June 2016

Chile & Argentina: Doing Business In These Dynamic Economies

• Multinational Team

• Full-time presence in Chile, Peru &

Mexico

• Experience in various industries

including mining, energy, health

technology, ICT among many others

• In Market Representation

• Trade Missions & Events

• Partner Search

• Business Meeting Facilitation

• Industry Reports & Market Studies

• Competition Analysis

Our Services:Our Company:

• State of Wisconsin

• Province of Ontario

• Invest Northern Ireland

• State of New York

• Conference of Great Lakes & Governors

• 1st West Mergers & Acquisitions

Our Representations:

A Look at Chile: Latin America’s “Dragon”

Chile at a Glance

• Area: 743,532 km2

• Population: 17.76 million

Growth rate: 1.1%

• Language: Spanish

• Capital: Santiago 6.5 million

• Other Urban Centers:

Concepcion 949,000

Valparaiso 934,000

• Workforce: 8.7 million

• Life expectancy: 81 yrs

Why Choose Chile?

• Highly competitive, dynamic and globally integrated economy: among the highest growth rate economies in the world

• Institutional and financial strength: low country risk

• Tax friendly economy: Chile's corporate income tax rate is 17%, one of the lowest rates worldwide

• High transparency: 2nd in Latin America, 21st place among 175 countries worldwide

• Great business environment and economic freedom: 1st in Latin America, 10th place among 174 countries worldwide

• Highly skilled and competitive human resources: labor costs in Chile are competitive compared to the USA and European countries

• Excellent transport infrastructure and connectivity to the world

Chile’s Main Industries

• Largest Sectors: copper, lithium, other minerals, foodstuffs, fish processing, iron and steel, wood and wood products, transport equipment, cement, textiles

• Agricultural Products: grapes, apples, pears, onions, wheat, corn,

oats, peaches, garlic, asparagus, beans, beef, poultry, wool, fish timber

Argentina

A new chapter under Macri

Argentina at a Glance• Area: 2,736,690 km2

• Population: 42.98 million

Growth rate: 1.0%

• Language: Spanish

• Capital: Buenos Aires 15.18 million

• Other Urban Centers:

Cordoba 1.45 million

Rosario 1.24 million

Mendoza 937,154

• Workforce: 19.5 million

• Life expectancy: 76 yrs

Why Choose Argentina?

• Recently elected business-friendly President: Mauricio Macri is prioritizing international trade and investment and securing access to capital markets

• 3rd largest economy in Latin America: with a GDP of over US$ 540 billion

• Abundant natural resources: in areas such as agriculture, mining and unconventional hydrocarbons. Argentina is the leading natural gas producer in Latin America

• High per capita incomes: income distribution is more equal than its Latin America neighbors and has a large middle class encouraging high consumer consumption

• Highly educated work force: a well developed education system has created a highly skilled workforce

• Digitally active society: Argentina has high internet and smart phone penetration rates

Argentina’s Main Industries

• Largest Sectors: agriculture, mining, foodstuffs, textiles, metalworking & steel, bio-fuels, oil & gas, automotives, consumer durables, pharmaceuticals, chemicals & petrochemicals, printing

• Agricultural Products: soya beans, livestock farming, wheat, corn, citrus fruits, tobacco, tea, grapes

Country Comparison

Economies at a Glance

CHILE ARGENTINA

GDP per Capita (PPP 2015) US$23,564 (highest in LA) US$15,168

GDP Growth (2015) 3.3% 0.7%

Inflation Rate (5 year average) 3.36% 10%*

Main Trading Partners (2015) USA, China, Brazil,

Germany, Argentina

Mercosur (mostly Brazil), China,

EU, USA

Imports from the US (2015) 18.9% of imports, totaling US$15.6

billion

13.2% of imports, totaling US$10.8

billion

*3 year average from 2011-2013

Country Stability & Competitiveness

CHILE ARGENTINA

S&P (2015) AA- SD

Moody’s (2015) Aa3 B3

Fitch (2015) A+ RD

Global Competitiveness Index 2015-

2016

(out of 140 countries)

35th (1st in Latin

America) 106th

Doing Business Ranking (2015) 48th 117th

Number of Days for Starting a Business

(2015)

6 days (down from 35

days in 2010) 25 days

Cost to Import (2014 US$ per

container) $860 $2,320

Enforcing Contracts Rating (2015) 56th (480 days) 38th (590 days)

Chile & Argentina: Open for Business

FTA’s and Global Involvement

Chile

• 23 FTA’s in force covering 61 countries, representing 90.1% of world GDP

– TPP pending application

• Member of the Pacific Alliance

– Trade bloc comprised of Chile, Peru, Colombia & Mexico

– Represents 38% of regional GDP, 50% of total trade and 45 % of total FDI flowing into the region

