Up your stakes in Uruguay (no, that’s not a typo)

Sunset over Montevideo

 

by Oliver Dowson, CEO of International Corporate Creations Ltd

The first thought of companies looking for business opportunities in South America is unlikely to be Uruguay – yet for many, that could be the ideal location to set up.
The country is best known for agriculture, especially beef farming – in fact, cattle outnumber humans by nearly 4 to 1 (12 million cattle, just 3.5 million people) and over 80% of the land mass is dedicated to meat production. So very few businesses are likely to consider it as an export market.

So, to attract international investment, the country has re-invented itself as a hub for business across the whole of South and Latin America. Taking advantage of its central location and time zone, Uruguay has set up Free Trade Zones which provide advantageous facilities for distribution, manufacturing and services to be delivered to all those huge markets around it – Brazil, Argentina, Chile, Colombia and others.

Visiting, as I did recently, one cannot help but be impressed. Although there are of course still enclaves of “real South America” in Montevideo, generally the city is uber-modern and buzzes with life. It has benefited enormously from years of political stability, and great strides have been taken to rid business of bureaucracy. As a result, it’s now the easiest country in South America to set up in and do business from. The fact that basing in a Free Trade Zone means zero taxes just feels like icing on the cake.

Although I admit to loving all South America, I have always avoiding favouring any one country. However, I do feel very positive about Uruguay. I’ve always found it very difficult to convince the businesses I talk to in Europe and North America of the potential of South America – but perhaps this is the place that can “tick all the boxes” and convince doubters of the value.

With my own experience of running service sector businesses in the region, one thing that particularly impressed me was the language capabilities. Obviously Spanish is the national language, but being bordered by its much bigger neighbour Brazil, many people also speak Portuguese. English is taught in schools from an early age, resulting in wide fluency. When I set up businesses myself in the past, I went to Brazil, as it was impossible to find enough staff in Colombia, Argentina or Chile who could speak Portuguese – and so I’ve now been kicking myself for never thinking of checking out Uruguay.

I visited three excellent examples of FTZ-based businesses, each demonstrating a different aspect of the value of choosing to base in Uruguay.

The first manufactures generic drugs for export throughout Latin America. The Science Park FTZ offered them literally a greenfield site to build a state-of-the-art facility, staffed by highly qualified local personnel but also exploiting robotics wherever feasible. The tax-free status was clearly a key factor, but the major points were the ease of export to all regional countries (and taking advantage of Uruguay being a member of the Mercosur tariff-free group of countries) and minimal bureaucracy.

The second was a vast distribution centre, importing a wide variety of products in bulk, and repacking them to meet specific retail orders to deliver to duty-free shops in airports throughout the continent. The value of being in one of the only free trade zones in South America, with a major port and airport within a short distance, no import or export duties and minimal paperwork, really came home here.

But it was the third example that registered with me as the best opportunity of all for the companies that I regularly talk to in the services sector. The company I visited is a sort of Latin version of Amazon. It has based its entire customer service operation in Montevideo and is now expanding its management team – it’s grown in just a few years from a dozen people to several hundred. Apart from the tax-free status of the FTZ, the real business benefits are the central location, multi-lingual staff and convenient time zone – which works not just for Latin America, but for the USA and Canada as well, of course. This is a model that can be replicated on quite a small scale, and SMEs looking to expand services across the Americas – and those that may have thought this to be an “impossible continent” – should definitely consider basing their operations in Uruguay.

It’s also a very civilised place to live, so, whilst you probably don’t need expats to run your business, any that you bring over should be very happy. Montevideo is a modern city, bordered by what seems to be unending beaches. And if it’s too quiet for you, Buenos Aires (Argentina) is just an hour by hydrofoil over the River Plate.

There’s a lot of support and advice available from the investment authority, Uruguay XXI.

