For several years, Central America has been presenting itself as a strategic zone for doing business. Thus, in addition to the intra-regional expansion of Central American businessmen, there has also been an increase in the interest and participation of companies from outside the region to invest and do business in Central America. One example of the above was the approval of the Central America-United States Free Trade Agreement (CAFTA).
This interest of a foreign company to invest more and achieve a greater exposure of its brand goes hand in hand with the introduction of the products that the company develops and manufactures in a third market. However, the Central American market may present certain particularities or conditions, which may lead a foreign company to consider which would be the best way to enter a market that is not the one with which it is familiar and where it has achieved its development.
Therefore, it has not been unusual for a foreign company to seek a business alliance with a local company, in order to reduce its own risk of entering an unfamiliar market, where its product or even its brand may not be well known. Such local company would assume the risk of the placement and sale of the products in the local market, or else it would represent such products while conducting its business locally.
For this reason, the regional Litigation and Arbitration team of Consortium Legal has seen the need to compile in this magazine the main concerns and questions that may arise, both for a local company that distributes in its country a product of a foreign company, as well as for a foreign company that wishes to invest in one or several countries of the region, or which may already have an active relationship with a local distributor.
It is our intention that this document will serve as a reference for all those companies that wish to invest in the Central American region, and even for local distributors, becoming a useful tool for structuring and making sound business decisions.