Bogotá, Colombia, like many other Latin American cities, seems like it never stops growing. One very noticeable feature in Bogotá is the strong presence of Asian brands.
You could see Nissan and Hyundai cars everywhere, and Samsung and LG dominate electronics. There are other brands you may not see but are there: mechanical parts for automobiles, machinery, and home appliances; semiconductors, even food. The pattern repeats throughout Latin America: São Paulo, Mexico City, Buenos Aires, Santiago… Japanese and Korean companies have strong appeal and shine above local products and often-inferior Chinese options.
Asia–Latin America economic relations have never been stronger. So, what makes Japanese and Korean brands and products so successful in Latin America? How can your Japanese or Korean business, whether a big player or a niche SME, market to Latin America? Some of the most effective ways are:
- Take advantage of Latin America’s emerging markets and investment-friendly governments
- Sell your status: sell Brand Japan and Brand Korea
- Focus on local needs and show you understand them
- Consider the role of language, adapt to it, and make emotional appeals
Here, we’ll take a deeper dive into the possibilities for your Asian company in Latin America. If you know how to appeal and what your own value is, you can open entirely new markets.
Take advantage of Latin America’s emerging markets and investment-friendly governments
Latin America is riding a wave of investment-focused, business-friendly governments. In recent years, Peru, Chile, Colombia, Brazil, and Argentina have adopted political platforms that support free trade and international investment. And other countries with more left-wing/liberal governments are also pro-free trade, such as Costa Rica and Uruguay.
This has helped Japan and Korea enter and often thrive in Latin America.
Regional trade blocs in Latin America encourage investment
There are regional integration initiatives like MERCOSUR, which allow easy entry to many markets at once. This is because they have an integrated patent system, and simplified immigration processes for their member citizens.
Similarly, there’s the Latin American trade bloc called the Pacific Alliance, (Allianza del Pacifico), formed through Mexico, Chile, Colombia, and Peru. All these countries have an interest in new investments. This promotes trade liberalization between member states and its membership is growing (Panama and Costa Rica are candidates)
Latin America has around 10% of the global population and almost the same amount of the global GDP, and most countries have a fairly young population. It also has the fourth-largest mobile market in the globe, and social media adoption is even higher than the US.
Welcoming of Asian companies
Latin American governments realize that the presence of Japanese and Korean firms brings top-notch technology and high-skilled jobs to the region. In the past, the region’s intellectual potential is enormous, but many high-level professionals had to leave because their capacities were not appreciated. This is much less the case these days.
Latin America has infinite commodities potential, and partnering with Japanese and Korean businesses has helped the region to sell more manufactured products instead of mere prime resources.
It also has a privileged geographical location: Investing in a country like Colombia or Panama gives you access to both oceans, manufacturing in Mexico reduces transportation costs to the US and Canada, and countries like Brazil have gigantic domestic markets.
Partnering in manufacturing has resulted in success. For example, Japanese auto parts producers have invested in Paraguay to supply automobile manufacturers in Brazil (both members of MERCOSUR). This helps both intraregional trade and Japanese presence. Not so long ago, before its economic collapse, Venezuela had a handful of Toyota factories to assemble cars that would be sold throughout the region.
More and more Latin American countries have become aware of the advantage here. Chile, Mexico, and Peru have FTAs with Japan and South Korea. And Colombia has one with south Korea, which is also negotiating an agreement with MERCOSUR. This has led Asia –Latin American commerce to pass the US$500 billion mark a few years ago and is expected to get close to US$800 billion by 2020.
This sustained economic growth in many countries in the region such as Chile, Peru, Colombia, and Costa Rica has led them to invest heavily in IT infrastructure, which means companies that want to enter the market don’t have to start from scratch.
This chart shows the main exports from Japan and South Korea to Latin America’s major countries. This doesn’t mean there aren’t opportunities in other areas; these are just the main ones..
