Nicaragua Market Entry

Nicaragua 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

The Nicaraguan market is relatively open to competition and provides opportunities for foreign companies to participate, but bribery and nepotism are a problem. The most effective form of distribution used in the country by most foreign companies is sales through local sales representatives, although especially large multinational corporations realize their sales within the framework of globalization and transnational markets directly. The state agency  PRONicaragua is in charge of supporting trade and investment. Check smber for agriculture and fishing facts of Nicaragua.

In terms of selling through a local representative, there are basically two options, selling through a dealer specialized in a certain commodity, or using the not yet very developed network of specialized stores. Market entry should be supported by a marketing study, which can be prepared by a reputable company familiar with local conditions. The optimal approach to the clientele should be realized by presenting an offer calculated not ex works, but including transport and insurance, which gives the customer a certain idea of ​​the total price. The offer must be formulated in Spanish and equipped with promotional materials, samples (if the nature of the goods allows) and references (where the company exports, with whom it cooperates, etc.).

An exporter entering the local market should, if the commodity requires it, 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. Institutions whose mission is to support Czech exports can significantly help here: EGAP and Česká exportní banka. The most effective form of distribution used by the vast majority of foreign companies is sales through local sales representatives, or participation in exhibitions, fairs and demonstration events.
Basically, there are two options: (1) selling through a dealer specialized in a certain commodity or (2) using a network of capital-strong department stores that have their branches in most important places. However, these sales houses mainly sell high-quality goods. A prerequisite for business success is frequent and personal contact with partners, including invitations to lunch, giving gifts, etc. Correspondence acquisition has practically zero effectiveness due to the above. The primary contact is personal contact with the customer and representative, regularly renewed and maintained. Local companies are not opposed to participating in international negotiations, incl. visits to the Czech Republic.
Growth in turnover would be ensured by a greater connection between business entities of the Czech Republic and the capital of EU member states, especially in the field of energy, means of transport and large construction projects. Securing financing is a necessary prerequisite for the success of Czech exports, especially large-value contracts and investment contracts. In the case of large investment projects, it is necessary to consider the BOT (build – operate – trade) principle as the most suitable model for local markets. This applies to all of Latin America, which does not abound in financial resources.

Import conditions
The export and import regime has been relaxed in recent years. The release is also related to the ongoing conclusion of free trade agreements not only with the countries of Central America, but also with the EU.

Export control
Foreign trade and the internal market is essentially liberalized. Non-tariff trade barriers are officially virtually non-existent, but phytosanitary certificates, certificates of origin or quality certificates are required for certain products, which means contact with inflexible bureaucracy. An import permit issued by the relevant ministry is necessary for the import of certain products (wood, weapons, waste, narcotics).

Import documents
As regards the documents required during importation, original invoices, bills of lading, the already mentioned certificates of origin, packing slips are required. Invoices and transport documents should be certified by the Nicaraguan embassy in the place of origin of the goods. However, everything depends on the terms of the contract or the terms of tenders for the import of goods and services.

Customs system
Tariffs and import controls apply not only to the member states of the Central American Common Market (MCCA), but uniform Central American tariff rates based on the Central American Customs System (SAC) and newly signed agreements are applied. When clearing goods, it is necessary to use the services of a customs agent.

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.

Nicaragua recognizes five forms of association of companies in its commercial code. They represent a legal personality distinct from their partners.

  1. Joint Stock Company (Sociedad Anónima)
  2. Simple Limited Partnership (Sociedad en Comandita Simple)
  3. Sociedad en Comandita por Acciones (Sociedad en Comandita por Acciones)
  4. Limited Liability Company (Sociedad Colectiva de Responsabilidad Limitada)
  5. Business Partnerships (Asociaciones Comerciales): (a) Temporary Partnerships (b) Joint Venture Partnerships

Marketing and communication

Both for the acquisition and for maintaining the permanent presence of already established companies on the Nicaraguan market, intensive promotion is a must. In this country, it is useful to participate in local fairs and exhibitions, which can be used in cooperation with local advertising agencies, taking into account their knowledge of the local (sometimes Indian) mentality and the ability to choose the most suitable advertising strategy for the given case. Advertising on the Internet and social networks is increasingly being used, or communication channels. (Facebook, Instagram, Whatsapp). A prerequisite for effective advertising should be its originality. Traders’ strong ties to the free trade zones in the US and Panama must be taken into account. In terms of effective media advertising campaigns, there are still considerable reserves in the area of ​​promoting Czech goods and services to the Nicaraguan market, which reduces the possible growth of trade exchange.

Issues of intellectual property protection

Nicaragua has acceded to the Paris Convention, which protects industrial property, as well as the World Intellectual Property Organization (WIPO) Convention. Intellectual property protection in Nicaragua is governed by Law No. 312 on Copyright and Related Rights and Law No. 380 on Trademarks and Other Distinctive Signs. The competent authority in matters of intellectual property is the Register of Intellectual Property (El Registro de la Propiedad Intellectual).
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 through the  Nicaragua Compra website. However, the system of providing information on state tenders is 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 or guarantee fees. Not only knowledge of the local mentality, but especially the official language, i.e. Spanish, and perfect fulfillment of all tender conditions are a must. It is for these reasons that it is advisable to look for a reliable representative, which 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 representative, successful participation in these tenders is completely excluded.

