Chile:
A Reliable Partner for
U.S. Business
by
the U.S. Commercial
Service, Santiago
With
additional information
supplied by
ExportMichigan, Paul
Litton, Webmaster
|
An
Anchor of
Stability in
Latin America
Chile's
GDP will
expand 3.1
percent in
2003,
according to
forecasts by
the
International
Monetary Fund
in its latest World
Economic
Outlook.
The same
report scales
Latin
America's
growth rate
down to 1.5
percent from 3
percent. In a
context in
which
"Latin
America, as a
whole,
experienced in
2001–2002
its worst
downturn in
two decades,
and prospects
are still
uncertain,"
the IMF
estimates that
Chilean GDP
will grow 4.8
percent in
2004, thanks
to an economic
performance
"underpinned
by generally
sound policies
and high
degrees of
integration
with the world
economy."
|
From deserts in the
north, through the
majestic Cordillera
with the tallest peak
in the Western
Hemisphere at 22,000
feet, to the arctic
conditions of Tierra
del Fuego, Chile is
one of Latin America's
most dynamic and
promising markets. Its
strength and
attractiveness lie not
in its size
(population of 15
million people) but in
the energy and
professionalism of its
entrepreneurs, the
transparency of its
regulation, and the
predictability of its
decision-makers.
Market-led reforms
adopted close to 30
years ago and an
increasingly
diversified economy
with strong ties to
buyers and suppliers
in the Americas,
Europe, and Asia have
given Chile a wide
range of options for
sustained growth.
Prudent economic
policy-making has
secured long-term
stability unknown
elsewhere in Latin
America.
This article presents
12 of the most
promising industrial
and service sectors of
this diverse economy.
The latest Country
Commercial Guide
for Chile provides
detailed information
on how to do business
in Chile and is
available at www.buyusa.gov/chile/en.
BILATERAL
TRADE
U.S. exporters have
over the past 10 years
shipped as much
merchandise to Chile
as they have to India
(a nation of 1 billion
people). Chileans, on
a per-capita basis,
buy two and three
times more U.S.
products as the
average Argentinean
and Brazilian,
respectively.
The United States has
enjoyed a $500-million
surplus in services
trade with Chile over
the last two years.
U.S. private services
exports to Chile in
2001 and 2002 totaled
approximately $1.3
billion, whereas U.S.
services imports from
Chile were about $800
million. Business
opportunities are
available within the
following service
sectors: finance,
insurance,
telecommunications,
education, law,
accounting,
advertising,
engineering, express
delivery, and
investment.
SUSTAINED
ECONOMIC GROWTH
Chile is the only
investment-grade
economy in South
America. In January
2003, Standard &
Poor's gave Chile an
"A-" rating.
Over the last 15
years, Chile has
witnessed the most
impressive real growth
rates in its history.
From 1987 to 1997, the
country's GDP grew an
average of 7.9
percent. While the
world economy entered
recession, the Chilean
economy managed to
grow at an average of
2.6 percent from 1998
to 2002. The
government of Chile
and several
independent economists
estimate the economy
will grow 2.5 to 3.5
percent in 2003.
The domestic savings
and investment rate
has hovered at 20
percent of GDP and is
fueled by private
pension funds created
in 1981. International
reserves remain
constant at just above
$15 billion, which
enables the government
of Chile to maintain
its policy of a
structural budget
surplus of 1 percent.
A strong, independent
central bank maintains
prudent fiscal
management that keeps
the country's
inflation within a
target range of 2 to 4
percent. The 2002 rate
of inflation was 2.8
percent. The latest
unemployment figures
for April 2003 came in
at 8.2 percent, lower
than the same period
for last year.
Single-digit
employment rates in
Chile are the envy of
Latin America—a
region that struggles
with unemployment
double or triple the
Chilean rate.
|
Lenel
Markets via
U.S.
Commercial
Service
In
March 2003,
the Commercial
Service in
Santiago
organized a
single company
promotion for
Lenel Systems
International,
Inc., of
Rochester,
N.Y. The
event, held
over breakfast
at a Santiago
hotel,
included more
than 30 guests
invited for
their interest
in Lenel's
state-of-the-art
automatic
identification
and access
control
integration
software. Todd
Smith, Lenel's
vice president
of
international
sales, and
Victor Merino,
Lenel's sales
director for
Latin America,
were very
impressed with
the event.
Todd Smith
wrote in a
follow-up
e-mail:
"Yes, the
promotion was
a great
success. We
had about 30
prospects in
attendance. We
did write
almost
immediately
approximately
$50,000 in
business (some
of the orders
arrived within
a day of the
seminar),
thanks to your
efforts in
conjunction
with our local
partner. More
importantly we
have been able
to prospect
some
substantial
projects worth
approximately
$250,000,
which we are
actively
working on.
