Uruguay Market Entry

Uruguay 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

Uruguay is a small country where the vast majority of business takes place in Montevideo, so people in the business community usually know each other very well. In the case of most commodities, the successful acquisition and subsequent sale of goods is not possible without the activity of a local representative, ideally with an already established name and network of contacts. This applies to both consumer goods and investment goods. The representative has the necessary contacts on the spot, can permanently convince potential customers of the value of the purchase, provide after-sales service, mediate the supply of spare parts, etc. Check smber for agriculture and fishing facts of Uruguay.

Mere written contact of the entity in the Czech Republic with the customer and an occasional visit to the territory are often not enough to successfully close the deal. Equally important is the participation of the embassy, ​​which often lobbies at the highest government level, especially for state contracts.

Forms and conditions of operation on the market

The most common forms of companies in Uruguay are the limited liability company and the joint stock company. Branches of foreign companies are also common, which are registered in the court register and have tax obligations towards the Uruguayan state. Establishing an office or representation of a foreign company is not complicated in principle. In the case of a joint venture, it is only up to both, or multiple parties, how they agree on the terms of the mutual contract. The relevant registration is then more of a formal act and will take place in accordance with their agreement.

Limited liability company (Sociedad de responsabilidad limitada)

The company must be founded by at least two partners. The signing of the agreement must take place at the court register of commercial companies and the company must be registered in the Registro Nacional de Comercio. The publication of this agreement in the Diario Oficial is also a condition. SRL can engage in any activity except financial services and insurance. There is no set minimum capital level. However, there is a requirement to deposit the minimum share capital in cash. Companies with more than 20 shareholders must hold general meetings and take minutes of them.

Joint Stock Company (Sociedad Anónima)

The statute of a joint-stock company must be approved by the General Inspectorate of the Ministry of Finance and must be registered in the same way as a limited liability company in the court register. Publication in the Diario Oficial is also a condition. The time to create a company, the capital of which must be at least 36,000 USD, can be several months. 25% of this amount must be deposited in cash and 50% secured by a bank guarantee.

In the case of establishing financial institutions, prior approval of the Uruguayan government is required. The minimum financial amounts are also different – they are assessed individually. Certain companies operating in the field of communications, transport, industry, fish processing must be granted special approval to operate. Joint-stock companies are subject to control by the National Court of Auditors.

Marketing and communication

The vast majority of marketing tools and communication methods common in Europe can be used in the Uruguayan market. Compared to the Czech Republic, it is possible to emphasize the more frequent use of social media by most age categories. Thanks to the large number of tourists who travel to the country every year, it is advisable to think about them when planning marketing activities, especially in the area of ​​consumer goods or food and beverages.

The most common and probably the most important form of promotion of products and services is through the mass media – mainly radio and television, as well as publications in dailies and specialized economic weeklies and magazines. However, this is not a cheap matter. A common form of promotion is sending promotional flyers or handing them out through personal contact. Address advertising also has its importance. A very effective form of promotion is the organization of demonstration events, where business partners are introduced to the company’s production and export program and its business strategy. At the same time, there must be enough quality printed catalogs and prospectus materials – in Spanish, of course.

Product marketing and promotion is a prerequisite for achieving business success in Uruguay. Strong competition from MERCOSUR member countries, EU countries and the USA spends considerable sums for these purposes. Business partners in Uruguay often complain that they do not know Czech products, even though they know that they are often at the same or even higher quality level and at comparable prices. In the end, the competition is more successful precisely because of systematic advertising.

Due to local language differences from standard Spanish, we recommend having the advertising message form checked by a local person to avoid misunderstandings or unwanted ridicule. This applies above all to electronic communication, where errors and mistakes spread very quickly over the network.

In Uruguay, there are only local, less important fairs, to which it is better to go with a local sales representative.

Issues of intellectual property protection

Uruguay is one of the countries in Latin America that protects intellectual property better than most. It is a signatory of basic international documents in this area. Also with regard to the protection of the local industry (textiles, software), control has recently improved, with the seizure of a large amount of fake branded goods. On the other hand, Uruguay, which is a country of European emigrants, has problems with compliance with the rules on trademarks and names of products with local designations, especially of European origin. There are many disputes, including over Gouda cheese, French cognac or Scotch whisky. The improvement should occur through the ratification of the trade agreement between the MERCOSUR countries and the EU. The country also cooperates with the US authorities, which in 2017 conducted training for customs employees on the issue of intellectual property protection.

Trademark registration is carried out by the National Directorate for Intellectual Property, which is part of the Ministry of Industry, Energy and Mining. Registration can be started online here. The World Trade Organization – WIPO advisory office also operates at the ministry.

More information: https://uruguayemprendedor.uy/articulo/que-es-la-propiedad-intelectual-y-como-registrarla/

Public procurement market

The public procurement market is regulated by a government decree, which, however, does not correspond to the current needs and investment conditions and has been subject to criticism by politicians and economists. Currently, a new version of the decree is in an advanced stage of preparation, which contains a number of innovations compared to the existing legal regulation.

In Uruguay, there is a State Agency for Purchases and Contracts (ACCE), which carries out most of the purchases for state organizations. It is necessary to first register as a supplier in the RUPE system (REGISTRO ÚNICO DE PROVEEDORES DEL ESTADO), then the company has access to all tenders. The company applies to RUPE itself or through an authorized representative, registration is done electronically.

