Spain-Chile relationship - A SWOT Analysis
Chile has historically been isolated due to its geographical and economic characteristics, arriving around 98% of all imports through the ports. But in the last 30 years the country has undergone a massive change, now to be found at the top of the free market movement - and to shed its previous protectionist economic policies - a world leader to be in the signing of the FTA.
As a result, Chile with respect to many Latin American countries on the front line when it comes to globalization and the development of markets worldwide. This in turn has led to Chile as in other emerging markets sustainable economic growth.
This opening of the country, the Chilean government on a regional basis with the installation of two new regions Arica and Los Ríos recently redistributed for foreign markets, the political power. The idea behind the creation of these two new regions was to donate revenue in tourism, mining, agriculture and communications, while decentralizing the same time, to enable the regions, the aim and power of capital. The new regions have been approved by President Michelle Bachelet March 15, 2007.
The government policies have a strong economic growth, the GDP in 2007 and was 5.2% compared to 4% in 2006 will be translated on the other side of the country the effects of the current global economic malaise feel with unemployment 7.2% in 2007, beating a strong economic growth and a sharp rise in inflation increased from 2.6% in 2006 to 7.8% in 2007 on the back of higher oil prices and the ripple effect on food prices, coupled with adverse weather conditions.
It should be noted that Spain's economy will go through a tough match, beat with an unemployment rate of 9.6% for the first quarter of 2008 - has been the highest since three years - in the third quarter result of rising unemployment. This sharp rise in unemployment has also Stoked concerns the Spanish Government run from funds may be paid unemployment benefits in September.
Still - and despite the local nature of the current Spanish press in relation to the collapse of the construction sector and rising unemployment - the general perception of Chile in Spain is one of a Latin American country, which has a strict business running policy which led to his being regarded as a developing country with a relatively low country risk.
could benefit in a roundabout way Chile of a struggling Spanish economy - which was built on EU subsidies and a booming construction sector - as many Spanish companies feel they have to diversify beyond its borders for growth and seek. Of particular interest are Spanish contractor who strongly diversified in Spain in the energy sector. Spanish companies are particularly interested in projects in Latin America, the Middle East, Eastern Europe and Asia.
In the Spanish business community is commented that Chile's economic stability - experienced in stark contrast to that in other Latin American countries - has made the country attractive for investment. While mining remains a sector of interest that Spanish companies are also attracted to the banking, telecommunications and electricity sectors.
Despite the sharp rise in inflation in Chile, see Spanish analysts continued in this country economic stability, a sustainable economic growth when given at a lower level than in previous years, the current global economic downturn.
Generally, it is considered, however, the growth is likely to continue to come from Chile with an emphasis on exports and to attract a foreign investment drive. must To encourage foreign investment Chile to continue to guarantee not only the liberalization of markets and financial transparency, but try to optimize their FTA.
That is, it is often mentioned in Spain that the downside of economic growth in Chile is that wealth is not equally divided among the Chilean population. More the difference between Chile rich and its poor always concrete, always pronounced. In this age of social responsibility and its growing importance in the Spanish corporate world, such discrepancies in the distribution of wealth could come into play with regard to future investments, either positive or negative.
In terms of trade, Chile exports more than it imports, with energy accounting for around 63% of exports Chile in 2006, while imports only around 25% over the same period.
These figures are misleading, however, as Chile Indigenous energy resources has limited the country to import the majority of its energy needs. Chile has particular from Argentina those who showed a dependence on natural gas exports. Since 2004 - when Argentina's natural gas exports began restricting - Chile was the revision of the energy policy.
Outside of energy, Chile also exports significant agricultural products (fruits and horticultures), the. 20% of all exports in 2006, while imports only 7% in this category for the same year In 2006, the production of goods around 10% of all Chilean exports, while imports close to 60% in the same category of goods.
Or in other words, Chile's export structure is substantially divided equally between industry (45%) and mining (45%) and the remaining 10% in agricultural goods.
Within the industrial products are the main exports cellulose, methanol and chemical products. Of increasing importance in the last decade are forest products, salmon and wine.
