GUATEMALA Country Report
BIENVENIDOS A GUATEMALA! Overview Guatemala “El Alma De La Tierra”(soul of the Earth) is a Central American country. It is located between Mexico and El Salvador, bordering Honduras and the country of Belize. It also borders with the Pacific Ocean as well as the Caribbean Sea. The country is spread over 108,889 Sq Km, it can be compared to the size of Tennessee. The country can be divided in three main regionsthe cool highlands with the heaviest population, the tropical area along the Pacific and Caribbean coasts, and the tropical jungle in the northern lowlands (known as the Petén). Guatemala counts with a strong indigenous culture, natural beauty and powerful identity. Mayan Ruins, Volcanoes, lakes, exotic flora and fauna can all be found in what is the most populous country of Central America.
GUATEMALA COUNTRY TRAITS
Capital Guatemala City NATURAL RESOURCES Language Spanish+ 20 indigenous languages Population 14,918,999 Government Democratic Republic religion Roman Catholicism + Indigenous Beliefs PETROLEUM WOOD FISH currency Quetzal 1 GTQ= 0.13 USD president Jimmy Morales Literacy Rate 81.5% Time Zone UTC-6 HYDROPOWER LIFE EXPECTANCY 72.0 IMPORTS: Minimum Wage US$ 3.0 Fuels, Machinery and Transport Equipment, Construction Metals, Grain, Electricity, Mineral Climate Tropical hot and Humid Products, Chemical products and Plastic Total Area 108,889 Sq Km Materials. Exports: GDP $58..73 Billion Sugar, Coffee, Petroleum, Apparel, Fruits and GDP GROWTH RATE 4.2 % Vegetables, Cardamom, Precious Stones, metals INFLATION RATE 3.4 % and Electricity..
POLITICS + sOCIAL SOCIAL Guatemala is Central America’s most populous country. It is a predominantly poor country. With high levels of infant, child and maternal mortality, as well as high levels of malnutrition. The Literacy levels are low as well as the awareness and use of contraceptive methods. The indigenous population is the most affected by this. Poverty particularly affects those who do not own land, wage laborers and traditional handicraft artisans. It is estimated that indigenous people who make up for more than half of the population are mostly excluded from political, economic and cultural mainstream. In spite of a standard of equality women are still payed significantly less than male workers and some domestic laws are discriminatory against women.
Political
The Guatemalan government is defined as democratic and representative, following their newest constitution that has been in effect since 1986. The Guatemalan president, who is also chief of state is elected by direct vote. Under the constitution congress is responsible for imposing taxes, which are 11.6 % of the GDP. State institutions face many difficulties which include high levels of political violence, inappropriate campaign finance practices and ineffective electoral regulations. These issues are a matter of corruption, legal impunity from criminal acts, organized crime, and some of the highest homicide and femicide rates in the world. Because of the proximity to Mexico, Guatemala serves as a large staging area for drug trafficking, affecting its relationship with both Mexico and the United States. Territorial disputes with the neighboring country of Belize remain in dispute.
economy +Technology economy
The GDP per Capita in Guatemala is roughly one half of the average for Latin America and the Caribbean. The agricultural sector accounts for 13.7 % of the GDP and 37% of the labor force, The inflation rate has remained somewhat stable since 2012 until 2015 being at 3.4 % The exchange rate is 7.833 Quetzales per US dollar, which is perceived to be in benefit as it contributes ro strong foreign investment. Some of Guatemala’s most productive economic sectors include sugar, textiles and clothing, furniture, chemicals, petroleum, metals, rubber and tourism. Guatemala just recently elected new president, Jimmy Morales on October 23rd 2015, following former President Perez Molina’s resignation, who was later arrested under corruption charges. This leaves Guatemala’s economic development uncertain as President Morales, a former comedian, has no political plan that has been made public. However, President Morales does want to revive the dormant dispute with the neighboring country of Belize, which could affect
Technology Total Internet Users: 2.5 Million Population Percentage: 17.1 % E-COMMERCE: USD $65 Million Social media users: 3.2 Million Mobile CELLULAR SUBSCRIPTIONS: 16.9 Million fIXED TELEPHONE LINES: 1.2 Million
Environment Biodiversity
Guatemala Environmental Agreements
Antarctic Treaty, Biodiversity, Climate Change, Climate Change-Kyoto Protocol, Desertification, Endangered Species, Environmental Modification, Hazardous Wastes, Law of the Sea, Marine Dumping, Ozone Layer Protection, Ship Pollution, Wetlands, Whaling
Climate Control
CURRENT ENVIRONMENTAL ISSUES Deforestation in the Peten Rainforest Soil Erosion Water Pollution
Endangered Species
LEAD TIME ON PRODUCTION NATIONAL HOLIDAYS -January 1st New Year’s Day-March 24 Holy Thursday-March 25 Good Friday-March 26 Easter Sunday-May1st Guatemalan Labor Day-June 30th Army Day
-August15th Feast of The Assumption-September 15th Independence Day-October 20th Revolution Day-November1st All Saints-December 25th Christmas Day-
POTENTIAL ENVIRONMENTAL HAZARDS Rich in Diverse landscapes, Guatemala also carries a diversity of potential environmental hazards. These would include numerous volcanoes in several mountains, occasional violent earthquakes due to high levels of seismic activity. The Caribbean coast is highly susceptible
Volcano
Earthquake
Hurricanes
TRANSPORTATION
-Roadways-
The Roadway system in Guatemala consists of a total of 11, 501 km, which includes 6,797 km paved roads, counting with 127 km of expressways. Unpaved roads are still numerous with 4,704 km of area covered.
