lands along much the same lines, but none of these nations showed the
deliberately planned aggressiveness and solidarity of purpose, or the
determined unity of spirit that animated the German. England did more to
establish her connections throughout Latin America along the path of
extensive investments in national and local securities, the building of
railroads, the dredging of harbors and erection of docks, while France,
relying upon the admitted and acknowledged fact that all the civilized
world looked to her for its fashions, styles, millinery, articles of
clothing and dress, toilet goods, and luxuries, very naturally took
advantage of existing conditions and used this as a foundation on which
to erect her trade. Whatever commercial prestige either Spain or
Portugal acquired in these countries was due almost entirely to the
presence of thousands of citizens of these nations, who created a demand
for articles of home production, and this is relatively small.
In this simple but thorough manner was the trail to business success in
this field blazed. The experiences of our predecessors, and the lessons
they learned should stand us in good stead in our efforts and help to
direct our feet from all possible pitfalls. In fact we should, by
following and improving on their attempts, if this be possible, acquire
a commercial supremacy in this territory in less than half the time
taken by the Europeans.
XXI
METHODS OF DOING BUSINESS
The question of what method to employ in developing a business in Latin
America depends primarily upon your capital and the nature of your
product. Obviously we manufacture numerous things that these countries
cannot use. Many of our manufacturers seem to be totally unaware of the
goods suitable for these markets or their peculiar requirements. I have
met a man in Brazil selling, or rather trying to sell, snow plows. It is
quite apparent that no amount of exploitation or argument could possibly
produce results with such a commodity. With the exception of a few of
the more southerly cities of South America, and some located in the
highest mountains it would be useless to send a representative to these
fields for the purpose of introducing a heating system, no matter what
virtue it might have. I know of an American canoe manufacturing concern
advertising its wares in a portion of the Argentine which is absolutely
dry and without navigable water, as a result of which imported bull
frogs die of old age without ever having a swim. It therefore behooves
one to make a full and exhaustive investigation through all possible
sources of information, and ascertain if one’s goods are really
appropriate for these lands. Another point worthy of consideration is
that wares especially adapted to the uses of some countries may be
totally unfit for others. Accurate preliminary data of a reliable nature
may generally be obtained by addressing the United States Consuls
located at the various seaports of the Latin American countries. These
gentlemen are especially equipped for obtaining all the information
necessary, and are charged by the United States Government to supply
complete details to inquirers.
[Illustration:
A COMPARISON OF CLIMATES
This map shows South America with its cities and countries placed just
as far to the north of the Equator as they naturally lie to the
south of it, in order to enable comparison at a glance of the
climatic relationship between the United States and the South
American markets. The effect is the same as if the map of the
Western Hemisphere were folded together at the Equator and the
impression of the South American part transferred upon the map of
North America. The longitudinal position of every part of South
America is thus correct.
The map at first glance would lead one to say that Argentina has a
range of climate equal to that from the City of Mexico to Hudson
Bay, but the climate of South America can’t be judged that way. A
cold ocean current along the West Coast and a warm one along the
East Coast greatly modify it. The altitudes of parts of the
continent within the tropical zone also temper the heat. The extreme
north of Argentina is described as having the climate of Southern
Florida. The mean annual temperature at the very southermost part of
Argentina is said to be about that of Maine with a minimum hardly
lower than the moderate one of Puget Sound and a maximum no higher
than that of Nova Scotia. All Argentina is said not to have the
extreme range of temperature found in the United States. Going to
show how greatly ocean currents offset latitude, the islands of
Great Britain are also drawn in on the map in their position
relative to the Equator. London is farther north than the
northermost spot in the United States exclusive of Alaska.
(_Reprinted by permission of the editor of_ The Americas, _published
by the National City Bank of New York_).
]
The wisest and best plan, once you are determined to enter these fields,
is for one of the heads of the firm or one of the leading officers of
the company to make a preliminary tour through the lands in question for
the purpose of studying the situation and ascertaining the demands
existing for similar lines. On such a trip prices should be carefully
observed, strict attention paid to duties, freight and other incidental
charges. It is by noting and studying these conditions that you will be
able to meet and overcome competition. Special care should be exercised
in giving the natives just what they want and not in trying to foist on
them the thing you wish them to have, even should it be better, cheaper
and more practicable. With this object in view, local dealers and
merchants should be interviewed and care taken to ascertain every detail
that might possibly have any bearing on your future marketing plans.
Being thoroughly prepared in advance helps materially in smoothing the
road to be travelled. Samples of competing lines with prices and minute
data of all kinds should be sent to the home office for reference
purposes.