• US-Chile FTA (2011)

– 100% of exports from US duty free since January 2015

Argentina

• Founding member of Mercosur

– Customs union with a CET

• FTAs with Bolivia, Chile, Israel and Peru

• Trade & Investment Framework Agreement with US signed March 2016

Opportunities in Chile

Wisconsin-Chile Exports

Source: ITA US Department of Commerce

0

100

200

300

400

500

600

700

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

US$

(m

illio

ns)

Top Wisconsin-Chile Exports

Source: ITA US Department of Commerce

Industrial Machinery:Electric Machinery:Medical Instruments:Iron or Steel Products:Paper & Paper Articles:

164,731,51128,831,29314,436,81510,662,6916,579,014

2015 Total Exports: US$ 283,429,850

Chile is ranked 15th Export Destination and 2nd in Region

Opportunities for Imports

Opportunities:

• Mining, Construction, and Energy Machinery

• Agriculture and Food Processing Machinery

• Healthcare Equipment

• Cars and Auto Parts

• Water Desalination

Main imports: Refined/crude petroleum, trucks, cars, aircrafts, heavy machinery, iron and steel, & telecommunication devices

Opportunities: Renewable Energy

National Energy Strategy:• By 2050, 70% of electricity must come from renewables• Chilean Economic Development Agency subsidies and grants

Mining companies moving from fossil fuels in order to minimize cost: can save US$20/MW hour using solar or wind

Non-Conventional Renewable Energies Opportunities:Huge potential for Solar, Wind, Geothermal, Biomass & Hydroelectric:must be developed sustainably

Opportunities: Bioscience

Opportunities:

• Biotech: agribusiness, mining, life sciences, aquaculture, forestry and energy sectors present opportunities

• Health: biomedicine, medical devices, pharmaceuticals (especially for non-communicable diseases), health diagnostics R&D

Life sciences represent 2% of GDP

Biotech industry annual sales of US$ 900 million in 2014

US$ 4 billion healthcare investment plan to support the expansion of the

Chilean health system

Opportunities: Food & Beverage

• Food sales reached US$20 billion in 2015 and is expected to grow at CAGR 6% from 2015-2020

• Highest soft drink consumption level in world• Strong consumption levels & disposable incomes will boost sector• Vast natural resources & trade network position Chile as a prominent

food production base for exporting to region & beyond

Opportunities:• Food: private label, processed foods, pasta,

nutritional products, high-value productse.g. chocolate & confectionery

• Drinks: coffee, beer, health drinks• Mass grocery sector: discount segment and

convenience stores

• Chile’s manufacturing sector underperforms• Diversification of economy will boost manufacturing sector• Major infrastructure projects will fuel demand for medical and

aerospace manufactures

Opportunities:• Mining equipment: open-pit & underground equipment, conveyor

belts, mill balls• Medical & hospital equipment• Agriculture: specialised & energy efficient machinery & equipment• Auto-parts: local supply only meets 30% of demand• Construction supplies & equipment

Opportunities: Manufacturing

Opportunities: Water Technology

• Total water production 2015: 1,664 million m3• Total mains water consumption 2015: 1,119 million m3

• Lack of natural water resources in Chile• Main industries in Chile are the largest water consuming sectors:

agriculture & mining• Water sector undergoing constant modernisation and expansion

Opportunities:• Potable water systems for municipalities• Water re-use systems for mining, industrial,

agricultural and aquaculture use• Pre-treatment technology for wastewater and sludge• Reverse osmosis, desalinisation, biological-based treatments,

photostabilisation, hydrodynamic separation & up-flow filter

Opportunities in Argentina

Wisconsin-Argentina Exports

Source: ITA US Department of Commerce

0

20

40

60

80

100

120

140

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

US$

(m

illio

ns)

Top Wisconsin-Argentina Exports

Source: ITA US Department of Commerce

Industrial Machinery:Medical Instruments:Electric Machinery:Animal By-Products:Plastics:

32,084,07628,884,400

2015 Total Exports: US$ 113,532,620

12,027,2156,655,8534,475,996

Argentina is ranked 28th Export Destination and 4th in Region

Opportunities for Imports

Opportunities:

• Agricultural and Food Processing Machinery

• Electronic Security Equipment

• Healthcare Equipment & Technology

• Shale Gas & Oil

• Biotechnology

• ICT

Main imports: Petroleum gas & oils, automotives, parts and accessories for light & heavy commercial vehicles, telecommunication equipment, pharmaceuticals, powered aircraft

