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Doing Business in Venezuela

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Doing Business in Venezuela

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  1. Doing Business in Venezuela

  2. COUNTRY PROFILE • Formal Name: Republic of Venezuela. • Short Form: Venezuela. • Term for Citizens:Venezuelan(s). • Capital: Caracas.

  3. The country at a glance • Geography Located in the northern part of South America, Venezuelan continental territory limits are the Caribbean Sea to the North; the Atlantic Ocean and the Republic of Guyana to the East; the Republic of Brazil to the South and the Republic of Colombia to the West. Its total area of 917.450 square km (354.227,44 square miles) is approximately 2.5 times the State of California.

  4. The country at a glance • Population: 25,017,387 (July 2004) Approximately 80% of the population is concentrated in the coastal region, with about 4 million in Caracas, the capital. The second most important city is Maracaibo, which is a major oil center, followed by Valencia, Maracay, and Barquisimeto (the major manufacturing and industrial cities of the country).

  5. The country at a glance • Climate: Venezuela is in the -4 Zone (GMT). The country has a variety of climates ranging from tropical to temperate. The only seasons are winter and summer. The rainy season runs normally from May to mid-November. The average temperature in Caracas is 72º F (22º C) and in Maracaibo 68º F - 91º F (20ºC - 40º C) year round

  6. The country at a glance • Ethnic Make-up: Spanish, Italian, Portuguese, Arab, German, African, indigenous people. • Religions: nominally Roman Catholic 96%, Protestant 2%, other 2% • Languages in Venezuela: About 40 languages are spoken in Venezuela. However, Spanish, the country's official language, is the most common. Italian, Portuguese, Chinese, Arabic and English are the most common foreign languages spoken in Venezuela.. • Venezuelans often speak less formally than people in most other Spanish-speaking countries.

  7. The country at a glance • Currency The "Bolivar" is the legal tender with notes denominations of Bs. 5,000, 2,000, 1,000, 500, 100, 50, 20, 10 and 5. Coins include Bs. 5, 2, 1, and 50, 25 and 5 centimes.

  8. The country at a glance • Business Hours Normal business hours are from 8 a.m. to 12 noon and from 2 p.m. to 6 p.m. Stores are usually open from 9 a.m. to 1 p.m. and from 3 p.m. to 7 p.m. Banks are open to public from 8:30 a.m. to 3:30 p.m. • Holidays The following holidays are observed: January 1st (New Year), Carnival (2 days in February), Thursday and Good Friday, April 19 (Declaration of Independence), May 1st (Labor day), June 24 (Battle of Carabobo), July 5 (Independence Day), July 24 (Bolivar's Birthday), October 12 (Discovery of America), December 17 (Death of Bolivar), December 25 (Christmas).

  9. Politics of Venezuela Venezuela is a federal multiparty republic, with a president who is both chief of state and head of government. The cabinet, or Council of Ministers, has twenty-six members. There is a bicameral congress, composed of the Chamber of Deputies and the Senate, and the judiciary is represented by the Supreme Court. Elections are heldeveryfiveyears. • CurrentPresidentHugo Chávezwaselected in December 1998. Chavezwasreelected in December 2006.

  10. THE VENEZUELAN ECONOMY • The Venezuelan economy is based on free enterprise, with a combination of public and private ownership. The oil industry has been the main source of fiscal revenues and foreign exchange earnings, and has been the engine for economic growth and social change for the past decades. • In 2000, the petroleum industry accounted for approximately 28% of GDP, 82% of the total value of exports and approximately 69% of the Venezuelan government's current revenues. The major components of non-petroleum GDP in 2000 included commerce, financial institutions, insurance, and manufacturing.


  12. Trade Agreements • Marrakesh Agreement that Establishes the World Trade Organization (WTO). • Latin-American Integration Association (LAIA). • The Free Trade Agreement between Colombia; Mexico and Venezuela, The Group of Three (G-3). • Andean Community.  • Central American Common Market (CACM).  • Venezuela and the Caribbean. • Venezuela and Chile. • Venezuela and MERCOSUR.

  13. INVESTING IN VENEZUELA • Foreign Investment are regulated by Decree 2.095 of February 13th, 1992. Such Decree submits foreign investments to the Decisions 291 and 292 of the Commission of the Cartagena Agreement. Following these regulations, all foreign investments are deemed approved and they are only subject to registration with the appropriate agency, provided that they do not contravene any provision of general applicability under Venezuelan legislation. • The allowed proportion of foreign investment depends upon the sector in which the company is planning its activities, as there are some limited sectors reserved to national enterprises

  14. POSSIBLE BUSINESS STRUCTURES • In order to do business in Venezuela, companies may take four different types of structure under the Venezuelan legal framework (Code of Commerce). • They are general, special, limited partnerships, and business corporations.

  15. POSSIBLE BUSINESS STRUCTURES • General partnerships are characterized by the way in which obligations of the firm are guaranteed by the unlimited and joint liability of all the partners. • In special partnerships, obligations are guaranteed unlimited and joint liability for some partners (general partners), and by limited liabilities for other partners (special partners). In both these partnerships, liabilities include all partners' assets. • Business corporations' obligations are guaranteed by a specified amount of capital and the stockholders are liable only for their shares.

