Expanding your business into new markets offers a wide range of benefits, including the ability to diversify your products and services, increase your talent pool and conquer new territories to increase sales. Indeed, an incredible 96 percent of the world’s consumers live outside of the United States of America, and so looking further afield for your business growth makes sense.
One territory that has seen a rise in investment in recent times is Latin America, with Western brands flocking to the markets to raise their profile and generate more revenue. But if you want to take a stronghold in a LATAM market, you first need to understand the local culture. Below, we give you reasons why and share tips on localising your products to maximise your success.
Why expand in Latin America?
As the world becomes more global and businesses look for new opportunities to grow their market share and increase profitability, international expansion is an option many entrepreneurs choose. Markets like the United States, Canada, and the United Kingdom are hugely popular for businesses to crack, but the truth is that such territories are incredibly difficult to enter. Not only do you require hundreds of thousands of dollars to establish a business and find employees, but with so much competition and growing favour of ecommerce brands, it can be tough to make an impact and it often makes more sense to choose a market that’s only just beginning to grow.
El Salvador, for example, in Latin America is a popular choice. The country has seen a huge increase in growth in recent years, with GDP growth reaching 2.1 percent in 2017 thanks to good performance across its livestock, manufacturing, commerce and forestry industries. As a business ready to take on a new challenge, El Salvador also benefits from its location, meaning that distribution to other LATAM countries such as Costa Rica, Brazil, Mexico, and Panama is possible without having to rely on shipping and air travel, which reduces costs and allows for a more affordable international expansion should your business take off within the territory. What’s more, with rising unemployment and a talent tool with low average wages, the risk of such an expansion is lessened than if you were to expand in a developed economy, like Australia’s.
Craig Dempsey, the founder of Biz Latin Hub, says that “companies in the Western world, like in the United States and the United Kingdom, are beginning to see just how valuable Latin American markets can be. Not only do they offer an untapped market in many industries, but because of the territory’s growing middle class and changing cultural attitudes, there’s never been a better time to look at company setup and get your brand established in a country such as Chile, Mexico, or El Salvador. Acting fast and getting ahead of competitors makes sense!”
Understanding Latin American culture
Latin America has a vast and multifaceted culture, covering a wide range of topics and aspects of life. In simple terms, the idea of a ‘Latin American culture’ simply doesn’t exist, as something that may be important to a Mexican family may not be important in El Salvador, and so on. Of course, if you look back at Latin America’s history, to the Pre-Columbian days or the European colonisation, you’ll see that the territory has been transformed and that its history has helped to shape the way people live today. One thing that all Latin Americans have in common is their family values and passion for life, whether that’s expressed through their art and dance or their everyday values. Christianity remains prominent within the territory, and religion plays an important part in everyday life for many, with families regularly visiting churches, purchasing religious merchandise and paraphernalia, and living their lives with God at the forefront.
Sports and leisure play an important role, with fútbol, rugby, polo, tennis, and golf making up middle-class leisure and entertainment, whilst visual art in galleries and through installations remain strong. What has changed, however, is the way Latin Americans consume music and entertainment, with TV shows and music imported from the United States, although traditional television in Spanish, including the ever-popular telenovelas, continue to dominate listings.
Some have argued that globalisation is threatening Latin American culture, and that brands are changing cultural attitudes and the way locals live. This has no doubt been seen already around the world as American brands infiltrate high streets and shopping malls; indeed, it’s rare to visit an airport or shopping complex without coming across brands such as McDonald’s, Starbucks and H&M, and those company’s values have rubbed off on the way we live, valuing affordability and fast food and fashion. In a location where home cooking and fixing and repairing clothing is the norm, perhaps globalisation will have a similar impact on Latin America, with consumers accepting the ‘throwaway’ nature of our industries, and spending more money at established Western stores. Others, however, argue that Latin America is fighting back against globalisation.
One of the best ways to understand the Latin American culture and get a feel for the way the countries work is to visit for yourself. If you’re planning on expanding your business into Chile, for example, then spend a month in the country getting to know the locals, consuming media and exploring your competitors. Without this first-hand insight, you’ll never be able to localise your products and services successfully, and you’ll instead have to rely on other people.
Localising your products and marketing
A product or service that worked in your home country will not necessarily work in a country in Latin America, so conduct some market research and get to grips with what local consumers want from your business. It may be that you need to change your product packaging to suit the audience, overhaul your company website or even change the way you market your business, moving away from Western social networks and instead using traditional marketing campaigns through leaflets, events marketing and in newspapers and magazines. Working with a local expert makes sense here, but remember that you know your business better than anyone else and that you should make the final decisions when it comes to overhauling your branding.
Whatever you decide to do, remember that the key to success in Latin America is to embrace the culture and differences, rather than trying to fight them and overcome them. Take Mexico and McDonald’s as an example. Although the corporations’ popular products like the Big Mac are sold in the territory, McDonald’s also offers a range of Mexico-exclusive products to appeal to the country’s differing tastes and attitudes to fast food. The Chipotle Ranch Signature burger, for example, is a popular choice, whilst offering McPatatas and products such as McMolletes and Desayuno Especial Mexicano allow the company to adhere to local tastes and cultures, whilst still growing their business and getting ahead of their regional and international rivals.
Executive Editor at Best in Australia. Mike has spent over a decade covering news related to business leaders and entrepreneurs around Australia and across the world.