By Editor Morten B. Reitoft

The Spanish-speaking population is the same size as Europe (EU) and, if we include Brazil, almost double the size of the US. Of course, the GDP is lower than both the US and the EU, but the growth is vast. Over the past 10 years, the GDPs of Brazil and Mexico have increased by 25% and 60%, respectively, and since COVID, the numbers are even more impressive. This is good news, as most expect the US to decline over the following years - there are alternatives!

But there is more to it. With rapid GDP growth, domestic demand is enormous, and labels, packaging, signage/large format, textiles, and even commercial print are growing.

Though the starting point is lower than in the EU and the US, it’s time to rethink your strategy. With more than 60,000 printing companies across the LATAM and 80% concentrated in Mexico and Brazil, you have to be there, and it’s time to think about whether this market is too important to be left to agents. My answer is that this is too important to leave to agents unless you also consider how you can use the agents to represent your brand, so they are obligated to align their activities with your branding.

The consequence of not having a strong strategy for this is that your company disappears in the rapidly developing market. The second threat to Western companies is as evident as it already is - China. Many of you are already represented in LATAM, but, as the continent is vast, many of you also depend on local dealers. These can be good, but they never have the same objective as you have, and therefore, you have to think: how will the market look in the next 10-15 years?

When I worked as Marketing Director for Roland years ago, I was intrigued by the model Roland Japan used to secure local representation while still achieving a high level of control. The model is simple, and can be copied easily - and legally. Roland established several national franchises across Europe, owned 50/50 by a local owner and Japan.

In the agreement, they agreed on various objectives, including shared marketing, marketing spending, exclusive distribution of Roland products, and a commitment to buy and stock spare parts. And when the local owner was ready to retire, the exit terms were already agreed, and as everything essentially was Roland operated, the transition to become one company was easy, smooth, and the people who locally took the risk in financing, marketing, staffing, etc., were generously paid for the long-term commitment.

By having each market operated locally, you’ll also get people on the ground that understand how to navigate, and it is a different market to navigate. Corruption is common and illegal. Unfortunately, according to various sources, it seems that public contracts are mos exposed to corruption. In the US and Germany, until a few years ago, bribery was tax-deductible, but this is no longer an option anywhere.

There have been several cases involving printing companies, print OEMs, and supplies, and the fines have been vast. The biggest was against Siemens, which ended up paying more than 1.6 billion USD in fines globally back in 2008/2009. But it’s not the only case. HP was involved in a case in Mexico and other LATAM countries back in 2014. It was, in many ways, a simple case, as commissions and prices were inflated and paid out to various middlemen.

This was before HP was divided into two entities, and nothing indicates that this was about HP Indigo, PageWide, or any other HP technology that is produced and delivered today under the HP brand. However, it was still part of a global settlement of 108 million USD.

So navigating countries with a high(er) level of corruption is something to be cautious about. The most important thing to be aware of today is that working through dealers, who may operate more in a gray-scale business, will still make you accountable. The best advice is to have strong anti-corruption measures in place and to sign a mutual agreement that can be communicated to competitors, so that all work under the same ethics.

This should be easy, both internationally and locally, corruption is against the law and shouldn’t be in your interest. But there is more to it. Despite LATAM, for the majority of LATAM, Spanish doesn’t mean it’s one country. There are many countries with different legislation, currencies, and rules. The countries' financial situations are also very different. Peru, for example, has an extremely low inflation of only 1.3~1.4%, which is lower than the EU with 2.2% and the US with 3.0%. The Peruvian SOL has also strengthened against the USD over the past year, but this is an exception.

On the other hand, we see Argentina, that not only has an inflation of 31%, but it also has extreme measures for cross-border trade. You can’t just sell a machine in Argentina. It takes time; it must either balance with the general trade balance, or part of the product must be produced in Argentina. So not only is the high inflation a serious problem, but from the order is given to it’s shipped to it’s delivered, comes now: what about payment? But there is, of course, more to it.

Many LATAM countries have fixed tariffs or import duties on printing equipment ranging from 0% to 14%. In some countries, HS-Code classification is tremendously important, as incorrect classification can lead to additional taxes being levied or even criminal prosecution if the change in HS-Code is intentional.

As one source said, LATAM is not a high-tariff continent, but a high-frictional one, and that’s what you need to handle if you want to be in the market.

Some OEMs have also established production in LATAM, where Brazil typically, is typically popular. Should you enter the market?

Let me share an anecdote told by my friend and editor, Naresh Khanna, at the last NON-EVENT. I had picked him up at the airport, and as we were leaving the parking, I, of course, was upset because it didn’t work. Naresh said to me. In India, we never expect things to work, so we are always so happy when they do.

I smiled, the gate opened, and this is and was a great example of how collaboration can not only be an exchange, but also become a journey of wisdom.

Of course, you should be exploring the new opportunities in LATAM. It will be fun!