  16. POSSIBLE BUSINESS STRUCTURES • There are other business' structures that are not defined in the Code of Commerce but that are widely accepted in practice. These include joint ventures, consortia, foundations, and associations. • Once the structure of the business is decided, foreign participation is defined by the amount invested and the degree of participation (technical and administrative) that the investors hold on the enterprise. A national company is defined by having at least 80% of local ownership, a mixed company has between 79 and 50% of local ownership, and a foreign company has less than 49% of local ownership.

  17. Es importante destacar, que las empresas mexicanas son líderes en el mercado en los sectores de alimentos y bebidas, materiales para construcción, productos metalmecánicos, autopartes y manufacturas diversas. • Además de estas inversiones, existe un buen número de empresas mexicanas con oficinas de ventas y distribución en el mercado, las cuales comercializan una gran variedad de productos como válvulas, equipos petroleros, software, sanitarios, equipos médicos, jugos de frutas, entre otros.

  18. Razones para seleccionar el mercado venezolano 1. La creciente desindustrialización en el mercado venezolano.2. La histórica dependencia por los productos importados.3. Las preferencias arancelarias que otorga el TLC G-3.4. La creciente preferencia del mercado venezolano por la calidad de los productos mexicanos.5. La diversificación de la oferta exportable mexicana.6. Los nuevos espacios comerciales que se abren ante la nueva realidad venezolana.

  19. Consejos sobre la cultura de negocios en Venezuela 1. La forma extrovertida del empresario venezolano, facilita iniciar la relación comercial.2. El empresario venezolano evita a toda costa la formalidad en el trato.3. La puntualidad no juega un papel importante en el inicio de la relación comercial.4. Las expectativas de negocios deben definirse claramente desde el principio, el empresario venezolano aspira grandes expectativas sin elementos.5. Los acuerdos comerciales se formalizan a través de un contrato legalmente constituido.6. Existen elementos de menor importancia que durante la negociación comercial el empresario venezolano formaliza de palabra.7. El empresario venezolano hace negocios en un marco de amistad y confianza.8. El empresario venezolano no está acostumbrado a trabajar bajo estrictas reglas.9. El empresario venezolano valora el esfuerzo para generar la relación comercial.10. El empresario venezolano esta acostumbrado a no modificar sus periodos vacacionales.

  20. Guidelines for business dress • Menshoulddressconservatively, in darkbusinesssuitsmade of lighterwools. • In business and in any of the more privilegedcircles, VenezuelanwomentendtobemeticulousdresserswhocloselyfollowEuropeanfashion. Femalevisitors are advisedtobringconservative, stylishbusinessclothes of thehighestquality, includingonecocktaildress. • In Venezuelanbusinessculture, itisconsideredimportantfor a womantomaintainanelegant, beautifullydressedappearance, whichincludesbecomingjewellery, heels, and make-up. • Venezuelanbusinesspeopletendtobevery status-conscious and willoftenbeimpressedbythesedisplays.

  21. Advicesfordoingbusiness in Venezuela Behavior  •  Business people are punctual and small talk is minimal •  It is good practice to follow up morning appointments with an invitation to lunch •  Have business cards printed in English on one side and Spanish on the other. Be sure your position is clearly indicated and present your card immediately following an introduction •  Unlike lunch, dinner is for socializing, not for business •  Businesswomen should be aware that going out alone with Venezuelan businessmen may be misconstrued •  The two senior executives should sit facing each other •  Guests rarely sit at the head of the table •  To indicate you have finished eating, place your utensils in parallel and diagonally across your plate •  An appropriate gift for a man is something for the office - such as a good quality pen. A women would appreciate the gift of an orchid – the national flower

  22. Advicesfordoingbusiness in Venezuela Communications •  Handshaking by both sexes common and customary; shake hands on greeting and departing. The handshake is firm. •  Good friends hug and women kiss cheeks • Avoid dominating the conversation. Venezuelans like to be in control • Titles are important and should be included on business cards.   • Most Hispanics have two surnames: one from their father, which is listed first, followed by one from their mother. Only the father’s surname is used when addressing someone •  Good conversation topics: business, art, literature, history •   Bad conversation topics: local unrest, inflation, politics.

  23. Business Gift Giving • Beforepresenting a businessgift, waituntilyouhaveestablished a cordial relationshipwiththerecipient. Forexample, giftsshouldbeconsiderednecessaryafteryouhavebeeninvitedtodinnerorwhensomeone has done somethingthoughtfulforyou. Femalebusinesstravelers, however, shouldnotgivegiftstobusinessmen. • Themostopportune time topresent a businessgiftisduring a long lunch. Refrainfromgiving a giftduringbusinesshours. • Wheninvitedto a Venezuelan home, alwaysarrivewith at least a tokengift.

  24. AppreciatedGifts • Fine chocolates • A quality, importedliquorsuch as scotch • A high-qualitydeskaccessorywithyourcompanyname • A high-qualitylighterwithyourcompanyname • A namebrandpen • A namebranddesk set • Small electronics • A bookfeaturedonthe 'New York Times' bestsellerlist [iftherecipientreadsEnglish] • For a woman, a good perfume is a welcomegift. • Anarrangement of orchids, thenationalflower, is a popular and easilyavailable floral gift.

  25. Interview: How to do Business in Venezuela • Pendiente!! • No han respondido.

  26. Bibliography • • • • • • • • • • • • • BIBLIOTECA DIGITAL • •