How to Access the Food Market in Chile

Thai Trade Center SantiagoSeptember 2007

Index Chile: 1 Geography 2. Demography3. Country Profile 4. Thailand Trade with Latin America5. Chile and Thailand Trade Exchange6. How to Set a Thai Restaurant in Chile7. Final tips of advise to Thai exporters

Thai Trade Center SantiagoSeptember 2007

1. Chile Geography and Demography

1. Geography 1. Geography Chile is situated in South

America

Chile's northern neighbors are Peru and Bolivia, and its border with Argentina to the east.

Continental Surface: 756,6 thousand Km2

Capital City: Santiago

Largest cities: Santiago, Concepcion and Valparaiso

Main Ports: Valparaiso, followed by Ports of Iquique and Antofagasta (chief links between Bolivia and the pacific)

Chile is situated in South America

Chile's northern neighbors are Peru and Bolivia, and its border with Argentina to the east.

Continental Surface: 756,6 thousand Km2

Capital City: Santiago

Largest cities: Santiago, Concepcion and Valparaiso

Main Ports: Valparaiso, followed by Ports of Iquique and Antofagasta (chief links between Bolivia and the pacific)

1.2. Geography:1.2. Geography:

Main Ports: Valparaiso, followed by Ports of Iquique and Antofagasta (chief links between Bolivia and the pacific)

Main Airport: Santiago Airport called “Arturo Merino Benito”. Considered to be the most modern in Latin America.

Main Ports: Valparaiso, followed by Ports of Iquique and Antofagasta (chief links between Bolivia and the pacific)

Main Airport: Santiago Airport called “Arturo Merino Benito”. Considered to be the most modern in Latin America.

2. Demography2. Demography

Population: 15.9 Million. 86% urbanlive in the city (6.5 million live in Santiago)

Official Language: Spanish

Literacy Rate: 96.2%

Life expectancy: 73 m – 80f. Years (2007 est)

Religion: Catholic, 70%, Protestant or evangelical 15.1%, Jehovah's Witnesses, 1% and The Church of Jesus Christ of Latter-day Saints, 0.9%.

Three main Ethnic Groups: Whites 30%(5 M), Mixed Races 65% (10M) Amerindians 5% (829,903). Main indian culture is called: Mapuche.

Population: 15.9 Million. 86% urbanlive in the city (6.5 million live in Santiago)

Official Language: Spanish

Literacy Rate: 96.2%

Life expectancy: 73 m – 80f. Years (2007 est)

Religion: Catholic, 70%, Protestant or evangelical 15.1%, Jehovah's Witnesses, 1% and The Church of Jesus Christ of Latter-day Saints, 0.9%.

Three main Ethnic Groups: Whites 30%(5 M), Mixed Races 65% (10M) Amerindians 5% (829,903). Main indian culture is called: Mapuche.

3. Country Profile3. Country Profile

GDP Per Capita: 756,6 thousand Km2

GNI Per Capita (Gross National Income): US$64.2 M.

Government: Chile is a multiparty democracy with a directly elected president who serves a six-year term and has a cabinet of 20 ministers. The bicameral legislature consists of a 48-seat senate of both elected and appointed members and a 120-seat elected chamber of deputies. Administratively, Chile is divided into 13 regions.

President: H.E. Mrs. Michelle Bachelet

GDP Per Capita: 756,6 thousand Km2

GNI Per Capita (Gross National Income): US$64.2 M.

Government: Chile is a multiparty democracy with a directly elected president who serves a six-year term and has a cabinet of 20 ministers. The bicameral legislature consists of a 48-seat senate of both elected and appointed members and a 120-seat elected chamber of deputies. Administratively, Chile is divided into 13 regions.

President: H.E. Mrs. Michelle Bachelet

4. Thailand Trade with Latin America

4.1 Introduction:

The main markets in Latin America are: Mexico • Brazil

Argentina • Chile • Colombia and Peru

During the last three years Latin America has grown faster

than industrial countries and approximately as fast as

most developing country region, with the notable

exception of Asia.

