Guatemala Market Entry

Guatemala 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

Distribution and sales channels, use of local representatives, other factors affecting sales
Entry into the Guatemalan market should be supported, as in the case of other remote territories, by a detailed study. Therefore, the preparation for entering the local market should be thorough and well thought out, it is necessary to count on a longer-term operation.

According to cheeroutdoor.com, the most effective form of distribution used in the country by most foreign companies is sales through local sales representatives specialized in a certain commodity. As in many other countries, it is not possible to expect to establish business contacts or implement business cases simply by sending an offer and company presentation to selected companies from the field. If you are interested in the Guatemalan market, you must expect a certain initial investment, long-term efforts and the need to be physically present on the market often. Among the most suitable ways to establish the first contacts with local partners are international fairs or through chambers of commerce or with the help of PaulTrade.

Import conditions and documents, customs system, export control, protection of the domestic market
Guatemala’s export and import regime was significantly relaxed after joining the WTO in 1995. The release is also related to the conclusion of free trade agreements not only with the states of Central America, but also with the USA, Japan and the EU. Tariffs and import controls apply not only to member states of the Central American Common Market (SICA), but unified Central American tariff rates based on the Central American Customs System (SAC) and newly signed agreements are applied. A general overview of Guatemala’s trade agreements with other countries can be found on the website of the Organization of American States.

When clearing goods, it is necessary to use the services of a customs agent. Guatemala’s foreign trade and internal market is essentially liberalized. Non-tariff barriers to trade are virtually non-existent. When importing goods, original invoices, transport documents (bill of lading, or airway bill), certificates of origin of the goods and, where appropriate, documents on exemption from customs duties or a special permit for the import of specific goods are required. An import permit issued by the relevant ministry is necessary for the import of certain products (wood, weapons, waste, narcotics). However, everything depends on the terms of the contract or the terms of tenders for the import of goods and services. After approval of the import declaration, this becomes a document proving the legal entry of goods into the country and the amount of tax liability. For more information, you can visit the website of the Guatemalan Tax Office,Superintendencia de Administración Tributaria, SAT ).

For the purpose of foreign trade control and statistics, a unified export registration system, the so-called Ventanilla Única para las Exportaciones, is applied in the country. Payment transactions take place mainly in USD. There is free exchangeability in the country. Internal payments are made in the local currency, which is the Quetzal.

Forms and conditions of operation on the market

A frequently used, and almost inevitable, market entry model is in the first stage in cooperation with an agent/distributor or partner company (e.g. on the basis of an agency agreement or joint-venture), and in the second stage, if the cooperation develops, the establishment of a Guatemalan legal entities. The main forms of business are regulated by the Commercial Code ( Código de Comercio de Guatemala ) and the Labor Code ( Código de Trabajo ). Foreigners can do business in Guatemala under the same conditions as Guatemalans, as stated in Article 8 of the Commercial Code. For any type of business, it is necessary to obtain the appropriate registration at the Commercial Register ( Registro Mercantil ).

Guatemalan law allows for 5 traditional forms of business: sole proprietorship, limited liability company (Sociedad de Responsabilidad Limitada), joint stock company (Sociedad Anónima), commodity company (Sociedad Comandita) and cooperative company (Sociedad Colectiva).

Local law firms provide assistance with setting up a company. If necessary, the Honorary Consulate of the Czech Republic in Guatemala can recommend a suitable law firm.

Marketing and communication

Promotional materials in Spanish, preferably printed and delivered in person, are an essential part of communication. Cooperation with Guatemalan chambers of commerce or advertising agencies is also appropriate, taking into account their knowledge of the local mentality and the ability to choose the most appropriate strategy for a given type of goods or services. Advertising on the Internet and social networks is increasingly being used, or communication channels. (Facebook, Instagram, Whatsapp). In the initial phase of penetrating the Guatemalan market, Czech companies can be recommended to participate in mass events such as fairs, or promotional events organized by the embassy, ​​PaulTrade or one of the chambers of commerce.

