Exporting into Argentina
- 1. Exporting the iPod into Argentina Corina Wentzel
- 2. Executive Summary Why Argentina IT industry increased 19% from 2005 to 2006 Over 40 million citizens Median age less than 30 GDP growth of 9% annually Why the iPod? High global demand Successful in Mexico International revenue grew 17% in 2007 Unique
- 3. Obstacles and Opportunities High Tariffs 10-20% tariff 37-47% tax and tariff Product Adaptations Language, 220 volt Double Taxation No tax treaty Few Non-Tariff Barriers No quotas or licenses Financing 2 nd largest trading partner Significant Growth Potential 1/3 live in or around Buenos Aires
- 4. Alternative Methods *Subsidiary* Foreign Distributor Contracting Agent Pros Guaranteed control Confidential information is protected Required by law Responsible for collecting payment Provide after purchase support Some home country management Know the market Complete control Know the market Easy to revoke Cons Governed by local laws Open to double taxation Unable to test the market Lack of control Often own competitors products Care about the sale, not the product Lack of control Disclosure of confidential information Agent assumes no risk Not responsible for arranging payment Only care about the sale
- 5. Key Elements
- 6. Legal Aspects Treated like citizens Access to financing Welcome to take profits Must have subsidiary or branch
- 7. Financing U.S. Loans Small Business Administration Short term loans International Finance Corporation Developing countries Export-Import Bank Guarantees loans Citibank Only U.S. bank in Argentina retail Argentina Loans Late 1990’s: 120 Banks Today: 67 Banks Advanced payment of imports
- 8. Questions?