Chile Market Entry

Chile Market Entry

Subchapters:

  • Market entry
  • Forms and conditions of operation on the market
  • Marketing and Communications
  • Issues of intellectual property protection
  • Public procurement market
  • Payment terms, payment ethics and resolution of commercial disputes
  • Visas, fees, specific conditions of travel to the territory
  • Employment of citizens from the Czech Republic
  • Fairs and events

Market entry

On the Chilean market, which is geographically far enough away for Czech manufacturing companies and exporters, the use of local representatives is the most appropriate way to penetrate the local competitive environment.

If a Czech company is interested in finding a representative, it is best to start with a presentation at a selected specialized trade fair and contact local interested parties there, carry out their initial selection and check the selected candidates for cooperation. Specialized consulting companies can also be used, which select, hire and then control representatives for a fee. The PaulTrade office, which has been operating in the country since 2014, can also help to select suitable contacts.

According to cheeroutdoor.com, all major suppliers of investment units and goods or services of an investment nature have branches or representative offices in Chile. In general, it can be stated that the more voluminous the deliveries are, the more necessary is the long-term presence on the market in the form of own office or representation, also with regard to monitoring and timely involvement in upcoming projects and tenders.

Various chambers of commerce and guild organizations (CNC, CCS, Sofofa, CPC) have a very well-developed methodology and database of company contacts. It goes without saying that it is also possible to establish initial contacts with companies also electronically.

Chile is one of the most open and liberal economies for trade. Virtually all goods are allowed to be imported into the country, with the exception of used cars, used tires and pornography. Customs issues are handled by the National Customs Service (Servicio Nacional de Aduanas, SNA), which in recent years has significantly modernized its activities, simplified documentation, changed most forms and significantly accelerated the entire administrative-customs process of implementing cross-border business operations.

Regarding the customs regime itself, goods imported into Chile are subject to payment of VAT at the rate of 19% and customs duties (with the exception of supplies for the armed forces). The customs tariff is calculated based on the inclusion of goods in the customs tariff according to the harmonized system. Preferential rates are applied to imports from countries with which Chile has a specific trade regime, such as:

– States of the Latin American Integration Association

– States of the Pacific Alliance

– MERCOSUR

– Countries with a bilateral agreement on economic complementation, the so-called ACE

– Countries with a free trade agreement called TLC (i.e. Canada, Mexico, Central America, EU, USA, South Korea, China, Japan, Australia, Panama, Turkey, Malaysia and Vietnam).

Chile has negotiated agreements on tariff preferences with countries representing a total of 80% of the global economic potential. A valid export regime allows almost all goods to be exported to any country in the world. The exception is risk areas, which are covered by UNSC decisions on sanctions and export bans. Export is permitted subject to the granting of a special permit for weapons, certain agricultural products, works of art, pharmaceutical products, etc. A complete export ban is applied only in exceptional cases, namely for rare animal species, antiques, archaeological and anthropological objects, etc.

Due to its high dependence on foreign trade, Chile implements a consistent pro-export policy with the support of so-called non-traditional exports (mainly goods of the manufacturing industry with a higher added value). The tax system allows exporters to recover part or all of the value added tax in case of proof of its payment for the purchase of services, semi-finished products or components necessary for the processing of these products.

There are almost no import restrictions in Chile. Deposits are not required and quotas, import quotas or other limits are not applied. Possible restrictions on imports from a certain territory are only possible as a reciprocal measure by the Chilean side. Among the instruments protecting some Chilean industries, in accordance with WTO international rules, the anti-dumping procedure or countervailing duty investigation is used, which is led by the Antimonopoly Commission (National Commission of Chile), composed of representatives of the Ministry of Finance, the Central Bank, the Ministry of Foreign Affairs, the Ministry of Economy, the Ministry of Agriculture and customs services. When importing animals and some other goods, health and phytosanitary certificates are required. So-called price bands are applied to some agricultural products (grain, sugar, vegetable oils).

