Head to the Latin American Market, Those Countries are Worthy of Your Attention

Latin America with a large population has achieved rapid economic development in recent years and is known as the BRICS market in the next decade.

In 2020, Latin America grew by 36.7%, ranking first in the world. In 2020, Argentina's retail e-commerce market grew the fastest, with an increase of 79%; Brazil increased by 35%, ranking fourth in the world; Mexico increased by 27%, ranking 17th.

The fast-growing Latin American e-commerce market has attracted many cross-border e-commerce suppliers to enter the local area. It is expected that the overall e-commerce development in Latin America will be booming in the next few years.

HKTDC Research held a seminar on "Developing E-commerce Business in Latin America" earlier and invited HKTDC's global market economics specialist Fu Chile to discuss the market and economic structure and share development experience.

Fu Zhile pointed out that Brazil and Mexico are the largest markets in Latin America. Among the top 10 Latin American economies in 2020, the highest share of GDP in Brazil (33%), followed by Mexico (25%).

Brazil is the most populous, with more than 200 million people, and Mexico has about 130 million people.

In per capita income, Chile ranks first among the ten largest economies in Latin America with nearly US$13,000 (equivalent to approximately RMB 82,693), while Costa Rica (equivalent to approximately RMB 76,332), Argentina and Mexico (equivalent to approximately RMB 54,068) are also higher than The average level in the region (equivalent to about RMB 51,524).

Fu Chile said that the largest cities in Latin American countries are usually capitals, with a high proportion of the population. Among them, the population of the capitals of Argentina, Peru and the Dominican Republic accounts for three-quarters of the country's population.

It is worth noting that the populations of the capitals of Chile and Guatemala also account for nearly half of the national population, and the capital circles of the two countries have accounted for 90% of the national wholesale activities.

With the exception of Argentina, inflation in Latin America's 10 largest economies is fairly stable, at 2% to 5% in 2020.

Argentina has experienced hyperinflation from time to time over the past few decades, most recently starting in 2019, with official inflation reaching as high as 50%, mainly due to excessive currency issuance to repay foreign debt. In order to solve the economic crisis, Argentina implemented foreign exchange and price controls in 2020 and discussed the debt issue with the International Monetary Fund (IMF) in December 2021.

Fu Chile believes that Chile, Argentina, and Mexico are the most noteworthy.

In addition to the large population, the per capita income of these three countries is not bad, and the local consumption power is expected to be quite large. Therefore, Chinese merchants can consider looking for local partners to operate local logistics, transportation, and wholesale. It is estimated that the business can cover most of the target customers.

As COVID-19 continues to spread, Latin American countries vigorously promote vaccination programs. By the day of the workshop, more than 85% of Chile's population had received two doses of the vaccine.

At the same time, the epidemic has also created a new market for online shopping in the region. According to a survey, 73% of Latin American online shoppers downloaded mobile shopping apps during the epidemic. Peru and Colombia have nearly 70% of online shopping on mobile phones, and Chile has an online bank account ratio of more than 70%.

In terms of shopping platforms, the top 3 of the top 10 Latin American online shopping platforms in 2020 are Argentina-based MercadoLibre or Mercado Livre, with users mainly from Brazil, Mexico and Argentina, and other populous countries. In addition, more Latin Americans use Falabella, headquartered in Santiago, Chile.

For future development, Fu Zhile quoted statistics and pointed out that 70% of online shoppers said they would continue to consume online and use electronic payment after the epidemic. Therefore, many Latin American countries are taking the opportunity to actively promote the development of e-commerce. For example, Colombia has a national policy to promote e-commerce, and Chile has reduced taxes on mobile phone purchases.

He expects that the e-commerce market in most countries in Latin America will flourish in the next few years, especially the e-commerce market size of Brazil, Mexico, Chile, Colombia, and Peru, which is expected to grow by an average of 35% or more.