Expanding a Business in Argentina
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Why Expand to Argentina?
There is something new under the deep blue skies of Argentina. It is not all about tango, three fingers tall steaks and football anymore. Stereotypes become obsolete when they are overused. Argentina, the second largest country in South America, is creating a brand new identity thanks to that self-consciousness of who has bottomed out and has learnt how to get back on top. Under these circumstances there is a huge hunger for newness, which suggests it is the right time to expanding a business in Argentina.
Expansionary policies and commodity exports triggered a rebound in GDP. This trend has been largely maintained, creating millions of jobs and encouraging internal consumption. However, unemployment is still high and who is expanding a business in Argentina will find reasonably easy to find competitive and qualified staff of all kinds. Pay is generally lower than in the UK but higher than in the rest of Latin America.
Economic expectations range between 0 and 2% of growth, which in comparison with other countries in the area is not as bad as it looks. With a population of approximately 40 million people, the country is resource rich and self sufficient in foodstuffs, power and oil & gas and has important exports in these sectors.
Moreover Argentina is regarded as the best point of entry to Mercosur, wich is a regional common market composed of Argentina, Brazil, Paraguay, Uruguay, Chile, Bolivia and Peru. Through Mercosur Argentina provides access to a market of 226 million inhabitants with a GDP that represents more than 40 percent of Latin Americas total GDP. Tariffs and other non-tariff restrictions between member states are standard and convenient: there is free movement of capital, services and people.
What's the attraction for a UK Business?
For almost a decade the devaluation of the local currency, the Argentine peso, made foreign imports more expensive, which means that now that the country is out of troubles new opportunities have arisen. The doors are open in a wide range of sectors. Moreover, British companies and their products and services are already well respected and valued for their quality and innovation. You'll have already a advantage on competitors when starting a business in Argentina.
Spanish is the official language, but English is commonly taught at schools as a second language and increasingly used in business. Argentinas transport infrastructure is relatively advanced.
The five most promising business sectors, listed by the British Embassy in Argentina, are:
Creative industries and Fashion: In particular finished products, particularly for high-end retail: women accessories, childrenswear, formal menswear, Pret a Porter, jeans, rainwear, lingerie and sportswear. Good sectors are also the services for fashion: consultancy, packaging, marketing for exporters.
Education & Training: There is a local rising demand for English Language Training programmes at primary level and educational material (books, software), corporate training, postgraduate level training supplies, special needs education material. Diversity of courses, technology transfer and cutting edge service provider are also required.
Environment: A growing environmental concern is having clear effect in business. Main opportunities are in the hazardous waste management (in particular batteries), in de-manufacturing and materials recovery (electric and electronic goods). Interest is raising in sustainable construction, new technologies and know how.
Healthcare and Medical Devices: Local producers of medical devices can be reliable partners for UK companies. The standards are high at competitive prices. The Argentinas capital Buenos Aires is a destination for medical tourism, specialised in cosmetic and plastic surgery, laser eye surgery and dental implantology. Over 50% of equipment is imported, with higher peaks for the diagnostic imaging, a business that was worth £50 millions. Famed research centres (such as Favaloro Foundation www.fundacionfavolavoro.com) are currently seeking international collaboration for drug delivery and implantable devices. Nanotechnology sector is also expanding.
Oil, Gas & Power: Interesting opportunities are in the consultancy to maximise existing on-shore production and downstream refining. Techniques, consultancy and investment to develop offshore fields in challenging South Atlantic conditions are also required. The thermal and hydro-electric sectors are expanding as well.
Other: Argentina's export sectors such as agriculture, technologies and design should be also taken in consideration. Mining, forestry and tourism benefit of special promotion (please see the Financing a Business section).
Buenos Aires, which is the Argentinas busy capital of stunning architectures and sweet life, is the centre of business life in the country and the easiest solution for expanding a business in Argentina. Other large towns such as Cordoba, Rosario, Santa Fé, Salta, Mendoza and Tucuman may offer good opportunities as well for licensing a business in Argentina or incorporating a business in Argentina.
Argentina paid its debt to the International Monetary Fund. However, the country still has to agree terms with the Paris Club and until it does so, export credit could be difficult to obtain. Another issue which you should consider when deciding to set up a business in Argentina is inflation, which remains at high level. In a country which has been through two crisis of the banking and financial systems in less than ten years, it is obvious there is little bank credit for businesses.
Problems may also arise facing local bureaucracy and the proverbial slowness of the business procedures. Knowledge of the South European markets, in particular those of Italy and Spain, can be helpful if you are expanidng a business in Argentina. Around 60% of the Argentine population is composed in fact of second-generation immigrants from South of Europe.
Organisations that can assist with Entering the Market
Simplified Global Payroll Companies with global employees often find that managing payroll in multiple countries is complicated - different systems, laws, and languages in each country, lack of reporting, and constantly changing laws and regulations each year. Trying to manage global payroll via fax and email with excel spreadsheets leads to data security issues, fines, and penalties for non-compliance. Blue Marble has solved global payroll challenges with cloud-based technology, aggregated reporting, and a hybrid service model in 135+ countries around the world.
PEO Worldwide is an international PEO offering employer of record, payroll, employee benefits management, HR and compliance services throughout the world.
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