Issues of intellectual property protection

Guatemala has acceded to the Paris Convention, which protects industrial property, as well as the World Intellectual Property Organization convention. The Industrial Property Act entered into force in November 2002. The competent authority in these matters is the Register of Industrial Property. The Patent Act protects patent owners through registration in the Intellectual Property Register. Protection is extended for 10 or 15 years after payment of annual fees, which must be paid before the legal protection of the patent expires. The ZÚ has not yet encountered a specific violation of the rights arising from the protection of intellectual property of Czech manufacturers in this territory.

Public procurement market

The public procurement regime is based on tenders announced by the state. Up-to-date information on the listed tenders can be found on the website  www.guatecompras.gt. Most government public contracts require the participation of a Guatemalan company or the direct conclusion of a contract exclusively with it. It should be added that the conditions of the tendering procedures are generally characterized by considerable complexity, non-transparency and signs of corruption, with the current requirement for the preliminary payment of relatively high participation and/or guarantee fees. It is necessary not only to know the local mentality and the specific people deciding on the order, but also the official language of Spanish and perfect fulfillment of all the conditions of the tender. It is precisely for these reasons that it is advisable to find 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 clearly and without language problems corresponds to the last point to the announced tender conditions, incl. dates and form of tender submission.

Payment terms, payment ethics and resolution of commercial disputes

Possible resolution of disputes connected with business operations before Guatemalan arbitration authorities must be resolved only and only through a local lawyer. 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. Guatemala’s judicial system in general is characterized by inflexibility and “holding on” to local entities, and disputes can drag on for years – so it is recommended to consider the route of out-of-court settlement.

The competition of foreign companies due to the globalization process as well as the competition of local production on the Guatemalan market is getting stronger every year. Bidding activities are therefore mainly carried out in the form of demanding acquisition trips of representatives and representatives of local and foreign companies around Guatemala. Attention must be paid in particular to the realistic price requirements for the offered articles in order to maintain their marketability in relation to comparable competitive products, e.g. from Asia or Mexico.

Usual payment terms are documentary letter of credit, documentary collection with deferred payment in various forms. 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.

Visas, fees, specific conditions for traveling to the territory

Visas, customs regulations:
On 6 November 2004, a bilateral agreement on the abolition of the visa requirement entered into force, but the total length of stay may not exceed 90 days. The agreement also prohibits citizens of both countries from performing any gainful activity during their tourist stay (this circumstance is considered an abuse of the agreement and is accordingly legally affected).

Vaccination:
According to the instructions of the hygiene station in the Czech Republic (for visiting certain areas, mainly outside tourist and recreational areas), vaccination against hepatitis (A/B) or against yellow fever is recommended. Recommended vaccinations include typhoid, rabies, distemper, tetanus, measles and malaria. It is recommended to pack antimalarial medicine for the trip.

Climate:
Large fluctuations in temperature between day and night must be expected; the climate is highly dependent on altitude. The rainy season usually starts at the end of May and ends at the end of October/beginning of November, depending on the geographical location.

Security and security recommendations:
Guatemala is among the countries with a relatively high crime rate, often associated with the drug trade. The greatest caution must be exercised at the border with Belize, where skirmishes often occur in connection with the long-running border dispute. It is not recommended to stay outside larger cities and tourist locations.

It is recommended to follow some basic safety principles:

  • keep your passport and other valuable documents, such as your ticket, in the hotel safe and travel with only a minimum amount of cash (but beware, using a credit card in smaller shops or markets is often not possible)
  • do not wear jewelry, be careful with valuables (mobile phone, camera, etc.)
  • always park in a guarded parking lot, never leave any valuables visible in the car
  • do not hire a hitchhiker, order a taxi service through the receptionist, rent cars only from well-known rental companies
  • travel only on main roads and in daylight
  • travel with health insurance, check the extent of its coverage before the trip
  • be careful of luggage and bags with documents in the city center, at hotel receptions
  • Use ATMs only inside secure bank lobbies or hotels. Frequent fraud involving attempts to obtain a credit card and PIN is registered.
  • Do not display signs of wealth such as wearing expensive jewelry or watches.
  • Do not use your mobile phone on the street.