-Waterways-
The Waterway System consists of 990 km. 260 km of which navigable year round, anadditional 730 km navigable during high-water season. It also counts with 5 seaports along the coasts of both the Caribbean sea and the Pacific Ocean. Major seaports include Puerto Quetzal and Santo Tomas de Castilla.
-Railway-
The Railway System covers a total of 800 km. It is not a very frequent mode of transport.
-Airway-
The Airway System counts with 291 airports, 16 of which have paved runways and 275 of which are unpaved. Guatemala only has one heliport. The most important airport in Guatemala is La Aurora International Airport.
Conducting Business Expect Guatemalan business people to believe in the “prosperity theology” of some Neopentecostal sects. These sects preach that God wants people to be wealthy, and that peasants are poor because they lack faith. The majority of Guatemalan maquiladoras (manufacturing plants) are Asianowned, which are primarily owned and managed by South Koreans.
-Appearance-
-For business, a lightweight suit is appropriate for men; women should wear a dress or skirt and blouse. Military clothing is illegal; it can neither be worn nor brought into the country
-Behavior-
-Usually Punctual -Men sit to the right of hosts, women to the left. -Breakfast and Lunch are preferred -Gifts may be given in a business setting -No white flowers, these are reserved for funeral.
-Communications-
-Shaking hands and saying “mucho gusto” is very proper -Handshake may seem limp, which is customary -Close friends embrace and pat each other’s back -Titles, especially among the elderly, are very important. Address a person directly by using his or her title only. -Most Hispanics have two surnames: one from their father, which is listed first, followed by one from their mother. Only the father’s surname is used when addressing someone -Speaking softly considered the polite thing to do -Social conversation before business is the custom -Good conversation topics: Guatemalan geography, history, culture -Bad conversation topics: politics or “the violence” since 1978
Textile and apparel industry
-FACTORStotal production
-OVERVIEWGuatemala is the strongest player in the apparel and textile industry in Central America. Its geographic position plays a key role in the export markets due to the closeness to USA, Mexico and Canada. It is a great source of raw materials, which are crucial for the industry, they produce: synthetic fiber fabrics, special fabrics, knitted fabric, with dyed yarn, twill, special purposes fabric, and Oxford fabric among others. The garments and textiles companies work alongside the whole value chain, without putting the final brand on the product. There is a high quality culture in the products, added to the efficient delivery time to the main clients is approximately 8 weeks. Some of the brands that produce their garments in Guatemala are: Nike, Polo Ralph Lauren, American Eagle Outfitters, Donna Karan New York, Guess, Tommy Hilfiger, Old Navy, Gap, Abercrombie & Fitch, and Hollister
THE INDUSTRY IN NUMBERS -Production in the Garment and Textile IndustryUS $ 1.2 Billion
-ExportsUS $ 1.24 Billion
-Labor CostUS $ 3.00
us$ 1.2 Billion JOBS
90,000 Female Work Force
46%
MAIN PRODUCTS: -Knit T-Shirts -Pants -Shorts -Sythetic Fiber dresses
ii
Attractiveness to the buyer i
-There is a commission in Guatemala, Garments and Textiles Commission (VESTEX), a cluster in charge of promoting the sector through technical assistance, training, information, marketing, exports promotion, and contacts at international and governmental levels-
ii -Guatemala boasts 140 garments companies, 41 textiles and yarn plants, and 260 companies for accessories and services-
iii -This sector is considered a net exporter, and thus the free trade zones in Guatemala provide the perfect opportunity for establishment here-
iv -The Central American region accounts for an important 14% of garments and textiles exports.-
trade agreements -cafta-drThe Dominican Republic-Central America FTA (CAFTA-DR) is the first free trade agreement between the United States and a group of smaller developing economies: our Central American neighbors Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, as well as the Dominican Republic. The CAFTA-DR promotes stronger trade and investment ties, prosperity, and stability throughout the region and along our Southern border.
