Are you planning business development?
And would like a partner to give you local contacts and make your marketing & sales scalable?
Why Chile is a good market for business development in South America.
Or isn’t it?
That’s the question I tried to answer during the past months living in Santiago, Chile.
And I gained a lot of interesting insights, which are hidden behind the surface and thus can only be discovered when you’ve actually living in the country.
Luckily for you, I’ll going to share all these findings about the sports industry & business development in Chile in the following article!
As every experience depends on the people you meet and information they share, don’t hesitate add own experiences or examples in the comments below!
Here’s an overview of the topics I decided to cover:
Chile is seen as the most advanced and stable country of South America, with a cost of living pretty similar to (Western) Europe or even America and a steady market growth, closing at 3,9% in 2018 and is suspected to land at 3,5% in 2019.
As a comparison, the Euro area GDP is now forecast to grow by 1.3% in 2019.
The core of their economy is based on their minerals: coles, salts, export of wine.
With their main export partner being China, they are suffering under the decision Trump has made to start an economic war with China as this is eating away their margins.
In terms of market and especially the sports market, the Chilean market is tiny.
Number of inhabitants are currently 18 million of which 5,5 million (35%) live in or around their capital: Santiago.
Though because they’re one of the (if not thé) only South-American countries that have open border agreements with Europe and America, Chile is very popular for foreign companies as they tend to use it as a HUB for South America.
More on that later, let’s dive into the sports market first.
In general, the sports market is hugely growing, with outdoor and endurance sports as the main drivers.
Chileans are really seen as outdoor lovers, making the outdoors or healthy position crucial for brands in Chile.
The biggest sports are linked to the ones they score well in on a high level, which are football, tennis and Chilean rodeo in the rural areas.
Hockey is on the rise due to the high level of the national team and endurance sports such as running and cycling are growing tremendously.
Though they have some individual athletes that score well, in general sports doesn’t reach a high level in Chili, as there’s a lack of money to support the growth.
In terms of medals in the Olympics they have a lower level than my home country Belgium.
And even though soccer is one of the most popular sports, here’s an important side-note:
Chile is also considered a huge soccer land, having won the Copa America in both 2015 and 2016.
In terms of popularity, soccer has the same vibe in Chile as in Europe, though the budgets are a lot lower compared to Europe or even the rest of South-America, with Mexico having the highest budgets and paying the same level as Europe.
More importantly, soccer recently acquired kind of a negative tone as the previous leading bodies were found guilty
on multiple charges of corruption.
I was told the president of the Chilean Soccer federation was involved as well and is currently residing in America to avoid charges as well.
The general sports landscape is organized very similar to Europe, where you have the government funding federations and private initiatives.
Even though Chili has recovered from a dictatorship over the last 30 years, and has moved towards a bit more socialism (poverty has gone down from 50% to 8%), there are very little public services in terms of sports participation.
At the moment there’s also a big contradiction on government level as Chile just decided to make sports classed in schools optional so it’s obviously not a big focus at the moment.
Public sports fields, classes or funds are hard to find around Chile, which leaves sport to be a leisure activity of the rich.
For the same reason, universities have very low working budgets and are constantly looking for funding.
Therefore in general, there’s a huge potential for PPS (Private-Public-Service) projects in Chile.
This lack of government funding and public venues, acts as a trigger for 2 very distinctive trends.
1 – On the one hand, it leaves space for the private sector to focus creativity and new concepts, like for example Mall Sport – which is a whole shopping mall solely focused on sports shops and sports activities.
On the other hand, middle class people don’t want to – or can’t – pay these premium prices for sports lessons and venues, which supports the growth for outdoor yoga sessions, untouched mountain bike trails and just more unorganized sports in general.
Which in its turn offers opportunities for coaches and suppliers of sporting goods.
2 – In terms of sports tourism, the same trend occurs.
You can explore the outdoors by yourself – especially in the region of Patagonia which is heaven for outdoors people – OR you can take tours which will cost you HUGE amounts of money.
For example the only mountainbike tour we found in Santiago would cost €180 per person, which is even that much higher than for example in New Zealand.
Although we found it hard to find shops which offer rental bikes, we managed to find some in the end.
Anyone you talk to in Chile will give you the same message: “Chile is really behind on Europe or America.”
Though the number of years behind vary from 5-20 depending on the person you’re talking to.
An interesting fact is that they skipped telephones and went straight to IPhones, which ensures companies are active on social media though their way of doing digital marketing is very ‘advertising’-like.
They aren’t focusing on inbound marketing where you offer value to your customers instead of selling it, because there’s just not that much competition and no need to do so for now.
SEO for example – making sure you’re found in google – is something that is hardly done, and apparently very hard to convince companies the value of.
Influencer marketing, sponsorship and events and so on seem to be on a same level though the digital link is not being made often.
The agencies and marketing professionals I talked to also indicated the need to focus more on personalization of marketing ànd moving towards a cross-channel marketing and sales strategy in order to stay ahead of online competitors..
In general, sports companies in Chile aren’t used to much competition, as they’re often very focused on what they’re doing and usually alone in their segment or market.
Many mature trends from Europe or America haven’t arrived in Chile yet,
for example the sportstech market or focusing on other target audiences such as clubs, federations or businesses rather than only on the end consumer.
Leaving a huge potential for first mover effect.
As there’s a lower focus in schools on physical activity which is opening up the market for (party)private initiatives as well.
In terms of marketing the same can be identified.
Talking to different marketing professionals and agencies, it’s clear that innovative digital marketing trends such as cross-channel marketing, SEO or inbound marketing are basically untouched in Chile, offering both opportunities for local companies, as threats to stay behind and have foreign companies taking over.