Japanese Exports to Latin America
|Products||Export (billions US$)||Export Product Share (%)|
|Machinery and electronics||6,310||22.75|
|Plastic or Rubber||1,174||4.24|
South Korean Exports to Latin America
|Products||Export (billions US$)||Export Product Share (%)|
|Machinery and electronics||8,427||31.26|
|Plastic or rubber||1,905||7.07|
Sell status: Sell Brand Japan and Brand Korea
Japanese and Korean brands are usually perceived as top-notch products for their design and technology. And Latin Americans typically hold a very strong image of Japanese and Korean products.
In general, Latin Americans don’t focus solely on utility or price, especially for technology, home appliances, clothing, and automobiles. A main focuses is status. Buying products from the most tech-savvy countries in the world, such as Japan and South Korea, comes with that status.
Remember to not treat all of Latin America the same
Again, this depends on the country. I’m speaking in generalities, but Latin America can’t be seen as a homogenous block. Every country is different, every society is unique.
It’s not the same to market a product in Bolivia than in Brazil. Heck, it’s not even the same to market it in Sao Paulo (Southern Brazil) than it is to market it in Manaus (Northern Brazil).
Every marketing strategy for Latin American countries from Japan and South Korea has to mostly focus on that: not on the price, not on its usefulness or practicality, but on prestige, prominence.
Think about who you’re targeting. For consumer products, it’s often young, educated, urbanized people. These types love to show off their status through their purchases. And that’s what you have to sell.
For B2B and in areas such as semiconductors and specialized parts, you still have a status. That status, however, is less outward: it’s the understood perception of Japanese and Korean quality.
The need for brand marketing in Latin America
A study conducted by the UN ECLAC stated that brand marketing in Latin America is key to promoting public acceptance of a product. Marketing has to be intense and highly stylized to succeed.
Also, many countries are opening themselves even further to Asian culture: Sushi restaurants are seen as prestigious in many Latin American countries, and Japanese and Korean culture are attracting much more interest.
Anime and K-pop are less and less seen as just for geeks. This may be hard for Asian countries to understand, but in the West and in Latin America, Asian pop culture has typically not been mainstream. Rather, it has been something in which less socially conforming young people found a certain identity.
Asian culture, music, food, and technology are something trendy in Latin America. Again: it gives you status.
Focus on local needs and show you understand them
If you’re entering a brand-new market, who can help you know it better than locals? There’s one basic vehicle for this: language. Not many Latin Americans speak Japanese aside from the children of Japanese expats. These are mostly located in Peru and Brazil. There are also many dual-ethnicity Korean–Latin Americans.
As this report says, Latin American marketing is in constant actualization. Latin America is at the forefront of social media and mobile phone adoption, so the most modern marketing strategies can be greatly adopted in many of its countries.
For example, inbound marketing is quite common and well-used throughout the continent. The aforementioned study says that around 85% of Latin American marketers are familiar with inbound marketing, and around 60% use it. It’s widely perceived as a way to gain a competitive edge in the market.
This reduces costs for acquiring leads: Companies that use inbound marketing spend 63 % less money to acquire new leads than those that don’t use inbound marketing. This helps when you consider that other types of marketing and market study are increasingly more expensive.
Hire and build capacity locally
Similarly, another vital issue is hiring and building capacity in the local workforce: Bringing welfare to the community, not just a product, as good as it is. According to the above-mentioned ECLAC study, technology investments tend to create posts in high-skilled jobs and boost the region’s ability to export high-value manufactured goods.
A good example of local collaboration is Hyundai. This Korean mega-company has seen great success in Latin America, and especially in Brazil, where it has invested close to US$2 billion since starting its manufacturing and production facilities in 2004. One of the keys to Hyundai’s success has been using the abilities of the local workforce. The company has offered internships for local engineering students supporting the government program Science without Borders, sent them to study and do internships in South Korea, and then employed them in the company back in Brazil.
The same applies to the South Korean electronics giant LG, which has emphasized hiring local workforce in all areas: design, marketing, and production. Meanwhile, Korean workers serve as a link between the subsidiary and parent company in South Korea.
