LATAM on the rise: nearshoring, market access, and untapped potential
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Latin America is increasingly becoming a focal point for international businesses, offering a wealth of opportunities from nearshoring to market expansion. This article delves into the region's multifaceted appeal, drawing insights from experts based in Colombia, Brazil, and Spain.
The Nearshoring Advantage
For international businesses, nearshoring in Latin America presents a compelling strategy driven by economic advantages, geopolitical considerations, and the need for resilient supply chains. Two primary types of companies are capitalizing on these benefits.
Manufacturing firms are drawn to the region's geographic and geopolitical advantages, with proximity to the United States translating to shorter travel times for site visits, reduced shipping times, and lower logistics costs. The convenience of overlapping time zones facilitates real-time communication with providers, enhancing efficiency.
Geopolitically, companies are actively seeking to reduce their reliance on Asia, particularly China, given the unpredictable nature of US-China relations. Latin America offers a viable alternative for diversifying supply chains, providing stability and predictability, especially within the well-established US-Mexico-Canada trade bloc.?
Beyond manufacturing, companies are also tapping into Latin America's burgeoning talent pool. The region boasts over a million software developers, with growing English proficiency facilitated by increased investment in education. From Mexico to Costa Rica, and increasingly in the Dominican Republic, Panama, Colombia, Argentina, and Brazil, diverse talent pools are readily available. This talent comes with significant cost savings, ranging from 30% to 70% in some cases. While the Philippines or India may offer lower costs, the advantage of real-time collaboration due to similar time zones makes Latin America an attractive option.
Joseph Novitzki is the Principal and CEO of Timberwolf International Consulting, where he helps U.S. businesses navigate the complexities of international expansion and build high-performing teams in Latin America. With over a decade of experience living and working in the region, Joseph brings a unique perspective to unlocking Latin America's potential as the next economic frontier. From saving clients hundreds of thousands of dollars in labor costs through nearshoring to leading market entry strategies across 12 countries, his results-driven approach focuses on efficiency and adaptability to local norms.
Colombia: a gateway to growth
Expanding into new markets can be complex, but Latin America, particularly Colombia, offers a strong return on investment. BBVA forecasts a GDP growth of 2.5% in 2025 and 3.2% in 2026 for Colombia, driven by private consumption and fixed investment in infrastructure, machinery, and housing.
Colombia's unique geographical position as the only South American country with access to both the Pacific and Atlantic (Caribbean) oceans makes it an ideal logistics hub. Major investments in infrastructure, including ports in Cartagena, Barranquilla, and Buenaventura, along with the upcoming port of Antioquia, are attracting import-export businesses. Tax incentives and free trade zones further enhance its appeal.
For companies looking to build teams and access talent, cities like Cali, Bogota, and especially Medellin, dubbed the "Silicon Valley of South America," have emerged as tech centers. Colombian universities produce approximately 13,000 IT and engineering graduates annually, with increasing English proficiency, making them well-suited to serve US-based clients and teams.
Cost advantages are evident in both manufacturing and talent acquisition. Manufacturing companies can achieve operational cost reductions of 30% to 50% compared to the US, while maintaining high-quality standards in industries like textiles and furniture. Service and tech companies can access highly skilled professionals at competitive rates, with potential cost savings of up to 70%.
Brazil: a healthcare powerhouse
Brazil stands out as an important market for foreign companies, particularly in the healthcare sector, due to its size and its role as a gateway to Latin America. As one of the top 10 global markets in most health segments, Brazil boasts a population of over 200 million with an aging demographic, driving increasing demand for healthcare products and services. All major multinational pharmaceutical companies have a presence in Brazil, some with local manufacturing facilities.
Brazil's dual healthcare system, comprising the public system providing universal care and a robust private sector covering over 50 million people, creates diverse opportunities. With over 6,500 hospitals, 63% of which are private, the country offers avenues for both basic care and high-end solutions involving technology and innovation.
The country is also competitive in the clinical trial space, with recent regulatory advancements making it an attractive destination due to its diverse population and well-structured ecosystem open to innovation. Major cities are actively seeking new digital solutions, medical devices, and innovative treatments, fostering partnerships between hospitals and companies specializing in AI and algorithms.
Henrique Malina brings over 20 years of experience and a proven track record in facilitating multi-million dollar agreements for pharmaceutical, nutraceutical, and med-tech companies in the dynamic Latin American market. Expertise focused on:
Market Entry Strategy: Assisting companies in navigating the complexities of the LATAM healthcare landscape.
Strategic Alliances: Building strong relationships with key players such as distributors and major pharma/med-tech companies in the region.
Global Opportunities: Connecting with leading biotechs, pharma, and nutraceutical firms to create new business prospects.
Strategic imperatives for Latin American market entry
Entering the Latin American market, particularly in the healthcare sector, requires a well-defined strategy. A common mistake is a lack of strategic planning, often replaced by a purely sales-driven approach. A successful market entry strategy should incorporate key elements, including:
Sao Paulo: The Heartbeat of Brazil?
Sao Paulo is a central hub for the Brazilian economy. The city accounts for 9% of the country's GDP, while the entire state represents 31%. However, Brazil's vastness means each region has unique cultural nuances, business etiquette, and market prices. Understanding these regional differences is crucial for adapting business strategies.
Marc Flo-Martin is a Sales and Business Development executive with a 20+ years international career that has taken him to live in Spain, The Netherlands, France, and particularly Brazil, where he lived and worked for a decade. Fluent in six languages, he leverages his linguistic skills to build connections and foster collaboration across borders. Currently based in his hometown of Barcelona, Marc combines his corporate expertise with a passion for developing global business connections.
Overcoming Challenges in Brazil
Despite its promising outlook, succeeding in Brazil requires understanding the "custo Brasil," or the cost of doing business in Brazil. This encompasses high-interest rates, taxes, labor costs, infrastructure challenges, and administrative red tape. Currency volatility necessitates frequent price negotiations in the local currency (Brazilian Real), especially for imported products priced in USD.
Brazilians tend to avoid directness in business communication, making it crucial to pay attention to non-verbal cues. Building trust requires multiple face-to-face meetings and patience. While Brazilians are warm and engaging, developing lasting bonds takes time and effort.
A common mistake among foreign companies is expecting a fast return on investment with limited investment. Success in Brazil requires a significant commitment of both money and time. Language can also be a barrier; while English is spoken at the corporate level, learning Portuguese is essential for integrating into daily life and building strong relationships. The high cost of living in cities like Sao Paulo can also be a significant factor.
Conclusion
Latin America presents a dynamic and promising landscape for international businesses. By understanding the nuances of each market, developing tailored strategies, and committing the necessary resources, companies can unlock the region's vast potential and achieve sustainable growth.
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LATAM Healthcare Business Development Expert | Market Access | Strategic Partnerships | Entrepreneur
6 天前It was a pleasure to work with you, Leonardo Marra!
Understanding regional nuances is vital for effective expansion. These insights highlight LATAM's potential perfectly.