4.2 Thailand -Latin America Total Trade Exchange

In Billion US Dollars

THAILAND-LATIN AMERICA 2005 2006 2007 (Jan-July)

Total Trade 4,241.7 4,857.6 3,782.4

Imports 2,096.5 1,887.4 1,551.9

Exports 2,145.2 2,970.2 2,230.5

Balance 48.7 1,082.8 678,6Source: World Trade Atlas, July 2007

4.3 Thai EXPORTS to Latin AmericaIn Million US Dollars - January - December

Rk

Description 2005 2006% Share %Change

2005 2006 06/05

1 MACHINERY 444.74 661.55 20.73 22.27 48.75

2 VEHICLES 420.67 630.89 19.61 21.24 49.97

3 ELECTRICAL MACHINERY 438.30 507.68 20.43 17.09 15.83

4 RUBBER 238.30 356.50 11.11 12 49.6

5 PLASTIC 76.52 90.77 3.57 3.06 18.63

6 MINERAL FUEL, OIL ETC 0.72 86.42 0.03 2.91 11837.6

7 PREPARED MEAT,FISH, ETC 59.18 73.39 2.76 2.47 24.02

8 IRON/STEEL PRODUCTS 42.72 52.05 1.99 1.75 21.84

9 MANMADE FILAMENT,FABRIC 33.40 42.21 1.56 1.42 26.35

10 MANMADE STAPLE FIBERS 31.45 38.06 1.47 1.28 21.04

Source: World Trade Atlas, July 2007

4.4 Thai FOOD EXPORTS to Latin AmericaIn Million US Dollars - January - December

Source: World Trade Atlas, July 2007

No.

Rank Top 10

out of 19 foodproducts Description

2005 2006

% Share % Change

2005 2006 - 06/05 -

2.145,20 2.970,16 100 100 38,46

1 7 Prepared Meat, Fish, etc 59,18 73,39 2,76 2,47 24,02

2 15 Preserved Food 14,28 25,31 0,67 0,85 77,26

3 27 Cereals 1,66 10,00 0,08 0,34 503,93

4 41 Miscellaneous Food 1,94 2,71 0,09 0,09 40,02

5 47 Fish And Seafood 1,10 1,48 0,05 0,05 34,71

6 51 Cocoa 1,13 1,16 0,05 0,04 1,95

7 61 Beverages 0,25 0,34 0,01 0,01 39,92

8 62 Edible Fruit And Nuts 0,29 0,32 0,01 0,01 10,04

9 65 Fats And Oils 0,06 0,17 0 0,01 199,46

10 67 Vegetables 0,26 0,14 0,01 0,01 -47,51

Thailand exports a total of 97 products to Latin America. Out of these 97,19 are food products. These are the main 10 products:

4.5 Latin America IMPORTS from ThailandIn Million US Dollars - January - December

RkPRODUCT DESCRIPTION 2005 2006

% Share

% Change

2005 2006 06/05

1 FOOD WASTE; ANIMAL FEED 426.63 440.35 20.35 23.33 3.22

2 MISC GRAIN,SEED,FRUIT 316.93 274.83 15.12 14.56 -13.28

3 IRON AND STEEL 479.22 216.63 22.86 11.48 -54.8

4 ELECTRICAL MACHINERY 104.83 129.21 5 6.85 23.26

5 HIDES AND SKINS 123.09 110.12 5.87 5.83 -10.53

6 ORES,SLAG,ASH 68.95 110.02 3.29 5.83 59.55

7 MACHINERY 93.12 103.60 4.44 5.49 11.25

8 COPPER + ITS ARTICLES 41.27 102.21 1.97 5.42 147.67

9 FISH AND SEAFOOD 61.20 71.65 2.92 3.8 17.07

10 PHARMACEUTICAL 28.47 46.85 1.36 2.48 64.59

4.6 Why Thai exporters should consider investing in Latin America

New possibilities: The main economic block MERCOSUR, which totals a population of some 233 million inhabitants.

