Chile, the new hub for companies expanding into Latin America

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Image courtesy of Forbes (http://specials-images.forbesimg.com/imageserve/c524f81518e1d673e650cc6b40cd8038/0x600.jpg)

Chile has been in the news this week but not the for the right reasons. Its loss of territory against Peru in the Chilean-Peruvian maritime dispute, was a sour drink indeed but not one that cannot be swallowed. For all it’s worth, the two countries settled the issue like democratic republics and the ruling of the International Court of Justice was seen as negative only outside Chile: although it lost a part of its territorial sea to Peru, it wasn’t as large as that country’s claim and it truly wasn’t harming to any of its economic activities.

 

The economy of Chile continues to be by far the most respected one in Latin America and it will continue being so for a long time. Highlights of its strengths include stability and a network of Free Trade Agreements that includes treaties with other fast-growing regions, emerging economies and mature markets. Chile currently has FTAs with Japan, China, the US, Mexico and Canada, the European Union, Singapore and New Zealand, among others; is part of the Pacific Alliance and an observer of the Mercosur and is in the process of ratifying or negotiating treaties with Australia and India. That makes Chile one of the most important trading partners of the world for agriculture, forestry, winemaking, tourism and finance although the largest investments have been done in mining, with Chile exporting 30% of the world’s copper[1]. With so much growth along the way, Santiago de Chile, its capital, has been transforming itself into a large regional hub.

 

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Santiago, Chile. Business District
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What drives investors to Santiago? The first reason is that the country’s services are highly concentrated here – although it doesn’t take much to for example, open a business in the country. Second, and according to data compiled by Bloomberg, Chile is the best place to do business [2] in Latin America, beating Peru, Colombia, Brazil and Mexico and moving up to number 21 on the general list, that measures economic integration and labor costs among other items. With a government fixed on making Chile an investment center to which to open to the continent, it is only logical that Santiago becomes a hub for companies to develop their Latin ties, just as Miami in the north. It has even been given a name, Sanhattan [3], a mix of Santiago and Manhattan.

 

Currently, more than one hundred multinational companies are housed in Santiago’s financial district and they include HSBC, KPMG, Shell and Claro, rivaling Sao Paulo in Brazil for regional headquarters. The Santiago area has several more advantages to it: first, it is located right in the middle of the country, so it has good access to all of its regions; second, it has high-quality services and is often ranked in top of innovation and quality of life indexes; third, it is only a hundred kilometers away from Valparaiso, one of the largest ports in the country and the door for Chilean exports to the world.

 

Needless to say, Santiago is the center of Foreign Direct Investment in the country, and it channels most of the businesses that end up in its most remote regions. Chile is the recipient of 30% of the FDI of Latin America [4] and its exports, all going through Santiago at some point, are almost as large as Argentina’s, a country three times as large.

 

Chile, the new hub for companies expanding Latin America

 

The influx of money and talent has turned Santiago into a capital to watch in terms of culture as well. With thousands of people arriving and looking for opportunities in this far south corner, with many coming from once-wealthy European countries [5], it is now a melting-pot of languages, cuisines and art, that delivers a unique travelling experience. Indeed, the Chilean government has rapidly tackled expansion projects that include a larger airport to accommodate more than three times the current passenger count, several new highways and metro lines, a high-speed train from Viña del Mar to Valparaiso (and in turn, to Santiago) and real-estate ventures with some of the highest buildings in the Southern Hemisphere. With the possibility of surpassing economies such as the ones of Portugal and Greece in a few years time, Chile and its capital city are poised for continued growth, given the fact that the whole society has the same goal: keep on transforming Chile into a world-class country.

 

References and Related Articles

[1] http://www.infobae.com/2014/01/15/1537245-chile-preve-una-produccion-6-millones-toneladas-cobre

[2] http://www.businessweek.com/news/2014-01-21/chile-beats-peru-as-best-place-for-business-in-latin-america

[3] http://en.wikipedia.org/wiki/Sanhattan

[4] http://unctad.org/SearchCenter/Pages/Results.aspx?sq=1&k=FDI%20Performance%20Chile

[5] http://www.reuters.com/article/2013/01/25/us-chile-immigration-idUSBRE90O17G20130125

 

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Jorge Mastrapa

Managing Director at Inloso LLC
Dr. Jorge Mastrapa is an international author, speaker, executive coach, and entrepreneur. His areas of expertise include cultural diversity, global leadership, organizational culture, and human capital management.

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CC BY-NC 4.0 Chile, the new hub for companies expanding into Latin America by Inloso is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.

About Jorge Mastrapa

Dr. Jorge Mastrapa is an international author, speaker, executive coach, and entrepreneur. His areas of expertise include cultural diversity, global leadership, organizational culture, and human capital management.

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