Realize what works at home doesn’t apply everywhere
Also, in marketing, it is important not to fall into absolutes. What works in Japan and South Korea may not work in Colombia. Similarly, what works in Colombia may not work in Costa Rica or Argentina. Yes, Latin America a region, and it shares some cultural similarities. Most people also speak Spanish, but the countries are not at all the same.
Would you market your product the same way in Thailand as in the US, and in the same way you do back home? Unless you’re Apple, you just can’t afford this type of arrogance. There are cultural, value, and language differences, and you must appeal to them.
Consider the role of language, adapt to it, and make emotional appeals
The fundamental rule of marketing is to sell benefits, not features. Sell how the product will make someone’s life better, not how strong or fast it is.
And grab the customer’s essential values, like their desire for status, their fears, and things they value, like family or independence. Then you need to speak their language: both the language of communication (English, Japanese, etc.) and the style of speaking (formal, casual, etc.).
In Latin America, you can be confident doing business in English without any problems, but the market is mostly in Spanish. You can communicate by email in English, and you can promote your benefits at the B2B level in English. But if you’re speaking to the end consumer, it’s usually Spanish.
If you’re thinking about your website or social media to show your products, that’s the language you have to work with. Many Latin American countries have educational programs that allow many people to have a decent level of English, but the best way to go is with the local language.
Also, you have to consider the particularities of the language in every country. There’s a funny example. In 1987, Braniff Airlines promoted their new airplane leather seats; their campaign was titled “Fly in leather”. The company translated it to Spanish literally: “Vuela en cuero”, which is fine on many Latin American countries, but in Mexico that equates to… Fly naked. Needless to say that the campaign wasn’t too successful.
The special case of Brazil
Brazil is a giant of its own. It is, by far, the largest market in Latin America, and has one particularity: they speak Portuguese, not Spanish. The differences between languages are not huge, but still, if you’re entering the Brazilian market you’ll need to be marketing to the end consumer in Portuguese.
In this case, for Japanese companies, there’s an advantage in Nikkei Brazilians of Japanese origin, many of whom are bilingual. So it shouldn’t be that hard to find Japanese–Portuguese translators or marketing experts in comparison to other Latin American countries.
The role of family and tradition in Latin America
In general, Latin Americans tend to value highly traditions and family. And we are passionate. Just watch a Sunday football (soccer) game or a rock concert in Latin America and you’ll see what I’m talking about.
Don’t sell features, sell an experience. Tell people why your product is exciting or how it will it connect them with their core values. One of the key reasons why Coca-Cola has been more successful than Pepsi in many Latin American countries is that it has been able to connect with people through their traditions. In countries like Venezuela, a Christmas dinner without Coca-Cola on the table doesn’t feel the same. Did you know that? Perhaps you have your own Coke traditions.
The typical kawaii commercial probably won’t work in Latin America or, in a best-case scenario, it will appeal only to a small segment of the market. The same applies to focus solely on features. Again, you need to appeal to values and emotions. Check this Hyundai Mexico commercial for example:
You see that it promotes family values (there’s a Hyundai SUV for every generation), it’s sophisticated and it has a dose of humor.
Now, check an Toyota Argentina commercial
It shows people in exciting situations and doing hard work with their pickup truck. The motto of the commercial is “A pickup that is much more than a pickup,” and the protagonists of the commercial say inspiring phrases such as “that I don’t sleep doesn’t mean that I don’t dream.” Again: appeal to emotions and values.
Conclusions: How you’ll succeed in marketing in Latin America
Latin America has huge potential as a market that has not been exploited. Most of the governments of the region are open to new investments. Its young, tech-savvy population is highly active in social media which helps smaller brands to be able to penetrate the market more easily. It also has an ever-growing urban population that sees Japanese and Korean products with good eyes.
A good marketing strategy that considers the particular characteristics of the population and how they perceive foreign products, and significant connections with the local population seems to be a way to go for all Japanese and Korean companies, be they multinationals or SMEs, that want to market in Latin America.