The second-biggest trade bloc is the ANDEAN COMMUNITY OF NATIONS comprising Peru, Colombia, Ecuador, Bolivia, Venezuela and as of 2006 Chile. The South American Community of Nations is expected to merge both trade Blocs.

Latin America is experiencing a period of macroeconomic stability marked by: Low interest rates, low inflation and stable foreign exchange rates.

The main inflation related problems will remain in Argentina and

Venezuela.

5. Chile and ThailandTrade Exchange

5.1 Introduction

During the last 25 years, Chile has become the only country in Latin America with the highest GDP per capita.

Chile´s GDP is compared to the GDP per capita of the United States. The purchase power of Latin American consumers today is at its lowest in comparison to the GDP per capita of North America. Today the only exception is Chile.

5.2 Thailand and Chile TradeIn Million US Dollars

Trade exchange between Thailand and Chile has been slow but

constant, with positive perspectives ahead.

2005 2006 Jan-July 2007

Total Trade 283.08 493.11 406.08

Export 122.97 262.56 217.05

Import 160.12 230.55 189.03

Trade Balance 37,15 32,00 28,01Source: World Trade Atlas, June 2007

5.3 Thai EXPORTS to ChileIn Million US Dollars

Rk Description

Total Exports Growth rate

2005 2006Jan-July

2007 2005 2006Jan-July

2007

1Vehicles (pick up trucks) Parts and accessories 51,8 82,4 82,7 42.92 57.44 163.29

2 Crude Oil 0,0 86,4 69.3 - - 57.92

3Washing Machines, dry-cleaning machines 6.9 18.8 10.9 31.62 173.96 -38.77

4 Electrical Machinery and parts thereof 6.3 7.8 7.2 122.24 23.39 101.55

5 Rubber products 4.1 5.6 4.7 20.46 35.20 60.26

6 Prepared or Preserved Fish, Crustaceans 6.6 7.8 4.0 42.01 18.46 -23.01

7 Cement 8.1 - 3.9 51.65 - -

8 Prepared or Preserved Fruits 2.6 3.7 3.3 -2458 45.27 93.31

9 Polymers of ethylene, propylene, etc 1.2 1.9 2.8 49.76 52.86 134.19

10 Radio-broadcast receivers, television 1.0 3.6 2.7 54.92 244.47 306.29

Source: Crystal Reports Viewer

5.4 Top ten Thai Food Exports to Chile:

Rk HS Description

2005

2006

Jan-June % Share % Change

2007 2005 2006 - 06/05 -

1 16 Canned Tuna 4,634 6,718 1,979 2,93 2,47 44,97

2 20 Preserved Food 3,088 4,108 4,048 1,95 1,51 33,01

3 12 Sowing Seeds 0,232 0,653 0,189 0,15 0,24 181,33

4 08 Fruit And Nuts 0,174 0,314 0,074 0,11 0,12 80,16

5 21Miscellaneous

Food 0,055 0,075 0,018 0,04 0,03 36,65

6 10 Cereals 0,044 0,033 0,059 0,03 0,01 -24,29

7 17 Sugars 0,003 0,016 0,011 0 0,01 431,37

8 03 Fish And Seafood 0,000 0,015 0,068 0 0,01 0

9 07 Vegetables 0,004 0,006 0,003 0 0 33,53

10 18 Cocoa 0,004 0,004 0,000 0 0 -3,48

5.4.1 Competitors Per Food ProductHarmonized custom code: 16

Top 5 Canned Tuna country suppliers to Chile

Rank Country 2005 2006

%Share

%Change

2005 2006 - 06/05 -

1Ecuador 10,523 13,361 52,74 55,8 26,97

2Colombia 6,111 6,035 30,62 25,2 -1,24

3Thailand 1,234 3,629 6,18 15,16 194,16

4Brazil 1,643 0,728 8,23 3,04 -55,7

5Peru 0,063 0,148 0,32 0,62 133,4

The main supermarket in Chile, LIDER offers a variety of 30 different types of canned Tuna brands