There’s a great opportunity to learn more about Uruguay and the opportunities it offers in a seminar, “Why Uruguay?”, at Tower Bridge London on 18 May 2018. International Corporate Creations is proud to be supporting and organising this on behalf of Uruguay XXI, and the event is also supported by the DIT Department for International Trade, the British Embassy Montevideo and the recently-formed Uruguayan-British Chamber of Commerce. For more details and an invitation, please contact silvia@internationalcorporatecreations.com 

One of the Free Trade Zones in Montevideo

Montevideo Port
On the top of the Uruguay World Trade Centre Montevideo

Expanding to Dubai – the Hong Kong of Arabia

Dubai is to Arabia what Hong Kong is to China – a super-modern, accessible, Western-friendly tax-free economic and tourist hub that bridges the divide to countries all over the region that appear more challenging to business. So it’s hardly surprising that so many companies are interested in setting up there, or in one of the other Emirates.
While Dubai’s economy originally relied on oil, gold and jewellery, there has been huge diversification, much of it driven by foreign direct investment. So, although it imports over $200bn of goods annually, around half of that value is re-exported. The burgeoning services and tourism sectors account for an even greater proportion of the economy.
Setting up a branch or subsidiary is not without hurdles, of course. The first decision, which puts off many, is whether to set up in a Free Trade Zone (FTZ) or on the “mainland”. The original concept of FTZs is to encourage inward foreign investment, typically by offering reduced or zero taxes and government-sponsored facilities. In the case of Dubai, FTZs are promoted on the basis that they allow 100% foreign ownership, whereas “mainland” companies need a minimum of 51% UAE ownership.
Although there are all sorts of restrictions on what business can be carried out, and where and to whom one can sell, B2B businesses shouldn’t be fazed – they just need to pick the right FTZ. B2C businesses that want to sell to consumers in the UAE, however, will need to be on the “mainland”, and will need a local partner. That’s often not as difficult to find as one might expect, and, with the right advice, there are ways of avoiding having to cede much control or a massive share of the profits.
For those going the FTZ route, the next step is picking the right one to set up in. That sounds easier than it is. There are 39 FTZs in Dubai alone, and more domiciled in other Emirates (e.g. Sharjah and Ras Al Khamah) that permit companies to trade in (and sometimes even work from) Dubai. The FTZs vary in terms of the types of company activity permitted or encouraged, facilities, costs and (to a limited extent) bureaucracy.
All FTZs have physical boundaries, but most are simply clusters of office towers and warehouses that one can drive through without being conscious of having crossed any boundary. One of the larger and typical ones is the Dubai Multi Commodities Centre (DMCC), which covers around 200 hectares to the West of Dubai. There are around 12,000 companies set up here, increasing by 150-200 per month.
The location of the FTZ only becomes a concern where the business needs physical premises. Perhaps the majority of the businesses starting up in Dubai are small, with just one or two staff who will work from home, so they can avail of flexible arrangements available from some of the FTZs.
Objective and independent advice on choosing the right FTZ is essential – and yet, perhaps surprisingly, it is not always sought or taken. There are many local agencies offering setup services (and in some cases the FTZ Authority itself might provide those services), but almost all “prefer” one or two FTZs they will steer clients towards and offer headline-grabbing low fees.
Beware, though, of the hidden costs. Simply obtaining, notarising and legalising the necessary paperwork can cost more than the setup services themselves. Different FTZs have very different licence fees and unexplainable differences in bureaucracy – set up times can vary from 4 to 26 weeks. And that’s under pressure – local agents need a lot of chasing, which can be very costly with your time.
Businesses need bankers, accountants and lawyers, and setup agents again steer clients towards their favourites. It’s clear that commission payments are an important consideration. Over the years I’ve made a point of personally visiting every business that our clients will have to rely on, to ensure that they are solid, reliable and meet Best Practice in business probity. That’s a good idea everywhere, but definitely essential in Dubai, where (regrettably) I’ve met quite a few charlatans.
So take good advice, and don’t be put off by apparent barriers. Dubai is a great location for business expansion. It’s easy to work, it’s perfectly situated for trading all over the Middle East, almost everyone speaks English, and it’s got great weather, beaches and things to do, so almost everyone will be happy to visit regularly.

New countries lead the way in Asia

There are a lot of countries in Asia – but most businesses tend to think only of a few when considering international expansion or investment.   Interest in China has faded as more realise how difficult it is to deal with, and outsourcing to India is drying up as wage inflation eliminates its competitiveness.   The tiger economies of Japan, Singapore, Taiwan and Hong Kong continue unabated.  However, those looking for new opportunities, whether it’s a matter of tapping export markets or seeking better value and quality manufacturing or outsourcing, should look elsewhere. 