Forms and conditions of operation on the market

When setting up an office, the foreign investor must present the following legal documents (both in the language of the country of origin and in Spanish), certified by a Chilean notary and signed by the Chilean representative of the company:

– A certified copy of the founding agreement and articles of association of the foreign company

– Proof of the parent company’s financial situation

– Proof of authorization of the local representative by the foreign company

In general, the establishment of a company with equity participation, or the founding process depends on which legal form the investor chooses. The following variants are possible:

– Sociedad de Responsabilidad Limitada (Ltda. – similar to our s.r.o.). It can be unipersonal or have multiple companions. It is established by a social contract (minimum two, maximum fifty participants), the establishment takes about two weeks. In addition to the partnership agreement, it is mandatory to publish a report in the official gazette, an announcement of the establishment of the company, containing the wording of the text of the founding agreement, and the company must also be registered with the commercial register at the relevant court. No minimum amount of paid-up share capital is required. Ltd. not subject to state control.

– Sociedad Anónima (SA – joint-stock company), has similar legal regulations as in the Czech Republic. It is also necessary to notify and register the establishment in the commercial register, to establish a SA with foreign ownership, a minimum share capital of 10,000 USD is required (a third must be subscribed in advance), to request permission from the Central Bank of Chile to transfer foreign currency into the country. SA is subject to state control – the so-called Superintendencia de Valores y Seguros (SVS).

– Sociedad por Acciones (SpA – joint stock company) simplified form of SA It can be single-person or have several partners. It can be established via the website: www.tuempresaenundia.cl almost immediately, after establishment, the signature must be verified by a notary within 30 days. Registration in the commercial register and starting a business can be done online. No minimum share capital is required.

ZÚ Santiago recommends that potential Czechs interested in operating on the Chilean market entrust the provision of bureaucratic procedures to a qualified local lawyer or consulting firm. In addition, she can advise on choosing the appropriate legal form of the future company, arrange the necessary formalities and advise on employment law, tax and other matters.

Marketing and communication

The Chilean market is very demanding on promotion, especially for mass consumption products. The most important global advertising agencies have their representatives in the country, and advertising here is comparable to European countries in terms of both price and content. Advertising through TV spots, on the radio and in the press is widespread. Direct mailing, various consumer competitions (motivational and loyalty programs) and specialized exhibitions are also at a high level. Generally speaking, high costs of promotion should be expected for a newly introduced product. Czech companies therefore, for example, use the already established name of their representatives and the promotion of their products takes place within the overall promotional campaign of the distributor (e.g. Porsche Auto in the case of Škoda cars is the official distributor of the Volkswagen Group).

Electronic media and social networks are gaining more and more importance in advertising, especially if the target group is a younger population.

Regarding the content of the promotion, the strong influence of the Catholic Church in Chile and a certain degree of semi-official censorship (or self-censorship) must be taken into account, and sexual or disparaging motives such as the church must be avoided.

Issues of intellectual property protection

Chile has long had problems with respect for the protection of intellectual property. Although it is an associated member of the EU, this issue is not explicitly mentioned in the EU-Chile Association Agreement. Therefore, there is no legal basis for actions for its violation by the Chilean side, and the only option is actions in ordinary courts.

In 2007, Chile adopted a law regulating the protection of intellectual property. Although this law is progress compared to the situation in the past, it still does not meet the standards of EU countries or other developed countries. In addition to the EU, the US is also a major critic of the insufficient protection of intellectual rights in Chile.

In principle, two main areas of intellectual property infringement in Chile can be defined:

– Piracy of books, movies and software that is not sufficiently sanctioned by local authorities. Chile currently has a law that imposes a 15% tax on software. This decision is criticized by the EU, which calls for the complete elimination of this tax.

– Pharmaceutical industry patent infringement. This is where the greatest damage to the interests of EU companies occurs, when Chilean manufacturers copy a patented drug of a European manufacturer and get distribution permission from the Chilean Institute of Public Health (ISP). The ISP only states that the drug is harmless to health, but no longer deals with the fact that it may violate the law on the protection of intellectual property. At the same time, local companies often use the tests presented by the European company that is the author of the patent to register the drug, and they only slightly modify its composition and give it a different name. The Chilean side argues that the ISP has set up an online website where it publishes the names of all applicants for drug registration and their names. EU companies must therefore check for themselves whether any local company is infringing patent protection and, in such a case, file a lawsuit in court.

