The Canning House Lecture - an annual London event since 1997 and traditionally delivered by a visiting Latin American or Iberian president - is a key event for UK-Latin American trade relations. This year the lecture was delivered by the president of Chile, Michelle Bachelet. The event, attended by business and government leaders, highlighted the numerous export opportunities presented by the Latin American powerhouse.
The case for trade with Latin America has been well made. While Chile is less prominent than some of its neighbours on the continent, the case for trade with the country – particularly its robust and diversified economy – is no less compelling.
Indeed, despite its small population, Chile has the highest level of gross domestic product (GDP) per capita in Latin America, posting an average of 5% GDP growth over the last 30 years. What’s more, it is among the region’s most globalised markets, having signed trade agreements with 62 countries. Chile is a founding member of the Pacific Alliance; a trade bloc representing 36% of Latin America’s GDP.
In addition, the country’s willingness to embrace foreign investment is well-established. For instance, in 2014, the government launched Tu Empresa Un Dia (your company in one day), an online initiative that allows both local and foreign entrepreneurs to form a business in a quick, efficient and convenient manner. Each of these strengths makes Chile an extremely attractive export destination for UK companies of all sizes.
Key export opportunities
What specific opportunities does Chile present in 2016 and beyond?
As the world’s largest producer of copper – accounting for over a third of global output – Chile plans to invest over US$70bn in the sector by 2021, providing significant opportunities across the supply chain.
Meanwhile, there are also increasing opportunities for firms in the renewable energy sector. Earlier this year, president Bachelet signed off on a new energy strategy with the goal of generating 70% of the country’s electricity from renewable sources by 2050. With 6,435km of Pacific Ocean coastline, Chile has significant wave energy potential, but is lacking in technological capacity – a gap that could very well be filled by firms from overseas.
Another area worth noting is education and science. In January 2016, Chile hosted the “Futures Congress”; a gathering of national and international scientists, analysts and intellectuals, to explore the most significant issues and challenges facing the field of science. With satellite technology and remote monitoring identified as key tools in tackling some of Chile’s main areas of concern – such as illegal fishing – there are clear opportunities for international partnerships, both scientific and commercial.
Further opportunities lie in the infrastructure sector. Chile has major plans to intensify the development of its infrastructure – set out in the 2015 brochure ‘Infrastructure Agenda for Development and Inclusion’ – and it has long been a proponent of public-private partnerships (PPPs). For 2016-17, the government has a total of 13 initiatives in the pipeline worth US$4.1bn in total. These include major projects such as the Cosanera Central highway (US$1.0bn) and the Airport of El Tepural (US$60m).
Finally, there are also increasing opportunities for retailers. In fact, according to global research, Chile is the third most attractive emerging market in terms of retail opportunities behind China and the United Arab Emirates (UAE). For instance, Almacenes París, a department store with over 30 branches across the country, already plays host to a variety of high-street and mid-tier labels such as Topshop, Espirit, Calvin Klein and Lacoste.
Establishing a presence
Indeed, as the Chilean middle class expands and consumer tastes become more sophisticated, the appetite for high-end labels, premium food products and niche products is only set to grow. The UK premium supermarket chain Waitrose is among those to have already established itself in the country. Clearly, the time has never been better for international retailers to take a slice of the Chilean consumer market.
Of course, expanding operations into unfamiliar markets can be daunting. Yet help is at hand with many global and regional banks, as well as organisations and governmental departments and bodies such as UK Trade and Investment (UKTI) in the UK. Each is well-positioned to assist companies exporting to international markets.
Chile is a country rich with opportunity, thanks in large part to its stable democracy, steady economic growth and a willingness to embrace international trade. Companies seeking to branch out into Latin America must not overlook the opportunities it presents. Indeed, as president Bachelet highlighted in her Canning Lecture, Chile is very much “open for business”.