The Chilean government is focused on maintaining an open market and competitive economy.
They are very open for investments and foreign companies because they want to attract foreign talent from abroad, especially from America or Europe, as within South America they already offer the highest level with the tech university of Santiago claiming to be the best university of South America.
“There are different forms of registering a business, with the required minimum share capital has been dropped to zero.
Chile allows 100% foreign ownership and has no monetary controls on the movement of capital.”
These reasons make the registration of a Chilean company attractive and accessible for foreign individuals or companies according to Bizlatinhub.
As import taxes are very low, this makes most markets are easily accessible.
The only two markets with huge entry barriers are food and cosmetics, as Chile has very specific norms in terms of labeling of products, to which basically any foreign product currently applies.
However, Chilenos often refer to themselves as being located ‘at the end of the world’, which is also noticeable if you look at the number of brands and product range for each brand present.
A specific example I got is that you can find the main cycling brands, though once you look at the really high end products or if you’re looking for replacement materials, they’re usually unavailable.
When ordering through e-commerce, each and every package that crosses the border is checked by border security, who will often call you in order to confirm that you actually ordered this package, causing very slow delivery times which stimulate brands to keep stock in Chili itself.
This is why a lot of companies will import ingredients or materials, but set-up a production locally.
Due to the fact that they have great trade agreements globally.
Many companies will also use Chili as a hub for south America. Chili is the only Southern-American company with an open border agreement between Europe and Chili, which allows
companies to ship goods from and to Europe without additional taxes.
The Belgian ambassador confirmed that this is the strategies of a lot of European companies, also due to the fact that it’s easier to set-up a business in Chile
than in the rest of South-America.
You’ll still have a lot of paperwork, though nothing compared to the rest of South America.
But they even go further than that.
They want to brand themselves as a tech-hub Internationally, which is why they created Start-up Chile.
This investment fund actually offers foreign entrepreneurs the opportunity to get up to 20K in funds with the main requirement to stay in Chili for 6 months while launching your business.
This seems very unique to me as I don’t recall Belgium – or any other country in Europe – has a similar system. Geert Criel – The Belgian ambassador – explained me the following:
As everywhere, key will also be to establish a local network and have local contacts to help you navigate the business world there.
I was helped a lot by the Belgian ambassador, Agoria, and the Flanders Investment and Trade Office, who brought me in touch with different locals who opened their network for me.
Some things to keep in mind if you’re considering expanding your business to Chile:
The obvious one: language is a tricky in South-America.
Everyone learns English at school, but it’s some type of principle not to do an effort to actually learn it.
So the result? Only about 5% of the total population speaks decent English.
So no way you should try to go to the market without full knowledge of Spanish.
I actually ended up doing a whole meeting in Spanish as the marketing director I was talking with didn’t understand English.
Great for learning Spanish, not great for my fluent explanation of my business.
Though I still consider it an accomplishment after 3 months of learning Spanish!
Class system is still very much present.
I was told that actually 15 families own ‘all the money in Chile’.
The average wage in Chile is about €2500 a month, whereas 80% of the population earns less than a €800 a month with the minimum wage being €500/month in an economy that has about the same cost of living as central Europe.
If you’re in the job market, being a European definitely gives you an advantage in terms of knowledge, but your chances of getting in will very much depend on the type of business you have.
Every expat I met who had been active on the job market gave the same remark: “It’s very hard to get in a company but once you’re in, you’re in.”
On top of that, they mentioned that:
For Chileans from lower classes the opposite is true, as it’s very difficult – it’s even said nearly impossible – to get into a good jobs when you’re from a lower class.
The different accents in Chile are generally not linked to region but to class.
In stead of saying “Tjile” ,people from higher classes will pronounce it as “Tsile”.
The same reasoning also accounts for partnerships.
An agency owner explained to me there is not many competition for agencies though the 1% top companies who own all the money will also only work with agencies who are part of that 1 percent, in order to sustain the system.
Related to the previous point, hierarchy is also very much present within companies.
El ‘Jefe’ is ‘el Jefe’ (the chief).
And if the boss wants something, this happens.
For some Chilean friends we made, it was unimaginable that I had a meeting with a CEO or a management team, as this is unheard of for people our age in Chili.
A Spanish friend we made who works for the company where a close family friend is the CEO, is even treated like royalty – ànd considered the ‘spy’ amongst colleagues.
I also heard from a female Belgian expat that within companies, you still have a very masculine culture as well.
She felt she really needed to work hard to prove herself worthy of her masculine colleagues, and still sometimes feels like she needs to work extra hard in order to get recognition for her work.
In terms of mindset they also differ from the rest of South America.
I loved the quote of this agency owner who explained it to me:
This was also related to mindset. I only learned the last weeks that Chileans are often compared to Chinese in terms of communication.
Meaning they will never say no to anything you say. But it goes further than that, it’s even harder to know in Chile what someone’s feeling is as they might suggest or agree something in the heat of the moment while afterwards just ignoring it completely.
This made it hard for me as it’s like I had to recalibrate my gut feeling.
It happened to me twice that I met people from the sports industry, had a great talk or meeting where they immediately and persistently asked for my help, but then they completely ghosted me afterwards.
This was a bummer on my self-confidence and left me clueless about how to communicate further as I started doubting if I had done anything wrong or had been too direct – which I know I can be – for the Chilean culture.
But by the end I learned this is just normal.
Another tip I got on this regard:
“In Chile, your deal isn’t closed until the money lands on your bank account.
Should you decide to go, make sure you take culture differences and the language into account.
Most importantly: network is key.
Due to the hierarchical structure and class system, that seems to be the only way to get into the market. But how?
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And would like a partner to give you local contacts and make your marketing & sales scalable?