The biggest “rising star” country in the last few years has been Malaysia.  The reduction in red tape has been notable, and strong action has been taken against corruption.  The government is pushing Kuala Lumpur as a regional and international financial centre (particularly for Islamic finance).  However, it’s a great country for trade from many other perspectives – good value, good infrastructure and communications, growing market and a well-educated workforce.   Like most of the countries I’m including here, it’s in the ASEAN Free Trade Area, so establishment in any one of them can open up significantly wider markets.

Philippines fell out of consideration in the 90’s for various reasons, but foreign business interest has been increasing in the last few years.  It is arguably the best country in the region for Shared Service Centres and Outsourcing, and has been taking business away from India, with its flexible workforce and excellent English language skills.  Other types of business face difficulties that can’t be overcome – it may be one country, but made up of over 7,000 islands, and plagued by typhoons on an annual basis, so economic activity is centred in just two or three locations. 

Recently, the most heavily promoted country for trade has been Indonesia.  There are many government incentives and the statistics are all encouraging, but many shy away because of security concerns. 

Vietnam’s economy continues to expand rapidly, and it’s a country worth considering as a more manageable alternative to China – although there’s still plenty of red tape.  For a number of years the pace of inward investment exceeded the availability of skilled personnel, but that issue is quickly being overcome.   Trade treaties with China and Japan, as well as other ASEAN countries, make Vietnam an attractive base.

Slightly more intrepid businesses that want to stay ahead of the curve should now be looking to neighbouring countries which are now opening up.   In my opinion, Cambodia will rival Vietnam and Malaysia within another five years, and although smaller, Laos won’t be far behind. 

The country that over the last few years has emerged from nowhere – in business terms – is Myanmar (Burma).  There have been rapid changes since 2010, five years before the new democratic government led by Aung San Suu Kyi came to power – and there were a lot of regional business leaders already negotiating deals there when I first visited in 2013.  It is a big country, most of the labour force work in agriculture, the infrastructure is terrible and the education level is poor, but the opportunities feel terrific. 

Other major countries in Asia have been declining as attractive business destinations.   Thailand has labour availability issues as well as a system that discourages foreign business ownership.  South Korea is a vibrant economy boasting some of the world’s leading brands, but is difficult for foreigners to penetrate, with almost all economic activity in the hands of a small number of powerful “chaebol”, and the country feels to be in gentle decline.   Sri Lanka and Bangladesh continue as important textile manufacturing centres, but rarely figure in any other international business considerations. 

Asia as a whole remains as attractive and important as ever – but it’s the emerging countries that are the most exciting.

 

by Oliver Dowson, CEO at ICC – International Corporate Creations

Georgia on my mind

International business expansion can bring even more successful and rapid results where there are unique opportunities.   So I’m always on the lookout for them, especially in countries that aren’t top of most people’s lists.  Last week I visited Georgia, and discovered an incredibly exciting pace of growth in a beautiful and welcoming country that exceeded all my expectations.  As soon as you step off the plane you start to see the potential.

It’s a small country with a population of just 3.5 million, and from 1921 to 1989 was part of the USSR.  Now it has reverted to proud independence, and is capitalising on its geographic position at the “crossroads of Europe”, a logical transport link between Asia and Europe.   As a result, most Foreign Direct Investment has been in infrastructure – new rail lines and motorways, and a deep water port in Anaklia on the Black Sea coast.   Now the country is starting to focus on other opportunities, and I see excellent potential for mid-range businesses – but it will be necessary to grasp them quickly.

At present, getting there can be a challenge – there are relatively few direct flights from Western Europe to the capital, Tbilisi (and none from the UK), and almost all of those arrive and depart at an unconscionable hour of the early morning.   That’s set to change over the next year, with budget airlines now negotiating access to other airports that are convenient both for the capital and the coast.  Once landed, immigration is a breeze, and it’s just the first warm welcome one receives.

