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Chile Shale Gas

By zikom1l1 Nov 17, 2013 996 Words
1. Tips for Doing Business in Chile
1.1 General Advise
While Chile is a top South American country, there is some general advice to follow when doing business with them: First, it is important to communicate with Chilean authorities in Spanish, at least in the first contacts made. Chilean companies can communicate in English, and you may find that they answer you in English, even if you contacted them in Spanish. However, some companies, or even authorities, are not able to correspond in English and they will not consider your letter or email. The most important reason though, is that Chileans will appreciate the gesture as courtesy, and that will work in your favor1. Second, it is imperative that you meet your trading partners personally. Chileans are used to meet their business partners face to face, and they will usually not do business with anyone that they have not actually met. It is more likely you will get taken seriously if you have met the person you are communicating with. Third, Chileans will look at you as a serious business person that wants to compete in the Chilean Market if you actually take the work to visit Chile. The best way to do this is by joining trade missions done by the US Government. It is important to follow-up this visits. Fourth, you can quote in US Dollars, as Chileans are used to deal in US Dollars, and they actually prefer it. Do not attempt to treat Chile as a third world country. It is true that Chile is still considered a developing country, but their economy is stronger than average South American economies and it is quite sophisticated. Also, do not attempt to bribe Chilean authorities. Unlike many other South American countries, Chile ranks very well against corruption, and you may find yourself in trouble if you attempt to bribe. Chileans are generally sincere, social, and easy going. The paper-work needed to trade is nothing if compared to other South American countries. 1.2 Business Meetings in Chile

One more important thing to know is how business meetings work in Chile. Sometimes, you will have to wait for someone to arrive to a meeting. This happens because the Chilean likes to appear as busy and in demand2. If you are very important, you will have to wait less. Business meetings begin with a handshake. If there are subsequent business meetings, a kissing on the cheek with a woman is appropriate, or embracing between men3. It is advised to never rush to the topic to be discussed. Doing so is considered rude. First, there should be some social chat about their families and such. It is advised to recognize Chile's beauties, as Chileans will react positively to this. Also, avoid visiting during January or February, as Chilean authorities tend to travel for holidays. In addition, it is important to establish connections with "pitutos", which are persons with lots of connections and can get you valuable information that you may need. 2. Economy

2.1 Overview
Chile is one of the most stable and prosperous nations in South America. According to The Heritage Foundation in their Index of Economic Freedom, Chile is the 7th freest economy in the world, making it a global leader in economic freedom. Chile, for many years, have recognized that a limited government with prudent fiscal and monetary policies is the best way to run a country. The results are evident. There is a positive and stable business environment, and barriers to free trade are extremely low. More factors that contribute to Chile's healthy economy are: efficient and transparent courts; respect for intellectual property rights and copyright law; reduced regulatory framework to seven days to start a business; inflation under control; and tariffs average 4 percent4. Chile's Economy is mostly composed by its services industry. Chile's GDP is composed 5.1% by the Agriculture sector, 41.8% by its industry sector, and 53.1% by its services sector.5 The industry sector is mainly run by the Forestry and the Mining industries. Chile produces 1/3 of the global copper output and is considered the copper mining capital of the world6. The services sector is primarily composed by its finance and tourism industries. Currently, Chile and the US have signed an Free Trade Agreement that was implemented in January 2004. 2.1 Economic Statistics

Chile's GDP PPP is $316,514 billion, ranking 6th in South America. However, it has a GDP per capita of $14,331, ranking second after Argentina. Chile's GDP consists 60.2% in private consumption, 11.8% in government spending, and it has a negative account balance of exports against imports. Chile's top exports are Mining 49.46%, industrial goods 27.45%, agriculture 5.04%. Chile's major trading partners are China, US, Japan, Brazil, and Argentina7. 3. Forecast

Chile's has been able to maintain a solid economy even throughout the worldwide financial crisis, thus, it makes sense that it will do fine in the next years. Having a Free Trade Agreement with the United States, trade has been liberalized over these last years.8 Chile's economy has grown almost 6% this year and it is expected to grow in a similar rate for the coming years. Inflation has been under control for Chile in the recent years, hitting as low as 1.68% in 2009. It is expected for Chile to have an inflation rate of 3% for the coming years. At last, Chile is not expected to have major changes as they are still 1 year away from presidential elections, and the power they have to actually change the economy so much, is very limited. It is safe to say that Chile will remain to grow and be politically and economically stable for the next years. 4. Tax System

According to Latin Business Chronicle, Chile has the best tax system in Latin America. Chile is the most attractive country for corporations if we consider primarily its tax system.9 Chile holds a flat-rate corporate income tax, known as the First Category Tax, which is 17 percent10. Personal income is taxed progressively at up to 40% depending on the wage of the individual. Overall, Chile has one of the lowest corporate tax rates in the world.

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