It will soon be apparent, assuming that the official or representative
who has gone over the field finds it pregnant with possibilities, that
your business in Latin America may be conducted upon one of the
following lines:
First. The opening of your own branch house for each country, or for a
group of countries.
Second. Establishing an exclusive agency for each country with a
resident merchant therein.
Third. Selling through your own representative directly and conducting
your own shipping and banking.
Fourth. Marketing your article through some American export commission
house.
Fifth. Exploiting your goods through your own representative and turning
the account over to a local or native commission house or merchant for
forwarding the goods and collecting for the same.
Sixth. Uniting with several manufacturers in allied lines and sending
one salesman to represent you, on a co-operative plan.
Which of these particular forms of introduction is best adapted to your
special line is a matter for you alone to determine.
Assuming that your capital and commodity warrants you in establishing a
branch house in each individual country or in a group of countries,
which is by far the best plan of conducting your business, the question
of prime importance is that you should be located in or near the leading
seaport in order that you may be close to shipping as well as to be able
to superintend personally the discharge of goods and their clearance
through the slow moving native custom houses. Great care should be taken
to be on the leading line of railway, or near as many different lines as
possible in order to facilitate the forwarding of goods to their
destination and to the interior. These are vital factors and should be
carefully weighed in determining your location. If your business is one
requiring the carrying of a large and varied stock, it will be rather
difficult to get proper warehousing accommodations especially in the
metropolis or port and it may be necessary to erect your own building
for this purpose.
The adoption of this system of introducing a line of goods requires
careful planning and too much stress cannot be laid upon the selection
of a tactful and experienced manager for your venture. Banking
arrangements must be made. Municipal and state taxes must be provided
for and the thousand and one details attended to that are unknown and
unheard of in this country, each one of which requires patience and tact
in solving and means the expenditure of money and the apparent wasting
of much time. In other words the initial expense involved is far greater
than a similar undertaking would be in the United States or Europe and
only a business yielding large profits can be expected to withstand the
immense financial drains to be incurred. While the salaries of the
native office help will be comparatively smaller than the prices paid in
the United States, still there will be noted an increased cost in
maintaining a travelling force as well as the necessary American
employes of the staff. Transportation charges are high and the cost of a
salesman on the road in any of these lands means fully double the
expenses of a similar man in this country. Travel facilities are poor,
distances between markets long and much time must be consumed in each
city visited, especially in the preliminary trips, all of which
increases the cost of the traveller, and for the first few years makes
him a rather expensive luxury. This must be submitted to with patience
for upon his efforts depends your success. It therefore follows that the
business to be done must be a large one to afford such preliminary
charges and its future outlook must be of the brightest character. That
such agencies can be maintained at a profit however is proved by the
fact that all the large houses of Europe prefer doing business along
this line, and within comparatively recent years this is the method
being employed by the big American houses and corporations venturing
into these territories. The Standard Oil Company, the Vacuum Oil
Company, The Singer Sewing Machine Company, The National Cash Register
Company and many of the larger mercantile houses and manufacturing
concerns maintain their own branch offices in the principal cities of
the Latin American countries and are entirely satisfied with the
results.
The establishment of your own agency in a country indicates to the
public your intention to become a portion of the native business
community and gives you a solid standing with the trade besides bringing
you in closer and more intimate touch with the consumer. It has many
other advantageous features which must be apparent.
Should your business not warrant such an outlay, the next best method of
approaching the situation is the appointing of some high-grade, resident
merchant, either foreign or native, in each country, as your exclusive
representative. It is obviously unnecessary to state that in making such
a selection the greatest care should be taken to investigate most
thoroughly the business reputation and financial standing of the one
appointed. Very often it is wisest to give your agency to some small,
young aggressive firm, with limited capital, rather than to a staid old
house with much money and prestige. These suggestions are given for what
they are worth. Common sense will indicate the concern which in your
good judgment is best adapted to represent you properly. Old established
houses generally have the capital and means to introduce goods through
the country and will often guarantee to place a certain amount of
business within the year upon conditions to be specified. Once you have
placed your agency, be sure to turn over all inquiries or orders
received from within their territory to them for their attention. This I
regret to state has not been typical of American houses and has done
much to make responsible firms hesitate about accepting exclusive
agencies. A strict adherence to this suggestion will tend to establish
your honesty of purpose and will be deeply gratifying to your local
representatives.