In recent years Georgia has modernised rapidly, with glitzy new buildings and malls, but all the history has been retained.   The old town of Tbilisi is charming, and the remote cave monasteries fascinating – and between the two is some of the most beautiful countryside in the world.  The coastal resorts are similarly stunning.  Costs are low, the people are welcoming, summers are hot and sunny, the food is delicious – and it’s the country where wine was invented.  The potential for developing tourism, therefore, is huge, and arguably the top motive for FDI.

The country is also justifiably proud of being rated the 3rd safest in the world, and ranks highly for ease of doing business, economic freedom, lack of corruption and economic stability.   Taxation, an important consideration for most businesses, is simple and low – it claims to be the 9th lowest tax burden country in the world – and new policies from 2017 will make the system more attractive still.

I met with the Ministry of Economy, and learnt that their other priorities are energy, transport and manufacturing.  Even without the attractive government incentives, the free trade agreements with the EU, EFTA, CIS, GSP and Turkey, availability of a young educated workforce with low labour costs (average US$ 355/month) and inflation at a low 4.2% make a compelling case for considering manufacturing.

One thing there is no shortage of is water, and only 20% of the potential for hydro-electric generation has been exploited.  The value here is not just domestic, but in exports to Turkey and Russia, neighbouring countries with power deficits.

I was quickly convinced that almost every type of business should think seriously about expanding to Georgia – the time is right.

 

by Oliver Dowson, CEO at ICC – International Corporate Creations

Australia

After 25 years growth, what next?

Although it’s one of the most attractive international investment destinations for UK companies and investors, Australia is always a difficult market to read.  It’s not just the distance and time zone.  Perhaps the conflict comes from the fact that it feels so “British” in so many ways, but is economically so different.  The heavy dependence on mining and a services sector focused on Asia-Pacific tends to mean that economic cycles are almost the inverse of those in the UK and USA.

So back in 2008-2011, when doom and gloom hit the West, Australia powered ahead, with rapidly improving GDP and strengthening exchange rates – almost solely built on Chinese demand for raw materials.  Over the past two years, however, the economy has retracted as mining has suffered.

That’s not to say that the economy has not been resilient.  Despite negative factors, the end of the financial year last Thursday (June 30) brought with it official confirmation of 25 years of uninterrupted growth.   In the last year, though, whilst GDP grew by 3.1%, net disposable incomes actually fell by 1.3%.  So the country is producing more but earning less.  Average salaries have fallen as high-paying manufacturing and mining jobs have been replaced by low-paying service sector jobs, many of which are part time.

Now economists are worrying about what will happen in this new financial year, with uncertainties around Brexit (despite the distance!), the Chinese economy and many other international factors which have significant effects on Australia.  A new government and new budget may mean increased taxes.

As a result, Australians are spending less, and companies have drastically cut back on investment.

So is this a crazy time to consider trading with Australia?  Not at all, if the focus is right.

The Australian dollar continues to trade at around 20% less than in 2013-14 and is around 30% less than its peak in 2012, when its value made it basically impossible for any business to sell anything in to or out of the country.  The costs for visitors, whether on business or tourists, were painful.   Now costs seem more reasonable and the country is once again viable for visitors and investors.

Key reasons for foreign direct investment into Australia are the high skill levels, geographical positioning to act as a base for the whole APAC region and, of course, the ease of doing business and easy cultural fit.  Although salaries are still relatively high compared to most other developed countries, Australia is definitely viable as a base for R&D and other skilled activity in sectors such as Healthcare and IT.  Tourism also presents good guarantees of investment return.

Since the exchange rate is only likely to reverse in the future – albeit it’s unlikely that will happen very soon – it could be a wise moment to make long term investments in Australian companies.  The ones that dominate their part of the world stage, and demonstrate great long term potential, are property investment companies such as Macquarie, AMP, LendLease and Westfield.  Their well-diversified portfolios mean that A$ growth should be reliable, and future exchange rate changes are likely only to improve the valuation.

From the exporter’s perspective, the opportunities for selling goods seem poor.  On the other hand, it could be a better time to be selling services, especially those that can be delivered into Australia from lower cost economies.   For example, “in time zone” outsourcing to Philippines has been undersold in the past, but must now be increasingly attractive as businesses seek to control costs.  More cost-effectively, Australian companies could be encouraged to invest in setting up their own offshore Shared Service Centres for even greater economic benefit.

