Since the early 1990s, Chile has had a politically stable situation and experienced steady economic growth. At the same time, it is important to be aware of the demonstrations and disruptions that has occurred lately. To make an expansion to the Chilean market should therefore be considered with. As one of the most open economies in South America, combined with its transparent political leadership, it is highly competitive compared to other Latin American countries. Chile has free-trade agreements with both the EU and the US and is one of two South American members of the Organisation for Economic Co‑operation and Development (OECD).
Opportunities for Swedish companies
As a well-developed market, Chile offers many business and investment opportunities for Swedish companies. The most important industries include mining, forestry, agriculture and viticulture, and in these sectors Swedish technologies and solutions can really make a difference. As Trade & Invest Commissioner Elsa Stefenson mentions in the interview below, the Swedish expertise about extraction and manufacturing processes can increase productivity and decrease costs. Chile has also achieved one of the highest positions in the “Easiness of doing business” rank compared to countries in Latin America.
In recent years, there has been an increased interest among Chilean companies for digitalisation and technology solutions, related to areas such as healthcare, e-health and transport solutions. The consumption in Chile has also gone up, mainly due to a boost in purchasing power, but also thanks to advantageous credit loan opportunities. In consequence, the retail sector has also experienced substantial growth.
Possible challenges in chile
With the economy growing, Chile offers a lot of chances to Swedish businesses for expansion and market entry, but there are some aspects that can be challenging. The level of English throughout the country is low, the tax system has a high level of bureaucracy compared to the EU and finding the right local partners to set up your business can be challenging. In addition, Swedish companies may perceive a gap between how information is communicated and transferred into actions by local stakeholders.
How we can help you expand
Business Sweden offers strategic advice and can help you set up a reliable local network. We have been present in Chile since 2008, our local office also covers Argentina, Peru, Uruguay and Paraguay.
Jesper BernhardssonCountry Manager Chile
What are the main advantages for expansion in Chile?
Chile, Argentina and Peru are commodity-based markets, focusing on mining, forestry, and agriculture. These economies are interested in technologies that create efficiency profits in their industries and help to close the competitive gap with the international market. Swedish companies are great potential partners, thanks to an impressive portfolio of technology suppliers and expertise about sustainability in the important Chilean industries. In addition, the growing investments and easy business environment lower the barriers for expansion even more. Countries such as Argentina and Peru are also attractive as they are large domestic markets with plenty of untapped potential.
What are the risks and challenges companies may face in Chile?
Identifying the right partners in Chile can be challenging for many Swedish companies. There is a high risk that you end up cooperating with a distributor that does not understand the core values of your company. To minimise the risks of damaging your brand, monitoring aspects such as competences and expertise or compliance with CSR guidelines are key when starting a cooperation with a local partner. Additional challenges are the perception of long distance from Sweden, high labour costs, low level of English, and the overall political-economic instability. Bureaucracy and corruption in the business environment are still prevalent, but many countries like Chile and Uruguay have actively been working on reducing these issues.
Are there any cultural aspects to consider?
Generally speaking, Latin America has a formal business culture. It is important to develop long-term relationships with business partners. The ability to communicate effectively in Spanish can be of great value since the level of English is generally low. Organisations tend to be hierarchical with clear responsibilities and a chain of command.