The house accepting your agency will have its own salesmen to travel the
country and to introduce your line to the trade in addition to other
appropriate means toward this end. They will be only too glad to have
your representative accompany their local man from time to time and are
highly appreciative of such an interest, because it stimulates both the
customer and their representative and at the same time gives you the
opportunity of knowing just what they are doing and what they have to
overcome in the way of prejudice and competition. It is always well to
aid the local agency with a small advertising allowance, to be spent as
your combined judgments may dictate. This gives a further evidence to
them of your desire to go after the trade and keeps their interest more
intense on your line. Unfortunately too many American houses think that
it is unnecessary to spend any money in advertising their goods in these
lands. The sooner they take advantage of the advertising possibilities
afforded by these virgin fields the larger and quicker will come the
returns. Very often it is advisable to make specific allowances to the
firm holding your local agency with a view to having their
representatives make special trips in your behalf. These are, however,
all details to be worked out advantageously between the contracting
parties and will suggest themselves as conditions develop.
In the event of your organization having an export department, properly
equipped to conduct correspondence in the native tongue and give direct
attention to the banking problems arising as well as to shipping and
forwarding it is advisable to have your own traveller, or travellers, to
cover one or more of the countries or all of the territory involved.
This keeps the home office in closer touch with all the details of the
business and is to be commended in certain lines of trade but is only
advisable when one’s foreign department is thoroughly perfected and in
the hands of a competent manager.
Orders sent in by your traveller will contain such complete and specific
instructions as to forwarding and banking that they can be intelligently
handled at a minimum of expense with your own force. It should be
observed however that your representatives for the first few years
should make the entire territory once every twelve months at least, and
oftener if conditions warrant, in order to keep your goods continually
before the dealers and to engrave upon their memories that you are in
the field to stay and wish to cater to them and their wants.
If conditions are such that you cannot afford a personal representative
the commission export house offers opportunities for bringing your goods
to the attention of the native dealer. There are many of these concerns
situated in all of the larger cities of the United States; New York, New
Orleans and San Francisco being especially well provided with them,
owing to the fact that they are the largest ports in the East, South and
West respectively and have excellent forwarding facilities. As a rule
these firms are well supplied with capital and capable of rendering
effective and efficient services. They are open, however, to the one
objection that most naturally they will give the greatest attention to
the line yielding them the largest profit, and just how to induce them
to handle your goods to the exclusion of other competitors is a problem
to be solved by you with the concern you decide to use for your
purposes. Furthermore, it should be your express duty to see positively
that your customer is thoroughly protected against the commission house
making any additional charges or increasing the original price quoted by
you to your client. This has been a common practice, and has had the
effect of tending to retard business and prejudice trade in these lands.
As a rule these agents pay cash for goods when delivered, a feature
which has its attractions to the manufacturer or merchant working on a
limited capital and requiring his money promptly. Their financial
connections are of a kind that enable them to do this, allowing a very
small commission for their trouble. In addition to all these features
they have a corps of experts familiar with shipping procedures,
insurance problems, the routing of freight, packing, banking, as well as
the details of foreign correspondence so that much of the complications
and annoyances of the export trade is taken from your shoulders and
borne by men familiar with the entire subject. Every few months it is
the custom of many of these organizations to send their representatives
through the entire Latin American territory with the idea of developing
trade and receiving orders. There can be no question as to their place
in this field or as to their general efficiency, and it is always well
to discuss with some high class commission export house what they can
offer your particular line when contemplating the possibilities of doing
business in these lands.
A few American merchants have found it expedient to sell goods through
their own representatives, turning the accounts over for delivery to
some local concern for the purpose of forwarding the goods and making
the collections thereon. While this may be advisable under some
conditions, still it is not a practice to be commended and is only
warranted when the local or native commission agent is of a high grade
and financially responsible and where the purchaser is likely to impose
upon the buyer through some of the many methods in vogue among a certain
type of small native business men.
Rather than entrust the future of one’s business in the export field
with an inferior representative, it would be better to co-operate with
several manufacturers in allied lines, and send one man to represent the
entire group. It is questionable if one traveller could do justice to
more than five or six lines and they for obvious reasons should be
related to each other, the principal idea being to economize the time
and expenses of the one handling them. For example, a representative
might carry neckties, shirts, collars, socks, and men’s underwear and
hats, or such lines as corsets, stockings, ladies’ underwear and shirt
waists might be effectively presented by one salesman.
The strictest care should be taken in the selection of the person to
represent each group of merchants and under no circumstances should
lines which might sooner or later develop into competing ones be allowed
to be carried.