That is in
addition to
the marketing
goodwill the
program has
provided,
which is as
you can
appreciate
difficult to
estimate in
tangible
terms. The
professionalism
and prestige
afforded by
our
association
with the U.S.
Commercial
Service has
helped us in
many areas of
the world
including
Santiago.
Lenel will
continue to
include
Commercial
Service
resources as a
valuable plank
in our
marketing
platform."
|
U.S.-CHILE
FREE TRADE AGREEMENT
The United States
and Chile concluded a
free trade agreement (FTA)
in December 2002. The
FTA text is currently
being prepared for
signature by both
countries.
Expectations of the
agreement remain
positive. Although the
United States remains
Chile's most important
trading partner, U.S.
good and services have
lost market share
among other trading
partners that now
benefit from trade
agreements with Chile.
Chile has free trade
agreements with Canada
and Mexico, the United
States' two NAFTA
partners, as well as
with the European
Union and South Korea,
among others. The
government of Chile
remains active in
negotiating other
trade agreements
around the world.
Therefore, a
U.S.-Chile free trade
agreement, once
approved by Congress,
would put U.S.
exporters on equal
footing to enjoy very
low import tariffs on
most products.
(Currently, U.S.
exporters face a
6-percent tariff.) The
full text of the FTA
can be viewed at www.ustr.gov.
Read more about the
U.S.-Chile FTA in the
article
"U.S.-Chile Free
Trade Agreement:
Comprehensive
Gains," published
in the February 2003
issue of Export
America.
A National Association
of Manufacturers study
estimates that the FTA
will provide an
additional 12,500 U.S.
jobs annually. The
University of Michigan
states that the FTA
could increase U.S.
GDP by $4.2 billion
annually. Chilean news
agencies predict that
the FTA could increase
trade between Chile
and the United States
by as much as 30
percent in its first
year. Other
significant gains will
be in the area of
investment. The U.S.
Commercial Service in
Santiago is drafting a
series of
opportunities for U.S.
companies once the FTA
takes effect. Stay
tuned and visit www.buyusa.gov/chile/en
for current news and
hot topics.
OPPORTUNITIES
BY SECTOR
Environmental
Technologies
Opportunities exist in
the privatization and
upgrading of municipal
water and wastewater
treatment facilities.
Chile offers excellent
opportunities for
suppliers of air,
solid waste, and water
pollution control
equipment. For
example, new
regulations require
that by 2010 all water
in Chile must be
treated (only 20
percent of waste water
is currently treated).
Specifically, a total
of $2.5 billion will
have to be invested in
water infrastructure,
$400 million in water
treatment, $700
million in rainwater
collection, and $1.4
billion in potable
water production. The
two largest sanitation
companies are Aguas
Andinas and ESVAL,
which were privatized
and control more than
50 percent of the
water supply market.
Aguas Andinas plans to
invest $563 million in
infrastructure and
technologies for water
supply and wastewater
treatment by 2010.
Aguayambiente, the
largest environmental
trade show in Chile,
takes place in
Santiago, June
25–28, 2003. Visit www.aguayambiente.cl
for more information.
Telecommunications
Equipment and Services
In 1988, Chile became
the first country in
Latin America to begin
privatization of the
telecommunications
sector. The
telecommunications
sector in Chile is the
most deregulated,
advanced, and
transparent in Latin
America. The total
market value of the
telecommunications
sector in 2002 was
$485 million. U.S.
telecommunications
products are well
regarded. Total U.S.
exports for this
sector reached $270
million. The lion's
share of investment
was in mobile and
fixed telephone
services. Competition
is fierce among
telecommunications
operators. The current
market trend is to
integrate services and
to provide
state-of-the-art
products and services
to consumers. In June
2002, Internet
connections totaled
almost 800,000, an
increase of 39 percent
over the previous
year. Increasing
telecommunications
penetration
rates—especially
Internet access—is
one of the highest
government priorities.
Medical
Equipment and Services
An aging population, a
strong private
hospital sector, and
planned hospital
construction make this
a dynamic sector.
Chile currently spends
approximately 7
percent of its GDP on
health care, making it
one of the largest
areas of government
expenditure. The
Chilean government
guarantees health care
coverage as a
constitutional right
and is committed to
improving the national
public-health system
that provides care for
approximately 70
percent of the
population. Several
programs for
large-scale purchases
of modern equipment
have received
government approval as
part of an effort to
upgrade the public and
private health
sectors. The United
States has for years
been Chile's most
important supplier of
medical equipment.
