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International Resources: Global Market Profile: Chile

As part of its commitment to providing its members with market analysis and insight, PMA has compiled the following information about Chile from Attaché Reports submitted by the U.S. Department of Agriculture’s Foreign Agricultural Service, as well as the CIA World Factbook, embassy sites, and business etiquette reference guides.

Entering the Chilean Market

Business practices in Chile are similar to those in the United States. The business day usually begins at 9:00 a.m. and ends between 6:00 and 7:00 p.m. Lunch breaks usually begin at 1:00 p.m. and last about an hour, unless business is being conducted, in which case two to three-hour lunches are common. Although social occasions rarely begin at the indicated time, business meetings nearly always do.

Try to make appointments from 10:00 a.m. to 12:00 p.m. or between 2:30 p.m. and 5:00 p.m. It is also popular to have business lunches following a late morning meeting. Avoid scheduling meetings in January and February, because this is when many Chileans take vacations. Days surrounding Christmas and Easter are also bad times for meetings. 

Chile has a relationship-driven culture so initial meetings should be used to build a relationship and establish trust. Devote time to non-business discussions or small talk, and wait for the other party to initiate the change in topic. Most Chilean business entertaining is at a hotel or restaurant. Good topics to discuss are: families, children, history, and Easter Island. Topics to avoid are: politics, human rights, and the 1988 Grape Export scare.

Chileans like an element of formality in all they do. Many Chilean business people are well-educated professionals who travel internationally and speak English. However, not all speak English, and foreign business people will often find the ability to speak Spanish very useful, if not an absolute must. Promotional literature should be in Spanish as well as English.

Women have advanced greatly in the business world in Chile, more so than in the rest of Latin America. However, there are still machismo feelings, so women might encounter a slight disadvantage, but not always. 

An importer/agent is becoming a necessity. Most supermarket chains prefer to buy new or less well-known products from importer/distributors. Products can fill gaps in the local market if supported on the ground. Intensive sampling, in conjunction with prominent shelf space in supermarkets, is key to successfully launching imported products. Agent/importers must also have the ability to store imported products until they are tested and released for sale and distribution by health officials of the region.

Gift giving is common if invited to a Chilean's home. Take sweets, chocolates or wine for the hostess. Sending flowers in advance is also common; however, do not give yellow roses as they indicate contempt. Do not give purple or black flowers as they symbolize death. Do not give scissors or knives as they indicate you want to sever the relationship. Gifts are opened when received.

The major commodities exported by Chile are: grapes, apples, pears, onions, corn, peaches, garlic, asparagus, and beans.

Chile is the main worldwide exporter of grapes and the second largest exporter of apples and pears. In the Southern Hemisphere, Chile is the largest exporter of apples, peaches, berries and avocados, ranking second in pears and kiwi fruit. In 2003, 24 percent of the world's grapes and 9.1 percent of the world's peaches were produced in Chile. They are harvested when these fruits are out of season in the Northern Hemisphere, thus making Chile the main exporter for these products in the opposite season.

In the case of vegetables, specifically, average exports surpass US$31 million and the total volume is around 68,000 tons. The main vegetables exported by Chile are onions, garlic, radicchios and asparagus.

Currently agriculture counts for 5.9% of Chile’s GDP and 13.6% of the country’s labor. In the 2004-2005 growing season the top fresh fruit importing countries were:

• United States 39.3%
• Netherlands 11.1%
• United Kingdom 5.3%

Doing Business in the Chilean Market

First impressions are important. Some differences are simply due to the language barrier; others are due to differences in deeply held traditions and practices. If you maintain a polite, patient and professional manner, the likelihood of committing a serious faux pas will be greatly diminished. To help bridge the gaps, we suggest that you:

