Doing business in Columbia
The C of 'CIVETS' – Columbia is set for fast growth. Here's why your business should be looking to export there
The CIVETS (Columbia, Indonesia, Vietnam, Egypt, Turkey and South Africa) are promising to be the fastest emerging markets over the next 10 years. Foreign investment in these nations is growing and – as most of their own production is in raw materials – there is a growing market for secondary goods. If the UK Government is to succeed in its plan for export-led recovery then the UK must focus on these markets.
Taking Columbia, the economy is on the up. As the oldest democracy in Latin America, Columbia has an established trading culture. Militant threats have in the past been a problem, and have prevented the country from reaching maximum potential until recently. Security has improved dramatically in the past decade or so, and the country has progressed rapidly as a result. GDP has increased from $89bn in 1999 to $288bn in 2010.
Government policy is very pro-business and focused on attracting foreign investment which has given a major boost to growth in recent years. There are also stringent measures in place to manage inflation; particularly important given the rapid acceleration of economic growth in Columbia thanks to a recent oil boom.
In simple terms this means that Columbian people will have more access to wealth and therefore be able to afford more expensive consumer goods and services.
Even though levels of personal wealth in Columbia are growing, the distribution of that wealth is still heavily weighted towards the super rich. According to the World Bank, the richest 20% of the population held 60% of the wealth in 2011. Meanwhile, the very poor remain so, often living on less than $2 per day.
Nevertheless, as infrastructures improve and businesses expand – more and more jobs are becoming available. The unemployment rate has fallen steadily since 2002 (when it peaked as the country recovered from a recession). This is unquestionably giving more people more money to spend and will, inevitably, lead to higher demand for foreign consumer products.
Business opportunities in Columbia
Columbia is the ideal marketplace for British businesses to expand to. The population is not only growing in wealth, but their interest in western products is also increasing. Imports from the US to Columbia increased 87% between 2002 and 2006, to $6.7bn. These imports displayed a wide variety of goods including organic chemicals, corn, plastics and computer equipment. All of these are products that can be provided by British companies. The high growth level should be on the radar of all British exporters looking to expand their business.
Some of the fastest growing imports to Columbia from the US – scattered among a large proportion of military supplies – are wines/spirits, computers and materials for the consumer aviation industry. This would imply that the Columbian consumer is becoming more interested in the sorts of high-end goods that UK businesses can provide.
Obviously there is a strong affiliation between the USA and its South American neighbors. not to mention logistical benefits which have led the Columbian importer to deal predominantly with his bigger cousin. However, British business would do well to target the Columbian marketplace and steal some market share. British businesses cannot be left behind in this race and would be wise to investigate the Columbian marketplace soon.
Torrie Callander is a corporate dealer at independent foreign exchange provider, Global Reach Partners