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

Turbulent times require an international solution

Global Access of Service and Technology Solutions System
Nationalism is resurgent. Brexit continues to be the known unknown, but is looming. The pound has fallen and shows no sign of recovering much. Inflation has started to rise. So have business insolvencies. We’re heading into the unknown of Brexit. We’re in the throes of an election that is at best diversionary.
All the indicators are scary, but despite them, much of British Business is doing what it does best. Keeping calm and carrying on. Waiting for “clarity” before taking any new action or making any investments or changes. Which is, of course, courting disaster.
As you’d expect me to say, the current uncertainties make internationalisation a top priority for businesses, especially those in the services sector. However, I’m coming from a different angle here.
The Brexit priority seems to be cutting immigration. Potential European immigrants, however, aren’t waiting for a change of policy – they’re already going somewhere else – and many who are already in the UK are looking for opportunities to leave. This is a problem for almost all businesses, even those that don’t currently employ any (and it’s not just the health service that’s dependent on foreign labour).
Fewer immigrants means it will be more difficult to hire. Some politicians seem to think that there is a vast pool of domestic labour that is being neglected by employers who would rather hire foreigners. Any business person could tell them that there is no prejudice against nationals in any company here – the vast majority of that pool of unemployed Britons either can’t work, won’t work or are unemployable. To solve the problem, we welcome and hire young, talented and hard working people from Europe and the wider world.
Following basic economic rules, a reduction in the supply of such people will increase the cost of all labour, as employers are forced to offer higher salaries to attract the staff they need from a scarcer offering. Deliberate cuts to profitability are limited, so, coupled with the higher prices now seeping through from exchange rate changes in 2016, we are bound to see an accelerating inflationary spiral.
One solution is to hire abroad, in countries where the skills you need are more plentiful and costs are lower. I’m not advising outsourcing – that takes away your control and generally increases costs – but setting up a subsidiary operation.
Entrepreneurs in the services sectors tend to shy away from this idea, or limit their interest to offshoring back office jobs. But why? The businesses that they serve, especially the younger and more dynamic ones, don’t expect local friendly face-to-face chats with their solicitor or accountant. In the modern world, everyone’s used to online access and video conference calls, and is happy if it means the service costs less or has other advantages such as 24/7 service.
Moving a lot of the work offshore to your very own subsidiary, retaining the core skills and entrepreneurship here, can ensure sustainability for the business and increase profitability.
Making new sales to an international market from that base can also guard against currency fluctuations. Companies already exporting services can, by moving the centre of delivery away from their home country, avoid any new trade barriers and guard against negative and nationalistic sentiments that may arise in their existing markets (think “America First”). Similar benefits can be had by manufacturers moving final assembly abroad.
Done the right way, creating a new overseas subsidiary can be quick and cheap to set up. In most cases, it could be trading within 6 months and be self-financing in the first year. Come on, small UK businesses, what are you waiting for?

What’s the first step to start your business?

Well the very first step is to have a great business idea!

Then you have all the bureaucratic and legal steps such as choosing the right business structure, the business name, logos, accountants, office and facilities, marketing strategy, etc. But how do you turn the idea into a profitable business? Here are some thoughts.

1 – Start by analysing your own problems

The easiest and most direct way of achieving that a-ha! moment is to come up with a product or service that you want to use yourself. Think about something that you need and cannot find the solution anywhere else. What is your need? And how do you fulfil it? The advantage of creating something for yourself is that you might find out there is a huge market for it as other people are looking for the same solution. You’re passionate about what you do because you’re solving your own difficulties and it works as a simple way of testing the quality of the idea!

2 – Execute your idea

How many times have you heard people saying – I’ve got this idea – but never tried it – they could have been millionaires by now – who knows? More important than having the idea is executing it. You have a problem, find of a solution, test it and see how much it is worth. It might not be successful the first time around, but do it!

3 – Make the time

“I don’t have the time” – make no excuses. Manage your time efficiently, define the priorities for that day and replace those 2 hours on the sofa in front of a TV to work on your project. As soon as you start, you’ll be sure whether this is something serious enough for a business or just something you could do as a hobby. If, after a while, you see it doesn’t work you haven’t lost anything at all – just a few hours of your life.

