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Argentina International Business 2018

ARGENTINA
GROUPMEMBERS
MUHAMMADSHAFIQKAMARUDDIN
(SUKD 1602332)
MELISSALO
(SUKD 1702205)
AMIRAHILYANAMDSAAT
(SUKD 1701989)
HARTINAAYUAHMAD
(SUKD 1701629)
KARYNLINDSEYFOOSHUYEE
(SUKD 1702272)

• Developing after the
change of precedence
from Cristina Fernández
de Kircher to Mauricio
Macri
• GDP increased to 192.80
USD Billion from 1962
until 2017
(IECONOMICS INC, 2018)
• Transactions in the average
exporting of goods and
services increased to
785.17 USD Million from
1957 to 2018
• Average imports increased
to 1570.66 USD Million
from 1975 until 2018

Argentina Political
Environment
Political System and
Structure
• Federal representative
democratic republic where
the president holds the
executive power
• Government operates in three
branches ; executive,
legislative and judiciary.

Executive
• President
holds the main
position in the
country
Legislative
• Argentina
National
Congress
divides into
two
• Senate and
the Chamber
of Deputies.
Judiciary
• Judiciary
department in
Argentina
include
Supreme
Court, federal
judges and
other
jurisdictions

Stability of Government
• To improve financial and
economic situation to attract
new investor and loosen the
barrier to foreign investment
• Success of Argentina
government in increasing foreign
investment has restore the
confidence for more foreign
investor to invest in Argentina.

Future Political
• Changing of government in the
upcoming election in October 2019
Strong rate of depreciation of
Argentina peso against the US dollar.

Ranked at 85 least
corrupt nation out of 175
countries.
Viewed as high risk
country for money
laundering
Weak money control,
financial crime and
fraud, and weak anti
money laundering
enforcement.
Since the appointment
of Mauricio Macri,
Argentina reputation in
money laundering cases
begin to improve

Economic and Business
Environment Analysis
ARGENTINA

Demographic
Least growth rate population in Latin
America's country (1%/year)
2018- growth rate is 0.98%
have welcomed immigrants (6.6 million)
“crisol de razas” mix of races
(Argentina country profile, 2018)
Population - 44.77 million as of
2018
capital city - Buenos Aires (3
million population)
92% Argentinian lives in city

Argentinian Population by age
Age % population
> 65 years old 11 %
15 - 65 years old 63 %
< 15 years old 26 %
 Argentinians - 55% Italian origins
 Argentinian legalized same-sex
marriage in 2010
(Worldpopulationreview.com, 2018)
 Many Asians especially
Chinese and Korean lives
there
 Not a landlocked
country

Argentina Currency
Argentina Peso ARS
1 ARS - 0.028 USD
(Worldpopulationreview.com, 2018)
Illegal immigrants
750,000 without
official documents
Paraguay, Peru, Bolivia

Major Exports and Trading Partners
Major trading partner countries
EXPORT BUSINESS
Brazil, United States, China, Vietnam, Chile
Soya bean, Corn, Oil, Petroleum
IMPORT BUSINESS
Brazil, China, United States, Germany, Mexico
Natural Gas, Plastic, Organic Chemical
(Roffarello and Roffarello, 2006)

Education level
Pre-primary (kindergarten) age 2-5
Primary School ( from age 6) - compulsory
(Internations.org, 2018)
Argentina wants to increase literacy
level in rural areas (1983)
-built 17000 adult school
-many secondary and night school
(Nalejandria.com, 2017)

Literacy level
• one of the highest levels of literacy in
Latin America
• student of Argentina - 12.2 million
people
Level of education % of Argentinian
Basic level education 81.3%
EGB1 and 2 levels 98%
EGB3 78%
Polymodal 53%
(Nalejandria.com, 2017)

Membership regional and International
Argentinais the memberof :
• Organization of American States
• Inter-American Development Bank
• Latin American Integration Association
• MERCOSUR (Mercado Común del Sur)
• Community of Latin American and Caribbean States.
• Founder member of the United Nations in 1945.
• Joined the World Trade Organization in 1995. The country is a
member of the Group of 15 and the Group of 20.
• Became an observer member of the Pacific Alliance (Alianza del
Pacífico) in 2016.
(Europaworld.com, 2018)

Protection of Intellectual Property Rights
(Moncayo Von Hase, 2009)
Customs surveillance system for trademarks and copyright started
in 2017
Correction of Argentine Patent Act in 2004 adjusted preliminary
injunctions in area of interest of patents
Proceeding faced against people who download music illegally on the
internet
Resolution Nr 2216 - trademark,copyright owners can register own
ownership in IP rights with zero cost

Religions in Argentina
mix from European customs and Latin
American traditions
most of the citizen are secular
crucifixes and churches normal in
Argentina

Ethnic and languages
Italian, Levantine Arabic and
others
Lengua de senas argentina (LSA)
Spanish most spoken
used in government,
education and media

