Contact us if you are planning on doing business in Central America.
For some years Colombian investors have demonstrated an interest in doing business in Central America. Sectors such as finance, real estate development, technology, and tourism are some of the most attractive niches.
Executives of Colombian companies have found fertile ground for doing business in Central America. The isthmus represents a market of approximately 50 million potential customers for their goods and services. In addition to being in close proximity to one another, Colombia and its Central American neighbors share many common customs and cultural affinities.
When analyzing Colombia’s influence in the region, ProColombia, the nation’s export promotion agency, identified more than seventy companies operating in Panama and Costa Rica. In fact, Panama is the main investment destination for Colombian companies.
Between 2000 and 2018, Colombian companies doing business in Panama contributed approximately US $8.8 billion dollars to the nation’s economy. After the United States, Colombia is the second largest investment in the canal country.
Colombian operations that are doing business in Central America are concentrated in sectors such as finance, construction, tourism, retail, transportation, energy, manufacturing, food processing, textiles, and chemicals.
Colombian companies that are operating in the region are doing so predominantly to compete in the Central American domestic market and not to use it as a platform to export to third parties. The overall market in Central America is compelling for them in terms of size, purchasing power, growth prospects, and economic integration.
Growth in Colombian companies doing business in Central America has been driven by trade agreements that have been established between itself and the Northern Triangle (Guatemala, Honduras, and El Salvador) and Costa Rica.
The Colombian experience in doing business in Central America
Vozy, a cloud computing business communication platform, with a presence in 15 countries including nations such as Peru, Chile, Argentina, Uruguay, Mexico, the United States and Puerto Rico, entered the Central American market in 2017. In a few short years, it has developed a considerable client portfolio in Panama and Costa Rica.
For the company’s leadership, the biggest challenge in doing business in Central America was raising market awareness. This is because the implementation of new technologies on the isthmus is not as well developed as it is in other regions.
Because Vozy offers a cloud platform for telephony applications, many potential consumers in Central America doubted the quality and security of its communication platform. Despite initial misgivings, with the support of a local team, the company was able to build a significant client base in the region.
Humberto Pertuz, CEO and founder of Vozy, is an individual that has identified an opportunity that justifies a decision to do business in Central America. In his market niche, there are many small and medium-sized businesses in expansion mode that are seeking reliable and cost-effective communications solutions.
From his point of view, doing business in Central America is a sensible choice because the nations of the region are prioritizing the inclusion of the digital age technologies in the development of their economies.
A further example of a company that is successfully conducting business in Central America is Platzi. The firm is dedicated to training technology professionals online. Through its sales department, the company has established various alliances in Costa Rica, El Salvador, Honduras, Guatemala, Nicaragua, and Panama. As a result of establishing these partnerships, Platzi provides online coursework that is designed to enable companies to train their employees more effectively.
Christian Van Der Henst, the co-founder of Platzi, has found that most of the growth of his company in Central America is linked to the region’s banking industry. This is the case because the financial sector is one of the parts of the regional economy that is investing significant resources in digital transformation.
Colombian banks are bullish on doing business in Central America
In less than a decade, Colombian banks became major players in the Central American financial system. While in 2006, the total number of branches of Colombia-based banks on the isthmus was 29, by 2012 this number had risen to 163. According to a report commissioned by the Banco de la República, 103 of these entities are located in Panama. The remaining branches of Colombian banks in Central America are found in El Salvador, Costa Rica, Guatemala, Honduras, and Nicaragua.
The increase of Colombian banks doing business in Central America is, to a great extent, a result of the acquisition of Banca Agrícola by Bancolombia, BAC Credomatic by Banco de Bogotá (Grupo Aval), HSBC in Central America and the Caribbean by Davivienda, and Grupo ING by Suramericana in different Latin American jurisdictions. To achieve this expansion in Central America the Colombian financial system invested approximately US $8.2 billion between 2007 and 2012 in the region.
Despite some economic and political ups and downs, investment dollars will continue to make their way into Central America. By the end of 2020 and beyond, trade and business relations between Colombia and the countries of Central America will continue to be increasingly relevant. Although there have been some challenges that have yet to be overcome, Colombian companies have seen and experienced the tangible potential of doing business in Central America.
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