4 – Define your limitations

If your product is not for everyone that’s ok, as long as it works for some. Your “customer” (even if this is a friend whom your showing your business idea to) may feel insulted because you do not want to add another service or feature to your product/service – and that is ok if you truly believe in your project. Your limitations are set by answering the question: “Why you are doing this?”

5 -Mission possible

Plan your business in a way that you only commit to what you can do, working within your limitations. This doesn’t mean you’re just being safe, you’re being honest about it. You can promise you’ll provide your product/service to the best of your abilities but don’t fall into the trap of promising the best service they’ll ever get. Set the expectations into a realistic level.

6 –What do you REALLY need

If all the bureaucracy seems a lot to take in and is already scaring you, take a second thought: do you need all of that in the first stage? Maybe you can start in a shared space instead of a river view office with ridiculous service charges? Can you reply to your own emails and handle and all the workload for the first 3 months? Can you start straight away instead of in 6-months’ time? At a later stage, you might need a more complex plan but outline what is imperative to have.

 The best time to plant a tree was 20 years ago. The second best time is now.” – Chinese proverb

 

by Joana Miranda, Manager Admin at ICC – International Corporate Creations

INTERnational Expansion by ICC

icc-expansion-intelligence

Working with ICC,  we’ll take you and your team through a logical 5 step process designed to help that you maximise the value of your business in every possible way, while minimising your risk and ensuring control of investment.

ICC’ll find the best way for your company to:

  • Grow sales
  • Reduce costs
  • Increase your business valuation

We’ve successfully conceived, built and managed international operations for ourselves and our clients in many countries. We know how to do that at the lowest cost and at the same time extract the highest value.

Contact us to learn more!

 

© ICC – International Corporate Creations Ltd

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

THE ICC DIFFERENCE

by Oliver Dowson, CEO, International Corporate Creations

People often ask me “What’s your USP?”.  I’m increasingly realising that it can be difficult for others to understand how ICC is different to other professional services – and difficult for us to explain concisely!  So I’m going to take a stab here at getting the message across more clearly, specifically for one of our core services of setting up new overseas business operations.

My “elevator pitch” is that, unlike other professional services, we put ourselves in the position of each client, and act as if we are spending our own money, prepared to undertake each step of the process ourselves.  We don’t just tell companies what to do, we’re actually prepared to do it.  So we have to give complete, accurate and practical details.

But that’s compressing a big project into a few words, so for those who are interested (and I hope that includes you, since you’ve read this far), here’s a more detailed explanation.

International Corporate Creations is unique in its approach to helping its clients expand globally through research and implementing the creation of new wholly-owned subsidiary and Joint Venture companies in any country of the world.

  • Before starting each project, we immerse ourselves in understanding our client’s business and their approach and objectives, to ensure that the recommendations we make are those that we would choose ourselves were it our own business.
  • We aim to think of absolutely everything that our clients need to know and act on
  • We always look for the most cost-effective solution, using trustworthy and reliable local service providers and partners in each country and location that our clients want to enter.
  • We’re not a conventional consultancy. We don’t just make recommendations, we’re ready to act on them.  Nothing is vague, everything is detailed.  If a client wishes, we can implement every step to deliver their new international business as a turnkey solution.
  • When we set up a new international operation, we QA every step to ensure that everything will work perfectly from the first day it opens for business.
  • We endeavour to quote firm, fixed prices for our services for each stage of each project. Where we cannot do that, we make that clear upfront, with the best estimates we can.

Setting up a new Overseas Operation

We divide setup of a new operation into three stages.

FIRST STEPS (STAGE 0)

This stage costs nothing, and carries no obligation.  Our objective is to prepare a proposal for the next stages – but if we find that a project won’t work, we’ll be honest enough to say so.  Usually this stage includes:

  • Exploratory meetings with the client, by WebEx or face-to-face
  • Further research and understanding of the client’s business sufficient to ensure that any Proposal that we submit is likely to be suitable
  • Our team brainstorms alternative solutions for the most appropriate and cost-effective solution for the client
  • Exploratory discussions are undertaken with ICC contacts in the relevant country
  • Initial research into legal and regulatory issues, restrictions and competition, to try to avoid any foreseeable hurdles
  • Project evaluation by ICC team
  • Preparation of Report and Proposal
    • Includes fixed price proposal for Stage 1 (next steps) which would be chargeable
    • Includes timeline for performing Stage 1
    • Includes a general indication of Stage 2 (if stage 1 approved)
  • Presentation to Client – findings of Stage 0 and Proposal for Stage 1 – and Agreement on Next Steps

RESEARCH & ANALYSIS (STAGE 1)

This stage creates a complete model, not only of how to create an overseas subsidiary or JV company, but of how it will work in the future.   Depending on country and complexity, this typically takes 6-12 weeks, keeping the client informed of progress on a weekly basis.