The approach of foreign participants to public contracts is basically equal, local companies are not favored in any way. Of course, it is not possible to ensure that already at the stage of announcing the competition, the order for the supply of the required goods or investment unit will satisfy all participants of the competition to the same extent. There is often a specific domestic or foreign supplier that has a better chance of success in the competition than the competition, because the conditions of the competition are “tailor-made” from the very beginning.

It is necessary to distinguish between public contracts containing a construction part and other public tenders for the supply of construction works. It is necessary to register with the Ministry of Transport and Public Works. On the basis of the submitted documentation, it will decide which company is the most suitable according to the specified criteria – e.g. technical equipment, participation of financial institutions in the project, experience with similar contracts, references.

Public tenders are a special form, where the contractor undertakes, in addition to his own contract, to ensure the operation of the built object for a specified period of time (the so-called form of concession). An example is the highway from Montevideo to the seaside resort of Punta del Este, where the company Consorcium de Este is obliged to operate the highway, collect tolls and pay taxes and other benefits. The condition that the supplier of the work must also be a concessionaire makes it difficult in many cases for Czech entities to participate in tenders.

Payment terms, payment ethics and resolution of commercial disputes

Ways of resolving commercial disputes

Disputes are resolved according to the specific terms of the contract, i.e. in the country and according to the law of the supplier or customer, unless otherwise specified. Dispute resolution institutions are judicial institutions, chambers of commerce or stock exchanges. In rare cases, disputes between partners from neighboring countries of the region can be resolved by the competent authorities of the Common South American Market Association (MERCOSUR) or the Latin American Integration Association (ALADI).

Local market issues and risks

Uruguay is traditionally rated by leading rating firms as a country with good investment conditions and low risk for the entry of foreign capital. It is currently rated grade 3 on a scale of up to 7 according to the OECD methodology. There is a stable economic and investment environment, a consensus on fundamental issues of economic policy and the successful implementation of structural reforms with relatively broad participation of the state in making fundamental economic decisions. Along with Chile, Uruguay is one of the countries with the least problems in terms of investment conditions.

Usual payment conditions, payment ethics

The most common way is to pay by letter of credit or bank transfer, sometimes by bill of exchange with a deferred maturity of up to 120 days. Repayment occurs without major problems. ZÚ does not register any Czech company with a significant outstanding debt. Partial payment in advance is used especially for some specific deliveries. Some companies are increasingly limiting the use of a letter of credit as a means of payment, as they are trying to save considerable fees for opening it.

Visas, fees, specific conditions for traveling to the territory

For holders of Czech and Uruguayan national passports, the visa requirement for a stay of up to 90 days was mutually abolished with effect from November 9, 1999. The visa requirement continues to apply to a stay for the purpose of study or work, or for any gainful activity.

In a country that has been affected by serious cattle diseases in the past, strict hygiene measures apply upon entry. The import of most foods, non-preserved food products and plants is prohibited. According to the regulations of the local Ministry of Foreign Affairs, the customs authorities have the right to search the luggage of holders of diplomatic and service passports if they suspect non-compliance with hygiene standards.

At Montevideo’s main international airport, Carrasco, which is managed by a private company, there is a departure fee that is often included in the price of the ticket, but it’s a good idea to check this information in advance.

Unlike, for example, Argentina, foreigners are not provided with free health care. Only people with resident status are entitled to it, others must pay for the care provided. It is therefore recommended to take out travel insurance when traveling to Uruguay, as the cost of health care is very high for uninsured people there. The level of health care is good, the country has a quality system of emergency services, medical and hospital facilities have adequate equipment and quality staff. For longer-term stays beyond the scope of tourism, especially for employees of commercial agencies, it is possible to arrange basic health insurance with a number of private health insurance companies. This insurance includes standard care comparable to the Czech Republic. Due to the geographical location of the country, there is no need to worry about malaria,

The transport system is characterized by frequent non-compliance with timetables in public transport, transport lockouts in connection with occasional strikes are no exception. Maximum caution is required when driving a motor vehicle. At intersections of two-way streets, turning left is usually prohibited, you have to go around the entire block. Pedestrians have priority at marked crossings (zebras).

In the context of Latin America, Uruguay can be considered a safe country with low crime. If you follow the basic safety rules, you can travel in Uruguay without any problems. With the exception of the occasional strong wind, no natural disasters affect the country.

Employment of citizens from the Czech Republic

In general, foreigners with higher education or from fields that are not represented in the country are welcome in Uruguay. Applications for work permits for citizens from this category are processed on a priority basis. The Czech Republic is currently negotiating with the Uruguayan side to simplify the employment of Czech citizens in Uruguay and vice versa.

Before leaving the Czech Republic, it is necessary to make an extract from the criminal record for the last five years and ensure an overview of the vaccinations carried out. Both documents must be accompanied by an apostille with a Spanish translation. Upon arrival in Uruguay, it is necessary to pass a medical examination and have a certificate of it (Carné de Salud).

Residence permits are issued by the Ministry of the Interior and its organization Departamento de Residencias de la Dirección Nacional de Migración.

Fairs and events

The largest trade fairs of individual sectors take place in Argentina, Chile or Brazil. We therefore recommend focusing your efforts on these events.

Uruguay Market Entry