5.4.2 Competitors Per Food ProductHarmonized custom code: 20

Top 5 Preserved Foods country suppliers to Chile

Preserved Foods from Thailand include: Prepared in vinegar, mushroom ruffles, jam and jelly

cooked, sweet corn, fruit and vegetable juices

Rk Country 2005 2006

% Share % Change

2005 2006 - 06/05 -

1Argentina 16,081 18,887 35,49 32,15 17,45

2Brazil 4,742 7,520 10,47 12,8 58,59

3Ecuador 3,549 6,344 7,83 10,8 78,74

4United States 2,843 4,817 6,27 8,2 69,45

5Thailand 3,088 4,108 6,82 6,99 33,01

5.4.3 Competitors Per Food ProductHarmonized custom code: 08

Top 5 Dry Fruits Mixtures country suppliers to Chile

Dry fruit mixtures from Thailand include: coco, cashews, pineapples, nuts and other fruits

Rk Country 2005 2006

% Share % Change

2005 2006 - 06/05 -

1 Unidentified Country 0,063 0,403 43,42 56,15 542,22

2 Thailand 0,015 0,187 10,67 25,97 1108,84

3 Philippines 0,000 0,081 0 11,34 0

4 France 0,048 0,044 33,03 6,17 -7,22

5 United States 0,000 0,002 0,08 0,3 1754,78

5.5 Thailand IMPORTS from ChileIn Million US Dollars

Rk Description

Total Exports Growth rate

2005 2006Jan-July

2007 2005 2006Jan-July

2007

1 Other Metal Ores, Metal Waste scrap 61.1132.

7 118.4 -36.13 117.20 77.27

2Fresh Aquatic Animals (chilled and frozen) 48.2 50.2 31.4 45.12 4.16 20.31

3 Pulp, waste and scrap of Paper 18.5 16.7 15.6 -17.48 -10.09 112.40

4 Animals and Animal Products 11.8 13.2 6.5 157.83 11.78 -26.08

5 Electrical Machinery and Parts 0.2 - 5.6 395.77 -83.30 28,134.34

6 Wood in rough, Sawn or Chipped Wood 3.2 3.5 2.4 65.85 9.74 5.13

7 Vegetables and vegetable Products 4.1 3.5 1.8 -9.82 -14.59 2.63

8 Fruits and Vegetables 3.0 2.3 1.8 -4.20 -23.92 80.91

9 Chemicals 2.7 2.7 1.3 14.56 1.81 8.02

10 Edible Meat 0.9 0.8 1.1 126.89 -17.99 209.13

Source: Crystal Reports Viewer

6. How to set up a Thai Restaurant in Chile

6.1 Introduction

• Thai entrepreneurs can expect to go through nine steps to launch a business, taking an average of just 27 days at a cost equivalent to 9.8% of income per capita.

• In Chile, there is no minimum capital requirement for registering a business, compared to averages of 18.1% and 36.1% of income per capita in Latin America and the OECD, respectively.

• Overall labor costs in Chile are also moderately low. This is partly the result of low additional wage costs -such as social security contributions- which are an important factor in the competitiveness of Chilean labor.