Opportunities: Energy

• Net importer of energy as insufficient power generation• Renewable energy key factor in Macri government agenda• Investment required to meet rising demand and diversify energy matrix

Renewable Energy: • Law 27.191 - promote renewable energy to 20% of national grid by 2025• Renewable Energy Development Fund (FODER)

Opportunities:• Hydrocarbons (Vaca Muerta shale oil & gas reserves)• Solar, Wind, Hydroelectric & Biomass

Opportunities: Bioscience

• Strong government investment in research centres, funding & PPPs• Leading biotechnology sector, especially in agroindustry & health• Pharmaceutical & healthcare industry offers strong long-term growth

Opportunities:• Biotechnology: agriculture, food industry, pharmaceuticals, health

diagnosis, genetics (human & animal)• Healthcare: Pharmaceuticals, medical devices & equipment, R&D PPPs

Opportunities: Food & Beverage

• High per-capita soft drink & alcohol consumption rates: 129L per capita for soft drinks in 2015

• Food consumption is expected to increase by 9.3% CAGR 2014-2019• Small local production of food processing equipment in Argentina:

71% imported in 2014, of which 15% originated in the US

Opportunities:• Food processing equipment & parts, especially related to seeds &

grains, eggs, oils, fruits, nuts and vegeables• Dairy products, confectionery, specialist food ingredients, soft drinks

& alcohol

Opportunities: Manufacturing

• 2012: manufacturing industry contributed US$85 billion to ArgentineGDP (18% of total GDP)

• 2003-2012 annual accumulated growth for manufacturing industry: 6%• US brands generally preferred by Argentines• Relaxing of import controls offers opportunities for Wisconsin

manufacturers

Opportunities:• Construction equipment and

materials• Mining supplies & machinery• Agriculture – irrigation equipment

and parts & components• Food processing equipment• Electronic security equipment

Opportunities: ICT

• Second largest IT market in Latin America, valued at US$ 4.2bnexpected growth from 2017 to US$ 7.7bn by 2020

software segment will grow at CAGR 13.7% 2016-2020

• Major government investments to boost services and penetration• Financial services sector biggest spenders (27% of 2014 total spending),

followed by telecoms (18.4%)

Opportunities:• Big data • Cloud computing• Enterprise software• Outsourcing• Infrastructure

Market Entry Strategy• Critical to assign agent, representative, or distributor

– Assist with regulation compliance

– Overcome language and cultural barriers

– Establish crucial relationships

• Offer a value-added proposition based on quality, price, and service to beat competition

• Ensure after-sales services

• Innovative marketing campaigns in Spanish

• Personal relationships can be key to entry, and reputation goes far

• Do your due diligence

Market Recommendations

• Come in with a clear objective

• Define clearly what type of business structures would be

viable for your product and market

• Be proactive in your marketing and follow-up and create

personal relationships

• Be committed and experience it first-hand

We look forward to working with you!

Verónica Medina

CEO of BusinessHubOfficial Representative of WEDC

Av. Vitacura 2969, 17th Floor Las Condes, Santiago de Chile

E: vmedina@businesshubconsultants.comW: www.businesshubconsultants.com

T: +(56 2) 2530 3600

Dates: September 24-30, 2016

Cities: Buenos Aires and Santiago

Itinerary:• Sept. 24: Depart from Wisconsin

• Sept. 25: Arrive in Buenos Aires; cultural tour and group dinner

• Sept. 26: Country briefing; individual business appointments in Buenos Aires

• Sept. 27: Individual business appointments in Buenos Aires

• Sept. 28: Travel to Santiago; country briefing and group dinner

• Sept. 29: Individual business appointments in Santiago; cultural tour

• Sept. 30: Individual business appointments in Santiago; evening departure for Wisconsin

Venture Fee:

• $2,500 for the first participant from a Wisconsin exporter of goods or services

• $2,700 for additional participants from the same company

This subsidized cost includes the following personalized services for participating

companies:

• Market research and customized one-on-one appointments with potential customers, agents, distributors and other market

intermediaries in each city

• Country briefings

• Cultural activities

• Hotel accommodations for the duration of the program

• Some group meals

• Transportation from Buenos Aires to Santiago

• Transportation to/from airports, business meetings and group events

• Interpreters as needed

Not included in the venture fee are the following:

• Round-trip airfare between the U.S. and South America (estimated cost: $1,400)

• Most meals

• Hotel accommodations outside of the official schedule, should participants choose to arrive early or stay late

The program registration deadline is Aug. 15, 2016.

For more information about this global trade venture, please visit www.InWisconsin.com/argentinachile.

If you have questions about this program, please contact: • Brad Schneider, WEDC Market Development Director

Tel. 608.210.6890 or brad.schneider@wedc.org