 

by Oliver Dowson, CEO at ICC – International Corporate Creations

Setting up a business in Brazil

 The ultimate guide – Part II

Is it complicated? Can I have an idea of the different steps?

Brazil has a high level of bureaucracy. We will explain bellow the step by step timeline to the creation of two companies in Brazil. These case studies are based on real companies that set up operations in Brazil.

 

Case Study 1 – Joint Venture

Multi-function business

  • Sell UK-created SaaS to Brazilian companies
  • Provide customer support to existing and growing customer base across Latin America

Why a JV?

  • Customer pressure forcing urgent establishment
  • Had to have branding and country presence
  • Only justified 3 staff initially
  • UK owner could only dedicate minimum resources due to other commitments

 

Case Study 1:

  • UK business determined Sao Paulo as an ideal base                                        [Day 1]
  • 15 possible partners found through remote library research                         [Day 15]
  • Prospectus sent and telephone call with CEO of each of 15                            [Day 18]
  • 3 were not interested, reducing list to 12                                                            [Day 30]
  • 6 of those eliminated by local representative visit                                            [Day 40]
  • Shortlist of 6 – half day visit by UK team (with local support) to each        [Days 55-57]
    • 4 in Sao Paulo metro area
    • 1 in Campinas
    • 1 in Sorocaba
  • First choice – one in Sao Paulo                                                                              [Day 60]
    • Fell through on business negotiation on terms within 3 days

Second choice (in Sorocaba) selected                                                                              [Day 63]

 

Remaining steps:

  • Legal agreements reviewed and refined by both parties                                   [Day 75]
  • Employee hiring process started                                                                             [Day 76]
  • UK Power of Attorney signed and sent for legalisation                                      [Day 76]
  • Company registered as 50/50 JV – Contrato Social signed                              [Day 85]
  • Candidates interviewed, and 3 selected                                                                 [Days 86-87]
  • 3 employees start work and training                                                                       [Day 90]
  • All other necessary business setup arrangements in place                                 [Day 95]

Official launch of Brazil company and announcement to world                                  [Day 100]

 

Case Study 2: Wholly-Owned

Provide communications and hospitality support to broadcasters and sponsors of major events – initially World Cup 2014 then Olympics 2016

  • Branded local presence essential for contracts with certain Brazilian suppliers and partners
  • Paramount need for total control over product quality
  • Urgency dictated by event timings

 

In case study 2:

  • Business requirements and deadlines dictated                                                                    [Day 1]
  • Decision made to pursue Turnkey Solution                                                                          [Day 2]
  • Detailed proposal and company definition drafted                                                            [Day 12]
  • Proposal and Definitions refined and agreed with UK management                             [Day 20]
  • UK contract for ownership handover signed                                                                       [Day 20]
  • Hiring process for Manager and Sales person commenced                                              [Day 21]
  • Contrato Social signed and legalised, interim Administrator appointed                       [Day 30]
  • Serviced offices contracted, initial staff interviewed and hired                                        [Day 44]
  • Banking, Accountants, Lawyers appointed                                                                           [Day 50]
  • Business launched and trading                                                                                                [Day 60]
  • UK Power of Attorney signed and sent for legalisation                                                      [Day 61]
  • Revised Contrato Social signed and legalised                                                                       [Day 70]

Company now fully owned by original UK parent                                                                          [Day 70]

 

Nice… Can I do the same for my company?

Contact us for a free consultation on: +44 (0)20 7278 9210.

 

by Oliver Dowson, CEO – ICC – International Corporate Creations

These case studies were presented at the UKTI Exporting is Great – Opportunities in Latin America Roadshow

Setting up a business in Brazil

 The ultimate guide – Part I

Why would I set up a business operation in Brazil?

There are many advantages to having your own company compared to relying on distributors and agents:

  • Local Branding and Identity
  • Control
  • Confidence that business and legal objectives are met
  • Add local content to unfinished products (or manage OEMs)
  • Ability to develop insourcing capabilities to support other operations
  • Act as a regional base to take advantage of MERCOSUR

 

Sounds good, I am convinced? But, what type of the company?

There are several legal types of companies, but on this article we are only considering:

  • Joint Venture
    • Local partner brings management skills for HR, legal and financial matters, and possibly premises or other things
    • You bring brand name, product/service, know-how
  • Wholly-Owned

 

Brazil a quite big. Where should I set up in Brazil?