Public procurement market

The most important procurement intermediary for the state is the ChileCompra agency. This agency has 16 branches in 13 Chilean cities, but its main means of communication with foreign suppliers is the website chilecompra.cl.

Through the mentioned website, foreign companies can register free of charge as suppliers of the Chilean state. The ChileCompra agency then selects from registered foreign companies those whose presentation is of the highest quality and whose products are most consistent with the given requirements of state structures. However, a major problem for many foreign companies is the fact that the website is only in Spanish, so registration and all offers and presentations must be made in the same language by foreign companies. This clearly favors Spanish and Latin American companies. However, this fact should not be an obstacle for Czech companies, because investing in a high-quality translation of their presentation not only for ChileCompra into Spanish is a promising investment, especially when we take into account the huge volume of purchases that ChileCompra makes every year.

Another way is to register a foreign supplier in the register www.chileproveedores.cl. It is a fairly simple procedure, registration is charged.

Tenders issued for companies registered in the ChileCompra system are published on the portal www.mercadopublico.cl.

Tenders of private companies are published mostly on the websites of individual business entities. It is a common practice, especially for large companies, that they buy only from companies that are registered with them in special supplier registers. These entities are usually invited to participate in corporate tenders as a matter of priority.

For contracts tendered by the armed forces of Chile (land army, air force, navy or police), participants in the auction must be registered in advance in the so-called Register of suppliers. The relevant form can be requested from the “Departamento de Registro de Abastecimiento” at the individual headquarters of the armed forces or filled out via the Internet on the relevant website (www.ejercito.cl, www.fach.cl, www.armada.cl, www.carabineros. cl).

Payment terms, payment ethics and resolution of commercial disputes

The resolution of commercial disputes depends on the conditions set out in the purchase contract. Chilean legislation makes it possible to specify in the contract who will perform economic arbitration (out-of-court dispute resolution). It is usually a predetermined Chilean lawyer or the conciliation commission of the National Chamber of Commerce. In the case of a judicial solution, it is best to specify in the contract an international court, where any dispute would be resolved. For business with European countries, it is usually the International Court of Vienna. If not specified, the dispute will be resolved in the competent court in Chile according to Chilean law.

However, if the Czech product is competitive in price and the exporter devotes sufficient effort to the preparation of the business case, it is necessary to secure a good payment term. A very common payment term is an irrevocable letter of credit payable at sight through a Chilean commercial bank. Current legislation also allows advance payments. They are, for example, commonly used during the first contacts between Czech exporters, when a given amount is requested as an advance payment, and the rest is then payable by letter of credit or against the handing over of documents. Asian exporters have recently been successfully applying supplier credit for periods of up to 120 days, as Chilean importers are always in favor of favorable financing. Large mining companies buy most goods on consignment.

The payment morale in Chile is well above the LA average, however, in business relations, and especially in the case of larger contracts and investments, it is necessary to obtain professional legal advice from local offices.

Visas, fees, specific conditions for traveling to the territory

For a tourist trip to Chile of less than 90 days, citizens of the Czech Republic need a valid passport of the Czech Republic. A passport valid for at least 90 days from the expected date of entry into Chile is required. Border control officials require the passport to be in perfect condition. There is no visa requirement for trips of less than 90 days.

An international vaccination certificate is not required when traveling to Chile; special vaccination is not necessary due to local hygienic and climatic conditions. However, it is currently necessary to fill in the arrival form C-19 and check the current conditions of entry into the country at https://www.gob.cl/en/news/plan-fronteras-protegidas-protected-borders-plan-come-effect -monday-restrictions-enter-and-leave-chile/

When entering the territory of Chile, a foreigner must fill out a form from the Chilean Agricultural and Veterinary Service (SAG) and the State Customs Service, in which he specifies, among other things, whether he is importing into the country any plants, fresh fruits and vegetables, meat and meat products, milk and milk products, honey and other foods. The relevant form can be downloaded from the SAG website.

