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Seven tips for doing business in Peru
The sun setting over the San Isidro business district (Luis Arturo Llerena Matienzo)
September 17, 2012
When traveling to a foreign country, the differences in language, food and customs are easy to see. However, when vacations turn into business trips, the unwritten differences in business etiquette and language are not always as apparent.
Unfortunately, unfamiliar business situations are not solved as easily as asking for the English menu at a restaurant. With that in mind, I have put together a list of basic principles to follow when doing business or investing in Peru from a foreigner’s point of view. These tips come from my personal experience making the transition from working in finance in New York City to investing in multiple businesses here in Peru.
1. Give yourself extra timeand use checkpoints
We’ve all heard stories of meetings that started hours late or deadlines that were postponed multiple times. Still, hearing these stories probably won’t prepare you for the different pace of business in Peru versus most English-speaking countries. Whether it’s waiting for government approval, late work from a third party or simply a lack of urgency, my experience has been that initial estimates of timing for a project are almost always overly optimistic.
When dealing with factors that may be out of your control, make sure you give yourself extra time, especially if you have your own deadlines to deal with. For time-sensitive projects, I suggest you use check points along the way as opposed to expecting all deliverables at once. There will be a lower probability of being surprised that the project is behind schedule if you already see that check points A and B are late.
2. Do as much homework as possible BEFORE you arrive
There are some things that can only be accomplished by being on location, and that is why we take business trips. However, your time in Peru will be much better spent if you have done some research before arriving. Industry regulations and certifications necessary for a business can usually be researched online, as can customs rules for importing/exporting. Speaking with people familiar with Peru can also help answer questions like, why isn’t someone already doing what you want to do in Peru, and if they are, what makes them successful? Also, speak with others on what you should be paying for services as they may be very different than what you are used to.
3. Be prepared for meetings where no business is discussed
The business pace is slower than what you may be accustomed to and the get-to-know-you period is usually longer. These initial meetings help your prospective partners/clients gain the comfort level needed to work with you.
4. Expect t less phone and email contact and more face-to-face communication
I think this is fairly self-explanatory. Peruvians are generally more comfortable discussing business in meetings than over the phone or email.
5. “I will get back to you” usually means “no”
In Peru, people usually avoid giving a direct answer of no. Instead, projects that will not be continued are said to be on “standby” and failed sales pitches get an answer of “I need to speak to my wife”. If someone says they will get back to you and they don’t, then that is your answer right there.
6. Realize that not all decisions are made for economic reasons
Traditionally, the business community in Peru has been small and its ties run deep. Companies don’t always accept the lowest price or best service proposal because of other factors. Family, classmates and the goodwill and trust that have been built with members of the business community are things that come into play when making business decisions in Peru.
7. Find a local partner
Let’s say that you are looking to invest or do business in Peru in a field in which you already have experience. You have the necessary business know how and the foreign contacts but what you are probably missing is the local contacts that will help your business succeed in Peru.
This is where finding a local partner will be helpful. I have found that having a local partner as opposed to hiring a service provider works better because your interests are aligned. Service providers get paid regardless of how successful the project is while partners all have skin in the game. Of course, just make sure that your partner is one that you can trust. Preferably not one that approached you but was recommended by someone you trust. And even then I would recommend checking in to see what they are doing.
Jorge Valcarcel is an experienced investor in equities, fixed income, derivatives and alternative investments. He is currently the CEO of Valcarcel Asset Management, an investment management firm serving both institutional and individual clients around the world. He can be reached at firstname.lastname@example.org
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Total coments: 4
Commented By: Martin
On: September 17, 2012. 1:20 pm
Hold onto your money until you are SURE that a done deal is a done deal or you may be kissing your money [and time] good-bye.
Commented By: Expat Chronicles
On: September 18, 2012. 12:33 pm
Excellent article! My only improvement would be to apply it not only to Peru, but all of Latin America.
Commented By: Long-term attorney
On: September 18, 2012. 8:35 pm
Generous of Mr. Valcarcel to share his experience. Sensitivity both to the environment in which one has chosen to do business, and to other aspirants, bodes well for endeavors in life generally. Thanks!
Commented By: dan
On: October 2, 2012. 10:19 am
I agree Peruvians are extremely over optimistic with deadlines and project planning, the greatest example would be the electric train proyect initiated in 1986, completed in 2012. I believe Peru has serious potential, if only they knew how to do business a little better, it would keep us investors from pulling our hair out seeking better prospects in Ecuador.
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