5 Tips for business success for US companies in Chile
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As one of the world’s most entrepreneurial nations, there are ample business opportunities for US companies in Chile.
Chile and the US have maintained a strong commercial relationship dating back to 1918. In 2019, both countries celebrated their 100th anniversary of the Chilean-American Chamber of Commerce.
This longstanding and mutually beneficial commercial relationship has fostered strong connections between the 2 countries. For decades, Chile has modelled its economy and institutional foundations on those of North America. The philosophy, principles and guidelines that shape the country’s public policies are similar in both jurisdictions. This includes Chile’s economic, commercial, banking, and trade policies, among others.
Succeeding in business as a US company in Chile
So what’s it like to do business between these two powers? Our Senior legal professionals in Chile have put together 5 key pieces of advice for US companies to succeed in the country’s commercial environment.
1. Engage with local specialists
Though it’s true that the Chilean economy and markets share important similarities with those found in the US, there are a number of differences that US companies in Chile must adapt to. It’s crucial to understand differences in corporate compliance requirements in Chile in order to ensure you operate in accordance with the law and secure your commercial success.
The US is home to a Common Law system, whereas the Civil legal system applies in Chile. US companies in Chile will also find the Chilean tax systems and regimes tend to change frequently, which can be difficult to keep up with.
Companies should seek support for tax, legal, migration and other needs to do business in Chile from trusted external service providers. Local specialists prove to be vital, as their monitoring of companies’ compliance obligations help to avoid run-ins with government authorities and unforeseen complications for commercial operations.
Find a legal and accounting services provider who can support your market entry and ongoing commercial activity as a US company in Chile, and who can bridge the bureaucratic and cultural gaps to ensure your success.
2. Understand cultural differences in conducting business
Chile excels in comparison with other neighbouring countries in areas of anti-corruption, legal framework, and stability among others. This offers a level of transparency that US companies may not easily find in other parts of the region.
The country’s history, language and culture still, however, influence several key differences in the way companies should conduct business.
US companies in Chile can expect to experience different expectations in how meetings are run, attention to professional hierarchy and attitudes towards timing and compliance. People may take a more relaxed attitude towards compliance policies that are not mandated by law. Foreign executives may also experience a greater need to build solid personal relationships in order to develop strong business ties in Chile.
US companies need from to find a way to ‘land’ their offshore business model in a fashion that aligns with bureaucratic, cultural and professional differences in Chile.
3. Understand the nature of recruiting local talent and labour costs
It’s important to note that when engaging with locals and negotiating hires, the figures discussed will always be for the employee in net terms. Because of Chile’s somewhat complicated labour and legal system, employees will generally think in net terms.
One quick way to do this is to take an employee’s net salary and add approximately 26% to the total amount to determine how much that employee will cost to the company each month.
4. Understand your banking requirements
Unsurprisingly, conducting business without a local corporate bank account is near impossible. US companies looking to do business in Chile should communicate with local banks as a priority, to ensure they can open an account swiftly. A local legal representative in Chile is crucial for foreign companies to ensure that this task is completed successfully. The legal representative will be the face of the company in the eyes of the bank, so make sure to engage a seasoned legal expert.
While big multinational companies may not face as many hurdles to open a bank account through banks’ ‘International Desks,’ smaller companies may have put in a bit more energy to obtain theirs. The right legal services provider may have connections with local banks that you can leverage to speed up your application process.
5. Learn Spanish, or find bilingual partners
Public entities’ personnel and many private institutions will typically speak little to no English. Though this can cause headaches at first, partnering with skilled bilingual professionals can help to reduce the language barrier. It can be difficult to find experienced lawyers and accountants who speak proficient English to support operations for US companies in Chile.
Key for US companies in Chile is to get a general understanding of how things work and get specialist support for the nuts and bolts of your setup activities. Encourage your partners and executives to build connections with multilingual local third parties. Don’t expect to receive bilingual legal and accounting reporting packages by default.
Chile is a very favourable business destination in Latin America for US companies. However, the country’s legal frameworks and business environment present hurdles that foreign executives will need support in overcoming. Many challenges can be easily solved by partnering with experienced local legal services provider who can support your market entry and ongoing commercial activities.
Post available in: English