SAG has implemented strict protection measures to prevent the importation of pests, livestock diseases and plant diseases into the country. At border crossings, including international airports, when entering Chile, luggage is routinely inspected (X-ray and manual inspection, inspection by specially trained dogs). Food import restrictions are not recommended to be underestimated; in case of violation of the regulations, the foreigner is exposed to the risk of sanctions (high fines and denial of entry into the country).

Registration is not required for short-term stays.

We strongly recommend that you take out quality health insurance that explicitly covers this country before traveling to Chile. The insurance must also cover the area of ​​COVID. In the Czech Republic, this insurance can be obtained from several entities (e.g. ERV, Kooperativa). The Czech Republic does not have an agreement with Chile on the provision of free healthcare. If a Czech citizen would like to get health insurance locally, he can do so with one of the 17 private health insurance companies (so-called ISAPRES). Healthcare in Chile is very expensive in private facilities; the state healthcare system has a rather low quality and very long waiting times.

Customs regulations allow tourists to bring into the country duty-free personal items up to an FOB price of USD 1,500. Commercial goods may be imported duty-free up to an FOB value of USD 1,000. If the value of personal items exceeds FOB USD 1,500, it must be declared and a CIF duty of 6% must be paid.

If the value of commercial items exceeds FOB USD 1000, it must be declared and a CIF duty of 19% must be paid. While entering Chile, it is possible to make purchases in the Duty Free Shop up to a value of 500 USD.

When importing animals, a certificate of completion of all relevant vaccinations issued by a veterinarian and verified by the Chilean consulate is required.

There is no mandatory currency exchange, the foreign exchange market is liberalized, it is possible to exchange any convertible currency. The most used currency is US dollars; outside of Santiago it may be difficult to exchange, for example, euros.

If you intend to rent a car during your stay, it is recommended to have an international driver’s license available, although a passport and a Czech driver’s license are usually sufficient, both for renting a car and for any roadside inspections. Car rental companies always require a credit card. When concluding contracts in car rental companies, we recommend a thorough check of the contract and its conditions, insurance and the vehicle when taking it over exactly according to the protocol on its technical condition, including its possible external damage. In most cases, you cannot travel outside Chile with a rented vehicle. When planning a trip outside of Chile, it is necessary to notify such a trip in advance at the time of booking and to expect an additional fee for international compulsory insurance. Due to the condition of roads and paths in remote areas, we recommend paying extra for full insurance when renting a vehicle.

There are relatively high tolls on highways and tunnels. These expenses must be calculated in advance, as tolled sections usually do not have a detour route. Tolls cannot be paid with credit cards or foreign currency, so you must travel with enough cash.

Compared to other Latin American countries, Chile is a relatively safe country. The most common problems, especially in big cities like Santiago, Valparaíso, Viña del Mar and others, are tourists with organized groups of pickpockets. We do not recommend women to wear jewelry in the centers of these cities. In particular, we draw your attention to the high level of crime in the center of Valparaíso, where robberies and acts of violence against tourists have also been recorded, and in towns near the Bolivian and Peruvian borders (the city of Calama).

The tourist-attractive south is almost problem-free from a security point of view, however, violent acts with a political undertone (protests by activists of the indigenous Mapuche ethnic group) are recorded several times a year in Araucania (IX region). In this context, a state of emergency was declared in the region at the turn of 2021 and 2022 and the presence of the army was strengthened.

Pay special attention to personal belongings during bus journeys (especially at bus stations) and in restaurants and places frequented by foreigners. Theft of travel documents or cash must be reported to the police (Carabineros or PDI) and a report written. Writing the protocol is of course necessary if you intend to apply for travel insurance. In the event of a passport being stolen, a police report is also required, and with this, a relevant notification to the Czech authorities is then written at the embassy.

We recommend avoiding political demonstrations (typically September 11 on the anniversary of the military coup or May 1) including student events.

