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Exploring Chile's export markets, August 2008

Chile’s economy is open and strongly export-oriented. Industrial products account for approximately 45 percent of GDP, mining 45 percent, and agriculture 10 percent. The country’s export mix includes cellulosic wood, methanol, fruit, fish, and dairy products. Forestry, furniture, and wine have also become important sources of Chilean export earnings over the past decade.

With sales to over 150 markets around the world, food products represent the greatest growth opportunity for Chile’s export sector in coming years. Chilean food exports are distinguished by their high quality, cultural originality, distinctive packaging, and efficient distribution.
 
Chile’s Competitive Advantages
Chile enjoys a number of competitive advantages in food exporting including ideal geographic features banked by sea and mountains, the Mediterranean climate and a low incidence of diseases.
 
Chilean food exporters also reap the advantages of a stable political system, a robust national economy and an efficient infrastructure. The country’s agricultural export sector also benefits from high quality professionals, technicians, and manual laborers who facilitate compliance with ISO (International Standards Organization) norms.
 
Geographic Markets
Both Chile’s location, at the southern end of the Americas, and their use of staggered harvests permit fresh fruit producers to supply to the markets of the North hemisphere in winter.
 
Chilean exporters are also beginning to penetrate the processed food markets of North America, Europe, South America and Asia. Pro-Chilean, an organization created by the Chilean government, has supported the participation of local exporters in International Fairs to showcase a variety of processed foods including olive oil, wine and dehydrated fruit amongst many others. Chilean exporters sell these products in small supermarkets, specialized nutritional chains, ethnic food stores, coffee shops, and other channels in the United States and China.
 
International Trade Agreements
Until years ago, the United States and Japan were the dominant destinations of Chilean exports. However, Chile’s multi-pronged foreign trade strategy (including membership in the World Trade Organisation, affiliation with Mercosur, and entry into an unusually large number of Free Trade Agreements) has greatly broadened access to global markets.
 
These agreements have permitted Chilean exporters to expand sales in Asia, as well as Europe, and boost growth in non-traditional categories like processed food. Chile’s international trade strategy has also induced food exporters to adopt new commercial and productive methods, raising their competitiveness in demanding foreign markets.
 
Foreign Direct Investment
A rising number of Chilean food producers are supplementing their international trade strategies with foreign direct investment, e.g. salmon and wine exporters are launching investments in overseas retail distribution.  These FDI initiatives provide Chilean companies with direct access to customers in high-value foreign markets.
 
This migration from traditional export strategies to foreign direct investment illustrates the increasing sophistication of Chile’s agricultural producers, which have leveraged the country’s unique natural assets and their own competitive capabilities to establish a growing footprint in the global market.
 
To read the full report, you can download here.
 
If you are interested in knowing more about Chile’s export markets, you should contact the author of this article, Fernando Landa, a member of Landa Consultores Auditores, the Chilean member firm of RSM International.