It should be noted that while Chile is trying to diversify from its dependence on the half production of copper - a product that represented 60% of the country's exports in the 1970s - to 35% in 2004, this product is still excessively in the country of export basket and the trade balance represented as a result of global demand and rising prices for these goods.
copper exports in 2007 around 45% of total exports represented on the basis of the trade balance.
Chile $ 1.3bn Spain exported in 2007, slightly down from nearly $ 1.4 billion in 2006. By comparison, Chile $ 8.4 billion in 2007 in the United States, down slightly from $ 8900000000 exported in of 2006. with regard to the import Chile received $ 845 million in goods from Spain in 2007, compared to $ 708 million in 2006. in relation to the United States were $ 7.3 billion imported by North American goods in 2007, up sharply imported from the $ 5600000000 Chile in 2006
PRESS ANALYSIS
Despite Chile's positive economic story that messages do not meet Spain - in fact, the reporting of Chile in Spain near nonexistent. As an example, if several Spanish businessmen to mention a recent article, were asked that they had read about Chile, they could not call a. Almost always the answer had something to do with the dictator Pinochet or the current president, Michelle Bachelet, of as something that can be seen as a novelty, in accordance with the Argentinean Cristina Kirchner.
include more news about Chile related: Reports could hide a Nazi "Doctor of Death" in Chile; the completion of an investigation into the death of the popular actor and singer 35 years after his death; Chile and Hawaii both try to get a contract for a giant telescope; A Chilean band was stolen with items blown from Europe; Ongoing coverage of Peru's Ex-President Fujimori, who is being held in a Chilean prison; and the broad access of Internet in Chile.
There was widespread coverage of the EU-Latin America Summit in Chile, but also the coverage for Spain home crowd was aligned with the primary messages to be whether or not Venezuela's Chavez Spain's King Juan Carlos I . had apologized - or vice versa - said after the Royal President, "shut up" at a summit last year in Chile.
is as Chile in the press covered, it is almost always in relation to Spanish companies related operating in this country. In particular stories to different Spanish energy and telecommunications companies are repeated in the context, but in general they lack the depth and are not in and of itself, the types of articles that would entice investors.
There has also been recent article about threats to the Spanish company.
Specifically, with respect to the US businessman Douglas Tompkins (owner of Patagonia and North Face) was there negative press, it is reported, the country is buying up in Chile. Reports in Spain claim Tompkins tried to buy enough land to create a nature reserve in the south of the country - and that would run from the Andes to the sea, effectively cutting the country in two. There are concerns that this Spanish company Endesa could affect that has plans to build dams in the vicinity of the project. Search in typical Spanish fashion of extremely bizarre details, the newspaper ABC reported speculation in the Chilean region is widespread that Tompkins could plan in the export of water, or even build a new promised land for some Jewish sect.
There are occasional articles related to tourism, but these are related to most scientific journals. In general, the perception that there are more items in the Caribbean, Mexico and Peru, which are not published in Chile. A person interviewed for this report said they were shocked that a family member was thinking of for the holiday, instead go somewhere to Chile "exotic".
There are virtually no coverage of Chilean imports, although it's wines a moderate knowledge of the quality of this country - but covered in selected media is directed an even select readers who gave perhaps not surprisingly, Spain own personal and plentiful, the history of wine.
This lack of knowledge is also backed by a 2006 survey by the Spanish state agency CIS, the news habits of those people surveyed on their views, found only 7.8% of respondents said that, they said "A Lot "watched news to related businesses, and 49%" quite a bit. " The most popular products in Spain followed in news about the European Union in the context of which over the North Africa. News Latin America with respect to the fourth most popular products (EU, North Africa, the US and Latin America, in that order). Generally Spaniard longer identify with the European countries and in North Africa, although there are some indications of changes. In late 2007 CIS survey, 31% of Spaniards thought surveyed that Spain should develop programs in Latin America to rekindle economic growth.
but found only the previous year, the CIS, that in terms of international politics, 56% of respondents in European integration was meant extremely important, with only 8.6% is concerned about relations with Latin America.
It is interesting to note that this shift has also an increase in Latin American immigrants in Spain, accompanied by rising unemployment accompanied.
Surprisingly, despite 85% of respondents say that they believed the vast majority, the main problem in Latin America to a Latin American country never traveled had a lack of democracy, weak economy and corruption was. Of those who had traveled to Latin America, the vast majority visited Mexico (24.5%), while only 5.7% to Chile went.
