Paraguay Market Entry
- 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
Most foreign companies operate in Paraguay through a local representative or dealer. With regard to the small market, we recommend starting negotiations with an existing merchant, only then possibly considering someone who would start developing the market from scratch (for example, if you do not agree with someone already established). The market in Paraguay is small and therefore it can be assumed that people in one market know each other well, so it is advisable to try to learn as much as possible about your partner in advance to avoid unpleasant surprises. Check smber for agriculture and fishing facts of Paraguay.
The rules for entering the market are not significantly different from those in other markets. Tradition and faith are important in Paraguay, so you need to think about it when planning marketing activities. Taking over a brand that has been operating for a long time can be a suitable market entry strategy. Respecting and commemorating religious holidays in company communication should be another rule that we recommend following.
The Paraguayan import regime is quite liberal. Although tariff rates are tied to the Mercosur bloc’s common tariff schedule, Paraguay applies an exemption to a large number of goods and does not apply any duty on them. This applies, for example, to raw materials and inputs to the so-called maquilas, if they are processed there and leave the territory of the country within six months. Certain restrictions or additional administrative tasks must be carried out by importers of arms and ammunition, textiles and clothing, footwear, sugar and meat. These items, along with cement and agricultural chemicals, are also subject to so-called non-automatic import licenses, and the importer must always have this license granted before each import.
Customs requirements are regulated by Law No. 2422 from 2004, relations between foreign and Paraguayan business entities are regulated by Law No. 194 from 1993.
Forms and conditions of operation on the market
All standard forms of business companies operate in Paraguay, such as in the Czech Republic – as, s.r.o., corporation, joint venture or individual business. When establishing an as or s.r.o., the share capital requirements are minimal, for a.s. it is 1 USD (for export companies 10,000 USD), for s.r.o. there is no such requirement at all. If the founders decide to invest capital in the emerging s.r.o., there is an obligation to temporarily deposit half of the invested capital into an account with a state bank. After the second half is deposited, the deposited amount is put back into the business. A limited liability company must include the abbreviation S de RL in its designation.
When establishing a branch of a foreign company, it is necessary to provide documents on the existence of the parent company and a verified decision of the company to establish a branch of the company in Paraguay. The minimum deposit is $25,000. For foreign equity investors, the minimum deposit is $70,000.
The relationship between foreign companies and their Paraguayan representatives is governed by Act No. 194/93. It establishes the possibility of granting a local company exclusive representation in the territory of Paraguay and lists the reasons that may lead to the termination of the contractual relationship and termination of representation by the local company. In the event of arbitration or litigation, the foreign company must prove the credibility of these grounds to the Court of Arbitration (Juzgados y Tribunales de la República).
Since 2006, all operations related to the establishment of a company can be carried out through the SUACE platform, Sistema Unificado de Apertura y Cierre de Empresas, http://www.suace.gov.py. The system is administered by the Ministry of Industry and Trade and also involves the Ministries of Finance, Interior and Justice, the Institute of Social Security, the Supreme Court and the City of Asunción. According to international comparisons, this system is the fastest and cheapest in South America, the company is usually established within 10-12 weeks. The SUACE platform can be used free of charge.
If the newly established company is not a subsidiary or a branch, a MIPYMES certificate is needed. In this case, we recommend contacting your local representative.
Foreign companies and citizens will need certified and apostilled copies of some original documents translated into Spanish: founding document of the parent company, identity card or passport, certificate of integrity.
Marketing and communication
For marketing communication and advertising in Paraguay, all standard channels of marketing can be used, such as in Europe or North America (web, social networks, printed advertising, newsletters, advertising in printed media, etc.). The message should be aimed at Paraguayan customers with knowledge of the local reality, therefore it is advisable to communicate with local advertising and communication agencies. It is also recommended to have the Spanish written texts checked by a local person who can point out inappropriate or misused words, taking into account the language customs in Paraguay. As a country with one of the highest proportions of believers in Latin America, the religious calendar needs to be followed, and if you incorporate a religious theme into your advertising message, you need to do so with sensitivity and understanding of local customs. Also proceed with caution where where your message may touch on politics, avoid controversial topics that are intrinsically Paraguayan. Also be careful with humor, it is often not transferable.
