As Australian entrepreneurs look to new markets to unlock growth, many are realising Asia is no longer the shining star it once was. Of course, the region is still growing at a healthy pace and delivering significant returns to investors, but Asia’s growth is slowing, prompting investors to take another look at their portfolios and enter into markets they once would not have considered.
For Australians, Latin America may not seem like the most logical choice, but the area is fast-becoming an Australian business paradise, with millions of Aussie dollars making their way into Latin American businesses to fuel growth and generate major returns.
Below, we take a closer look at the growing relationship between Latin America and Australia and offer words of advice for Aussie entrepreneurs considering expanding into the region…
Ease of market entry
Perhaps one of the biggest reasons why Australian businesses are turning to Latin America is the ease of entry. Of course, entrepreneurs must still submit visa applications and go through the Latin American company incorporation process, which is very different from that of Australia’s, but the truth is that the region’s processes are relatively straightforward and designed to make it easy for investors. In fact, some regions offer perks for foreign nationals who are willing to pump money into Latin American businesses, so there’s no reason why an Australian entrepreneur with a bright idea can’t incorporate and trade in the region overnight.
What’s interesting to note is that there are a number of companies offering back-office services like recruitment, company formation, and visa processing, taking the pressure off of your expansion into a new market and ensuring ease of entry. It’s also good to know that popular Latin American regions like Mexico and Brazil have fast visa processes, and Aussie entrepreneurs can typically expect to apply and receive approval in less than thirty days.
Major industry opportunities
There are a growing number of opportunities for Australian businesses in Latin America, not least in the Mexican tourism sector. Australian entrepreneurs, many of whom are versed with the tourism and hospitality expertise required to capitalise on Mexico’s ever-expanding visitor numbers, can benefit by offering unique services and experiences that local businesses can’t afford to implement, whether that’s luxury hotels and transport opportunities, through to fine dining and fashion shows. Sustainable tourism in Chile has also presented some major new business opportunities for foreign investors, as consumers become increasingly conscious of their environmental footprint and look to visit natural beauties rather than the commercialised and over-populated tourism strips that offer little in the way of local culture or unique sights.
Of course, tourism is only one industry where Australian businesses can benefit. In fact, the two regions, despite being thousands of miles apart, have a lot in common, like agriculture, which is a staple in both Australia and countries like Peru and Chile. Meat and wheat are two major exports in Latin America, whilst coffee, cacao, soya, and bananas are popularly-traded commodities where value can be added and sold for a profit in Australia and other markets.
Colombia, for example, is responsible for more than eleven million bags of coffee a year and is the world’s third-biggest producer of coffee. As coffee shops in Australia continue to grow in popularity, incorporating a business in Latin America to supply high-quality organic beans is a sensible move, although understanding Australian and international competition is key.
Other industries where Australian businesses can benefit include the mining sector – Latin America is home to a tonne of natural resources and many Australian entrepreneurs are equipped with the knowledge and capital required to exploit these resources. Petroleum and manufacturing are also growing in popularity, whilst the FinTech sector is booming. Take into consideration that FinTech growth in South America, Australia, and Africa is fast outpacing growth in traditional hubs like the US, UK, and China, and there are opportunities to be had.
Growing number of LATAM-Australia trade deals
It’s easy to raise an eyebrow when first considering the pairing of Latin America and Australia, but governments on both sides of the South Pacific Ocean have been working together to increase their trading relationships and introduce new bilateral trade agreements and policies. Imports from Latin America to Australia totalled AU$6,349 million in 2017, with sectors such as manufactured goods and agriculture benefitting the most. As demand for products on both sides increases, and Australian investment expected to grow, we envisage this figure to balloon in the years and decades ahead. Acting fast is critical to your success.
The Pacific Alliance-Australia Free Trade Agreement unlocks business opportunities for both Australian and Latin American businesses, and a number of free trade agreements, like the Australia-Chile Free Trade Agreement and the PAFTA agreement, can be utilised to import and export goods and services from one nation to another, but bear in mind the cost of your logistics – there’s 7,581 miles between Sydney, Australia and Santiago del Estero, Argentina.
Improved connections increase access
With Australian entrepreneurship in Latin America on the rise, one of the biggest concerns amongst investors was transportation, and being able to travel to Latin America with ease. It has, in the past, been expensive and difficult to travel from one region to another, particularly from Australian cities away from major transport hubs like Sydney Airport, which saw more than 44.4 million passengers in 2018 alone, but things have been changing. CEOs need to be able to connect from one to the other without challenge or expense, and the good news is that inconvenient connecting flights can now be a thing of the past, with airlines such as Norwegian Air Argentina introducing direct flights from Buenos Aires to Perth, and Singapore Airlines, China Southern, and Qantas all receiving approval to start AUS to LATAM routes.
There’s no denying that Latin America is a whole different ballgame to Australia, or even to Asia which is the most common expansion destination for Aussie firms. What’s also hard to deny, though, is the immense opportunities that Latin American countries can offer Aussie entrepreneurs – and vice versa. Underestimate the potential for your business and you could miss out on hundreds of thousands of dollars’ worth of custom – explore Latin America now.