Proven concepts attractive in Chile
The blue of Chile’s flag symbolizes the sky, white is for the snow-covered Andes and red represents the blood spilled to achieve independence. The five-pointed star represents a guide to progress and honor.
Location: In southern South America, Chile borders the South Pacific Ocean and is between Argentina and Peru.
Language: Spanish (official), about 10 percent English
Total Population: 18 million
Government: Presidential republic
Religion: Roman Catholic (66.7%), Evangelical or Protestant (16.4%)
Economy: With a market-oriented economy characterized by a high level of foreign trade and a reputation for strong financial institutions, Chile consistently ranks high on international indices relating to economic freedom, transparency, and competitiveness. Exports of goods and services account for approximately one-third of GDP, with commodities making up some 60 percent of total exports. Copper is Chile’s top export and provides 20 percent of government revenue. A continued drop in copper prices prompted Chile to experience its third consecutive year of slow growth in 2017. The United States is Chile’s No. 2 trading partner, behind China.
News note: Chile’s environmental authority in late 2018 approved the development of the largest desalination plant in Latin America, with an initial investment of about $500 million. The plant will desalinate seawater for industrial clients in the Atacama desert mining region, home to some of Chile’s largest copper deposits and one of the richest deposits of lithium, a metal used in batteries.
GDP (official exchange rate): $277 billion
Currency: Chilean peso (conversion rate at press time: 1 CLP equals $0.0015 USD).
Franchising in Chile: There are no franchise-specific rules in Chile. While accepting of U.S. brands, a major challenge for franchises is identifying local investors interested in signing a master agreement. Given the conservative and risk-averse Chilean business culture, U.S. franchisors will find Chileans hesitant to make large, upfront investments until the concept has first been proven successful in one or two locations in the market. Franchises with low initial investments (in the range of $100,000-$200,000) will likely have stronger market potential than those requiring larger investments ($500,000-plus).
Cultural notes: While business practices in Chile are similar to those in the United States, less than 5 percent of the population speaks English and U.S. business people need to speak Spanish or identify a local partner who can speak both English and Spanish. Expect business lunches to run two or even three hours.
Ease of doing business ranking by World Bank: 56, down one spot from 2017.