Location is important!

  • Different state regulations and taxes
  • Physical distribution – infrastructure varies, and distances can be huge
  • Education, skills and experience of potential employees
  • Communications infrastructure
  • Access from the UK

 

(please read more on the “Part II” entrance for this topic.)

 

by Oliver Dowson, CEO – ICC – International Corporate Creations

These case studies were presented at the UKTI Exporting is Great – Opportunities in Latin America Roadshow

It’s business as normal in Brazil

… and a good time to grasp opportunities

Reading the press and watching TV news covering the current impeachment process of Dilma Roussef, you might think that Brazil is descending into chaos.  But for Brazilian companies, and for 99% of the population, it’s very much business as usual.   And for international companies, now is a great time to grasp the nettle and exploit this market.

I’ve just returned from meetings with several recent start-ups in Brazil, and can vouch for the continuing high level of enthusiastic confidence that they will achieve great economic success.   Nobody is fazed by the political situation – almost everyone in business is looking forward to Dilma going, even if so many other untrustworthy politicians will remain in office, as it’s a first and big step towards improving the country.

It’s true that the economy has nose-dived in the last year, but this is more down to the depressed mining sector, that has become increasingly reliant on the Chinese market, which has largely dried up.   The spark that came with the discovery of huge oil reserves under the sea off Rio has dampened more because of the fall in oil prices than the “car wash” corruption scandal at Petrobras.

Unfortunately, the corruption scandals have further discouraged foreign direct investment and business expansion in Brazil.  The reality is that corruption is largely off the map for most businesses.  I’ve set up, managed and grown several companies there since 2006, and have never in that time even seen suggestions of bribery or false accounting. That’s not to say it doesn’t exist – when it comes to government or very large corporate contracts, clearly it does.   I can see how some Brazilian accounting practices, such as allowing small businesses to work on “Lucro Presumido” (presumed profit) could support it.  However, I believe that international businesses starting up in Brazil can be confident that they won’t get involved in any way.

Confidence in Brazil has picked up a great deal in the last few months, as evidenced by the improvement both in the exchange rate and the stock exchange (see charts).  The exchange rate is still around half that of 3 years ago, and looks to have stabilised.

Whilst this – in addition to tariff barriers – can make the Brazilian market unattractive for most exporters, it’s very good value now for setting up in-country operations such as Shared Service Centres, in/out-sourcing, and local manufacturing for the MERCOSUR countries.

The overwhelmingly young workforce is increasingly well-educated, and it’s easy to hire professionals in most sectors who have very good English.  In my experience, productivity levels can be impressive.   There are some interesting barriers to overcome.   Brazilian employment laws are archaic and byzantine, all staff are “unionised” (but not in the sense understood in other countries), annual salary increases are mandated, the paperwork can be formidable.  However, all these can be addressed in a straightforward way, with some professional help, and the advantages of having 3 or 4 professionals for the price of one definitely outweigh the disadvantages.

It’s also one of the most pleasant countries to live, work and do business.   If the weather alone doesn’t lift one’s spirits, the enthusiasm and “can do” attitude of the Brazilian people will.

 

Brazil Stock Exchange Index

Brazil Stock Exchange Index

 

Brazilian Real Exchange Rate

Brazil Exchange Rate

 

 

by Oliver Dowson, CEO, ICC – International Corporate Creations

(Graphic Brazil Stock Exchange Index – courtesy Google)
(Graphic Real Exchange Rate – courtesy Yahoo)

 

Getting in ahead of the US Invasion

Business Opportunities in Cuba

President Obama’s visit to Cuba and the opening up of US-Cuban relations has made headlines over the past few weeks.   A major part of that story was the enthusiasm of US companies to expand into Cuba – and it gave the impression that a major corporate invasion was under way.  But US sanctions remain in place (but are being eased), so despite the definite interest, it will be some time before significant deals are put into place.

For those of us in Europe, though, there’s no embargo on doing business with Cuba, and now appears to be an ideal time.   Setting up in Cuba isn’t easy, of course. It’s also a destination way off the map for most companies, and there are indeed many that would struggle to benefit.  However, the rewards for SMEs with a suitable business model could be huge, especially if the inevitable US invasion is “designed in”.