6.2 Steps to Set up a Restaurant Business in Chile

Proc # Nature of Procedure (2006)

Duration(days)

US$Cost

1 Notarize articles of incorporation and record them ina public deed

1 250.0

2 Publish deed (SA) in the official gazette Diario Oficial 3 150.0

3 Register at the commercial registry of the state inwhich the entity is formed

4 132.4

4 Register for the Single Tax Register 1 0.0

5 Inspection from the Internal Revenue Service (SII) 1 0.0

6 Print receipts/invoices in the authorized printingcompany

1 43.0

7 Seal documents account books & official receiptsforms at the Single Tax Register (RUT)

1 0.0

8 Obtain a "Patente Municipal" working license fromthe competent municipality

14 0.0

9 Register with the labor-related accident insurance atInsurance Mutual

1 0.0

9 Totals: 27 $575.4

This procedure runs simultaneously with previous procedures

6.3 dealing with Restaurant License (data 2006)

The steps, time, and costs of complying with licensing and permit

requirements for ongoing operations in Chile are shown below. It

takes 12 steps and 171 days to complete the process, and costs

114.18% of income per capita.

Indicator Chile Region OECD

Procedures (number) 12 15.4 14.0

Time (days) 171 198.7 149.5

Cost (% of income per capita) 114.2 246.2 72.0

6.4 Employing Workers (data 2006)

The difficulties that employers in Chile face in hiring and firing

workers are shown below. Each index assigns values between 0 and

100, with higher values representing more rigid regulations. The

Rigidity of Employment Index is an average of the three indices. For

Chile the overall index is 24.

Indicator Chile Region OECD

Difficulty of Hiring Index 33 34.0 27.0

Rigidity of Hours Index 20 34.8 45.2

Difficulty of Firing Index 20 26.5 27.4

Rigidity of Employment Index 24 31.7 33.3

Hiring cost (% of salary) 3.4 12.5 21.4

Firing costs (weeks of wages) 52.0 59.0 31.3

6.5 Registering Property (data 2006)

The ease with which businesses can secure rights to property is

measured below. In Chile it takes 6 steps and 31 days to register

property. The cost to register property there is 1.3% of overall

property value.

Indicator Chile Region OECD

Procedures (number) 6 6.6 4.7

Time (days) 31 77.4 31.8

Cost (% of property value) 1.3 6.0 4.3

6.6 Paying Taxes (data 2006)

The effective tax that a medium size businessman in Chile must pay

or withhold within a year is shown below. Entrepreneurs must make

10 payments, spend 432 hours, and pay 26.28% of gross profit in

taxes.

Indicator Chile Region OECD

Payments (number) 10 41.3 15.3

Time (hours) 432 430.5 202.9

Total tax rate (% profit)

26.3 49.1 47.8

6.7 Thai Restaurants in ChileNo. Restaurants Thai-Chef Fastfood Tableservic

e

1 Alma Restaurant 2 Thai Bangkok Restaurant 3 Resto Bar Ky Restaurant & Pub 4 Pad Thai Restaurant 5 Anakena Restaurant, in Hyatt Regency Hotel 6 Etniko Restaurant 7 Samsara Restaurant 8 Asian Bistro Restaurant 9 Naukana Santiago Restaurant & Pub

10 Naukana Pucón Restaurant & Pub 11 Gato Tuerto Restaurant 12 El Subterráneo Restaurant, Discotheque &

Pub

13 Gus-tai Restaurant 14 Chi Tai Restaurant

6.8 Thai Restaurants ALMA Restaurant

ETNIKO RestaurantANAKENA Restaurant

Thailand must increased consumer awareness and recognition of Thai brand names in Chile. It is time to

impose a world recognition of good quality and designer made

products from Thailand. This is not well known in Chile.

7. Final Tips for Thai Food Exporters1. Quality and presentation: strong factors in entering the Chilean

market. 2. Knowledge of local market is essential.3. Local distributors: It is important for a Thai businessmen to find a

good representative or distributor. 4. Visiting Chile and meeting with potential distributors is important.

The local partner should already have other good quality products and attractive prices, as well as good customer service and proper stock or inventory control.

5. Efficiency: Timely delivery, constant quality and an overall dependable service.

6. Advertising and Marketing: In addition, a strong campaign for Thai food must be undertaken. This will contribute significantly towards increasing the demand for individual Thai products.

7. Market presence: By participating in local trade shows.