• Dress professionally and conservatively: Men customarily wear a dark blue or gray suit, a light shirt, and a conservative tie. Bright colors and flashy fashions are not suitable, nor is wearing anything on the lapel. Women should wear a suit and heels.
• Prior appointments for meetings are necessary. It is advisable to make meeting arrangements 2 weeks in advance and confirm them upon arrival in Chile.
• At business meetings, punctuality is valued.
• Chileans stand very close when conversing. Direct eye contact is important and shows interest and sincerity.
• A firm handshake accompanied with a smile and appropriate greeting is normal in a business setting (men will usually shake hands while women generally pat each other on the right forearm or shoulder). Some women may not shake hands with men, although this is becoming less common. Men rise when a woman enters the room.
• These are always accompanied by the appropriate greeting for the time of day - Buenos días (good morning), Buenas tardes (good afternoon) or Buenas noches (good evening).
• Business cards are exchanged on the initial meeting at the very start. Try and have one side translated into Spanish. Keep cards in good condition – a tattered card will reflect badly on you. Also, include your title if you have one, they are important in Chile.
• Use titles where they apply, and if no title exist, then simply use Señor (male) or Señora (female) followed by the surname. Address a person directly by using his or her title only. A PhD or a physician is called Doctor, teachers prefer the title Profesor, engineers go by Ingeniero, architects are Arquitecto, and lawyers are Abogado.
• Like many South Americans, Chileans use both their maternal and paternal surnames. The father's surname is listed first and is the one used in conversation.
• Always let your Chilean counterpart progress to the stage of formality. First names are used between close friends - wait until invited to move to a first-name basis.
• Meetings are not always linear in their progression. Schedules are not very structured and issues can be tackled all at the same time.
• Remember that decisions are not made at meetings so it is important to provide all necessary information during the meeting.
• It is important to be patient as time is not of the essence in Chile – meetings will last as long as they need to last.
• Pay attention to hand movements - gestures change in meaning across cultures.
• It is common to interrupt someone while they are speaking. However, never openly criticize anyone.
• Communication styles tend to be tuned to people’s feelings. Confrontation is generally avoided in order not to jeopardize another’s honor or dignity – it may therefore be necessary to read between the lines in order to fully understand what is really meant. Chileans are generally indirect in their communication styles, but can become very animated and assertive when if they get emotional.
• Chileans are straightforward and serious during negotiations. Always have a bottom line and terms clearly drawn out.
• In Chile, it is considered rude to arrive on time for a social event. You should arrive 15 minutes late to a dinner and around 30 minutes late for a party.
• If invited to a Chilean’s home for a meal: women sit first, the host/hostess invites everyone to begin eating, and keep hands visible (wrists resting on the table).
• Always use utensils to eat and avoid speaking with eating utensils in your hands.
• It is considered polite to finish everything on your plate.
• Wait for a toast to be made before taking the first sip of your drink. The host makes the first toast. The most common toast is "Salud!" When you lift your glass, look at the person being toasted. Pour wine with the right hand only.
• Cover your mouth or stifle yawns.
• Holding the palm upward and then spreading the fingers signals that someone is stupid. Slapping your right fist into your left open palm is considered obscene, and do not raise your right fist to head level, as this is a Communist sign.
• Do not try to barter if purchasing items on the street or in stores. Also, it is illegal for a Chilean not to issue a receipt.

Consumer Preferences, Tastes, and Traditions

Consumers are very brand-oriented. Chileans would rather have a known brand rather than a lower price. Major supermarket chains are introducing private labels. Sampling is usually required to introduce new products successfully.

Middle and upper class consumers generally steer clear of spicy ethnic foods. Fresh fruits and vegetables are viewed as safer and higher quality if purchased from a supermarket rather than a street vender.

Consumers are not overly concerned about the health aspects of fat, cholesterol, and extensive processing. At the same time, noting the health benefits of a product can be helpful in marketing a product. Consumers relate expired shelf life to spoilage, which is one of their major concerns when shopping. Chileans will purchase food that is labeled ‘light’ more often than not.

Export Business Reminders

• Before coming to Chile, use the many sources of information, for example, the U.S. Foreign Agricultural Service, state agricultural offices, and state/regional trade organizations.
• Build at least a minimum team within your company to help on the Chilean market.
• Use metric terms.
• Ensure that all sales documentation is correct.
• Be patient regarding requests for documentation, ingredients lists, production process, and quality assurance.
• Respond to such requests with diligence and in a timely fashion.
• Use letters of credit to reduce risk.
• Hedge export values with your U.S. bank if you are concerned about exchange rate risk.
• Set up wire transfers for payments.

Food Standards and Regulations

Labeling requirements: consult www.sag.gob.cl for regulations (an unofficial translation into English is available on the U.S. embassy Web site, www.usembassy.cl)

Sanitary and Phytosanitary Measures

Both the U.S. and Chile committed to continue to work on resolving important sanitary and phytosanitary issues affecting market access.

For additional details, see http://www.fas.usda.gov/info/factsheets/ChileFTA/chilefta06.asp

Advantages/Disadvantages to doing business in Chile

Information: Import/Export

Agricultural imports from all countries (2004, in millions): $2,508, U.S. market share: 9%.

