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3.2 The Chilean Consumer Profile

One of the most cited drawbacks of trading with Chile is its small pool of consumers. Chile currently has a population of some 16 million, which is projected to reach 17 million by 2012. Similar to other countries in Latin America, Chile is a young country, with a median age of 30, which is low compared with the average age in most of the developed economies, such as 43 in Japan, 39 in the UK and 36 in the US. With over 50% of its population falling into the 15-49 age cohorts, the younger age groups – particularly the working class which has relatively high income and spending power – are an important driver of the Chilean consumer market, and therefore present lucrative potential for Hong Kong exporters.


Being a natural resource-rich country, Chile has achieved remarkable economic progress in the past few years amid sustained food and commodity demand worldwide. With average (annual) gross income increasing by more than 75% or a CAGR of 16% over the period 2003-2007, Chilean consumers are empowered to spend more in improving their living standards. In comparison, Chile’s average gross income of some US$9,100 was far higher than most other major economies in the region including Argentina and Brazil, whose average gross incomes were only US$6,300 and US$7,700 respectively in 2007.


Another point worth noting about the Chilean consumer profile is the size of the middle-income class. In general, Chilean consumers can be divided into five social classes, namely ABC1 (upper), C2 (middle), C3 (lower middle), D (lower) and E (poor), according to monthly household income, with C2 and C3 being commonly referred to as the middle class in the country. According to National Characterisation Socio-economic Survey (CASEN), Chile’s middle class is estimated to compose 36% of the total population, or six million inhabitants. These middle-income consumers are expected to add critical mass to Hong Kong exporters’ marketing efforts in Chile and provide further growth momentum in the market, although in absolute terms, the middle class is not as large as in other Latin American markets such as Brazil, Mexico and Argentina.





On the other hand, notwithstanding an appreciable improvement in incomes among the lower- and middle-income classes, the overall income distribution in Chile is considered uneven, with the top 20% of the population earning as much as 20 times more than the least privileged 20%. Against this backdrop, Hong Kong traders are advised to take into consideration this skewness when formulating their market penetration strategies targeting the mass market in Chile.

Moreover, although Chilean consumers enjoy easy access to credit, Chilean consumers are much less receptive to new and fancy products than say Brazilian consumers. In Chile, large retailers, especially department stores, are a major source of consumer credit. They usually have and operate their own banks, extending credit to their customers. Altogether the major retailers in Chile issue more credit cards than the whole banking system, outlining also the close relationship between the retail and financial sectors in the country.

Concerning spending patterns, housing is estimated to account for 12% of household expenditure in Chile. Excluding also the 24% share of the food, beverages and tobacco, Chilean consumers are estimated to spend over 60% of their income on goods and services. In light of a rosy economic outlook and employment prospects, Chile’s consumption demand for goods and services has been increasing quite steadily in recent years, presaging an auspicious picture for Hong Kong traders planning to make their debut in the country.


Evidently, the evolving wealth-induced and credit-fuelled consumption spree is pushing up Chile’s imports, which increased from US$18 billion in 2003 to US$44 billion in 2007, demonstrating a CAGR of 25%. Accounting for more than one-fifth of the total imports, Chile’s imports of consumer goods surged 132% (i.e. a CAGR of 23%) from US$3,899 million in 2003 to US$9,060 million in 2007.

With respect to buying habits, Chilean consumers, in general, are very conservative in making purchases. They prefer simple design to fancy design, and ordinary outlook to colourful appearance, except for some items such as iPods, which have been launched via extensive promotion campaigns throughout the country and created a strong public sentiment. However, even as iPods are gaining in popularity in Chile, most Chilean consumers prefer to buy Fujitel (from Asia) as a substitute, given the latter’s competitive prices and comparable functionality.

On brand preference, Chilean consumers bear less sense of showing off; they are not used to wearing fashionable clothing, precious jewellery and watches. It is not uncommon to see Chilean consumers choosing unbranded but cheaper items as substitutes for branded and more expensive ones. In fact, the Chilean government does not encourage the consumption of luxury goods. It imposes excise taxes on luxury goods ranging from 15% to 27% on top of import duties and 19% VAT, which certainly put a bridle on the demand for luxury and high-end products.

Content provided by Hong Kong Trade Development Council
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