the potential that exists. UK exports (including both goods and services) amounted to £418 million in 2010, up 60 per cent on 2009 and strong growth continued in 2011. Our principal export categories are pharmaceuticals, chemicals, machinery and beverages. On the services side, the UK is particularly strong in insurance.Its economy is currently the 33rd largest in the world, but it is the positive business environment and strong growth prospects that mark out Colombia as a potential market of interest for UK companies. Colombia was included in the group of new emerging markets (the so-called CIVETS) alongside Indonesia, Vietnam, Egypt, Turkey and South Africa. Colombia regained investment grade status in March 2011, a move that was an endorsement of its positive outlook, both economically and politically. The Government continues to seek the modernisation of the Colombian economy and has ambitions to join the OECD (Organisation for Economic Co-operation and Development) in the future.

Although trade is relatively small, UK investment in Colombia has been of significant interest. Historically, this was principally concentrated in the extractive sectors (oil and mining) but recent years have seen new companies arriving in services, beverages and chemicals. The UK is the second largest investor in Colombia after the United States, with recorded investments of US$5 billion in the last ten years.

Colombia today offers a range of opportunities in a variety of sectors. Historically, Colombia has looked primarily to the United States for new products and technology but Europe is increasingly seen as an interesting alternative.


The Security Situation

It is impossible to talk about Colombia without considering the security situation. Many people's first reaction to the thought of Colombia is to think of drugs cartels and the associated violence. Many are also familiar with Colombia's history of political violence which has led to large-scale displacement of people. As is often the case, the reputation is in general, outdated and does not reflect the current reality of the country.

Having said that, Colombia does still face the problems associated with drug trafficking and particularly in rural areas, an ongoing struggle between armed groups and the Government.

But Colombia's cities are broadly similar to any large cities around the world and the problems that visitors face are those that exist in all large cities. The Foreign and Commonwealth Office's (FCO's) travel advice (available through www.gov.uk/foreign-travel-advice) provides the latest information and advice for those visiting.

For companies that plan to operate in more rural areas of Colombia (such as those related to the extractive sector or agriculture), professional security advice will be an important part of your research work.


Human Rights and Business

Colombia has long given rise to justified human rights concerns. President Santos has taken a different approach from his predecessor, proposing and steering through landmark legislation to compensate victims of violence and restore land stolen during the conflict (when owners were often forcibly displaced). The Colombian Government is engaged in dialogue with human rights groups and plans a national human rights conference, but there is a long way to go in terms of effective implementation, especially in remote areas where much abuse takes place.

In Colombia, as anywhere else, we encourage and expect British companies to respect human rights in the places where they do business. Both UK Trade & Investment and the Embassy provide advice for British companies to ensure that this happens.

UK Trade & Investment and human rights colleagues in our Embassy in Bogotá work closely on the issues around human rights and the extractive industries. Our British Embassy was a founding member of the Mining and Energy Committee in 2007, an organisation to facilitate the application of the International Voluntary Principles on Security and Human Rights in Colombia.

Further information is available on the Overseas Business Risk pages at: www.ukti.gov.uk


Taking the Strategic Approach

Doing business in any new market can seem daunting for those new to the country, but taking a strategic approach is the key to making the process manageable. Researching your plan and strategy in the market will be important.

In many sectors, Colombia is already a well-developed market, with strong domestic companies and the presence of a number of international players.

Night Construction

But new products, technologies and services are well received once their benefits are understood. Educating potential clients and partners about the competitive advantage that you offer, will be important and may take time.

Your initial research should tell you:

  • whether there is a market for your product/service in Colombia;

  • if you should be targeting particular niches;

  • if you can be competitive in the market.

UK Trade & Investment can help you with market research through its Overseas Market Introduction Service (OMIS).

Once you have confirmed that there is a market for your product in Colombia, you will need to address questions such as the form of market entry (i.e. setting up a subsidiary, using a distributor or an agent, joint ventures etc.), identification of customers, potential partners, geographical locations, sales structure, product delivery, payment channels and after-sales set-up.

 

What is the Right Approach to Colombia?

Doing business in any new market can seem daunting for those new to the country, but taking a strategic approach is the key to making the process manageable. Researching your plan and strategy in the market will be important.

  • Leave your preconceptions at home.

  • Keep hold of your business sense as tightly as you would anywhere else.

  • Do your homework on the market and on potential partners.

  • Be patient - as in any market with which you are not familiar, bureaucratic issues can take longer than you would expect.

  • Take the time to meet and speak with people - as in many Latin American markets, people prefer to do business with people who they know personally. Building a positive relationship will be crucial.

