It is difficult to generalize risks across an entire continent, as each country and region has its own unique socioeconomic, political, natural, financial, and cultural risks. However, there are specific challenges that businesses planning to expand to Latin America should be aware of. No matter where, in Mexico, Panama, or even Paraguay, expanding your business or hiring talent will bring risks.
Nevertheless, there are specific challenges that businesses planning to expand to Latin America should be aware of, here is a list with relevant items:
Understand the language and culture: One of the biggest risks for businesses operating in Latin America is a lack of understanding of the local language and culture. This can lead to misunderstandings, miscommunication, and cultural faux pas. To mitigate this risk, businesses should invest in language and cultural training for employees, such as hiring local staff, partnering with a local translation and interpretation service, and hiring a local cultural consultant to advise on business practices. Tip: additional strategy here, is having the advocacy and expertise of a local partner, with enough knowledge of location, culture and legislation.
Be aware of bureaucracy: Latin America is known for its bureaucratic red tape, which can make it difficult for businesses to navigate the legal and regulatory landscape. To manage this risk, businesses should invest in legal and regulatory compliance services, and work with local lawyers and accountants who understand the bureaucracy and can help navigate it. It’s also indispensable to establish a good relationship with government officials.
Socioeconomic vulnerabilities: Widespread youth disillusionment is a significant concern that is impacting many locations, but especially Latin America. Additionally, increasing inflation is widening the gap between the wealthy and the underprivileged; further impacting the already struggling middle class in most places such as Mexico, Colombia or even Perú. This leads to a sense of uncertainty and instability for individuals and families, as they confront unresolved issues and fragmentation.