Costa Rica Market Entry

Costa Rica Market Entry

Basic conditions for the use of Czech goods on the market

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

According to cheeroutdoor.com, the Costa Rican market is open to competition and offers the opportunity for foreign companies to participate. Selling through local sales representatives can be an effective form of distribution. In general, however, the distribution network is not as strong as in large countries such as Mexico or Colombia. In many cases, end customers can therefore be approached directly, as no local distributors may exist in the given sector at all. In particular, large multinational corporations realize their sales within the framework directly.

It is advisable that entry into the Costa Rican market be supported by a marketing study, which, depending on the sector, can be prepared by the Trade and Economic Section of the Embassy in Bogotá or by PaulTrade Mexico. When approaching the clientele with an offer, it is important to show maximum flexibility to the requirements of the Costa Rican side. Some clients prefer ex-works, others the whole package. At this stage, the Czech company should be as open as possible, and if the Costa Rican partner wants a price including transport to the port, it is good to comply. It’s a good idea to quote the ex-works price + shipping, and not include it in the final price. Often, a foreign company will price the transport itself and see exactly whether their route or the Czech route suits them. It is good to formulate the offer in Spanish. It should be accompanied by promotional materials, samples, references (where the company exports, with whom it cooperates, etc.). An exporter entering the Costa Rican market should have thought through the provision of service or service requirements. He should also have calculated what funds he is willing to invest in sales support and how he will finance the business transaction and whether he will insure the customer’s insolvency risks.

Networks of capital-strong department stores, which have their branches in most important places, can also be used for distribution. However, these sales houses mainly sell high-quality goods. The market is largely saturated by American companies, with less competition from suppliers from the European Union.

Forms and conditions of operation on the market

The establishment of an office, representation, or joint venture is one of the most suitable forms for achieving the required efficiency in the realization of business interests. In the preparatory phase, however, it is necessary to expect a complicated and lengthy administrative procedure. Therefore, despite the significant financial burden, it is often advantageous to use the services of specialized local law firms.

Marketing and communication

Both for the acquisition and for maintaining the permanent presence of already established companies on the Costa Rican market, intensive promotion is a must. A prerequisite for effective advertising should be its originality. The traders’ strong ties to the nearby free trade zones in the US and Panama must be taken into account. For a company that wants to operate in the Costa Rican market, it is important to travel to the country in person. Considering the small number of these events, Costa Rican fairs and participation in them are more of a supplement. Due to the absence of trade fairs, Costa Rican companies go to Colombian, Mexican, American, and European trade fairs.

Issues of intellectual property protection

The terms of intellectual property protection can be found on the ProComer website: https://www.procomer.com

Public procurement market

The public procurement regime is based on tenders announced by the state. The system of providing information on state tenders is quite inflexible and inoperative. The announcement of tenders is communicated with a delay, the closing dates are in most cases only a few days from the date of announcement of tenders. In addition, announcements of tenders almost never contain complete and clear information about all conditions.

The conditions of tenders are generally characterized by considerable complexity, with the simultaneous requirement for the preliminary payment of relatively high participation and guarantee fees. Knowledge of Spanish, local customs and perfect fulfillment of all conditions of the tender is a must. Precisely for these reasons, it is advisable to look for a reliable representative who notifies the Czech business entity in advance of the government’s intention to announce a public tender and submits an offer that corresponds to the announced tender conditions, incl. dates and form of tender submission. Without a local representative, successful participation in these tenders is excluded.

Payment terms, payment ethics and resolution of commercial disputes

Most often, the deal is agreed on the basis of prepayment, by default 30-50% is paid at the time of ordering and the rest against the documents after sending the goods. We recommend using debt insurance. For large-scale orders, a documentary letter of credit, a documentary direct debit with deferred payment in various forms is also used. In some cases, especially when establishing new business contacts, it is appropriate to request an advance payment from Czech entities. Satisfactory payment discipline prevails in the country, trade debts tend to be the exception rather than the rule.

Possible resolution of disputes connected with business operations before local arbitration bodies must be resolved only through a local lawyer. However, the chance of success is small. Therefore, it is generally recommended to enshrine in the relevant commercial contract a clause on the jurisdiction of the arbitration court of the exporting country, for the resolution of any disputes arising from the given transaction.

Visas, fees, specific conditions for traveling to the territory

Citizens of the Czech Republic do not need a visa when traveling to Costa Rica, and the total length of stay may not exceed 90 days. The relevant agreement on visa-free travel prohibits performing any gainful activity during the stay. Detailed information regarding the types of visas and residence permits can be found on the Migración website: https://www.migracion.go.cr

Costa Rica is still a relatively safe country in the Central American region, although you still need to be careful. The health risk is primarily the risk of malaria and dengue, and vaccinations against hepatitis A/B and typhoid are recommended. Local medical care (especially in the capital) is at a good level, but the reimbursement amounts for foreigners are very high. It is therefore highly desirable to secure additional health insurance already in the Czech Republic.

The Ministry of Foreign Affairs of the Czech Republic recommends that all travelers inform themselves about the current security conditions on their website of the Ministry of Foreign Affairs and register in the DROZD database for travelers.

Employment of citizens from the Czech Republic

Employing foreigners, including citizens of the Czech Republic, in the country is not a problem, but compared to the employment of local forces, this mechanism is more complicated due to the protection of the national labor market. Both are governed by applicable labor law and migration regulations, which are continuously updated. Information regarding work permits and other migration measures can be found on the Migración website: https://www.migracion.go.cr

More information can also be obtained on the website of the Ministry of Labor and Social Affairs of Costa Rica: https://www.mtss.go.cr/

Fairs and events

Fairs in San José are of more local importance and when preparing to participate in these events it is advisable to study the website of the Ministry of Foreign Trade: https://www.comex.go.cr/

Alternatively, we recommend visiting the Eventos Pedregal website: http://www.eventospedregal.com/

 

Practical telephone numbers (emergency services, police, firemen, information lines, etc.)

Emergency (police, fire and ambulance): 911

Police: 117

Firefighters and ambulance: 118

Red Cross CR: 128

Traffic accidents: 800 800 8000

Traffic police: 2222 9330

Important web links and contacts

Presidency of the Republic

Inicio

Ministerio de Relaciones Exteriores y Culto
https://www.rree.go.cr/

Ministerio de Comercio Exterior
https://www.comex.go.cr/

Ministerio de Planificación y Política Económica
https://www.mideplan.go.cr/

Ministerio de Vivienda y Asentamientos Humanos
https://www.mivah.go.cr/InicioN.shtml

Ministerio de Seguridad Pública
https://www.seguridadpublica.go.cr/

Ministerio de Obras Públicas y Transportes
https://www.mopt.go.cr

Ministerio de Educación
https://www.mep.go.cr/

Ministerio de Hacienda
https://www.hacienda.go.cr/

Ministerio de Trabajo
https://www.mtss.go.cr/

Instituto Costarricense de Turismo
https://www.ict.go.cr

Dirección General de Aviación Civil
https://www.dgac.go.cr

Asamblea Legislativa
http://www.asamblea.go.cr

Costa Rica Market Entry