U.S. companies hold
about half of the
medical equipment
market.
|
SSA
to Operate at
Chilean Port
With over
3,000 miles of
coastline,
Chile is a
"seaport
country."
Stevedoring
Services of
America (SSA)
saw an
opportunity in
May 2002 to
provide cargo
container
services in
Chile and
found a local
partner to bid
on and win a
concession for
the rights to
operate in the
Port of San
Antonio and
San Vincente
in Chile.
Thanks to
SSA's efforts
and the
assistance
provided by
the U.S.
Commercial
Service in
Santiago, SSA
now operates
the largest
volume
container port
in
Chile—surpassing
older and
better-known
neighboring
ports.
On
top of SSA's
new $6-million
crane, left to
right:
Commercial
Service
staffers Mary
Lou Lathrop,
Americo Tadeu,
and Jim
Rigassio with
Peter McGivern,
general
manager of SSA
Chile.
Photo
courtesy of
U.S.
Commercial
Service,
Santiago.
|
Computer
Hardware, Software,
and Services
Technologically
advanced U.S. computer
products find a
receptive audience
among IT buyers. The
Chilean government has
eliminated tariffs on
computer equipment
imports in order to
support the
development of
high-tech skills and
jobs.
Chile has Latin
America's
second-lowest software
piracy rate (51
percent), according to
a recent study
conducted by the
Business Software
Alliance and
International Data
Corporation. The
report also indicates
that cutting Chile's
piracy rate from 51 to
41 percent could add
another $200 million
to its economy,
causing the local IT
industry to grow to
nearly $1.6 billion by
2006.
TecnoInternet-Softel
is the largest IT
trade show in Chile.
It takes place in
October. See www.tecnointernet.cl
for more information.
Architectural,
Engineering, and
Construction (AEC)
Services
This is an untapped
market for U.S. firms.
The AEC services
market is estimated
conservatively at $200
million a year.
European companies
dominate this market.
They provide
architectural services
for high-rise
buildings,
construction services
for new public works,
and engineering
services for
industries such as
mining, water
treatment, and waste
management. The
projected 2003 growth
for construction is 4
percent—slightly
higher than Chile's
estimated GDP growth
for this year.
Sustained economic
growth, an orientation
towards U.S.
construction
standards, and
expanding business and
infrastructure needs
provide a strong base
for AEC service
providers. The main
trade events where
U.S. exporters may
exhibit are
Expohormigon (October
2003, Santiago, www.expohormigon.cl)
and Expomin (May 2004,
Santiago, www.expomin.cl).
Food
Processing Equipment
and Services
Natural and
phytosanitary
conditions, worldwide
demand,
entrepreneurial
experience,
infrastructure, and
off-season production
have enabled Chile to
become a key player in
the export of
agricultural and
processed food
products. Chile is a
world leader in
producing and
exporting high-quality
fresh fruit ($1
billion in annual
exports), and the
world's second-largest
producer and exporter
of salmon and trout
($1 billion in annual
exports of this
non-native species).
Increasingly, Chilean
wines are winning
major international
competitions. Chile
exports $600 million
worth of wines a year.
Chile's pork, poultry,
and exotic meats
industries, as well as
its dairy industry,
have plans for export
expansion. Chilean
producers are all too
aware that to remain
competitive, they must
maintain and update
their processing and
packaging plants.
Especially given the
trend toward producing
value-added goods,
significant commercial
opportunities exist in
the areas of cost
reduction, production
standards, safety, and
final product quality.
Financial
Services
Chile’s domestic
capital market has a
value of more than $50
billion. The
privatized social
security system
represents the largest
institutional
investor, with nearly
$40 billion in assets
under management. With
assets of $5 billion,
the mutual funds
industry is growing
more than 20 percent
annually. The
factoring industry is
also growing rapidly.
Capital market reform
in 2001 deregulated
the industry, making
it the most open and
modern marketplace in
the region.
|
DSC
in Copper
Mining Deal
In November
2002, Dredging
Supply Co.,
Inc. (DSC) of
Reserve, La.,
reported a
new-to-market
contract to
supply two
custom-made
mining dredges
with a
combined value
of $2.8
million to a
copper mine in
Chile. To
finance the
cost of their
construction,
DSC obtained a
$1.2 million
export working
capital line
from Bank One,
secured by an
U.S.
Export-Import
Bank
guarantee.
DSC has a
reputation for
reliable,
state-of-the-art
equipment.
Chile holds
future sales
opportunities
with other
mine
operators.