The income of Paraguayan citizens is several times lower compared to, for example, the EU, so sales revenues are likely to be lower as well. It is a good idea to adapt the marketing budget to this, so that the campaign is not too expensive for local conditions compared to the income. Simplicity and directness are appreciated.
In Paraguay, digital marketing is developing a little slower than in developed countries. However, the use of smartphones is quite common among residents. Some of the most well-known home agencies that offer digital marketing include Hash Content, MVA, Lupe Agency, and Incanta.
There is no significant trade fair in the country that has an international or at least regional impact. Therefore, it is more appropriate to support your own marketing or the marketing of a local partner with activities other than participation in the fair.
Issues of intellectual property protection
Paraguay has valid basic legislation in the area of intellectual property. Some of them, however, lack coercive means and punishments, so non-compliance with certain laws remains unpunished. Paraguay is regularly listed as one of the problem countries in the US’s regular Special 301 report on the observance of intellectual property rights. Specifically, it concerns the markets in the city of Ciudad del Este, through which a large amount of counterfeit goods are smuggled into Brazil.
DINAPI (Dirección Nacional de Propiedad Intelectual) is the national authority that ensures compliance with laws in the area of patents, copyrights, industrial and utility designs. When looking for a lawyer who is familiar with this issue, it is possible to turn to APAPI (Asociación Paraguaya de Agentes de la Propiedad Intelectual). An overview of current legislation is maintained by the World Intellectual Property Organization WIPO, in the Wipo Lex section.
In the event that a trade agreement between the EU and MERCOSUR countries enters into force, the protection of intellectual property will increase dramatically.
Public procurement market
In Paraguay, the state organization DNCP (Dirección Nacional de Contrataciones Públicas) is responsible for the correctness of the procedures for awarding public contracts. It is governed by Act No. 2051 of 2003. Foreign companies can also participate in international tenders, only domestic companies may submit bids for tenders marked as national. All public contracts must be published on the server https://www.contrataciones.gov.py/, foreign companies must register in SIPE (El Sistema de Información de Proveedores del Estado) to participate in the tenders published here. Article 18 of Act 2051 gives tenderers the right to favor domestic bidders, the maximum advantage can be ten percent of the offered price.
The two largest hydropower plants, Itaupú and Yacyretá, which were founded on the basis of international agreements with Brazil, are exempted from the public procurement regime, respectively. Argentina. It is also possible to follow the published tenders on the website https://www.licitacionesparaguay.com/, which is run by a private company and is therefore not complete.
Payment terms, payment ethics and resolution of commercial disputes
Care must be taken when negotiating payment terms, as standard terms carry a certain risk. At the beginning of a new business cooperation, it is advisable to insist on payment in advance. For new customers, we recommend requesting bank information. Administrative obstacles still cause major problems today, for example late payments to suppliers. We recommend using a letter of credit for payment transactions.
To resolve disputes that may arise, it is recommended to establish a court on neutral ground or in the Czech Republic in accordance with local laws.
Visas, fees, specific conditions for traveling to the territory
Citizens of the Czech Republic who enter Paraguay for a period of less than 90 days do not need a visa. Make sure that when you enter the country, the official marks the date of entry in your passport, if you do not show the entry stamp in your passport, you run the risk of problems when you leave the country, including the imposition of a fine.
Paraguay is a transit country for drug smuggling and it is therefore a good idea to avoid border areas. In general, it is good to consult your travel plans with someone who knows the situation and can warn you in time.
Climatically, Paraguay is a very demanding country with tropical temperatures and high humidity. The meeting schedule has to be adapted to this, often in the early morning hours and then later in the afternoon and evening when the heat subsides a bit. We recommend drinking only bottled water and protecting yourself sufficiently from the sun. Tropical diseases occasionally occur in the country. Do not travel to Paraguay without vaccination, recommended best by the Clinic of Travel Medicine of the FN Královské Vinohrady.
Street money changers operate on the streets, in the vast majority of cases they will offer you the current exchange rate and will not cheat you (for example by slipping fake banknotes). Also, official taxi cars charge real prices that will be shown by the speedometer and do not try to get more money from foreigners. But it is always good to have a Paraguayan guide and partner with you. Paraguayans are a hospitable nation and probably one of your partners will offer you an escort even after the meeting or a ride to the next place.