by Real Business - Thursday, 30th August 2007

The mercosur region If South America is a serious target market for you, then Argentina is potentially a good entry to the region, as one of the members of the Mercosur regional common market. The other members are Brazil, Paraguay and Uruguay, with Chile, Bolivia and Peru as commercial partners. They have between them 226m people and a GDP of $765bn – 40 per cent of Latin America’s total GDP, according to Argentinian trade advisers Fundacion Invertir (www.invertir.com). Since Mercosur’s creation in 1995, tariffs and trade restrictions between the member states have been eliminated, increasing trade substantially. There is also now – supposedly – free movement of people, capital and services. But fashion designer Lezley George says the movement of goods between member states is not hasslefree, and a wrongly stamped document can cause as many problems as it would without Mercosur.

Somewhere between Evita and Maradona lies the real Argentina. It’s a huge area of South America, where 40 per cent of the 37m-strong population lives in and around the very European city of Buenos Aires, and the economy is starting to recover after a disastrous start to the Noughties.

It’s potentially an exciting time to be doing business with Argentina, which in 2004 imported £179m of goods and services from the UK, including medical products, chemicals, and specialist industrial machinery. There is a strong note of caution, however, after the political and economic crisis of 2002, when the peso was devalued and many foreign companies pulled out of Argentina.

Although things are very much on the up and there is demand for premium consumer products from the remaining wealthy residents, no-one is claiming that the country is a get-richquick destination for growing British businesses. There is still some nervousness among UK companies: the London Chamber of Commerce has just cancelled its agriculture trade mission to Argentina in March because there was not enough interest.

Fashion designer Lezley George has been exporting her clothes to selected retailers in Buenos Aires for 12 years. She says business has gone down since the crash, “but I would still say it’s a good place to export to if you have the right product – it depends on the price and how it is positioned in the market. It needs to be unique, and not competing on a low price point. Younger people are a lot more positive since devaluation, but there is still a lot of fear among the older generation.”

George adds that in Argentina everything tends to be “in a minute”. “Nothing happens for ages and then suddenly it’s all go. My clients have become friends so it’s pretty straightforward now, but I can imagine if you are working through a network from the UK, no-one will get back to you for ages and then they will suddenly want something tomorrow. It’s important to build friendships at the same time as building business.”

Phil Spencer is regional manager of HSBC, the only global bank to stay in the country through the financial crisis, and now advises British SMEs on breaking into the Argentinian market. He agrees that building exports to Argentina is a long game. “Unless you are extremely lucky, you can’t just walk in and do a deal. Do your homework and build contacts and relationships. Talk to the British Argentine Chamber of Commerce and the embassies, and be specific about what you want to achieve so they can make the right contacts for you. We reckon that it usually takes until the third visit for a deal to be successful.” And it’s worth making the long flight to Buenos Aires: business in Argentina is all about personal contact. Email is considered a cold and even rude way of doing business, so pick up the phone and talk to contacts directly before you visit.

Neptune Oceanographics exports its offshore measurement and consultancy services all over the world, and has had one contract with Argentina so far, sending an engineer to work on a pipeline leak job for oil group Total. Director Chris Teal said he had no problems with the deal. “It all went very smoothly, our invoices were paid on time, and everyone was very friendly. I’d be very happy to work out there again.”

Spencer does have one word of warning about Argentinean red tape, however. “Buenos Aires can be intoxicating, but have all the mechanisms in place to make sure you get paid. In other South American countries, if there is a technical error with a document, you’ll still get some help from the authorities. In Argentina, you might find it difficult to get paid.”

But don’t get put off by negative stories. If your research tells you that Buenos Aires is the right move for your business, then do your homework, build relationships, and go for it.

Where next?
British Argentine Chamber of Commerce:
www.britargcham.co.uk
The Buenos Aires Herald newspaper:
www.buenosairesherald.com
Canning House, a non-profit that encourages links between the UK and South America:
www.canninghouse.com

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