Such an arrangement appeals particularly to the smaller manufacturer or
merchant in that it brings his goods to the attention of the foreign
dealer at a minimum of cost with a maximum of efficiency and paves the
way for developing the market. Many of the leading sellers in Latin
America to-day had their start along this line of co-operative selling.
Whatever medium you may feel it wise to select in entering these fields,
bear in mind the fact that under no circumstances should your
representative overstock the buyer with goods. It is far better to
receive small orders at first than to sell large ones which may move
slowly. Climatic conditions are such that in Latin America many goods,
unless sold quickly, rapidly deteriorate and the consequent loss will
fall on the individual merchant and result in complaints from the buyer
if he becomes the possessor of damaged goods, thereby prejudicing your
article in his sight. The salesman in thus cautioning a dealer will
exhibit his material interest in the future welfare of the merchant and
more thoroughly establish a substantial business friendship with his
client.
In many of the countries of Latin America, owing to their enormous
extent and lack of travel facility, as well as the exorbitant local
freight rates and great distances to be traversed it is often wise to
establish more than one agency. In Brazil for example, it might be well
to place agencies in Rio de Janeiro, Santos, Bahia, Pernambuco, and
Para, for the simple but sufficient reason that the freight on goods
from New York to any of these ports direct, is less than the local
freights between many of these cities. To get from Callao, Peru, on the
west coast to Iquitos on the eastern boundary of that republic is a
difficult problem. It is really quicker, cheaper and far more convenient
and comfortable to come first to New York, then go to Brazil and up the
Amazon, to Iquitos, than to undertake the hazardous journey of many
weeks across the risky overland trails through the interior of Peru.
Assuming that you were desirous of giving an agency for some special
line of merchandise liable to be a good seller in the eastern frontier
of Peru as well as throughout the republic, one agency should be placed
in Callao, or Lima and the other in Iquitos. In Chile, it is likewise
often advisable to place an agency for goods in one of the northern
ports of the republic as well as in Valparaiso, or Santiago, either
Iquique or Antofagasta being selected for this purpose, as being best
adapted to reach the center of the nitrate industries.
[Illustration:
_Photograph by Underwood & Underwood_
Drying hides and skins in Argentine
]
Many of the Central American countries, particularly Nicaragua,
Guatemala, and Honduras, as well as Mexico, having seaboards on both
coasts will present problems for determining the location of agencies
accessible to both oceans. These and other conditions will be
continually arising. After discussing the matter with your factor or
your representative, common business judgment will be the only safe and
sane rule to warrant you in reaching a decision.
XXII
THE SALESMAN AND THE CUSTOMER
The success or failure of a business venture in Latin America depends
materially on the character of the representative sent to these marts of
trade. Never having seen or heard of you or your goods, it is most
natural for the foreign merchant to make his deductions from your
emissary.
The typical ambassador of commerce for South American fields should
combine elegance of dress and courtliness of manners; be a linguist; a
scholar; a diplomat; a philosopher; always a student and a business man
as well. He should continually bear in mind that his visit is
unsolicited—that in a sense he is an aggressor, an intruder, and above
everything he should conform to the usages that custom has established
in this part of the world.
European merchants and their travellers, with the hope of strengthening
their position have spread about the unwarranted idea that the Yankee is
tricky in all his dealings and this condition must at all times be
combated not theoretically but obviously and practically. Be frank with
prospective customers. Do not try to load them up with goods. Keep your
agreements to the letter. Live up to your contract even if you lose
money by doing so. Follow exactly whatever shipping instructions are
given.
After an initial visit to a possible client it is advisable to develop
his social side. Ascertain to what clubs he belongs and get put up at
them, so that an opportunity may arise to see him after the cares that
infest the day are gone. You will find the Latin American a gentleman, a
past master of the art of etiquette, a Chesterfield in matters of
decorum and an agreeable companion. He, like ourselves, has his
weaknesses. Find what they are and cater to them. He will be responsive,
after he gets to know you. The amount of flattery that he will stand for
and assimilate is beyond belief. The Spanish language is especially
equipped for the purpose and provides means for raising to its _n_th
power the superlative degree. Do not for a moment get the idea that you
are dealing with a child, for though, like the Chinaman, he presents a
bland exterior, he is uncannily wise. He knows his line and prices and
market conditions. Existing in a world of little excitement, few
amusements, and one foreign mail per week, his mind is not diverted and
he unconsciously concentrates and becomes a specialist in his business.
Having always lived thousands of miles from markets he has learned to
prognosticate trade developments years ahead.