The medical device sector, opportunities in the region. Latin America offers tremendous opportunities for the medical device sector. The region is not only a good market it also offers good outsourcing alternatives. There is increasing social concern and governments in many countries are looking to improve the health systems backed also with private initiatives. For instance, Chile is implementing a poverty reduction program, which includes a health improvement component. This includes construction and upgrading of numerous hospitals.

The Latin American market for medical equipment, devices and diagnostics represents around 7 US $billions. Brazil is the largest national market in Latin America with almost two thirds of the total. Mexico and Argentina follow, jointly accounting for around a quarter of the total. Brazil has over 67,000 healthcare establishments (this includes hospitals, clinics of different specialties and treatments, first-aid services and dentists)

In terms of outsourcing, Mexico and Costa Rica offer the closest alternative for the US. Both countries offer stable economies, low operating costs and close proximity. In comparison with China, these Latin countries have lower shipping costs, reduced lead times, and tax advantages. For these and other reasons it is expected that the OEM relationships in the sector will grow. According to the U.S. International Trade Commission (ITC), Mexico in 2004 was the largest Latin American exporter and third largest overall exporter of medical devices to the U.S. with a value of $2.3 billion. Costa Rica was second among Latin nations with $476 million in exports to the U.S.

While U.S. medical OEMs have stepped up sourcing from Latin markets, few of the products made are sold back into those regions. According to the ITC, Mexico is the sixth largest purchaser of U.S. medical products with $873 million imported in 2003.  Much of these imports are used in the manufacture of finished devices that are eventually sent back to the U.S. The same occurs in several other Latin nations. An exception is Brazil, which imported $234 million in U.S. medical devices last year, most of which were for its domestic consumption. The medical device industry has a tremendous potential in the region, it is time to develop the opportunities.

Latin America and China, opportunities and challenges.  Economists agree that the bonanza of Latin America in 2004 is mostly explained by the growth in China. The largest consumer of iron ore, copper and aluminum is sourcing most of these commodities from the region. The impact of the increasing trade has been different from country to country.  Chile is the most favored, having a surplus of US $0.5 Billion coming from mining products, especially copper. Argentina, is the second on the list concentrating 80% of its exports in soybean. Brazil has a diversified export portfolio including commodities such as soybean and iron ore and also value added products such as electric motors and paper.  On the reverse side, Mexico is the most negatively affected by China and has a US $8.9 billion deficit. The imports are mainly coming to the maquiladoras and re-exported with value added to the US (eg. electronic components). This represents a big danger for Mexico, which is losing competitiveness with its main trade partner the US.

China's potential growth is still large and therefore the trade benefiting the region will continue. The domestic market is equivalent to 20% of the world population and the middle class is equivalent to 20%, growing by 1% since 1999. There are still 400 million people living in rural areas and if they continue transferring to urban areas, then the impact will be even bigger for Latin America, especially in agribusiness where Brazil has the biggest advantage. The Latin American region needs to diversify their exports more, create strategic alliances and attract Chinese investors. It requires a lot of work and a long-term vision, which should begin with a better understanding of the market.

TRADE WITH CHINA % OF TOTAL TRADE 2003
COUNTRY	% OF EXPORTS	% OF IMPORTS
Argentina	8.37	5.25
Brazil	6.31	4.59
Chile	9.29	7.48
Colombia	0.51	0
Ecuador	0.22	5.01
Mexico	0.28	5.47
Peru	7.73	7.61
Uruguay	4.27	3.99
Venezuela	3.02	2.04
Source: ALADI

Doing Business in China, more and more western companies are interested in conducting business with Chinese counterparts.  In order to be successful, one of the important aspects to understand is the culture and environment of business, which could be a barrier if is not treated appropriately. Here are some hints from some people that have already broken the barrier.

China is an exciting place, a very rich and culturally diverse environment. Business in China is based on personal relationships and it is very important to build these with your prospective partners/clients. It takes more time than usual to develop business; you need to do a lot of work, but it is worthwhile. In order to build the relationship you would need to spend time with your partners/clients and make 3 to 4 visits a year. When you have meetings it is always good to show interest in their culture (eg:  learn some Chinese words, eat with chopsticks, and learn some history.)

In terms of business etiquette, business cards are very important.  Before greetings give your card with two hands and bow, showing your name. Keep the cards exchanged on your desk or table during the meeting, don't put it in your pocket immediately. Seniority in Chinese organizations counts, so always respect that when conducting business.

When you are negotiating a deal, don't be surprised that is not the normal structure that you are used to.  There is a very strong aversion to saying no.  Business people will tell you that they will think about a proposal but never say NO.  There is a very subtle body language, so be aware of that. Be careful when you ask for discounts, because even if they accept this the quality could be damaged.  The meaning of "soon" it is not the same as in the US, "soon" can be a very long time. Chinese dislike "the accusatory style". You cannot blame or accuse a responsible person for delays.  The Chinese work very hard, they spend 12 hours in the office.

Face to face meetings are always preferred but people are getting used to technology for communications. Three years ago email addresses were not indicated on business cards but now this is more common. The Internet is controlled in China, and that can cause you to get rebounds in your emails because some servers are blocked. You can check this in advance.

When you find a counterpart you are willing to work with, always conduct due diligence before closing a deal. Check the company experience in the industry and with other international companies. List and check all the possible things that can be wrong. In China, the history of a company is very important. In general, state owned companies are dangerous.  If you are interested in conducting business in China contact Karina Liendo.