16 May 2011
1.7 Practical Recommendations
First, customs clearance costs (including widely applied VAT) can be expensive and adversely affect landed costs. In order to keep customs clearance costs low and avoid fines and demurrage charges, it is advisable to await detailed shipping instructions from the importer before shipping. Facilities at major ports are good, and continue to improve following the large-scale privatisation programme. To ensure smooth customs clearance and maintain efficient logistics control, exporters are also advised to employ well-established forwarders who can offer advanced shipping and tracking service and support. In light of the potential difficulties (bureaucracy and corruption) in customs clearance, efficient and fast customs clearance can help save a lot of problems and costs, especially for fashionable and seasonal products.
Secondly, in Argentina, as legislation, rules and regulations may change or be amended rather frequently, foreign companies must keep themselves informed about these new developments. In this regard, Hong Kong and mainland exporters can refer to the Hong Kong Trade Development Council’s biweekly newsletter, Business Alert – US, for up-to-date information on the latest developments in major trade policies and trade regulations in Latin America, including Argentina. To tackle the aforesaid novel non-tariff barriers, on the other hand, Hong Kong and mainland exporters are advised to work closely with the corresponding testing laboratories or agencies. In fact, some Argentine product testing companies, such as Lenor Lab & Inspection, have established laboratories in the Pearl River Delta (PRD) to provide product testing and certification services to prospective exporters. Hong Kong and mainland exporters can therefore seek help from these companies before shipment to mitigate the chance of failure in complying with Argentina’s import requirements.
Regarding the terms of payment, letters of credit are recommended when starting trade with Argentine companies. It is important, however, to understand that letters of credit are considered expensive in Argentina, and local customers may wish to move into other payment forms, including advance payments. You may wish to explore the credit history of your local importer. This may be done by using the services of one of the many credit-rating agencies established in the market such as Dun & Bradstreet which operates both in Hong Kong and Buenos Aires. A less thorough but quicker check of the creditworthiness of an Argentine company may be explored via the on-line database offered by Argentina’s Central Bank.
Moreover, to do business with companies in Argentina, a country far away in South America, Hong Kong and mainland companies need to appreciate the differences in consumer and cultural preferences in Argentina and sufficiently incorporate them into their products. In addition, new-to-market companies that do not have prior experience in Latin America are advised to pay special attention to body language in Latin American countries, as they can convey a lot of information. For instance, one should hurry up or finish talking when they see people continuously tap their middle finger against the thumb.
Furthermore, since Argentina is a large country, new-to-market firms should first identify their niches and target customers before penetration. With its high concentration of potential consumers and more sophisticated logistics infrastructure, Buenos Aires is widely regarded as “where things happen” in Argentina, and looks set to offer a good starting point for foreign exporters targeting the Argentine market. For companies that would like to set up production facilities in Argentina, on the other hand, the Tierra del Fuego Free Trade Zone located in the southern part of Argentina is considered a prime destination. However, companies should note the necessary financial and managerial resources required to do so.
In addition, to avoid being a victim of crime in Argentina, traders should pay attention to local don’ts, for example, avoid black-and-yellow taxis with the word “MANDATARIA” printed on the doors. These taxis are rented on a daily or hourly basis and are often involved in criminal acts. On the contrary, “Remises” (hired cars and drivers) are considered the safest mode of public transportation in Argentina.
Finally, to reduce travelling costs but enhance the chance of success, new-to-market companies, instead of establishing a direct presence in Argentina, should consider the alternative of meeting Argentine business partners or buyers at trade fairs and exhibitions in Hong Kong. As an illustration, the Hong Kong Trade Development Council received 1,297 Argentine visitors at its various trade fairs in 2007, compared to a total of 1,015 for all of 2006. Meeting Argentine businesspeople in Hong Kong can further help Hong Kong and mainland traders avoid language barriers, as well as the crime and violence that are prevalent in Argentina.