As part of our company diversification, I had the unique opportunity to look into opening up the CellAntenna market in Argentina. For the most part, many U.S. companies have been reluctant to do business there due to the country's history of economic turmoil. It is not encouraging that a few years back the Argentinean government defaulted on loans and sent their credit rating down to nothing. As a backlash, banks were unable to obtain funds to allow small businesses to borrow money to fund payrolls and projects. To most Argentinians, what we are going through with our economy now is nothing compared to what they went through. At least we have a government that can bail out the banks.
Borrowing money in Argentina is almost impossible with rates at three percent per month. You heard it -- more than 36 percent per year. So most businesses operate on a cash basis, with no mortgage capability; houses and assets in general are all paid for. Chances are when you are dealing with a company that has a factory, or their own building, you know that there is no debt! (Something to consider when looking at our current financial collapse, right?)
Entrepreneurship in Argentina is thriving. Based on my own business experience there, I discovered that there are many opportunities both in the exporting of U.S. goods and services to Argentina, and in the importing of quality products -- leather goods, for instance -- to the U.S. marketplace. The country has many well-trained workers, and there is a high level of education that equals, if not surpasses, some of our standards. Add to that a good infrastructure, safe environment, and modern atmosphere, and you have a country that is quite sophisticated.
When looking into doing business in Argentina, I would recommend that you have within your organization someone who speaks Spanish, and preferably that person is from Colombia, Ecuador, Chile or Venezuela. The Spanish spoken in these countries is very similar to that of Argentina, with some distinct slang and pronunciation differences. Although most Americans can get by with just English, you will be surprised how quickly and eager most businessmen will be to work with you if you take away the language barrier. In general, when you are dealing with a global business, having personnel that speaks the language is something that is not only respected, but is also appreciated.
The U.S. Department of Commerce has a great team of experts in Buenos Aires headed by Sylvia Yaber. They offer a Gold Key service that I highly recommend. You pay a fee for having the DOC introduce you to qualified businesses, possible customers, and government agencies. It goes a long way in having the DOC call up a business and say Uncle Sam wants you to meet someone special.
You will need a strong banking relationship as well. If this is the first time you are expanding into another country, make sure you current U.S. bank is knowledgeable enough to do business in Argentina. One of the first moves we did when we started to expand internationally was upgrade our bank. HSBC is a good choice because they have offices in almost every country of the world. Citibank didn't want our business because I wasn't borrowing any money. I only wanted to deposit! Stay away from the savings and loans, and the small regional types of banks. Chances are they will be weak on advice and procedures. That will only get you into trouble when it comes to transferring funds.
Another point to remember is not to transfer money using the currency exchange at the bank. Use a reliable currency broker like XE.com or FOREX. In Europe, XE.com provided me with the best rates that were within two percent of the actual currency rate shown on the market. We saved hundreds of thousands of dollars when we were transferring funds to our U.S. bank. Most banks nail you with 8 to 12 percent in fees.
Finally, Argentina is a big country, with pride in its beef and wine industries. Remember to always order Argentinean wines. In other countries wine is an industry. In Argentina wine is a culture. All of your business will revolve around dining! Get used to it. I know I have!
If you have any concerns about expanding your business outside of the U.S., post a comment or email me at email@example.com. I look forward to hearing from you!