ExporterToday caught up with Beachhead advisor Jorge Forteza, to discover that there’s never been a better time to seek trade with Argentina, and indeed most of South America.
It’s no secret that South America has had more than its share of unstable governments over the past half-century. But today, with just one or two exceptions, the continent is generally stable politically.
And it’s time for Kiwi trading companies to pay attention.
Argentina is one country that has gone ahead in leaps and bounds since a new centre-right government was elected in December 2015.
On a recent trip to New Zealand, Jorge Forteza, NZTE’s beachhead advisor for Argentina (pictured below), explained that the new government has learnt from the lessons of the past and is focused on bringing the country back into the world. Since the election it has brought in a number of measures to encourage a more open trade and investment driven economy, including the elimination of export taxes.
“Now begins the long, hard work of improving the competitiveness and infrastructure of the country.”
Already Argentina’s’ income per capita is rising, he says – although once much higher than that of Uruguay and Chile, it is at least now back on a par with the continent’s two star performers.
Moving to a more open economy involves both Argentina introducing measures as well as Mercosur, the long-time economic alliance and customs union comprising Argentina, Brazil, Paraguay, Uruguay and Venezuela, which also needs to become a more open trading area.
Unfortunately, as it stands, Mercosur is not part of the CCTTP agreement, and linking with the Pacific Alliance countries is still a distant prospect.
Meanwhile Argentina is getting on with restructuring industries, developing the services sector and dealing with poverty, and is very much alert to what is going on in Australia and New Zealand – two countries it has long admired for their developing economies and, as Forteza describes it, “with similar resource endowments”.
“New Zealand in particular has a very good image in Argentina. There have also been several very good ambassadors based there who have enhanced the importance of the region, and we are very much connected through tourism, education and our rugby,” he says.
“Argentinian people are very much alert to what’s happening in this part of the world.”
Forteza visited a number of Waikato, Tauranga and Auckland companies across different sectors during his visit here – predominantly agri-business, dairy and precision engineering firms that are generally expanding their South American business and are excited about their future in Argentina.
“This is a good time to expand into not just Argentina, but South America too,” Forteza says.
Chile a stepping stone
A number of Kiwi businesses have already accumulated experience in dealing with Latin American markets through Chile which, Forteza reminds me, has had a very good business environment for a long time. He also reminds me that Argentina’s economy is three times the size of Chile’s.
If you’ve been trading with Chile, and now want to enter the Argentina market, there will be some small adjustments to make, “but it’s not a different planet”, says Forteza.
You can initially get started from a Chilean base – but at some stage you will require a presence on the ground in Argentina, he adds.
It’s common knowledge that Fonterra is eyeing up opportunities within Argentina’s dairy industry, but Forteza also sees partnership opportunities for New Zealand companies in the meat, fruit, horticulture and wine industries – “a whole lot of segments where both countries can be complementary, rather than competitors”.
He also lists biosciences, the extractive industries, specialised manufacturing (design and technology intensive), services (professional, IT, medical and tourism) and infrastructure as areas of mutual benefit. “All areas in which New Zealand is very good at.”
“Our message is that we now have a more open economy,” explains Forteza. “We’re doing all the basic homework at the macro-economic level and repairing relationships with other countries and capital markets.”
There is much in common between the two countries, he says. New Zealand is famous for its DIY or ‘number 8 wire’ resourcefulness and Argentinians mirror this approach.
Forteza’s advice is to get in early on the opportunities presented by the change in sentiment in Argentina. Put sufficient time, resources and focus into your international strategy, he says, and remember that smaller countries, such as Chile and Argentina, often present a better business climate than larger ones.
“By all means put your own people in first, but then look to employ locals,’ he suggests.
Forteza is excited about the number of entrepreneurial Kiwi SMEs that are, or are becoming, world leaders in their segment. He found his visit to these shores both stimulating and inspiring.
He admits that Argentina is playing catch-up to economies such as New Zealand and Australia. “But at long last we are seriously working on it.”
Article by Glenn Baker, editor of ExporterToday.
