16 May 2011
1.6 Challenges Facing Exporters
Corruption and Red Tape
Like many emerging markets in the world, Argentina is not immune from corruption and red tape. In response to its administrative problems, the Argentine government has taken steps to combat corruption and cut red tape. Nonetheless, these steps are still considered insufficient. It was revealed by the Heritage Foundation in the “2007 Index of Economic Freedom” that corruption is still perceived as being widespread in Argentina. Customs corruption, which results in clearance delays and confiscation, has also often been covered by the media and complained about by importers.
Novel Non-tariff Barriers
Customs tariffs aside, there are several novel non-tariff trade barriers in operation in Argentina. In addition to the licensing requirements and port restrictions mentioned above, some rather unique product standards and requirements deserve more attention from exporters. Argentine electrical plugs are a case in point. They look exactly like Chinese plugs, but there are important differences between them. For instance, the nominal diameter of the Argentine plug body is 1mm smaller and the nominal length of the contacts in the Argentine plug is 1mm longer, while the line and neutral on the Argentine plug are reversed in comparison with the Chinese plugs.
Tyranny of Distance
Given the fact that it takes some 30 days for cargo exported from Hong Kong or the Chinese mainland to arrive at ports in Argentina, logistics control and management will therefore likely pose an overwhelming burden for traders, who are also discouraged from travelling to the country because of the tyranny of long distance. On the other hand, export financing and insurance are difficult and expensive to obtain as the shipping time and distance are long, burdening traders with financing and cash flow arrangements.
Argentina, like many other countries in Latin America, is a Spanish-speaking country. In fact, most people on the street in Argentina speak only Spanish, although English has become more popular and has been widely included in formal schooling in recent years. The situation is better when it comes to business. While not all Argentine businesspeople are willing and able to use English in business meetings, most of them can understand English conversation. New-to-the-market people should keep this in mind and avoid disclosing business secrets in English during meetings with their non-English speaking Argentine counterparts.
Crime and Violence
According to the Overseas Security Advisory Council (OSAC), crime is common, is becoming increasingly more violent, and is often perpetrated with firearms in Argentina. Criminal activity is concentrated in urban areas, especially greater Buenos Aires, Córdoba, Rosario and Mendoza. Common crimes include pick-pocketing, purse snatching and kidnapping. Virtual kidnapping, in which a criminal calls and falsely claims to have kidnapped a victim, is also on the rise, while express kidnapping of a short duration and low ransom continues to be rampant.