  • Take a long-term approach, but do not always stick too rigidly to your plans.

  • Obtain good-quality, independent legal and professional advice.

  • If your product is in danger of being copied or counterfeited, seek specialist legal advice on how best to protect your intellectual property rights.

  • Do not forget to carry out due diligence.

  • Consult UK Trade & Investment teams in Colombia and the UK who can provide help with researching the Colombian market.

 

How UK Trade & Investment can help

UK Trade & Investment is the government department that supports companies in the UK trading internationally and overseas companies seeking to locate in the UK.

UK Trade & Investment helps companies of all sizes do business in Colombia through a network of international trade teams based in the nine English regions and the devolved administrations in Northern Ireland, Scotland and Wales. In Colombia, there is a dedicated trade team based in the British Embassy in Bogotá.

You will be able to find much valuable free information from carrying out desk research. A good place to start is the UK Trade & Investment website (www.ukti.gov.uk) which provides detailed country and sector information. Registering on the website, which is free, provides you with a number of additional benefits such as access to business opportunities, sector and market reports and information alerts. You can choose the information you receive.

Once you have gained a clearer idea of the Colombian market and what you want to achieve, it is time to start exploring what kind of tailored research you might need to make an effective entry into the market and to find the right customer or partner.

You can commission a wide range of information about the Colombian market from UK Trade & Investment through your local International Trade Adviser or directly from UK Trade & Investment's team in the market.

In England, UK Trade & Investment provides support for companies through a network of international trade teams based in the English regions.

UK Trade & Investment services are also available to companies in Scotland, Wales and Northern Ireland (click here for contact details).

As well as providing general help and advice on all aspects of exporting, the trade teams run a range of roadshows, seminars and other events on Colombia and other markets. To find your nearest International Trade Adviser, call +44 (0)20 7215 5000 or enter your postcode in the local trade team finder at: www.ukti.gov.uk.

 

General Support:

As an initial support, the following fully funded or subsidised services are available from UK Trade & Investment in the UK:

Export Marketing Research Scheme:
Assistance with the development of a strategy for considering which overseas markets to target.

Business Opportunities:
Free information through our internet-based service matching UK companies with international opportunities identified by trade and investment teams overseas.

Aid Funded Business:
Advice on business opportunities that are created through multilateral development agency projects.

Export Communications Review:
An assessment of your company's export communications, followed by practical recommendations for improvement.

 

Freight Bridge Picture

Tailor-made Support

UK Trade & Investment officers in Colombia provide tailor-made information for UK-based companies at a highly subsidised rate. This may include the following:

Pre-visit research Market overview: Basic market information such as sector information and statistics.

Market analysis: Market information, specific to your product or service, including analysis of competitors and the regulatory environment affecting your market entry.

Contacts - Initial list of potential business contacts: Tailored list of named individuals and verified contact details, ranging from local sectoral chambers and relevant government contacts through to potential customers or business partners.

Details of other service providers: Information on such essential in-market contacts as lawyers, accountants, risk management specialists and freight handlers.

Warmed list of customer/partner contacts: A more detailed list of potential customers or partners (agents, distributors etc), including assessment of their level of interest in connecting with you based upon phone calls and provision of information about your company.

Verification of potential partners: Information on specific partners such as verification of company registration details and assessment (with or without direct contact) of their potential reliability. This should inform, rather than replace, your wider due diligence processes.

In-market support briefing: Face-to-face briefing at the start of a trip or debriefing following market visit.

Assistance with appointment programme: Arrangement of appointments with contacts (either identified through research or provided by you) and putting together visit programmes.

Assistance with visit logistics: Advice on costings and arrangement of logistical services such as transport, hotels and interpreters. Charges associated with such services are the client's responsibility and costs will be paid direct to the service providers.

In-market promotional events: Assistance with arrangement of in-market events, such as technical seminars to explain your product/service to a wider audience or a social marketing event to launch a brand. Events can be arranged in the Embassy or Ambassador's Residence (subject to approval) or assistance can be given in identifying and making arrangements with a suitable hotel or other location.

Assistance with marketing issues: Support in tailoring press releases to local markets and distributing material to potentially interested media contacts. Where appropriate and feasible, arrangement of interviews with relevant local media.

In all cases, the service can be tailored to your particular needs. If in doubt, please ask us. We will be happy to help. We are always willing to give general advice and chat through your potential approach to the market before defining the exact ways that we can help.

The cost of UK Trade & Investment services depends on the time invested in research or spent undertaking these activities. Details of the rates are available from www.ukti.gov.uk - the exact charge will depend on the specification of the service.

 

Source - UKTI

 

Strategic Partners