By Maëlle Alquezar
The British government aims to double British exports overseas by 2020. Its target also includes Peru where the UK government will try to double its global exports by 2015. Why should you consider exporting to Peru?
Even though people don’t really think about exporting to Peru at first, the country has experienced very good results for the past few years. During 2000-2010, Peru experienced a 60% increase of its GDP that is to say the 5th most important growth rate after China, India, Vietnam and Kuwait. Last year, its GDP grew by 6% and it is expected to soar by 6% in 2013. Moreover, Peru is succeeding in controlling inflation.
Several sectors are likely to experience a development. One of them is the building industry. Given that Peru is lagging behind compared with other countries. As a consequence, the authorities are planning to build new roads, more than thousand bridges, one port and one international airport. With regards to rail, two projects are going to be launched along with an urban rail network which is will improve transport in the country. SMEs specialized in construction equipment should consider targeting Peru.
Other types of SMEs are encouraged to export their products or services in Peru such as companies specialised in tyres, conveyor belts, lubricants, software, industrial control equipment or institutional catering.
Tourism is also one of the most important sectors in the country. Peru has a rich culture and so many places to visit. It is one of the most visited countries in South America with around 2.6 million tourists in 2012. And 3.7 million tourists are expected in 2013. As a consequence, the hotel industry keeps growing and receives a great deal in terms of investment ($270 million in 2010-2011 and $184 million in 2012). Catering also benefits from these investments as a result. Furthermore, the country is considered as the dining capital in South America which is one the main reasons for visiting the country (cited by 40% of tourists).
What should you know about Peru before exporting? What strategy could you use?
Of course there is not one unique strategy. However, here is some advice.
Spanish and Quechua are the two official languages in Peru. While Quechua is mainly spoken in a few places in the Andes, Spanish is spoken almost everywhere throughout the country. Translating your website or brochures into Spanish or even possessing bilingual business cards (Spanish and English) will be very appreciated and considered as a polite gesture. Being able to speak Spanish is a real asset and you should consider hiring an interpreter if you can’t communicate in Spanish. You should also be aware that business deals are very formal there: appointments are planned well in advance and confirmed in writing, titles must be used if known. In terms of negotiation, you should know that the whole process may be slow since Peruvian professionals and executives need to trust their partners. And it takes time for them to create strong bonds before closing a deal.
In terms of habits and customs, Peruvian people are more likely to speak quietly and don’t appreciate noisy behavior. Moreover, they are used to speak to people at a close distance. Stepping back can be interpreted as a sign that you are uncomfortable; you should avoid it even if you don’t feel at ease. You should also often use eye contact as it helps build trust. Professionals don’t get straight to the point in Peru. Try to understand what they are really thinking since they are more likely to say what their audience wants to hear. You should beat around the bush as well since being direct can be considered rude.
Of course, you must also adapt your prices to the local market. Prices are very important in Peru and you should be able to offer similar prices or even lower if you want to succeed. Take the example of the Kola Real (Pepsi and Coca-Cola competitor in South America) which has succeeded in Peru mainly thanks to its pricing policy (the company cut prices!). The low-cost Cola was created in Peru and then exported throughout the continent due to its huge success. As a consequence, Coca-Cola and Pepsi had to adapt and lower their prices to remain competitive. Since the company doesn’t advertise a lot, Kola Real can save money and keep offering very low prices (remaining lower than its competitors). The company now has 20% of the market share in Peru and is planning to keep expanding its soft drinks abroad.
Peru has real business potential for SMEs. From the building industry to the catering sector, the country has so many opportunities for you to explore. You should of course consider conducting further market research in order to be aware of the market trend and Peruvian culture and customs.
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