Exporting from Latin America during the Current Pandemic

While Latin America is referred to as one group, each country in the region has different trading partners that depend on their geographical location and their main exports. It is a fact that the COVID-19 pandemic has decreased the demand for certain services and products exported from Latin America and that the region has been badly hit. However, demand in other sectors — such as personal protective equipment and agricultural products — has increased.

According to the Inter American Development Bank, commodity exports from Latin America have faced a 30% decline in their value compared to the first quarter 2019. Given that the majority of exports from the region are agricultural and mineral products (i.e. commodities), this dip in value is a concern. One might conclude that this is not the best time to venture into new foreign markets, but there is still opportunity. The pandemic has forced many to reevaluate and pivot their businesses, or to reinvent themselves in a different industry. Although many factors are involved in the decision to expand into foreign markets (as explained on the International Trade Administration’s website), one important characteristic is to be able to respond quickly to changes in demand levels. Latin American people and businesses have shown much resilience and creativity, and there are promising factors and steps small businesses can take to expand into foreign markets, even during the pandemic.

Digital transformation offers many more possibilities now. Although e-commerce has been around since the mid-1990’s, there are now multiple platforms and services that make it easier for small businesses to reach foreign customers efficiently. Platforms like WhatsApp for business, Facebook, Instagram facilitate presence in the digital world. Market places – such as Mercado Libre, Linio, Amazon, and Ebay – offer Latin American small businesses the opportunity to sell abroad. In fact, Amazon has partnered with government agencies such as the Agencia Argentina de Inversiones y Comercio Internacional (AAICI) in Argentina to enable small companies to sell directly and without intermediaries.

Current trends towards healthy eating and plant-based diets. Given that Latin America’s historical exports are agricultural commodities, there continue to be opportunities for these type of exports. In particular, exports of native grains from the region — such as quinoa, chia and amaranth — are in demand and have export market potential.

Small Businesses Challenges Remain. A universal challenge (and very much an issue for small businesses) is the efficient use of two limited resources: time and capital. It takes time and capital to build a brand in a foreign market and to create trust with new business partners. The costs of international logistics and the time and effort to comply with the destination country’s regulations are often underestimated by many small business exporters. Additionally, although it is true that e-commerce has opened borders like never before, there is a learning curve before reaching the desired level of growth.

Alternatives and Possible Solutions. For small businesses it is still important to find reliable partners in the destination country to help develop the business and navigate the regulations in the earlier stages of internationalization. Export promotion agencies from governments in Latin America — such as Procomer in Costa Rica, Procolombia, Proecuador, Uruguay XXI, and ProChile, to name a few — provide training and opportunities to connect businesses. Other international multilateral organizations like the Inter-American Development Bank, also offer very good opportunities for training and networking. Lastly, the use social media and of resources readily available, such as LinkedIn, offer the opportunity to develop networks and to reach decision-makers in real time.

In conclusion, it is feasible for small businesses in Latin America to start exporting in the current pandemic. The economic crisis brought on by the pandemic has pushed business owners and consumers alike to take more risks. And risk is a crucial component of doing business across borders. Improvements in business processes and better products and services will come out as a result.