Exporting to Peru: key sectors and cultural facts
Peru is very much a South American country of three forms: a mix of Pacific coastal cities, Andean mountains and Amazon rainforest, hosting the western edge of the Amazon rainforest which covers 60% of the country. This is how Peru is one of the most bio-diverse countries in the world.
Bordered by Bolivia, Brazil, Chile, Colombia and Ecuador, it is home to over 90 different micro-climates, offering unique precipitation levels, temperature, and wildlife in each. As elevation changes so dramatically across the landscape, so does the plant and wildlife.
Connecting Peruvians internally
In developing a modern economy the country has faced challenges in connecting its cities, because of its unique territory. Peru is therefore strategically modernizing its infrastructure now, to face the task of asserting its place in the world, beyond traditional mining strengths.
The World Bank Group (WBG) is responding to the Government of Peru’s agenda, focusing on three pillars: (i) Productivity for growth; (ii) Citizen services throughout the country; and (iii) Management of natural resources and climate risk.
The Peruvian government is investing heavily in major transport projects; these include Lima Metro (£12bn), Airport expansion in ten locations (worth £3bn), and the Lima-Ica Rail link (£2.6 bn). These improvements are mainly being financed by Public Private Partnerships (PPPs). The improvement of transport links is likely to boost trade into the regions of Peru, beyond the Capital City of Lima.
A growing middle class
The UK has been a foreign investor in Peru’s huge natural mining resources, silver, zinc, gold and copper, but the country is fast developing its middle classes and seeking to provide more services to citizens. Over the past decade, Peru has been the fastest growing economy in Latin America (World Bank, 2019) and among the fastest-growing economies in the world, with a sustained GDP growth still above 5% over the last five years. It is also the 39th largest economy in terms of nominal GDP. This tremendous surge in GDP growth has helped reduce poverty levels by one third.
The sustained growth of Peru’s middle class over the past 20 years has increased levels of healthcare provision and other services. Demand for pharmaceuticals and medical equipment have increased alongside the number of public hospitals and private clinics in Peru.
UK – Challenge accepted
As a Country of Origin, the UK has huge scope to improve, compared with our peers in Europe. Total trade in goods and services between the UK and Peru was just £276million in the year ending June 2018 (ONS, 2019), just one tenth or one eighth of what Germany and Italy have each achieved.
Among the 32 million population, Spanish, Quechua, and Aymara are the three state-sponsored languages in Peru. While the first may be familiar to us, the second two are totally alien! They are the native languages of the original dwellers of the Andes mountains and have between 10 and 13 million speakers in South America. Fortunately, in the coastal cities, Spanish is ubiquitous!
NB: Before doing business in Peru you’ll need to register with Proinversion, the authorized government agency. Options include setting up a foreign owned company in Peru, a branch office, establishing a joint venture and finding an agent or distributor – strategies which can all be discussed and implemented with How2Go’s help.
Be prepared – 6 reasons to work with a foreign trade consultant when targeting business in Peru:
- Cultural norms – every country does business differently and a locally based foreign trade consultant can help you acclimatize to local business practices.
- Strategic planning – a locally based office, like our How2Go Peru colleagues based in the Capital City, understands current market needs and trends and have access to extensive databases of information about local markets. A foreign trade consultant can help you plan and execute your strategy in a timely manner whilst avoiding any pitfalls.
- Language issues – locally based foreign trade consultants can ensure you can perform sales and marketing activities in the target language and avoid misunderstandings, improving communication and delivery of the project.
- Legal advice – a foreign trade consultant can guide you through the process of setting up a new business in the country, what legal entity you become and legal requirements to doing business in Peru.
- Financial advice – a foreign trade consultant can offer advice about how to set up bank accounts, invoicing protocol and payment terms, taxes or help you find a local expert to advise you.
- Beating barriers to entry – what are the specific barriers to entry for your product into the Peruvian market? A foreign trade consultant can help you identify the ones most relevant to your business and devise a market entry strategy accordingly.
Louisa Criscenti-Brown is the UK Partner of How2Go Worldwide Business Solutions who offer international consultancy services to companies and are located in 10 countries worldwide. www.h2gconsulting.com