Chile Market Briefing: Business Overview and Best Prospects

Isabel Margarita Valenzuela Senior Commercial Specialist U.S. Commercial Service Santiago, Chile

Chile: Key Facts

•2,600 miles long •100 miles average width •Diverse climatic zones •Opposite seasons from the U.S.

•Isolated by mountains, desert and sea •Population of 17 million (6 million in capital city of Santiago)

Why do business in Chile?

• Trade Agreements – 61countries • 15 years of avg. 5% GDP growth • Prudent fiscal policies • Stable democratic government • Solid business practices • Rule of law • Low corruption

Why Chile?

       Macroeconomic, fiscal, political stability 15 years of average 5% GDP growth Ranked 34 out of 189 on ease of doing business (World Bank) Rule of law, low corruption Trade Agreements- 61 countries Growing integration with international capital markets A+ Credit Rating (Fitch)

  

Political Overview

Strong democracy and institutional framework – Peaceful transition from dictatorship in 1980’s Solid economic policies have provided platform for economic growth – However, high income inequality President Michelle Bachelet – Socialist Party – – 2 nd term – sworn in March 2014 Strong reform agenda • Education • • Tax Constitutional

Chile - U.S. Free Trade Agreement

    10 th year of the agreement Duties eliminated on 99% of U.S. products Bilateral trade between U.S. and Chile reached $28 billion in 2013, a 335% increase from before the FTA U.S. exports to Chile reached $17.6 billion in 2013, a 548% increase!

Chile in the Latin American Region

• Chile considered as a platform for Latin American countries • The two largest retailers in Latin America are Chilean.

• Chile is the largest Latin American investor in Brazil • • Chilean companies are regional companies: LAN (largest airline in Latin America), Cencosud (retail), Arauco (forestry), Detroit Chile (shipbuilding), Falabella (retail), Sonda (ICT), Corpbanca (banking), Salfa Corp (construction)

U.S. Companies Invest in Chile

• • • • • • • • • Wal-Mart (acquired largest supermarket chain: LIDER Aramark – 5,000 employees in Chile AES Corp/Gener – 2nd largest electricity generator Sempra Energy – electricity generator Freeport-McMoRan - Copper & Gold mining MetLife acquires Interamericana de Seguros Air Products acquires Indura Google – data center Investments like these and others tend to inspire even more confidence in the Chilean economy.

Challenges

• High energy costs • More rigorous permitting process and environmental enforcement have paralyzed or permanently halted energy and mining projects • Education and Health improvement • Income inequality of salaries

2014

U.S. Department of Commerce U.S. Commercial Service

 Assists U.S.exporters in doing international business  International and Domestic operations  International – U.S. Commercial Service  Domestic - U.S. Export Assistance Centers  Teams according to industry sectors  Programs: Gold Key, International Company Profile, Single Company Promotion, Advocacy, Trade Shows in the U.S., Trade Shows in Chile

Best Prospects for U.S. Exports

• • • • • • • Mining Equipment Total imports: USD 4.2 billion Imports from the U.S.: USD 1.8 billion Chile produces 34% of copper sold in the world USD 80 billion in new investment over next 10 years Best Prospects: Mining equipment that requires regular replacement (i.e. Grinders, Off-road trucks (240-440), underground mining technology services, engineering services.

Cooperative Agreement with Asociación de Industriales de Antofagasta (AIA) to support U.S. companies in Chile’s northern mining district Local trade shows: Expomin, April 2014

• • • • • • • • Construction Machinery and Equipment Total Imports: 1 billion Imports from the U.S.: 459 million The U.S. is the largest supplier of machinery for Chilean construction industry (36.8% market share); #2 Germany (15.9% market share.) 2012 sectorial growth of 11 %, one of the fastest growing sectors. Projection for 2014: 5.5 % Industry subsectors: large mining projects, infrastructure, private and public housing, upcoming airport expansion.

Chile ranks 12 in the world in LEED certification.

Trade shows: Conexpo Latin America 2015 (w/Edifica) For additional information contact: [email protected]

• • • • • • • Energy / Electric Power Equipment Total Imports : 1,200 billion Imports from the U.S.: 180 million Energy demand growing: Current installed capacity is 18,600 MW and 8,000 MW needed in the next decade.

Generation, transmission and distribution managed by private companies both foreign and Chilean 66% of the energy matrix derived from thermal; 32% hydro ; 2% renewables – opportunities in all areas conventional and renewable.