It is recommended to drink only bottled water. Protect yourself from mosquitoes, especially near the coast. Recently, epidemics of Zika, malaria, chikungunya and dengue diseases, which are caused by the Aedes aegypti mosquito, have appeared in Central American countries.

Opening hours:
There are no official opening hours in Guatemala, but usually shops are open from 9.00 – 11.00 a.m. to 7.00 – 8.00 p.m. There is a break from 2.00 p.m. to 4.00 p.m. lunch, but shops mostly operate without a break.

Working hours:
The length of working hours varies depending on the region and type of organization, usually from 8:00-9:00 a.m. to 6:00-7:00 p.m. with a two-hour lunch break between 12:00 and 2:00 p.m.:00 h. The offices are open to the public often from 8:00 a.m. to 5:00 p.m.

Public transport and movement within the country:
Hotel: The offer in larger cities and tourist locations is wide and, except for important Guatemalan holidays, also available with last-minute reservations. It is strongly recommended to stay in a category of at least 3*, not only with regard to hygiene, but also safety (higher category hotels have a fenced area, security and have all the necessary services within the building).

Car: Renting is a good choice in terms of comfort, speed and, above all, safety, as the distances within the country are short. It is not recommended to drive at night due to assaults and drunk drivers. Guatemalan drivers don’t pay much attention to traffic signs and constantly blow their horns.

Taxi: Taxis are easy to find, however, the rates are not very cheap, especially for foreigners. In Guatemala, taxis do not use a taximeter, so you have to agree on the price with the taxi driver in advance (ask the hotel in advance how much the route might cost). Make sure the taxi driver knows where to go, as it is common for them to not have GPS navigation and not know the streets of the city apart from major landmarks. It is ideal to choose destinations such as hotels, offices, squares, hospitals, etc. instead of a specific address. You can hail a taxi on the street, but it is much better and safer to call a taxi service and order a ride. For example, in Guatemala City, use Taxi Amarillo/Taxi Seguro or Green Cab, or taxis approved by INGUAT. Uber is also generally a safe option for travel in Guatemala City and Antigua, however there are not many drivers available.

Buses: It is not recommended to use public transport, especially if you are carrying large sums of money, jewellery, business goods and documents. Otherwise, buses are the most common form of public transportation for ordinary Guatemalans. Most of them are old American school buses that are cheap and readily available. However, frequent criminal activity (especially against white foreigners) and fatal accidents are recorded. Bus lines also operate throughout Guatemala. Tickets even outside the city are cheap, but you have to take into account that the buses are often overcrowded. Companies with more luxurious buses operate in larger cities.

Insurance and health care
A good standard of medical care is available in major cities and tourist areas, but is very limited elsewhere. Guatemalan public hospitals often experience a serious lack of even the most basic medicines and equipment, so care in private hospitals is recommended (after agreement with the travel insurance company, which will often recommend suitable facilities). In general, private medical care is sufficient for most common illnesses and injuries, and many of the doctors who work in private hospitals are trained and certified in the US. Many hospitals in Guatemala require payment before treating patients, even if the treatment will subsequently be covered by personal insurance.

Employment of citizens from the Czech Republic

Conditions for employment of citizens from the Czech Republic
Employment of foreigners 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. Current information regarding work permits can be consulted on the website of the Migration Office (Migración Guatemala, CA). For this reason, we recommend consulting with local legal counsel on a case-by-case basis.

Conditions for the use of local health care by Czech and EU citizens
The Czech Republic has no bilateral agreement with Guatemala on the mutual provision of health services. Local medical care (especially in the capital) is at a good level, but the prices are very high for the average tourist from the Czech Republic. It is therefore a good idea to get travel health insurance before traveling to Guatemala. Social insurance is insufficient, especially with regard to the needs of pensioners.

Fairs and events

APPAREL EXPO (Textile Industry Fair), Guatemala City – 24-26. May 2022

Agritrade 2022 (Agricultural Fair), Antigua Guatemala – 18.-20. May 2022

Feria Alimentaria (Food Fair), Guatemala City – 5-7 September 2022

Ferretexpo (Hardware and Building Materials Fair), Guatemala City – 10.-13. November 2022

Guatemala Market Entry