"In
Chile, we have
seen
tremendous
export
activity, and
we are
currently
negotiating
several other
contracts as
well,"
notes Robert
Wetta, chief
operating
officer of
DSC.
DSC enjoys a
solid working
relationship
with the U.S.
Export
Assistance
Center in
Baltimore,
where the
firm's
international
sales director
is based. It
is also on
good terms
with the U.S.
Export
Assistance
Center in New
Orleans, which
is convenient
to its
shipyard and
headquarters
in Reserve.
The U.S.
Commercial
Service office
at the U.S.
embassy in
Santiago
supported the
Export
Assistance
Center trade
specialists
with market
research,
business
briefings, and
business
referrals.
"We
appreciate the
help,
guidance, and
advocacy we
receive from
the U.S.
Department of
Commerce in
identifying
and closing
new export
opportunities,
such as our
recent Chilean
success,"
says company
official
Charles Sinunu.
|
Mining
Equipment and Services
Mining is Chile's
largest industry. It
represents a
$700-million market.
Imports total
approximately $450
million, of which U.S.
companies supply more
than 60 percent.
Chile's principal
mineral is copper, and
it comprises 40
percent of all Chilean
exports. Given the
relatively low price
of copper on the world
market, solutions to
save costs and thus
increase profitability
are in high demand. As
the price of copper
rebounds from current
lows, investment in
this sector will
follow. Expomin is
Latin America's
largest mining show.
In 2002, more than 200
American firms
exhibited at the U.S.
pavilion, which
attracted buyers from
all over the region.
Visit www.expomin.cl
for more information.
Power
Generation
Power generation has
not kept pace with
demand. Supply
shortages are creating
new investment and
trade opportunities.
The Ministry of
Economic Affairs is
planning new projects
to keep up with future
demand. Some examples
include two new 400
MW, gas-fired,
combined-cycle power
plants valued at $400
million each. Major
U.S. power companies
are already in the
power generation and
distribution market.
Security
Equipment and Services
The total market size
for 2002 was $34
million, of which
imports made up 88
percent. The United
States supplies 30
percent of all
imports; China
supplies 16 percent.
The local market
demand for this
industry extends from
personal safety
products to industrial
security solutions,
such as access
control, alarms,
detectors, perimeter
protection, security
equipment for prisons,
security equipment for
airports and seaports,
fire-fighting
equipment, and more.
There is no specific
local trade event for
this industry.
However, Edifica (www.edifica.cl)
is an international
trade fair for
construction machinery
and equipment. The
show is held in
Santiago, September
24–27, 2003, and is
a great regional show
for U.S. companies.
Material
Handling Equipment and
Logistics
The development of
logistics, including
the material-handling
equipment industry as
well as related
services, is a key
component of economic
activity. Logistics
has grown impressively
over the last few
years, covering the
entire supply chain:
airfreight, ocean
transportation,
warehousing, inventory
management, surface
transportation,
management software,
and more. Chilean
companies require
increasingly
sophisticated
processes and
technologies to be
cost-effective and
efficient, improve
economies of scale,
and provide
just-in-time delivery
to domestic and
international
customers. The most
important local trade
show in this sector is
Logisti-k last held in
2003.
E-Business
Services
The government of
Chile sees future job
growth and prosperity
tied to the digital
sector. A new digital
signature law is
helping business
streamline operations
by eliminating paper
contracts. While
business-to-consumer
services are limited
by a per-capita
Internet penetration
rate of 28 percent,
business-to-business
(B2B) services provide
the engine for sales
in this sector. The
government is
seriously looking to
fulfill its
modernization
commitments agreed
upon in the free trade
pacts with the
European Union, South
Korea, and the United
States. A Santiago
Chamber of Commerce
study states that B2B
transactions in 2002
totaled $2.47 billion
within its 22 B2B
e-marketplace sites.
The study estimates
that this year
businesses will focus
on digital technology
to make traditional
processes more
efficient, and that
traditional companies
will augment their
investment in digital
technology.
Secretary
Evans' Trade Mission
to Chile
 U.S.
Secretary of Commerce
Donald L. Evans
visited Santiago,
December 4–5, 2002,
leading a delegation
of 14 U.S. companies
interested in starting
or expanding business
in Chile. During the
visit, Secretary Evans
had a successful
meeting with Chilean
President Ricardo
Lagos, spoke at a
breakfast sponsored by
the American Chamber
of Commerce, discussed
investment and FTA
issues with Santiago
businesspeople, and
visited a children’s
burn clinic supported
by ExxonMobil. While
the trade mission was
not planned to
coincide with the
final round of
U.S.-Chile FTA
negotiations, the
presence of Secretary
Evans in Chile during
this crucial time in
negotiations was
interpreted in Chile
as a sign of U.S.
government commitment
to the economic
welfare of the
country.