We recommend that you keep your passport and valuables in a safe place and only carry a copy of the personal information page of your passport.

Employment of citizens from the Czech Republic

A long-term visa for Chile for the purpose of employment can be applied for both at the Chilean embassy and in the territory of Chile. For more detailed information when applying at the embassy, ​​see the website of the Chilean MFA in English or Spanish.

An application submitted in Chile is processed by the Chilean Ministry of the Interior (Ministerio del Interior), or its Foreign Affairs and Migration Department (Departamento de Extranjería y Migración), information in English and Spanish. More information can be found at www.extranjeria.gob.cl

According to the information provided by the Chilean Embassy in Prague, the following documents must be submitted when applying for a long-term visa:

– Completed form

– Valid passport

– Criminal record

– 1 photo in digital form

– Proof of academic degree (if required)

– A curriculum vitae in which experience in the field in which the applicant will work in Chile is required

An employment contract valid for more than 1 year, which must contain:

– Minimum salary that must be higher than the minimum wage in Chile, i.e. 350,000 CLP

– The employer’s commitment to pay for the plane tickets back from Chile to the Czech Republic for the employee and his family

– Obligation to pay health and social insurance

According to information from the same source, the visa application is submitted online; the applicant must register at sac.minrel.gob.cl and submit all the necessary information in digital form. Documents issued by the Czech authorities must be certified by an apostille clause.

For long-term stays (more than 90 days, with a visa), registration is required, which according to the Chilean Aliens Act (Reglamento de Extranjería) applies to “all foreigners over the age of 18, with the exception of tourists and foreigners staying in Chile for official reasons”. Foreigners are required to be registered in a special police register and have a certificate of first visa registration issued by the Policía de Investigaciones de Chile within 30 days from the date of crossing the Chilean border. From 2021, the entire registration process takes place online at www.pdivirtual.cerofilas.gob.cl.

After that, it is necessary to report to the Service for the Registration and Identification of Persons (Servicio de Registro Civil e Identificación), which will issue a Chilean identification document to the foreigner within three weeks of the previously arranged electronic meeting. Failure to fulfill this obligation has serious consequences: foreigners are not allowed to leave the country, their passports are confiscated and then they are subjected to an official procedure lasting several days, at the end of which they are assessed a fine (in the order of hundreds to thousands of crowns). Important: To enter and stay in the territory of Chile, citizens of the Czech Republic must meet the conditions set by Chilean laws. The Chilean embassy in Prague is authorized to communicate the current conditions of entry and stay in the territory of Chile. The above information is intended for a basic overview only.

Fairs and events

EXPONOR 2022

Innovation fair for the mining industry and energy

13.-16. June 2022 – La Portada, Antofagasta

EXPO HOSPITAL 2022

Fair of technologies for healthcare

6-8 September 2022 – Espacio Riesco

EDIFICA 2022

Construction trade fair

3.-6. October 2022 – Espacio Riesco

EXPO ANDES 2022

Fair of mountain equipment

12-14. October 2022 – Centro Eventos Puente Verde

FRUITTRADE 2022

Fair of fruit and vegetable producers

12-12. October 2022 – Casa Piedra

SECURITY EXPO 2022

Safety fair

25-27 October 2022 – Espacio Riesco

EXPONAVAL 2022

Latin American Naval Exposition and Congress

November 29-2 December 2022 – Valparaíso

The most important fairs in Chile with an impact on the entire LA region are FIDAE and EXPOMIN, held every two years.

FIDAE: Aerospace engineering and technology, ground support of air traffic, defense and security industry. EXPOMIN: Mining and mining technology, technology and services, mining and related mineral processing, energy, work safety, environment.

EXPOMIN alternates with the EXPONOR trade fair with the same focus (EXPOMIN odd year, EXPONOR even year).

FIDAE was held from April 5 to 10, 2022 after the coronavirus hiatus. EXPOMIN was supposed to take place from 19-23. April 2021, but was canceled – the new date is from April 24 to 27, 2023 in Santiago.

Chile Market Entry