Why?  Well, the owners of almost all SMEs will want to plan an exit route at some time in the future, and in most cases that’ll be through a trade sale.  One of the surest ways of growing the value of a business is to expand internationally.   If it’s the sort of business that’s likely to be attractive to American purchasers, having an operation in Cuba could seal the deal and drive substantial additional value – it would provide a fast track for US companies to operate in Cuba, simply by buying an existing business.

It used to be near-impossible to have a foreign owned or JV business in Cuba, but the Foreign Investment Act of 2014 opened up a raft of possibilities.  Specifically, the right to transfer the ownership of property to a third party – and a foreign one – is now accepted.   There are now expectations of over $8 billion of foreign direct investment over the next few years.

What sorts of business could benefit?  Well, Cuba is not a market economy, and it’ll be a long time before consumer goods companies find it worthwhile.  The major opportunities lie in tourism, infrastructure, healthcare, agriculture and technology.    Of these, perhaps the most interesting is healthcare.  Cuba has a very well-developed system and trains a huge number of doctors and medical staff, sending many to staff hospitals in developing nations around the world.  In Cuba itself, pharmaceutical manufacturing grows every year and bio-technology is particularly strong.   When the US embargoes on travel are dismantled, there will be huge scope for health tourism.

Young Cubans are well-educated and hugely enthusiastic to succeed, and businesses can rely on getting the labour force they need to develop effectively and quickly.

But as I said, it’s not an easy market to get started in.  Businesses need help, even for the most basic research.  Trustworthy local partners are essential, as is the Spanish language and a great deal of patience.  Entrepreneurs who are brave and get over all the hurdles, though, will reap rewards – and I suspect that in many cases that will mean millions by selling their businesses on to Americans.

by Oliver Dowson, CEO, ICC – International Corporate Creations

 

Portugal: sun, sardines… and start-ups

by Cristina Parente, International Business Strategist at ICC

The announcement of this summer’s openings in Lisbon of a Second Home Hub – a major tech workspace in London, and Impact Hub – one of the biggest entrepreneurship communities in the world made me stop for a second and ask myself: why are these two iconic start-up incubators interested in settling in Portugal? Can a country submerged in a deep financial crisis, with one of the biggest population exoduses in Europe, be the next big tech destination?

Last month, $US 22 million in Venture Capital was raised by Veniam, a Portuguese start-up that wants to enable free Wi-Fi in urban settings using vehicles. The company was created two years ago in the incubator of ctwo Portuguese universities and now has offices in Porto, Silicon Valley and Singapore.

When start-ups and VC hold hands in the same country, it is probably worth taking a closer look.

Portugal is a small, financially troubled country better known as a tourist destination than for its entrepreneurship.

Portugal has a population of 10 million people. It is part of the EU, and is a gateway to a market of 250 million people worldwide, thanks to its ties with other Portuguese speaking countries such as Brazil, Angola, Mozambique and Macau. It also has a long tradition of trade with the UK. The Eurozone crisis hit Portugal early in 2009, and a great recession led Portugal to a 3-year bail-out programme in 2011. Portugal’s GDP grew by 0.9% in 2014 and 1.5% in 2015, and the growth forecast for 2016 is 1.6%. After an extremely difficult period, the Portuguese economy is now showing signs of recovery and a buzz of excitement is attracting international attention… and investors.

Is it safe to assume that a small tech revolution is happening in Portugal? Why should you, or I, be considering opening a start-up in Portugal?

Porto, in the north of Portugal, was recently considered one of the best value destinations for start-ups. In summary, Portugal has a low technical cost base (low rent, cheap food and transportation, etc) and a developed local infrastructure, with good connections by road, air and sea. The government has introduced a number of tax breaks and incentives for those who set up their own company. Portugal has a well-educated work force with a talented young generation with a high technical skill set. Portuguese are welcoming people, and English is widely spoken in business.

Portugal is becoming synonymous with innovation and leading companies are building a new and effervescent reality. If these are not good enough arguments for you to take your laptop and move to Portugal, I will give you a few more: sun, quality of life, security, golf, Port wine and… sardines, of course!