With regard to the perception of which Latin American politicians to implement measures to promote their business, there has been a dramatic shift in favor of Chile recently. In a CIS report Released May 29, 2008 (administered in November 2007), on a scale of 1 to 10, Spaniard Chile Bachelet as the most effective Latin American leader rated a 4.93 ranking. The next Latin American highest ranking leader was Brazil's Lula 4.61 10 ranking. Bolivia's Morales had received a 3.42 rating, while Cuba's Fidel Castro received a 1.82 out of 10
During this recent survey is not accurate to measure the same criteria, it is interesting that the in a 2006 CIS polled noted survey, 19% of them gave Brazil Lula good grades, followed by Bolivia's Morales (16%). Only 6.6% of the Spaniards was in this survey assessed the work done by Chile's Bachelet, in relative terms only slightly higher than the 3.7% who thought surprising that Cuba's Fidel Castro do a good job the.
Despite the improvement in the perception of the Chilean Government, it is clear is that embassy of the country is not reach the Spanish public, but this is a public, where 35% of the population has never Latin American of the Summits belongs.
SWOT analysis
strength
- As a result of the jump to other Latin American countries with respect its markets liberalization is there a generalized perception that in Chile increased complexity and professionalism there is when dealing with the Chilean businessman.
- The Chilean telecommunications and software sectors are considered to be consolidated and highly regarded.
- Tourism is a particular strength not only beautiful views, but also the additional advantage that it is considered safe to travel to remote places, unlike in many other Latin American countries. After all, what good is a vacation if you can not come home to develop the photos.
- As mentioned several times in this report, Chile's economy is seen as a definite bonus, the government is looking to follow wholeheartedly embraced a free market model, and attract foreign investors.
- The willingness - and business code - foreign investors buy without allowing any kind of restriction of discrimination towards foreigners in Chile companies or create.
- A favorable tax regime, which is avoided with Spain double taxation. Direct taxes on company / companies of 17% on profits; Indirect taxes VAT 19%.
- Patent protection: Chile subscribed strict patent protocol that the Paris agreements, including and recognizes these patents issued in other countries. Patents should get registered in Chile full protection.
- Common language - Spanish - and in many respects a common culture and religion. This will not be downplayed, as Spaniards are notorious for there terrible understanding of foreign languages. o The current strength of the euro also makes investments in Latin America attractive.
weakness - As mentioned above, an area which is increasingly draw criticism from interest groups and activists in the field of distribution of wealth. In Chile where the lines have between the and those who do not have to rise.
- Chile's energy grid / grid shown signs in the past (1999) further investments need bottlenecks in the production and supply to avoid.
- Chile's energy portfolio is certainly a weak point, the while the country has some sources of renewable energy - particularly in the field of hydroelectric power - there is a deficit in terms of gas and oil to supply the result of lending bottlenecks.
- While Chile is "an open market" there is indeed a tight control over the distribution channels - about 80% of retail trade is handled by 20% of traders who suggest that this area must be liberalized.
- With respect to the above point, if some consumer products merchant introduction, the demand to provide additional support for advertising and promotions for the foreign companies will have to be ready available.
- given the strict control of the retail supply chain and distribution sometimes it is considered that certain participants to hold too much power when it is time to negotiate terms.
- While the tax is generally lower - except for alcoholic beverages (27%), there are some obstacles to the importation of motor vehicles and parts.
- There were some reports stricter controls on press freedom. In Spain, there were reports recently by a committee Journalist Report (May 23) that Chilean photographer Víctor Salas suffered a serious eye injury on Wednesday protect when he was beaten by a police officer when he covered a protest outside parliament in the southwestern city was Valparaíso. Salas is working for the Spanish news agency EFE.
- While Chile's economy is positive, there is also some evidence of growth is slowing and unemployment and inflation both rise.
- has for most of Chile avoided political financial scandals, but that has changed lately - and that seems to be strangely inherited the product of a stuffy government process of dictator Pinochet. o In fact, Pinochet remains a weakness in terms of branding and marketing, perhaps not helped by the current leaks, studies and reports. On the other hand, Spain has something to offer in this area, as it seems to have recovered well from a similar situation under Franco.
