Ecuador Market Entry

Ecuador 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

The sales and distribution network is not processed systematically on the Czech side, there is a lack of significant new business connections and a sufficiently competitive price range. The shortcoming is the limited possibilities of financing Czech exports, little promotion of Czech exporters and often a lack of interest in the implementation of the initial investment on the part of Czech producers. For Czech exporters, it could be useful to contact the Chambers of Commerce in Quito, Guayaquil, or Cuenca, which can further distribute any offers. According to cheeroutdoor.com, Chambers of Commerce are also willing (for a fee) to search their register for links to the most important companies dealing with the given article and send these documents to the Czech company. Part of such a request must be the exact marking of the goods by customs code.

Any natural or legal person who is registered in the Register of Importers and is approved by the National Customs Service (Servicio Nacional de Aduanas de Ecuador, SENAE, www.aduana.gob.ec) can import. It is necessary to receive the so-called RUC (Registro Único de Contributyente), which is issued by the Financial Administration Office (Servicio de Rentas Internas, SRI), to be registered in an active status with a valid confirmation of income and to be in the SRI database as a taxpayer. Customs requirements vary by import regime. The import of the following products into Ecuador is prohibited: selected chemicals (fungicides, pesticides), used tires incl. vulcanized, snake skin, leather of various animals using the method of vegetable production, used clothes and shoes, ivory and its products and others (bones, turtle shells, horns and antlers, etc.).

In June 2012, the Ministry of Foreign Affairs, Trade and Integration issued several resolutions (No. 63, 66, 67) restricting the import of certain products that were determined to be domestically produced. In total, these restrictions affect 106 products, including some types of alcoholic beverages, cars, mobile phones and electronic devices. Restrictions in the form of quotas are of two types: quantitative and value, with this measure the government tries to reverse the tendency towards a passive trade balance. Quotas are determined with a one-year validity always at the beginning of the year. Alcoholic beverages have been subject to restrictions since 2012, in the form of an additional tax of 1% on each bottle and $0.25 levied on each percentage of alcohol the drink contains. However, given that Ecuador 1. 1.

Forms and conditions of operation on the market

In order to establish a branch in Ecuador, it is necessary to submit a decision of the statutory bodies of the parent company. The approval of the General Meeting of Shareholders (Junta General de Socios) is required for the establishment of a limited liability company. The record of the decision to establish a company, including the amount of capital and the appointment of a legal representative for Ecuador, must be notarized at the place of the meeting and superlegalized by the consulate of Ecuador (the articles of association of the company must expressly allow the establishment of branches abroad). The minimum amount of capital for a branch of a foreign legal entity is set at USD 2,000. The relevant Ecuadorian consulate must also issue a certificate of the legal existence of the company and the ability to act abroad on the basis of notarized and translated documents (including an extract from the commercial register). Said documentation shall be forwarded to the Ecuadorian legal representative for the establishment of the branch, who shall publish a notice in the official local newspaper. Subsequently, the notary in Ecuador will make a record of the act, which must be registered in the commercial register (Registro Mercantil). After the registration and appointment of the company administrator, it is necessary to apply to the tax office (SRI) for the issuance of the Taxpayer Registration (Registro Único de Contribuyentes). In order to establish a company in Ecuador, the registration of the capital deposit in the Ecuadorian banking system is required. After the registration and appointment of the company administrator, it is necessary to apply to the tax office (SRI) for the issuance of the Taxpayer Registration (Registro Único de Contribuyentes). In order to establish a company in Ecuador, the registration of the capital deposit in the Ecuadorian banking system is required. After the registration and appointment of the company administrator, it is necessary to apply to the tax office (SRI) for the issuance of the Taxpayer Registration (Registro Único de Contribuyentes). In order to establish a company in Ecuador, the registration of the capital deposit in the Ecuadorian banking system is required.

