The manufacturing sector of Colombia

Colombia possesses a set of components that make the country an interesting country to take into consideration for manufacturing purposes. There is an ongoing transition from solely raw material provider to (semi)-finished producers.

Not only Colombia understands these opportunities, also foreign companies start to understand this. Important to mention is that Colombia can be considered to be a providing country for your services and products, but also a potential sales market if the products or services are able to compete in especially pricing and brand value.

The Colombian manufacturing sector represents over 10% of the total GDP, and is growing gradually each year. Costs of manufacturing are relatively low, however, Colombia is not a low wage country such as many countries in Asia. Nevertheless, the quality of the products are high, and the sector is developing itself to be competitive towards other countries.

In addition, Colombia is also interesting for companies that have technology or knowledge that will lead to economic and environmental sustainability.

The main sectors for the manufacturing industry are:

–       Fashion

–       Food and beverages

–       Printing and publishing

–       Chemical

–       Pharmaceutical

–       Cosmetics

–       Building materials

–       Furniture

–       Crafts

Entry strategy

The entry strategy regarding production or sales depends heavily on your vision of doing international business. We believe in a platform-based strategy that includes partnerships and outsourcing to make use of actors that are already active in the market to avoid high investment costs, unnecessary competition and not using resources that are already available. However, it is also possible to create a vertical based integration that includes acquisition and setting up the chain on your own behalf.

Regarding the provision of technology and knowledge, we advise to look for local partners that will implement the products or services before taking further action such as setting up local companies or make other types of investments.

Every path has its advantages and disadvantages that are strongly related to local conditions, culture and the level of dependency that you are willing to have.

How can Nvest help you?

The network of Nvest reaches to many of the main manufacturing sectors of Colombia. This means that we can be your local partner and help you with:

–       Project planning

–       Obtaining finance

–       Potential partner sourcing

–       Product sourcing

–       Implementation and management of the chain

–       Logistic support

In order to give more background of the Colombian situation, please have a look at a summary of a few key aspects of the country.

Location

First of all, Colombia has an ideal location on the world map that has easy access to Europe, North America and Asia, also due to its access to both the pacific and Caribbean Sea. This means that Miami is within a 5-day reach, New York in 8 days and Rotterdam in 3 weeks by a ship.

Besides, from North America it is just a flight of a few hours, and from Europe it is around 11 till 15 hours depending on your location. This means that visits can be arranged pretty fast and easy.

Human resources

In addition, the human resource costs are relatively low with a 230 euros minimum wage for ‘low’ skilled. ‘High’ skilled can be found for around 700 or 1500 euros and specialist jobs can be a lot more expensive but do not come close to the same level as in Europe.

Besides, the level of education of Colombia is relatively high with a 74% of people that attended secondary higher education. Also, the official unemployment rate is around 13%, which means that there are sufficient people available and willing to work.

Operational costs

Costs related to rent and utilities depend on the location of the facility or office. The better the location, the higher the utility costs such as electricity will be.

Administration and accounting costs can vary from 500 euros and upwards per month to have a trustworthy accountant that handles everything properly.

Regarding taxes, this depends heavily on the company structure and the products or services it is providing. For example, there are tax exemptions for companies that work with sustainable products.

Trade agreements

Colombia has trade agreements with countries in Europe, North America, Latin America and Asia. As a result, many products that originate from Colombia have a preferential import tariff.

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