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Latin America PDF Print E-mail

Market Entry Considerations

Latin America is an "untapped" region of the world for many companies. Most countries, but especially Brazil, Chile, Mexico, Argentina and Colombia continue to invest heavily in their wireless services and technologies. This continent, only 10 years ago, was mostly TDMA. Today, GSM has replaced most TDMA networks with the exception of a few CDMA licenses. Many operators are also offering 3G services in some areas.

For the telecom sector and the power and utility sector, an "in market eco system" consisting of the required distributors, system integrators and / or value added resellers is an important part of a company's market entry assessment. Usually, for each country, a customized market entry plan needs to be developed which includes the identification of the "market eco system. " This market entry plan is essential for a company's successfully securing orders for products and services. These "eco system partners" must also have access to the wireless operators, private utilitiy companies and / or appropriate government agencies that will be issuing RFIs and RFPs, when they are required. It is the responsibility of the consultants and/or agents to make sure that inputs from their partners are forwarded to the authors of the RFIs and RFPs for consideration.

In the case of the power and utilities industries, the new regulations of the electrical sector in South America, coupled to the privatization processes that have taken place, have transferred to the private sector the responsibility for expansion of the electric infrastructure in a free market environment. This translates into an "open market" that is looking for the best and most competitive solutions, without a lot of interference by the government.

Emerging Trends and Requirements

Mobile telephony in Latin America had a somewhat late start compared with the rest of the world, and only really took off in 1999-2000, when the major mobile markets in the region experienced an explosive growth. Prepaid services played an important role the sector's success, as they made cell phones available to millions of low-income users.

Mobile penetration in Latin America surpassed fixed-line penetration in 2001. By end-2005, cellular subscribers had overtaken their fixed-line counterparts in every Latin American country except Cuba. Paraguay leads the trend, with more than twelve mobile phones for every fixed line in service in early 2008.

By early 2008, mobile penetration in all of Latin America was over 66%, well above the world average of around 46%. With 375 million people owning a mobile phone in early 2008, Latin America and the Caribbean holds approximately 12% of the world's mobile subscribers. There are, however, vast differences in cell phone development throughout the region.

Latin American companies have started rolling out the region's first 3G networks. A 3G mobile auction in Brazil proved a huge success. All the mobile operators in Chile, Argentina, Uruguay, Colombia and Mexico are offering 3G services.

For the power and utilities industries, infrastructure development is crucial to growing economies. This is particularly the case for the energy infrastructure, particularly for electricity. The role of the State in stimulating investment in infrastructure has been redefined in the new market economies. The State remains as a regulator for monopolistic activities and as an indicative planner for competitive ones, like electricity.


Western technologies including  generators, transformer, switches, test switches, process control / monitoring systems, nuclear power station and hydro electric components will find  markets in most Latin American countries that have rapidly expanding industrial programs that are driving the need for more energy. For example, Brazil is the third largest producer and consumer of electric energy in the Western Hemisphere. They consume more than 91 gigawatts  per year and have actual electricity generation  projects in progress which will produce another 31 gigawatts.

Argentina is also  planning to increase its production from 31 gigawatts today to more than 40 gigawatts by 2025.  They are the 3rd largest producer of electricity in Latin America.  Mexico today is producing more than 40 gigawatts of electricity and  is forecasting another 15 gigawatts in increased capacity needed by 2025. 

Certification is also important in many cases. For example, Argentina requires the S certification, Mexico requires NOM certification and Brazil, requires INMETRO. This is in addition to the UL certification that all American companies must provide.

Market Summary and Challenges

  • Market: nascent, embryonic, especially for data services
  • Customers are early adopters
  • Services: Embryonic market requires complimentary services from vendors to maximize the value and efficiency (Sales ECO System)
  • Challenges / risks:
    • Selling a new solution in a new market
    • Identification of the right "eco system partners"
    • Banking Relationships and Credit Instruments to successfully export money
    • Some countries have steep tariffs and/or duties on imported products unless they have "local content"
      • This forces some companies to consider local manufacturing or assembly partners, especially if there are competitors who have "invested locally"