Find out why Latin America is heating up for Victorian trade and investment prospects.
From online platforms such as Carsales, to agricultural heavyweights Nufarm and Rubicon, to mining giants Newcrest and OceanaGold, more and more Victorian-based companies are making inroads into Latin America.
Could your business also benefit from establishing a presence in the region? The Victorian Government office in the Chilean capital of Santiago, which opened in 2016, can help you find out.
To get a feel for the business areas growing between Victoria and Latin America, we spoke with Tiago Peixoto. He’s fresh from a 12-month posting to Santiago, where he was working for the Victorian Government as Trade and Investment Manager, promoting bilateral trade and investment across the region in sectors such as mining, agribusiness, professional services, technology, and food and beverages.
"One day I could be helping a Victorian mining equipment supplier identify potential partners or distributors in Chile,” he says, "and the next, the team and I could be pitching to a large tech company in Brazil to establish operations in Melbourne. Significant time is spent building relationships with stakeholders and businesses across this very large, diverse area, which is a critical aspect for doing business in Latin America."
Tiago already had a card up his sleeve with his Spanish language skills. He had also lived in Latin America for almost half of his life, including in Brazil and Colombia, and his fluency in Portuguese was a bonus, making him a natural fit for the role.
Current state of play
Latin America is often overlooked as an export destination for Australian companies, according to Tiago, as the region is often perceived to be a competitor, particularly in agricultural goods and minerals. Yet this notion doesn’t take into account export opportunities that can exist via knowledge transfer and process improvements.
"For instance, several Victorian companies have been successful in driving innovation in the region’s agriculture sector, including Nufarm, Rubicon and GP Graders," he explains. "And in the resources sector, Australia’s strong reputation has helped several Mining Equipment and Technology Services (METS) companies – such as Gekko Systems, Duratray, AMC Consultants, and ATC Williams – achieve business success.
Indeed, speaking of mining, Victoria’s Santiago office has secured the participation of key mining ministers at Melbourne’s annual International Mining and Resources Conference (IMARC) coming up in October. Networking facilitated by the Victorian Government has helped Victorian-headquartered companies such as Newcrest and OceanaGold expand into Ecuador and Argentina, respectively.
Trade is on the rise
In recent years, there have been three key developments that have positioned Latin America as a place for Victorian businesses to foster relationships. First was the opening of the Victorian Government office in Santiago in 2016. Second was the start of direct flights between Melbourne and Santiago in 2017 (just over 13 hours flight time, in case you were wondering), which the Victorian Government helped support. And third, multiple Free Trade Agreements (FTA) are coming into effect, meaning trade and investment ties between Australia and Latin America are set to grow and diversify in the coming years.
Tiago explains. "Australia has had a FTA with Chile since 2009 and recently signed an FTA with Peru, which is currently under ratification.
"Then last December, the Comprehensive and Progressive Agreement on the Trans Pacific Partnership (TPP-11), came into force for Mexico and Australia, improving market access into Mexico for Australian dairy, red meat and wine producers and online education service providers. Concurrently, Australia is negotiating a FTA with the Pacific Alliance trade bloc (Chile, Colombia, Peru and Mexico)."
As well, Latin America’s entrepreneurial community is on the rise, which creates new opportunities to attract foreign direct investment. In 2018 alone, the region achieved record-breaking levels of venture capital investment.
For example, Brazil’s mobile marketplace company, Movile, food delivery firm iFood, fintech firm Nubank, ride share company 99 and Colombia’s delivery app Rappi all reported surpassing US$1 billion valuations, and Brazilian fintech firms Stone Pagamentos and PagSeguro listed on the Nasdaq and New York Stock Exchange, respectively.
Victorian tech companies also stand to benefit from the fact that mobile penetration and internet usage is growing rapidly in Latin America, creating sizeable export opportunities in the region’s digital economy. “As a result of the region’s huge e-commerce growth, Victorian-based Carsales has established a strong presence in Brazil, Mexico, Chile and Argentina while emerging tech-related subsectors likely to present opportunities in the region include fintech, agtech, edtech [education technology] and healthtech.”
After his invaluable time in Santiago, Tiago’s now furthering his career in Melbourne with Global Victoria, the state body responsible for connecting Victorian businesses to global export opportunities.
Find out if your business could benefit from trade and investment ties with Latin America by reading ‘Victoria’s Latin America Trade and Investment Strategy’ on the Global Victoria website.
You can also sit back and watch the Airport Economist Latin America series, which features Victorian companies.