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Quality, Flexible Pricing Terms Key For Latin American Importers, Finds UPS

A new report from UPS suggests SMEs in Latin America are well-positioned to expand their global trading operations, with importers looking overseas for new corporate suppliers.

In its 2017 UPS Business Monitor Export Index Latin America report, released last week, UPS found SMEs across Latin America are eager for global business. Comprising more than 90 percent of the region’s companies, Latin American SMEs could serve as a significant opportunity for suppliers across borders. But they have particular needs, UPS found, that must shape the way suppliers strike new business.

Conducted in partnership with RGX Global Export Network, the report surveyed 2,170 importers across industries with a particular focus on SMEs’ buying trends.

According to the 2017 BEMI, 47 percent of Latin American business customers are looking for new international suppliers. Industry fairs and trade shows are the most common way these SMEs find a vendor, while more than a fifth said they expect a supplier to contact them — a statistic that suggests suppliers must be proactive about reaching out to potential new clients in the region.

When broken down by country, importers in Brazil emerged as the most proactive in their own search for overseas suppliers — just 5 percent in Brazil said they don’t contact new suppliers and instead wait to be contacted themselves.

Meanwhile, the automotive sector in Colombia, Costa Rica and Peru all have the highest percentage of importers that are looking for new suppliers. Further, these SMEs also tend to operate on a more digital plane. The U.S., Costa Rica and Chile, meanwhile, express the greatest potential for suppliers in the apparel industry.

That’s compared to the nearly one-third of U.S. importers that said they don’t reach out to suppliers themselves, preferring instead to be contacted.

Importers across Latin America value product and service quality above all, with 97 percent reporting that this factor influences their purchasing decision. Close behind is the availability of seller services like payment term flexibility and after-sale services, with 87 percent reporting this as having an influence on their ultimate decision to buy.

UPS highlighted the manufacturing sector as a particular area of potential, with nearly half of SME importers in the industrial manufacturing space reporting that they import raw materials and basic inputs. More than half (56 percent) of importers that are looking for new suppliers said they do so via internet search engines, with more than a third saying potential suppliers typically contact them via email, findings that infer “online communications are a viable channel for exporters to reach out to new potential customers,” the report concluded.

When it comes to the automotive industry, importers pay particular attention to logistics and shipping offerings from their suppliers, in addition to flexible payment terms. Reflecting on this trend, UPS Canada Vice President of Automotive Craig Rayner said automotive exporters to Latin American SMEs should act accordingly.

“Canadian exporters in this sector would be well-served to initiate trade activities in markets with existing trade agreements in place and, where possible, a local industry that is open to international competition,” he said.

The high-tech sector, meanwhile, sees the highest level of online procurement activity, with Latin American importers showing a greater preference for online searches when seeking out new suppliers. Further, half of the businesses in this market say they complete purchases entirely online and also present greater rates of frequent and varied use of online promotional tools than other industries.

In a statement, UPS Americas Region President of Public Affairs Jose Acosta said this region should be one to which global buyers pay attention.

“The BMEI study provides importers and exporters  with a deeper understanding of the purchasing dynamics of SMEs in Latin America,” he stated. “The SME sector in the Americas is playing a significant role in the region’s economic growth and global trade.”

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