Chile Market Briefing: Business Overview and Best Prospects

1. Chile Market Briefing: Business Overview and Best Prospects Isabel Margarita Valenzuela Senior Commercial Specialist U.S. Commercial Service Santiago, Chile

2. Chile: Key Facts • 2,600 miles long • 100 miles average width • Diverse climatic zones • Opposite seasons from the U.S. • Isolated by mountains, desert and sea • Population of 17 million (6 million in capital city of Santiago)

3. Why do business in Chile? • Trade Agreements – 61countries • 15 years of avg. 5% GDP growth • Prudent fiscal policies • Stable democratic government • Solid business practices • Rule of law • Low corruption

4. Why Chile? • Macroeconomic, fiscal, political stability • 15 years of average 5% GDP growth • Ranked 34 out of 189 on ease of doing business (World Bank) • Rule of law, low corruption • Trade Agreements- 61 countries • Growing integration with international capital markets • A+ Credit Rating (Fitch)

5. Political Overview • Strong democracy and institutional framework • Peaceful transition from dictatorship in 1980’s • Solid economic policies have provided platform for economic growth • However, high income inequality • President Michelle Bachelet • Socialist Party • 2nd term – sworn in March 2014 • Strong reform agenda • Education • Tax • Constitutional

6. Chile - U.S. Free Trade Agreement • 10th year of the agreement • Duties eliminated on 99% of U.S. products • Bilateral trade between U.S. and Chile reached $28 billion in 2013, a 335% increase from before the FTA • U.S. exports to Chile reached $17.6 billion in 2013, a 548% increase!

7. Chile in the Latin American Region • Chile considered as a platform for Latin American countries • The two largest retailers in Latin America are Chilean. • Chile is the largest Latin American investor in Brazil • Chilean companies are regional companies: LAN (largest airline in Latin America), Cencosud(retail), Arauco (forestry), Detroit Chile (shipbuilding), Falabella (retail), Sonda (ICT), Corpbanca (banking), Salfa Corp (construction)

8. U.S. Companies Invest in Chile • Wal-Mart (acquired largest supermarket chain: LIDER • Aramark – 5,000 employees in Chile • AES Corp/Gener – 2nd largest electricity generator • Sempra Energy – electricity generator • Freeport-McMoRan - Copper & Gold mining • MetLife acquires Interamericana de Seguros • Air Products acquires Indura • Google – data center • Investments like these and others tend to inspire even more confidence in the Chilean economy.

9. Challenges • High energy costs • More rigorous permitting process and environmental enforcement have paralyzed or permanently halted energy and mining projects • Education and Health improvement • Income inequality of salaries

10. 2014

11. U.S. Department of CommerceU.S. Commercial Service • Assists U.S.exporters in doing international business • International and Domestic operations • International – U.S. Commercial Service • Domestic - U.S. Export Assistance Centers • Teams according to industry sectors • Programs: Gold Key, International Company Profile, Single Company Promotion, Advocacy, Trade Shows in the U.S., Trade Shows in Chile

12. Best Prospects for U.S. Exports Mining Equipment • Total imports: USD 4.2 billion • Imports from the U.S.: USD 1.8 billion • Chile produces 34% of copper sold in the world • USD 80 billion in new investment over next 10 years • Best Prospects: Mining equipment that requires regular replacement (i.e. Grinders, Off-road trucks (240-440), underground mining technology services, engineering services. • Cooperative Agreement with Asociación de Industriales de Antofagasta (AIA) to support U.S. companies in Chile’s northern mining district • Local trade shows: Expomin, April 2014

13. Construction Machinery and Equipment • Total Imports: 1 billion • Imports from the U.S.: 459 million • The U.S. is the largest supplier of machinery for Chilean construction industry (36.8% market share); #2 Germany (15.9% market share.) • 2012 sectorial growth of 11 %, one of the fastest growing sectors. Projection for 2014: 5.5 % • Industry subsectors: large mining projects, infrastructure, private and public housing, upcoming airport expansion. • Chile ranks 12 in the world in LEED certification. • Trade shows: Conexpo Latin America 2015 (w/Edifica) • For additional information contact: Mary.Lathrop@trade.gov

14. Energy / Electric Power Equipment • Total Imports : 1,200 billion • Imports from the U.S.: 180 million • Energy demand growing: Current installed capacity is 18,600 MW and 8,000 MW needed in the next decade. • Generation, transmission and distribution managed by private companies both foreign and Chilean • 66% of the energy matrix derived from thermal; 32% hydro ; 2% renewables – opportunities in all areas conventional and renewable. • Environmental permits and permits to obtain concessions for the use of state owned land are numerous and time consuming. • Trade Show: Power Gen, Orlando, December 9-11, 2014 (www.power-gen.com)