- Some Spanish businessmen said they can not understand why there is no complete agreement between Chile and Mercosur, and to be not only an associate member.
Opportunities - the current constitution of the Chilean energy sector, where - to invest this, the country should offer the possibility - its dependence on gas and oil, etc. renewable energy, such as in solar and wind power, areas in which Spain has a number of leading companies. Iberdrola, Acciona, Endesa, Gamesa, ACS include more than qualified, their technology and expertise to Chile.
- Chile also diversified in the LNG market, an area in which Spanish companies are world leaders.
- Chile, a platform to enter other countries agreements in view of its huge free trade. In particular, foreign investors can benefit from a law on taking November 23 signed in 2002, to kindle the foreign investors look for Chile to use as a base to enter other Latin American and global countries. Spanish companies and investors are particularly useful advantage of such arrangements, to take, where in the region the cultural similarities and a common language.
- Chile provides growth and investment opportunities in the construction sector, especially in the field of building second homes.
- Chile continues to offer important investment opportunities in the tourism sector.
- Chile has a stable and dynamic market, which is supported by a professional way of doing business.
- A sector which is currently undergoing a spectacular growth, and the Spanish companies can contribute their know-how and investments, is "green" in the area of projects, based on sustainable growth, corporate responsibility and environmental protection.
- The Chilean market is very competitive in terms of the relationship between price and product, which means that there is space when negotiating for value added services or products, if the positioning in the market and client loyalty Search - something that the Spanish company can offer.
- The Spanish government has to invest a priority in science and technology, it is that the government's economic policies do given clear opportunities business has made in Chile mind looking foment and investments in this sector could.
THREATS
- There are no additional supply concerns only electricity but also in the field of agricultural products.
- Chile needs to resolve its outstanding border disputes with Peru and Bolivia.
- it does the threat of the policy, especially from Venezuela, Ecuador and Bolivia exist influence of populist governments in Latin America in Chile.
- Given Chile's geography where the constant threat of earthquakes does not exist.
- Environmental concerns:
- caused Major threats to Chile's freshwater and marine habitats through the growing aquaculture industry - primarily of salmon farming.
- The establishment of non-native tree plantations is to be regarded by many as the greatest threat to Chile's native forests.
- The primary environmental threats to Chile are the air pollution from the vehicle and. Industrial emissions, water pollution from untreated industrial effluent.
COUNTRY PERCEPTIONS In view of that which has a very positive one perception of the country in Spain must first be noted that Spain is very nationalistic. There is a love-hate relationship - some would say envy - with different countries based on historical events.
In addition, Spaniards love rankings and products constantly to show publish that they are at the top. This is sometimes extreme, to the point where there are products, was how many cigarette butts, compare or trees - or worse - to find on the streets of several European cities.
Specifically, Spaniards could admit that certain products from the United States are of the highest quality, but they are that they do not permit, vary from still dig the Spanish-American War of 1898 and the loss of territory to complain. Americans are represented consistently as naive and religious fanatics, while at the same time to be hypocrites. It is a common game in Spain under the American ex-pats for the "strange or bizarre American intelligence history" to see that the Spanish media publish regularly.
In the same way, there have been extensive this year reporting that back to celebrate 1808 war France - the while Spain of the French was also freed the beginning of his declining influence in Latin America. A weakened Spain later wars of independence took over in Venezuela and Argentina.
all say that Spain - and Spanish - have a long memory, and some would argue an inferiority complex.
to be
Spaniards besides nationalistic, are idealists. The countries with the most positive image perceptions in Spain have enriched a strong balance sheet in human rights and democratic ideals by solid economic models. In this regard are equally important countries, which may in the fields of culture and art, and contribute High Technology. Spaniards are big spenders who love the latest high-tech gadget, and that vein luxury goods.
Against this background, it is interesting that. According to a recent study by the BBC, only 31% of Spaniards consider it a positive factor that China is an economic power In fact, according to this study from all European countries, it is Spain, which holds the distinction of having the most negative image of China.
In light of the above information, a tendency of the typical Spaniard to associate its spending what is popular and trendy, are not related as to a particular country.
by Robert Steven Duncan