U.S. Secretary of
Commerce Donald Evans
meets with members of
Chile's national youth
basketball league—a
league created and
sponsored by the
U.S.-based energy
company PSEG Global
This is not an
all-inclusive list of
commercial
opportunities in
Chile. For more
information on Chile
and to find out about
the products and
services offered to
help American firms
evaluate the market
and develop successful
relationships, contact
the U.S. Commercial
Service in Santiago at
www.buyusa.gov/chile/en.
Michigan Exports
to Chile
| Item |
2000 |
2001 |
2002 |
2003 |
2004 |
%
change
2003 to
2004 |
| Product
Total |
63321472 |
76656098 |
71619967 |
64825949 |
52399792 |
-19.2 |
| 336
Transportation
Equipment |
31476713 |
39905342 |
46970017 |
37510761 |
24793554 |
-33.9 |
| 333
Machinery
Manufactures |
20418298 |
24703273 |
13023782 |
13584987 |
16992231 |
25.1 |
| 325
Chemical
Manufactures |
3670647 |
4225619 |
5334628 |
3895314 |
3344996 |
-14.1 |
| 334
Computers &
Electronic Prod. |
1994315 |
1297542 |
1009604 |
2907464 |
2228602 |
-23.4 |
| 339
Misc.
Manufactures |
246713 |
1012065 |
660618 |
1074003 |
947731 |
-11.8 |
| 311
Processed Foods |
72718 |
29105 |
360880 |
873725 |
832028 |
-4.8 |
| 332
Fabricated Metal
Products |
680333 |
875264 |
711848 |
769523 |
820487 |
6.6 |
| 337
Furniture &
Related Products |
1953880 |
1219031 |
430082 |
473954 |
774904 |
63.5 |
| 335
Elec. Eq.;
Appliances &
Parts |
482800 |
816828 |
680494 |
514957 |
511061 |
-0.8 |
| 331
Primary Metal
Manufactures |
192605 |
364933 |
165313 |
196533 |
289400 |
47.3 |
| 327
Non-Metallic
Mineral Mfgs. |
633783 |
604177 |
899293 |
472536 |
272217 |
-42.4 |
| 990
Spec.
Classification
Provisions |
183194 |
718468 |
193154 |
33150 |
159258 |
380.4 |
| 326
Plastic &
Rubber Products |
374685 |
179319 |
232363 |
233004 |
126490 |
-45.7 |
| 324
Petroleum &
Coal Products |
42296 |
154176 |
110672 |
1327887 |
94530 |
-92.9 |
| 111
Crop Production |
0 |
0 |
0 |
287395 |
68897 |
-76 |
| 920
Used Merchandise |
0 |
0 |
125710 |
91720 |
46051 |
-49.8 |
| 323
Printing &
Related Products |
69236 |
84784 |
58267 |
60082 |
28770 |
-52.1 |
| 313
Fabric Mill
Products |
34800 |
14647 |
38296 |
17353 |
17460 |
0.6 |
| 315
Apparel
Manufactures |
0 |
0 |
10143 |
34870 |
16000 |
-54.1 |
| 316
Leather &
Related Products |
546590 |
307554 |
519761 |
68514 |
11585 |
-83.1 |
| 314
Non-Apparel
Textile Products |
29206 |
38900 |
0 |
8600 |
10518 |
22.3 |
| 321
Wood Products |
41868 |
15478 |
0 |
107214 |
6640 |
-93.8 |
| 322
Paper Products |
166502 |
77249 |
76475 |
270312 |
6382 |
-97.6 |
| 211
Oil & Gas
Extraction |
0 |
4128 |
0 |
0 |
0 |
|
| 212
Mining |
7598 |
8216 |
8567 |
12091 |
0 |
-100 |
| 511
Publishing
Industries |
2692 |
0 |
0 |
0 |
0 |
|
| 910
Waste &
Scrap |
0 |
0 |
0 |
0 |
0 |
|
For additional
information on Chile,
please see:
To view all USDOC
market research for
Chile, please click here.
|
The
Export Channel
Expand your vision!
What’s
on? Insightful,
interactive,
international business
Webcasts, brought to
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Commercial Service.
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Market
Brief
In-country
experts share unique
perspectives and new
opportunities for
markets around the
world.
|
| Chile,
one of
the
most
dynamic
and
promising
markets
in
Latin
America...
Click
on the
picture.
|
 |
|
|
Date Updated: March 27, 2007
|