15. Water Resources Equipment • Chile faces a huge water shortage, especially in the northern region, to satisfy needs from mining operations, agricultural sector and population. • Between 2012 and 2014, investments are estimated at US$ 20 billion. • Best Prospects: • Design/construction of desalinization plants, wastewater and water treatment plants. Preventive maintenance techniques such as vibration, laser alignment, oil dialysis and others. • Reutilization of wastewater for agricultural irrigation. • Best marketing strategy: • Individual use of programs offered by the Commercial Service • IBP - WEFTEC 2014, New Orleans, Sept./Oct. 2014 • Local Trade Show: Aguatech, October 2015 It is held in Santiago, Chile every two years. http://www.expoaguatech.cl/index.html

16. Food Processing and Packaging • Total Imports: 78 million • Imports from the U.S.: USD 13 million • Chile is 15th largest world food supplier. Will be among top ten countries in 2015 with USD 16 billion in annual exports. • Main production and exports include fish and seafood (catch/aquaculture), wine, fresh fruit, dairy and meat products. • CHILE brand well positioned in international markets. • Chile’s Mediterranean climate and favorable geography allows for a wide variety production. The country is free of most phyto-sanitary diseases and pests due to strict and enforced regulations. • For additional information contact: Mary.Lathrop@trade.gov

17. Agricultural Machinery & Equipment • Total Imports: 635 million • Imports from the U.S.: 126 million • Rising energy and labor costs requires agriculture production to use energy efficient machinery & equipment, and increase efficiency using mechanized harvesting, precision irrigation. Green production requires natural fertilizers and pesticides. • Best subsectors include: • Irrigation equipment • Precision agriculture equipment • Fresh fruit harvesting equipment For additional information please contact: Mary.Lathrop@trade.gov

18. Healthcare • Public sector = 26,300 beds, private sector = 15,000 beds. 75% of the population is under the public healthcare insurance system. • Private sector – World class private hospitals and health care facilities – Joint Commission accreditation. • Pharmaceuticals, mandatory registration at the Institute of Public Health. Medical eq. and devices do not need registration except for contraceptives, gloves, needles and syringes. • Medical devices in demand: ventilators, infusion pumps, aspiration pumps, central monitors, trauma equipment, surgical tables, ECG monitors, hospital beds.

19. Safety and Security • 12% projected growth in 2014 • Market potential: security equipment for residential, commercial, industrial compounds, firefighting equipment and tools, and safety devices for the mining, industrial/chemical industries. • Specific products in demand: access control, parking systems, fire detectors, sprinkler systems, extrication equipment, firefighting suits, alarms and monitoring, CCTV, outdoor perimeter protection, locks, safes, sensors, and general safety gear.

20. Telecommunications • Chile's telecom sector grows an average of 15% percent annually. • The wireless communications market is the fastest growing subsector. • Chile leads cellular penetration in Latin America with 125 percent at the end 2013. Current pilot projects in 4G. • Best Prospects: • Equipment and technology to support broadband Internet, corporate data communications, IP related services, and wireless applications. • Equipment and technology to support upgrade of national communications network to respond to disaster/emergencies. • Best Marketing Strategy: • Use individual programs offered by the Commercial Service. • Mobile World Congress (MWC) February 2015 - Barcelona, Spain • IBP: CTIA May 2014 (Wireless Communications Association.)

21. General Consumer Goods • In Chile, a wide variety of consumer goods are manufactured locally and large volumes are imported, mainly from Asia. • 80 percent of total consumer goods sales in Chile are done through Department Stores and Supermarket chains. • The remaining 20 percent are sold in pharmacy chains (cosmetics) and other specialized retail stores (toys, school & office supplies, home décor; and others). • Department stores’ acquisitions are made through local distributors or directly by their product managers, who travel regularly to meet with foreign suppliers. • Products with best potential: Accessories for cell phones & IPads, eco- friendly and innovative products; and households energy saving products, • For additional information contact: macarena.marin@trade.gov

22. Contact us today to connect with a world of opportunity. U.S. Commercial Service – Santiago, Chile U.S. Department of Commerce Isabel Margarita Valenzuela Senior Commercial Specialist Tel: (56-2) 2330-3421 Isabel.valenzuela@trade.gov www.export.gov/chile