-benefITS OF CAFTA-DR-Total two-way goods trade between the U.S. and our six CAFTA-DR partners has increased over 71 percent since entry into force, from $35 billion in 2005 to $60 billion in 2013. -Trade under CAFTA-DR supports Made-in-America jobs and unlocks opportunities for well-paying work as goods flow across borders and are manufactured into final products. Working together, our region can compete better. -CAFTA-DR is strengthening workers’ rights and conditions in the region, through enforcement of labor protections to which its workers are entitled under countries’ national laws. This includes through the first labor dispute under any free trade agreement to ensure Guatemalan workers can exercise their rights under Guatemalan law. -Trade and economic growth promotes prosperity and stability and opportunities for citizens within their home country. CAFTA-DR requirements for rule of law and transparent and fair procedures in government actions create a better climate for investment and business
top suppliers in guatemala -Centexsa Sociedad Anonima TOP CUSTOMERS: 1.Kohl’s 2.Target 3. J.C Penney
TOP PRODUCTS: 1.Cotton Shirts 2.Knits 3. Pullovers
-Csa guatemala s. a TOP CUSTOMERS: 1.Old Navy 2.Gap Japan K.K 3. Kohl’s
TOP PRODUCTS: 1.Cotton Shirts 2.Crew Necks 3. Short Sleeve Shirts
-startex sociedad anonima TOP CUSTOMERS: 1.Ralph Lauren Childrenswear 2.Ralph Lauren Corp 3. Outerstuff
TOP PRODUCTS: 1.Knit Short Sleeve 2.Cotton boys Knit 3. Cotton Infant Knit
-Winners S.A TOP CUSTOMERS: 1.Kohl’s 2.Wal Mart 3.Target Stores, Division of Target C
TOP PRODUCTS: 1.Cotton shirts 2.Knits 3. Pullover
FREIGHT SERVICES AND TRANSIT pORTS FOR InterNATIONAL SERVICES 1. PUERTO QUETZAL 2. PUERTO SANTO TOMAS DE SANTO
SHIPPING COMPANIES+ Transit 1. CMA CGM 31 days Puerto Quetzal to NYC, USA 2.TIBA GUATEMALA S.A 26 days from Puerto Santo Tomas de Santo to Los Angeles
costs
Puerto Quetzal to NYC (40 ft container) $1,548.94 - $1,711.99 Puerto Quetzal to Los Angeles (40 ft Container) $831.27 - $918.77 Puerto Quetzal (40 ft container) $1,624.58 - $1,795.59
why guatemala?
PROS - High levels of quality of product, -Easy access to raw materials. -Low Wages US$ 3.00/hr -CAFTA-DR Trade Agreement -VEXTEX commission - Quick Delivery Times because of geographical positioning,
CONS - Low Literacy Rate, -High Levels of Corruption. -Possibility of Natural Disasters -Primarily Agriculture Oriented -Unsure Economic Future - Drug Conflicts,
works cited “Suppliers in Guatemala” Panjiva.Panjiva.com, n.d. Web October 2015. <https://panjiva.com/search/global-supplier?q=shirts&x_history=> “CAFTA-DR” USTR. ustr.gov, n.d Web October 2015 <https://ustr.gov/trade-agreements/free-trade-agreements/cafta-dr-dominicanrepublic-central-america-fta> “Freight Calculator” World Freight Rates,n.d Web October 2015 < http://worldfreightrates.com/freight> “Garments & Textiles Sector in Numbers” Invest in Guatemala, n.d Web October 2015 < http://investinguatemala.org/investors_guide/content/garments-textiles> “Guatemala” World Bank Org, n.d Web October 2015 < http://www.worldbank.org/en/country/guatemala> “The World Factbook: Guatemala”Central Intelligence Agency, n.d Web October 2015 < https://www.cia.gov/library/publications/the-world-factbook/geos/gt.html> “Guatemala Social Development” Nations Encyclopedia, n.d Web October 2015 < http://www.nationsencyclopedia.com/Americas/Guatemala-SOCIALDEVELOPMENT.html> “Jimmy Morales , TV comic and self-styled outsider candidate, wins Guatemala presidency” US NEWS, n.d Web October 2015 <http://www.usnews.com/news/world/articles/2015/10/26/tv-comic-jimmy-moraleswins-guatemala-presidential-runoff> “Sea Rates” Sea Rates n.d Web October 2015 < https://www.searates.com>