Consumer food imports from all countries (2004, in millions): $1,755, U.S. market share: 7%

U.S. Exports to Chile

*Calendar Year and Year-to-Date Comparison (In Thousands of Dollars)

 U.S. Imports from Chile

Trade Agreements

PMA Global Trade Insights: U.S.-Chile Free Trade Agreement

The origins of an agreement with Chile began with the October 1990 signing of the U.S.-Chile Trade and Investment Framework.  In 1994, the United States announced interest in extending the North American Free Trade Agreement (NAFTA) to include Chile. Negotiations with Chile were initiated in December 2000 and finalized two years later. After a review by the President, private sector advisory committees, Congress, and the U.S. International Trade Commission, the U.S.-Chile Free Trade Agreement was signed on June 6, 2003.

On January 1, 2004, the United States began implementing  the U.S.-Chile Free Trade Agreement (FTA), the first comprehensive trade agreement with a South American country. After 2 years, total bilateral trade had grown 80%, benefiting both countries. Many agricultural products received tariff free access upon implementation.  Three-quarters of U.S. agriculture goods exported to Chile will be duty free by 2008 and full agricultural liberalization will occur by 2016.

Overview of the Agreement – Market Access

With the agreement, U.S. deciduous fruits – as well as citrus – gain preferential access as a 6% import tariff is immediately eliminated. Technical discussions with the appropriate regulatory agencies on Chile’s phytosanitary regulations for certain stone fruit are ongoing.

Since Chile already has duty-free access for most deciduous fruits, the agreement is expected to have little impact on Chile’s total fresh fruit shipments to the U.S. market. The nominal duties will be immediately eliminated on table grapes. In the case of fresh berries, nominal duties will be immediately eliminated, which may allow Chile to improve its competitive position vis-à-vis China.

Concerning Chilean fresh citrus, this commodity gains preferential access as U.S. import tariffs are eliminated on different schedules. Technical discussions with the appropriate regulatory agencies regarding U.S. phytosanitary standards which limit trade are on-going.

With the agreement, U.S. fresh and processed vegetables gain preferential access to the Chilean market as the existing tariff is phased out. The phase out period varies by product from immediate elimination to elimination after 12 years. For example, Chile’s 6% tariff on U.S. frozen potato fries and potato chips is phased out over 4 years. Tariffs on fresh or chilled tomatoes, onions, and garlic will be phased out immediately. Tariff elimination will make U.S. vegetables more competitive with products from Canada and other competitors.

Some fresh and processed vegetables from Chile will continue to benefit from duty-free access, while others facing tariffs will benefit from immediate tariff elimination. In other cases where the U.S. industry is more sensitive to trade, tariffs will be phased out over 4 to 12 years. For some products, different schedules are established for different times of the year.

Regarding tree nuts, all U.S. tree nuts gain preferential access when Chile’s import tariff is immediately eliminated. The very high U.S. share of the import market provides an excellent base for a continued strong presence in the market. With the agreement, Chilean tree nuts gain preferential access to the U.S. market on different timeframes. Tariffs on almonds, hazelnuts, and shelled walnuts will be phased out in 4 years. Tariffs on in-shell walnuts, pistachios, and pecans will be immediately eliminated.

http://www.fas.usda.gov/itp/chile/us-chile.asp

Annual Exporter Guide for Chile (2005)

http://www.fas.usda.gov/gainfiles/200509/146131080.doc - Information Regarding: a) market sector trends available page 5 of guide b) retail sector trends available page 8 of guide

Chilean related Links and Resources

Currency - the currency of Chile is known as the Peso (CLP)i. Use the free currency converter to compare to dollars, British Pounds, etc.

Weather - visit Yahoo!'s up to date Weather for Chile.

News - check out all the latest Google news on Chile.

Intercultural Know-How - use the Intercultural Business Communication tool for tips on doing business in Chile.

Dialing Code - the international dialing code for Chile is +56.

Time -Chile is -4 hours GMT. Get the time in Chile now.

History - read about the long and rich history of Chile.

Government Resources

• Chilean Ministry of Agriculture: http://translate.google.com/translate?hl=en&sl=es&u=http://www.minagri.gob.cl/&sa=X&oi=translate&resnum=1&ct=result&prev=/search%3Fq%3Dchilean%2Bag%2Bministry%26hl%3Den%26sa%3DX
• U.S. Embassy and Consulates in Chile: http://santiago.usembassy.gov/OpenNet/asp/default.asp?boton=Hom
• Good Agricultural & Good Manufacturing Practices - Chile’s National Commission to promote food safety and standards
• Background Notes on Chile