For joint-stock companies (sociedad anónima) of Ecuadorian individuals and legal entities, a minimum capital of 800 USD is established; for limited liability companies $400. In the case of a joint venture, the conditions of this business are governed by the same rules as when establishing branches of foreign companies. The World Bank Group prepared the Doing Business-Ecuador study on starting a business in Ecuador.

Marketing and communication

All forms of promotion, advertising, advertising or the use of mass media, especially television and radio broadcasting, are common in the country. There are also no peculiarities in terms of applied marketing and all forms of marketing are used depending on the traded item. Czech products are still exotic on the local market (not only because many Ecuadorians have no idea where the Czech Republic is) and they do not trust an unknown product. Until the seller convinces the customer of the quality, service and (good) price, he will not buy the product. Please note that advertising and promotional materials must be in the Spanish version. English or other language mutation is not suitable.

Issues of intellectual property protection

The issue of intellectual property falls under the competence of the Ecuadorian Institute of Intellectual Property (Instututo Ecuatoriano de la Propiedad Intelectual) and is governed by the Law on Intellectual Property. As part of the protection of industrial property, brands, logos, company slogans and inventions are protected. Patents are valid for 20 years.

Piracy in the field of music, cinematography and software is widespread.

Public procurement market

The public procurement regime is governed by the Law on the National System of Public Procurement (Ley Orgánica del Sistema Nacional de Contratación Pública). The law stipulates the obligation to register national and international suppliers in the unified register of suppliers (RUP). SERCOP is the competent authority and regulator that oversees public procurement and draws up tenders (it also manages the public procurement portal: http://portal.compraspublicas.gob.ec/sercop/herramientas-de-busqueda). Basic information about the procedures can be found in the Programas/Servicios tab. Annual plans for public purchases (Plan Anual de Contratación/PAC) are drawn up in advance and for each state institution separately. The law allows equal conditions for local and foreign entities. In the case of public contracts for consulting services, it is possible to invite foreign consulting companies only after a domestic company does not show interest in the contract within the 30-day period (after the first call) or does not meet the conditions (domestic entities are preferred). Contracts with government financing are approved exclusively by the President of the Republic. A five-member committee (Comité de Contrataciones) is established for each ministry or provincial government, which establishes the conditions of competition and appoints a technical commission to evaluate the tenders submitted. A bank guarantee is usually required, the amount of which depends on the volume of the contract. It is also refundable to participants who did not qualify. Other special conditions that would distinguish Ecuador from other Latin American countries are not established. Conditions are always prepared and announced for each order separately according to local and state standards, in accordance with the state plan for the modernization of the country. Tenders are not required for private sector purchases.

Payment terms, payment ethics and resolution of commercial disputes

Commercial disputes resulting from the non-fulfillment and non-compliance of the terms of the contractual arrangement between the partners (Contratos de Compra-Venta) are usually resolved by arbitration before the Chambers of Commerce in Quito or Guayaquil or in a civil court. The rules of the Commercial Code (Código de Comercio) are applied to resolve these disputes. There is an obligation to use the services of local legal representatives for the resolution of commercial disputes.

In addition to the normal risks arising from commercial activity (e.g. non-payment of delivery, product complaints, etc.), the risk of possible social unrest, strikes and increased crime rates in general must be taken into account. For these reasons, a higher form of security (bank guarantee, guarantee, etc.) is recommended in order to ensure the return of the receivable from the supply of goods and services. Furthermore, it is recommended to require payment by irrevocable confirmed letter of credit or payment in advance when dealing with new partners.

A common payment condition in relation to foreign suppliers is an irrevocable confirmed letter of credit. In the case of providing credit terms, it is recommended to secure the claim as much as possible, preferably with bank instruments such as a bank guarantee, bank guarantee, etc. As far as payment morals are concerned, prudence and thoroughness are recommended when ensuring the repayment of the claim.

