GIA Latin America Open for Business

Following GIA’s long history in assisting Latin American clients, we are pleased to launch our own base in Sao Paulo, Brazil. Thomas Rideg, Regional Director, GIA Latin America, will help lead GIA Latin America sales and marketing as well as client management across GIA’s network of consultants and partners in 12 South American countries.

We ask Tom about the market dynamics within Latin America.

What businesses are most likely to benefit from working with GIA in Latin America?
“In spite of the crisis, we have seen a lot of activity from consumer goods and logistics companies.  When it comes to market intelligence, a downturn in the economy does not necessarily mean a decrease in demand for our services.  In some businesses, it is rather to the contrary.  Companies want to re-assess their strategic planning and market intelligence is a crucial part of this business.

I believe that GIA’s own team in the region will bring more confidence to multinationals because we are established in the region, on the ground, every day.  Where I see the largest opportunities, however, is with local companies in the region that will want to explore our capabilities on a global scale.  We have some very reputable local giants that are planning expansion into other markets, and these would be more than happy to have GIA work with them.”

What are the most difficult challenges in conducting market intelligence in the region?
“For international players, one of the toughest challenges has to do with the softer aspects, such as culture, regulatory environments, etc.  Another challenge has to do with the region’s diversity.  One of the biggest mistakes one can make is to look at the region as a single entity.  The differences are enormous.  To highlight some of them; Brazilians do not speak Spanish, and the Spanish-speaking Latin Americans do not speak Portuguese.  When native Spanish and native Portuguese speakers are in a meeting room, the language spoken will most likely be English.  Also, the countries within this region have little knowledge of one another.  An average Mexican, Colombian, Argentinean or Brazilian executive very  likely knows more about the US than about his/her neighboring country.  Each country therefore should be looked at independently of the other.

Another challenge is the lack of public data.  As professional market intelligence practitioners, we often have a hard time accessing all the secondary sources we need, and we have subscriptions to the most advanced sources.  What we find is oftentimes quite fuzzy.  We truly need to know the local market in order to synthesize the information that we gather.  Primary research is fundamental, and fact-to-face contact is always more fruitful.  A good combination of secondary and primary is important to cross check and validate information that we obtain from the market.  The most important part of the equation is analysis.  One can only conduct a proper analysis if one knows how to interpret results accurately.  And for this to happen, knowledge of the local culture is key.”

What cultural nuances should international business development and strategic planning directors beware of?
“All emerging markets have their challenges; currency fluctuations, semi-developed infrastructures, disparities in wealth, disparities in public verses private service and so on.

There are two basic facts that locals are familiar with, but that internationals often have a hard time grasping.

Firstly, interest rates are a lot higher than in the US and in Europe.  In some countries, interest rates can reach eight to nine percent.

Secondly is the regulatory environment, which tends to be very bureaucratic.  The most difficult is the tax system, which in most countries is not very business-friendly and the return on said taxes is not easily discernible.  One has to be prepared to live with some frustration, as there is no formal way around it.  Either you are in the system, or you are out.  The cost of hiring an employee in Brazil, for example, is 80% above the employee’s gross salary.  The employee’s gross salary is 27% above his or her net salary. Just try doing the math.”

What other advice would you give to businesses interested in Latin America?
“Do not underestimate the locals.  There are some extremely competent local businesses and professionals in the region.  The guys understand the region inside out, are in tune with the culture, have the networks and have lived through the ups and downs.  Brazil’s financial banking system, for example, is one of the most sophisticated in the world.  After enduring years of hyperinflation in the 80’s, people had to learn how to manage, and they did!

Marketing is another example.  The region has some of the best marketing agencies, and is constantly winning awards for creativity and professionalism.  The region has an abundance of local talent, and at this particular point in time of economic recovery, highly-qualified talent can be found.  Many companies have fallen into the trap of assigning 100% foreign expats to their management teams.  Expats are important in that they know the corporate culture, values and strategy; but it is the locals that know the local culture, marketplace and dynamics of the place.  Again, a company must first know how to identify these local talents.  They should initially seek help from professionals to understand the background and credibility of the resources that they plan to bring on board.”

That is all very insightful, thank you Tom. How can you be contacted?
“I can be contacted at tel: +55 11 2308 0591 or via email: thomas.rideg@globalintelligence.com.”

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