Payment terms, payment ethics and resolution of commercial disputes

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 minimal. 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.
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
There is a bilateral agreement on the abolition of the visa requirement for citizens of the Czech Republic and Nicaragua, while the total length of stay may not exceed 90 days (see Acts 12/2000Coll. and 89/2004Coll.). The agreement prohibits citizens of both countries from performing any gainful activity during their stay.

Vaccination
Travelers arriving from a yellow fever endemic country or transit country should be prepared to present an international yellow fever vaccination certificate. Recommended vaccinations include hepatitis (A/B), rabies, typhoid, diphtheria, tetanus and measles.

Other caveats
Nicaragua is one of the countries with a relatively low crime rate (although it has been increasing recently), but it is recommended to follow some basic principles:

  • keep valuables in the hotel safe and travel with only a minimum of cash
  • always park in a guarded parking lot, never leave any valuables in the car
  • travel only on main roads and in daylight
  • travel with travel insurance with sufficient coverage be careful of luggage and bags with documents in city centers, at hotel receptions, at bus stops and also directly on buses

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

Movement within the country
Hotel: The offer in larger cities and tourist locations is wide. It is highly recommended to stay in a category of at least 3*, not only with regard to hygiene, but also safety.
Car: Renting is a good choice in terms of comfort, speed and, above all, safety, as the distances within the country are short.
Taxi:In Nkaragu, taxis do not use a taximeter, so you need to negotiate the price with the taxi driver in advance. Make sure that the taxi driver knows where to go, as they often do not have GPS navigation (it is ideal to choose a waypoint such as hotels, offices, squares, etc.).
Buses: It is not recommended to use public transport, especially if you are traveling with valuables. Otherwise, buses are the most common form of public transportation for ordinary Nicaraguans. Bus lines also operate throughout Nicaragua. Tickets even outside the city are cheap, but you have to take into account that the buses are often overcrowded.

Employment of citizens from the Czech Republic

Conditions for employment of citizens from the Czech Republic
Employment of foreigners in the country is possible, 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. For this reason, we recommend consulting a local legal advisor or the EU delegation in Nicaragua on a case-by-case basis.
The minimum wage in Nicaragua is set at 6,518.24 Nicaraguan córdobas (US$186.6)

Conditions for using local health care by Czech and EU citizens
The Czech Republic does not have any bilateral agreement with Nicaragua on the mutual provision of health services. Local medical and private 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.

Fairs and events

Expo APEN – exhibition organized by the Association of Manufacturers and Exporters of Nicaragua (September 2022, Managua), https://apen.org.ni/eventos-apen/expo-apen-2022/

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

Police: 118
Firefighters: 115
NI Red Cross: 128
Airport: 2233 1539
Information: 113

In case of emergency, you can call 911 from a mobile phone.

Important web links and contacts

Presidencia de la Republica:  www.presidencia.gob.ni
Super Intendencia de Bancos y Otras Instituciones Financieras (SIBOIF):  www.superintendencia.gob.ni
Telecomunicaciones y Correos (TELCOR):  www.telcor.gob.ni
Vicepresidencia de la República:  www.vicepresidencia.gob.ni

Export support:
Asociación de Productores y Exportadores de Nicaragua (APEN):  www.apen.org.ni
Fundación para el Desarrollo Tecnológico Agropecuario y Forestal de Nicaragua (FUNICA): www.funica.org.ni
Instituto Nicaraguan de Desarrollo (INDE):  www.inde.org.ni
Banco Centroamericano de Integración Económica (BCIE):  www.bcie.org
Comisión Económica para América Latina y el Caribe (CEPAL):  www.eclac.cl
Secretaría de Integración Económica Centroamericana (SIECA):  www.sieca.org.gt
Sistema de Integración Centroamericana (SICA):  www.sica.int
Sistema Económico Latinoamericano ( SELA):  www.sela.org
HOPEN:  www.hotelesdenicaragua.net

Banks:
Banco de Crédito Centroamericano,
BANCENTRO:  www.bancentro.net Banco de America Central,
BAC:  www.bac.net/nicaragua
Banco de Finanzas, BDF  www. bdfnet.com
Banco de la Producción, BANPRO:  http://corporativo.banpro.com.ni
Banco PROCREDIT:  www.procredit.com.ni
Banco Produzcamos  www.bfp.com.ni
Citibank:  www.bancouno.com.ni
Banco LaFise Bancentro, LAFISE, BANCENTRO:  https://www.lafise.com/CuentasAhorroNicaragua/Index.html
Financiera Arrendadora Centroamericana, FINARCA:  www.finarca.com

Print:
El Nuevo Diario:  www.elnuevodiario.com.ni
ESTA SEMANA:  www.estasemana.tv
La Prensa:  www.laprensa.com.ni

Nicaragua Market Entry