Visas, fees, specific conditions for traveling to the territory

A visa is not required for Czech citizens traveling to Ecuador, for Ecuadorian citizens a visa is issued by the embassy in Lima. When departing the country, an airport tax of USD 59 must be paid at Quito (Mariscal Sucre) airport, USD 29.78 at Guayaquil airport. Special fees are required when flying domestically to the Galapagos Islands. A health certificate of vaccination against Covid-19 is currently required upon arrival in the country.

The trip from Quito airport to the center costs about 20 USD by taxi, about 8 USD by bus, it is recommended to use a taxi or the personal car of a local representative. The journey takes 45-50 minutes.

Recently, the security situation in the country has worsened, especially crime in the larger cities and also in the border areas with Colombia. The main safety principles are not to travel at night, carry only minimal cash after dark, leave your luggage in a safe place and prefer simple and non-flamboyant clothing. Taxi vehicles have taximeters, however, it is not recommended to stop them on the street, but to use a hotel taxi. In Quito, the areas with higher crime rates are the historic city center, the “La Mariscal” zone, the Carolina and Egido parks, and the Panecillo viewpoint (especially in the early evening and at night). In general, Guayaquil has a higher crime rate than Quito, as it is a port city. From this point of view, the following areas are the worst: the waterfront, 9th of October Street, and Santa Ana Viewpoint. Recently, the number of so-called

Some tourist areas of Ecuador are located at a high altitude, which can cause headaches, dizziness, difficulty breathing and also vomiting. Upon arrival, it is advisable to allow for a period of acclimatization. In higher altitude areas, it is recommended to walk more slowly, to rest more often, not to eat heavy and fatty foods and to drink a lot of fluids.

Employment of citizens from the Czech Republic

Employment of citizens of the Czech Republic is subject to internal regulations, i.e. a work permit and, in particular, a residence permit for the purpose of employment (work permit – carné ocupacional) must be obtained. Completing these formalities is not easy, it requires a lot of patience and, above all, a certain amount of time. More information about the requirements is available on the website of the Ministry of Labor www.trabajo.gob.ec. The relevant application is generated online in the system of the Ministry of Labour, signed by the applicant and the employer (or his authorized representative). In addition, a color copy of a valid passport (data pages and pages with an entry stamp), a simple copy of the employment contract registered at the Ministry of Labor and a receipt for this registration is required; proof of compliance with the 20/80 rule (i.e. max. 20% of employees foreigners and min. 80% Ecuadorians) according to the applicable legislation.

Czech citizens with permanent residence in Ecuador use local health care with full health and social insurance either from their own funds or with a mandatory employer contribution. There are no other special conditions set for foreigners. Medical treatment is paid immediately in cash, more demanding medical procedures must be paid for in advance. It is recommended to get travel insurance for trips to Ecuador. If it is necessary to seek medical care, the patient pays for this care on the spot (in cash or by credit card) and subsequently reports the insurance event to his insurance company with the medical report and receipts.

Fairs and events

SEGURIEXPO ECUADOR 2022 – international trade fair and conference of technology and innovation in security, prevention and control, 9-10/06/2022, Guayaquil, https://exposeguridadecuador.com/

EXPOMINAS QUITO – International Fair of Mining Machinery and Mining Equipment, 13-15-07-2022, Quito, https://www.feriasinfo.es/Expominas-M13317/Quito.html

ECUADOR INDUSTRIAL Y PRODUCTIVO EXPO-CONFERENCE – industrial production fair and conference and production support and commercialization of the country’s manufacturing sector, 12-14/10/2022, Quito, https://www.hjbecdachferias.com/ecuadorindustrial/

ECUADOR OIL AND POWER 2022 – international fair for mining machinery and mining technology + oil, gas and renewable energy sources, 9-11/11/2022, Quito, https://www.hjbecdachferias.com/oilpower/

Ecuadorian import laws do not allow the import of promotional printed materials, i.e. catalogs, brochures, etc., into Ecuador, so it is necessary to have this type of material printed in Ecuador at a local printer, or to bring it in the personal luggage of the exhibitors (this material cannot be sent as part of the cargo with product samples or as separate shipments).

Ecuador Market Entry