Environmental permits and permits to obtain concessions for the use of state owned land are numerous and time consuming.

Trade Show: Power Gen, Orlando, December 9-11, 2014 ( www.power gen.com

)

• • • • Water Resources Equipment Chile faces a huge water shortage, especially in the northern region, to satisfy needs from mining operations, agricultural sector and population.

Between 2012 and 2014, investments are estimated at US$ 20 billion.

Best Prospects: • Design/construction of desalinization plants, wastewater and water treatment plants. Preventive maintenance techniques such as vibration, laser alignment, oil dialysis and others.

• Reutilization of wastewater for agricultural irrigation. Best marketing strategy: • Individual use of programs offered by the Commercial Service • IBP - WEFTEC 2014, New Orleans, Sept./Oct. 2014 • Local Trade Show: Aguatech, October 2015 It is held in Santiago, Chile every two years. http://www.expoaguatech.cl/index.html

Food Processing and Packaging • • • • • • • Total Imports: 78 million Imports from the U.S.: USD 13 million Chile is 15th largest world food supplier. Will be among top ten countries in 2015 with USD 16 billion in annual exports. Main production and exports include fish and seafood (catch/aquaculture), wine, fresh fruit, dairy and meat products. CHILE brand well positioned in international markets. Chile’s Mediterranean climate and favorable geography allows for a wide variety production. The country is free of most phyto-sanitary diseases and pests due to strict and enforced regulations.

For additional information contact: [email protected]

• • • • Agricultural Machinery & Equipment Total Imports: 635 million Imports from the U.S.: 126 million Rising energy and labor costs requires agriculture production to use energy efficient machinery & equipment, and increase efficiency using mechanized harvesting, precision irrigation. Green production requires natural fertilizers and pesticides.

Best subsectors include:  Irrigation equipment   Precision agriculture equipment Fresh fruit harvesting equipment For additional information please contact: [email protected]

• • • • Healthcare Public sector = 26,300 beds, private sector = 15,000 beds. 75% of the population is under the public healthcare insurance system.

Private sector – World class private hospitals and health care facilities – Joint Commission accreditation. Pharmaceuticals, mandatory registration at the Institute of Public Health. Medical eq. and devices do not need registration except for contraceptives, gloves, needles and syringes.

Medical devices in demand: ventilators, infusion pumps, aspiration pumps, central monitors, trauma equipment, surgical tables, ECG monitors, hospital beds.

• • • Safety and Security 12% projected growth in 2014 Market potential: security equipment for residential, commercial, industrial compounds, firefighting equipment and tools, and safety devices for the mining, industrial/chemical industries.

Specific products in demand: access control, parking systems, fire detectors, sprinkler systems, extrication equipment, firefighting suits, alarms and monitoring, CCTV, outdoor perimeter protection, locks, safes, sensors, and general safety gear.

• • • • • Telecommunications Chile's telecom sector grows an average of 15% percent annually. The wireless communications market is the fastest growing subsector. Chile leads cellular penetration in Latin America with 125 percent at the end 2013. Current pilot projects in 4G.

Best Prospects: • Equipment and technology to support broadband Internet, corporate data communications, IP related services, and wireless applications.

• Equipment and technology to support upgrade of national communications network to respond to disaster/emergencies.

Best Marketing Strategy: • Use individual programs offered by the Commercial Service.

• • Mobile World Congress (MWC) February 2015 - Barcelona, Spain IBP: CTIA May 2014 (Wireless Communications Association.)

General Consumer Goods • • • • • • In Chile, a wide variety of consumer goods are manufactured locally and large volumes are imported, mainly from Asia.

80 percent of total consumer goods sales in Chile are done through Department Stores and Supermarket chains.

The remaining 20 percent are sold in pharmacy chains (cosmetics) and other specialized retail stores (toys, school & office supplies, home décor; and others).

Department stores’ acquisitions are made through local distributors or directly by their product managers, who travel regularly to meet with foreign suppliers.

Products with best potential: Accessories for cell phones & IPads, eco friendly and innovative products; and households energy saving products, For additional information contact: [email protected]

Contact us today to connect with a world of opportunity. U.S. Commercial Service – Santiago, Chile U.S. Department of Commerce

Isabel Margarita Valenzuela Senior Commercial Specialist

Tel: (56-2) 2330-3421 [email protected]

www.export.gov/chile