  • Detailed market study
  • High-level discussions with client to agree approach to different aspects of the project and understand corporate methodologies and objectives (Finance, IT, Marketing)
  • Analysis of alternative business locations (country and city) and recommendation of the most suitable one(s)
  • Research and analysis of relevant business legal, regulatory and employment issues in sufficient detail to enable fully-informed business decisions to be taken
  • Identification and selection of suitable local business partners (legal, accountancy, real estate, HR, banking, etc), usually located in or near the recommended destination city
  • Analysis of IT infrastructure requirements and any issues
  • Evaluation of employment situation (availability of staff with suitable technical and language skills, local competition and retention risks, salary levels and other employment costs. Recommendation for methodology of recruitment and salaries and benefits to be offered.
  • Evaluation of training requirements and where this would be done (bring trainer to country or take staff to home base)
  • Infrastructure and costs for future client routine visits – transport, hotels with corporate rates, etc.
  • Fully detailed costing for Stage 2 Actual Implementation (as accurate as is possible)
  • Detailed step by step costed operational plan for the first full year of operation, including all necessary bureaucracy, legal documentation, financial plan, recruitment, training, local promotion and marketing.
  • Detailed “Road Map” and proposed timetable for implementation and first year operation. ICC use their skill and experience to identify steps in setup that can be carried out contemporaneously and that therefore make the overall setup process as efficient as possible
  • Stage by Stage client update meetings (usually by WebEx)
  • Detailed business “Model” presented as a fully-illustrated Report on conclusion of Stage 1
    • Exactly what the business would look like on Day One
    • What it will look like after 3 months
    • What it will look like after 12 months
  • “On the ground” presentation – face-to-face meetings at the recommended destination location, with presentation of the detailed business models mentioned above, meetings with suggested local business partners, visits to competitors or similar operations where possible, visits to possible office/property locations, etc. These meetings would be spread over 1-3 days depending on the size of the project, and have the objective of ensuring that ICC’s Stage 1 Report is clearly understood and all client questions are completely answered on the spot.

MAKING IT HAPPEN (STAGE 2)

At the completion of this stage, our client will have a fully-operational overseas company!

  • Research and implement any modifications to the Model developed in Stage 1 as required by the client
  • Agree implementation plan with client – refine timescale to adjust to client needs and objectives and decide “who does what”. ICC are willing to undertake the entire implementation of setting up an overseas operation for a client, but most clients want to be involved to varying degrees, and every country and project is different, so there is no single model for this stage.
  • Carry out implementation of project to set up overseas operation following the step by step plan developed in Stage 1. Typically this will take between 3 and 6 months and include
    • Business legalisation (including company name registration, regulatory matters, tax registration, etc)
    • Banking arrangements
    • Contracts with local business partners for accountancy, legal and other required services
    • Business premises acquisition and furnishing
    • Staff recruitment and training
    • IT infrastructure acquisition/import and installation
    • Communications (telephone, internet, etc)
  • QA – we test every step of the way to ensure that everything works the way it should
  • Complete Transparency Guarantee – When things don’t happen as expected, we consult with our clients immediately and adapt the plan to overcome issues and get back on track as efficiently as possible

At ICC we offer a host of other services revolving around the creation and management of overseas operations of all kinds, in all countries of the world.  We aim to take a similarly comprehensive approach to all of them.

 

Welcome to the ICC – International Corporate Creations blog

Our Blog supplements our regular website at www.internationalcorporatecreations.com.  We will be posting a range of items that will be of interest to businesses planning global expansion and those that have existing international operations that they are interested in managing better.

Examples of future content include:

  • Country insights
  • Approaches to exporting goods and services
  • Setting up and managing SSO Shared Services & Outsourcing Operations and GBS Global Business Services
  • Global Marketing opportunities
  • Use of Data Analytics to measure success of international operations

Please keep coming back for new items!  We welcome questions, comments and constructive criticism.