Argentina: Want To Sell Porsches? Export Our Wine And Olives
With a 35% import tax on new cars, Argentina is already a touch market for foreign brands seeking to bring cars into the country. But the Argentinean government has just made it little bit harder by demanding that importers export an equal amount of Argentina-made goods for every car imported. As a result, Bloomberg reports that Porsche’s importer is exporting Malbec wines and olives, Mitsubishi’s importer is getting into the peanut export game, and Subaru’s representative is shipping chicken feed to Chile. BMW, which has had recent difficulties importing into Argentina, is focusing on its core business, exporting auto parts and upholstery… and a little processed rice to make up the difference. But why are these major manufacturers getting into all kinds of strange side businesses just because Argentina wants to improve its trade balance and foreign currency reserves? Simple: Argentina is South America’s second-largest economy, and it’s been growing at over 5% per year since 2007 (i.e. when other markets were shrinking). So if the government wants imports balanced with exports, well, Porsche’s importer is just going to have to get into the wine business, isn’t he?
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"We were buying BMWs from the Germans and selling them tomatoes." --Greek author
Argentina is being smart. No economy can be healthy in the long term if it imports more than it exports. The US should be so smart visa-vis trade policy.
Well, this makes no worse sense than Toshiba, Hitachi and the gang getting sugar beat import quotas from MITI 40 years ago to offset their losses abroad as they dumped televisions onto the North American market. Look at how it worked out for them? (Hint: whatever happened to Zenith, Admiral, RCA and the gang?) To our American cousins, who are used to running a current account deficit, your northern cousins may be soon joining you at the bread line. We're running 9 consecutive quarters of current account deficit, mostly thanks to increased imports of finished goods from Korea and China. Argentina is in good company. Canada does not have enough lumber and fish to sell to Korea to offset Canadian's recent obsession with Kia and Hyundai. This could be an interesting betting pool. Who go down first, after Greece?
Whether you agree with it or not, you can understand the plight of the Argentines. Plus, there are some great opportunities in Argentina right now, anything that is domestically grown there, or anything that requires skilled labor/value-add, etc. In regards to shipping/exporting, etc - these guys can help - http://www.argentinaairexpress.com