SPORTS IN ARGENTINA
Football popular sports
played from childhood until
adult
6th place for FIFA world ranks
participate in Rugby World Cup
23

FAMILY
close
relationship with
extended family
household
structure varies
from social class
children live at
house until get
married

BUSINESS CUSTOMS AND ETIQUETTE
Business card
must have one
side with Spanish
translation
Dress formally
Hierarchy in
business is
important
Bring small gift
for showing
gratitude
Arrive later for
a dinner party
Left small amount
of food on the
plate

COMMUNICATIONS
¿Cuántos años tienes? (How old are you?)
Physical contact, placing their hand on another’s
shoulder
Maintain eye contact
Inappropriate gestures negative meaning

Market Entry Mode
EXPORTING
 The major exporter to Argentina is
the U.S.
 unique economics, demographics
and cultural attributes that
differentiate it from other Latin
America countries.
 famous for its natural
resources
 not many countries has
natural resources.

TURNKEY PROJECT
Argentina is the most
advanced in technology
The companies can recruit
Argentina to build advanced
software in their countries
promising site for
information technology
advancement and developing
high-end software products.

Successful Multinational Companies
McDonald’s
Opened in 2016
first modernized location in all Latin
America countries
Arcos Dorados company represents
McDonald's in Latin America
(Nielsen, 2018)
goal investment in McDonald's is to restore
and upgrade the technology in its current
restaurants
Arcos Dorados double investing to expand the
employment in Argentina
decrease the rate of unemployment

Yamana Gold Inc.
• A Canadian-based gold producer
throughout the Americas
• Yamana has been exporting Argentina
mines and has been a partner with
Gualcamayo to acquire the gold mine in
Argentina
Gualcamayo has increased the support
of production for Yamana mines, based
on the solid production through the
first nine months in 2018 (Mining
Weekly, 2018)

Market Opportunity Analysis and
Challenges
Market
Opportunity
Rich availability of
natural resources
Population who
are highly
literate and well-
educated
individuals
Digitally capable
high-speed internet
and smartphone
penetration
Infinite possibility
of developing and
improving the
infrastructures of
their country

Rich availability of natural resources
• Gas extract from offshore and onshore site
• Vaca Muerta shale in Neuquén province
• Mineral deposits consisting of lead, zinc, and iron ore, etc.
• Agriculture products which are high in quality
(Wildcat International FZ-LLC, 2018)
(Oxford Business Group, 2018)
(U.S. Department of Commerce’s International
Trade Administration, 2016)

Population who are highly literate and
well-educated individuals
Country’s strong cohorts of the
profession in the medicine, business, law,
accounting, engineering, architecture, etc..
Lower cost to train employees
Recruiting individuals for any high position
(U.S. Department of Commerce’s International
Trade Administration, 2016)
(Houlcroft, 2017)

Digitally capable high-speed internet and
smartphone penetration
• Transfer or share information with other
companies worldwide
• Example:
HSBC (Hong Kong & Shanghai Banking
Corporation) store information of their
customers in their network system storage to
transfer the data to their other branches
worldwide

Infinite possibility of developing and improving
the infrastructures of their country
Opportunity for Argentina
exporters and foreign
investors
• Build relationship bonds with
the exporters from
Argentina when funding
(ELANBiz, 2015)
(Houlcroft, 2017)
Example:
The Government’s RenovAr
programme requires the
investment of USD 36 Billion
in their power generation and
transmission projects

Market Opportunity Analysis and
Challenges
Market
Challenge
s
High inflation
rate
Requirement for
importers to
acquire approval
from the
Argentina Tax and
Customs Authority
(AFIP)
Limitation on
profit, royalty and
licensing remittance
Dispute with
investors who did
not accept the
2005 and 2010
restructurings of
its foreign
obligations

High inflation rate
• 2014 the estimated inflation
30%
• 2015 the estimated inflation
20-24%
Leads to the:
• Rise in the cost of
production
• Appreciation of the
exchange rate of
Argentina currency Peso
since January 2014

Requirement for importers to acquire approval fromthe Argentina Tax andCustoms
Authority (AFIP)
• Foreign currency to pay for the
imported goods and services
• Government of Argentina
requested for approval in changing
their trade balance and foreign
exchange levels policy
Denied in the appeal by the
United States (U.S.),
European Union (E.U), and
Japan at World Trade
Organisation (WTO) court

Dispute with investors who did
not accept the 2005 and 2010
restructurings of its foreign
obligations
Ineligible for coverage under the
U.S.
Example
Exim Bank, Overseas Private
Investment Corporation (OPIC),
and the Trade Development
Agency assist American
companies in Argentina

• Lack of transparency and a public
comment for new regulations
• Lead to the:
• Uncertainty which causes
Businesses to have a “wait and
see” approach before making
risky decisions
Discourages investing in
Argentina’s future businesses
Limitation on profit, royalty
and licensing remittance

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Argentina International Business 2018

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