Time to tune in

Latin American companies turn up the volume on global growth

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Insights and recommendations

Not so long ago, many considered Latin America a business opportunity for outsiders. But focus on outward-bound investment is likely to become much more familiar in the next few years.

The best of the companies some scholars are calling “Multilatinas” or “Global Latinas” are now world-class companies. They can be useful partners – or major competitors. Over the next decade, the strategists of most multinationals will come to know them in both capacities.

The results of our survey and our qualitative research show that Latin American companies are poised to expand significantly outside their borders, presenting both opportunities and challenges for global companies based outside the region. The following are our key findings:

  • A majority of our respondents export or sell to markets within Latin America (80%) or outside the region (66%), but relatively few have brick-and-mortar operations through direct investment in Latin America (56%) or outside the region (33%).
  • For 54% of our respondents, the US and Canada are by far the top countries for conducting international business, but they will be less dominant in the next three years as Latin American companies expand farther afield.
  • Notably, China ranks fourth for international business, ahead of several other Latin American countries and Western Europe; 32% of Colombian respondents and 26% of Chilean respondents currently conduct a significant amount of business with China.
  • India is among the top 10 overseas markets expected to hold the best growth opportunities in the next three years.
  • According to 43% of the executives surveyed, rapid-growth markets beyond Latin America currently account for more than 10% of total international revenues, but 54% expect these markets to account for more than 10% of total international revenues in three years.
  • Reaching new customers and increasing sales growth are the top benefits expected from international expansion across all types of new markets.
  • Macroeconomic stability, high-quality infrastructure and political stability are the features of the business environment that Latin American companies assess most carefully in targeting an international market.
  • Identifying reliable business partners is one of the top challenges when expanding internationally, according to 54% of executives. But 62% consider themselves effective at forging relationships with local suppliers in new markets, which positions them well to meet this challenge.
  • To build an international management team, 50% of our respondents expect to draw on talent from within their companies, but as many as 37% plan to recruit locally in their target markets for overseas expansion. This is in line with respondents’ plans to make boards more representative of overseas markets (55%) and make their corporate culture more international (49%).

Business implications and recommendations

These opportunities and challenges require several strategic responses from global companies that wish to respond effectively to and benefit from Latin American business expansion. Those companies that tune in quickly to the new Latin America stand to gain a significant competitive edge. By understanding where, how and why companies from Latin America are expanding, global companies can prepare to grab opportunities rather than risk falling behind potential new competitors.