Insight

Doing business in Latin America: pitfalls, pathways, and promise

May 2016
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For most multinationals, doing business in Latin America presents both promise and pitfalls. To succeed in this region, they must understand the most common pitfalls—then make smart decisions to avoid them.

At a glance

  • Pitfalls in Latin America include corruption, P&L statements that mask performance problems, taxation complexities, currency risks, and higher-than-expected employee costs.
  • To overcome these challenges, multinationals need a strong local leader with P&L responsibility and deep market knowledge.
  • To battle corruption specifically, MNCs need rigorous internal controls and an experienced audit function.
  • To manage problematic P&L statements, companies must implement detailed, local statements and regularly review cash positions, so they can anticipate and prefund cash needs.
  • To deal with taxation complexities, they should work with trusted local advisors who can optimize tax payment timing.
  • To manage labor costs, companies should research and quantify the true costs and update the information frequently.

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