Doing Business in
Ecuador
Produced by the UKTI Team in Contact: Sebastian Sauleo Email: Sebastian.Sauleo@fco.gov.uk Last Updated: February 2010 The purpose of the Doing Business guides, prepared by UK Trade & Investment (UKTI) is to provide information to help recipients form their own judgments about making business decisions as to whether to invest or operate in a particular country. The Report’s contents were believed (at the time that the Report was prepared) to be reliable, but no representations or warranties, express or implied, are made or given by UKTI or its parent Departments (the Foreign and Commonwealth Office (FCO) and the Department for Business, Innovation and Skills (BIS)) as to the accuracy of the Report, its completeness or its suitability for any purpose. In particular, none of the Report’s contents should be construed as advice or solicitation to purchase or sell securities, commodities or any other form of financial instrument. No liability is accepted by UKTI, the FCO or BIS for any loss or damage (whether consequential or otherwise) which may arise out of or in connection with the Report.
Are you a member of a UK company wishing to export overseas? Interested in entering or expanding your activity in the Ecuadorian market? Then this guide is for you! The main objective of this Doing Business Guide is to provide you with basic knowledge about Ecuador an overview of its economy, business culture, potential opportunities and an introduction to other relevant issues. Novice exporters, in particular will find it a useful starting point. Further assistance is available from the UKTI team in Ecuador. Full contact details are available at the end of this guide. Important Information - Sanctions and Embargoes Some countries may be subject to export restrictions due to sanctions and embargoes placed on them by the UN or EU. Exporting companies are responsible for checking that their goods can be exported and that they are using the correct licences. Further information is available on the Department for Business, Innovation & Skills (BIS) website
Content Introduction ...........................................................................................................................................4 1. Trade statistics - Top 10 UK Exports to Ecuador in 2009................................................................5 Visas.....................................................................................................................................................................7 2. Preparing to Export to Ecuador .......................................................................................................8 3. How to do business in Ecuador ........................................................................................................8 Import controls..............................................................................................................................................10 Anti Dumping/countervailing...............................................................................................................11 Drawback and bounties ..........................................................................................................................11 Customs duties ..............................................................................................................................................11 Recruiting and Retaining Staffing ......................................................................................................12 Documentation ..............................................................................................................................................12 Labeling and Packaging Regulations.....................................................................................................13 Getting your Goods to the Market ..........................................................................................................13 Intellectual Property Rights .....................................................................................................................13 4. Business Etiquette, Language and Culture .......................................................................14 5. What are the challenges? ...........................................................................................................14 6. How to Invest in Ecuador ............................................................................................................15 Financial Assistance .................................................................................................................................15 7. Contacts ...............................................................................................................................................15 8. Resources/Useful Links................................................................................................................16
1.
Introduction
Ecuador is located in the northwestern part of South America, bordered by the Pacific Ocean on the west (the coastline is 1,860 miles in length), Colombia on the North and Peru on the South and East. The country also includes the Galápagos Islands, about 600 miles west of the mainland in the Pacific. Ecuador is rich in natural resources, biodiversity and culture. It has 24 ethnic groups in four distinct regions (coast, highlands, Amazon and Galapagos Islands). The UK good relations with Ecuador go back since the independence of the latter from Spain in the 17th century. As one of Latin America’s largest crude oil exporters, Ecuador’s economy is largely dependent on revenues generated from oil production. Following years of economic stagnation and local currency devaluation the economy was dollarised in 2000, which has reduced inflation and increased GDP growth. Strengths of the market • • • • •
Ecuador’s strategic position in the core of the Andean Region and excellent weather. Ecuador boasts extensive resources — mining, gas, and especially oil — most of which are still to be exploited. World-leading exporter of bananas and shrimp, the country is also endowed with rich fishing areas especially for tuna. The economy's dollarisation has notably contributed to limiting inflation and capital flight. Rising wages and easier access to credit have spurred household consumption.
Opportunities in Ecuador The Central and Regional Governments are implementing a very important infrastructure programme which includes a new Hydrocarbons Refinery to process 300.000B/pd and the development of new oil fields; thousands of kilometres of new roads; upgrading the railway line; redevelopment of the port of Manta; construction of a new airport in Quito and Guayaquil; construction of the underground and light railway in Quito, improvements to post, telecommunication and water systems; new hospitals, schools and housing. In order to develop these projects the Government counts with oil exports and the development of the rich but unexploited mining sector. Both sectors are located in environmentally fragile tropical forest regions demanding state of the art environment friendly technologies. There are opportunities in a number of sectors: • • • • • • • • • • • • •
Oil – upstream and downstream opportunities Mining Airports Environment Water Security Healthcare Railways Renewable Energy Communications Food and Drink Ports Tourism
Trade between UK and Ecuador Ecuador is not a big market for the UK the trade balance is still heavily in favour of Ecuador. British exports in 2009 totalled £54 million pounds an increase of about 35% from 2008. Ecuador exports to the UK amounted £85 million pounds a decrease of 15%. A bi-lateral Investment Promotion and Protection Agreement was signed in 1994. British companies play an important role in both public and private sectors. Trade statistics - Top 10 UK Exports to Ecuador in 2009 Description
£million
Machinery
20
Medicinal and pharmaceutical products
5
Chemicals
4
Petroleum, related products and materials
9
Essential oils
2
Electric Machinery and appliances
2
Beverages
9
Iron and Steel
2
Road Vehicles
1
Dyeing, Tanning & Colouring
1
Source: Compiled by BIS SPA Statistics based on data from HM Revenue & Customs Economic Overview Ecuador economy is largely dependent on petroleum production, along with exports of tropical fruits, fresh cut flowers, vegetables, coffee, cocoa and seafood including tuna fish and shrimp. The aftermath of El Niño and a depressed oil market of 1997-98 impacted on the economy in 1999. The beginning of 1999 witnessed a downturn in the banking sector, which helped precipitate an unprecedented default on external loans later that year. Continued economic instability drove a 70 percent depreciation of the currency throughout 1999, which eventually led to the government to move to dollarise the currency in 2000. Ecuador inaugurates the millennium with stable macroeconomic figures during a decade of political turmoil. Dollarisation has obliged governments to maintain a strict fiscal policy. In consequence, inflation has remained under control and the uncertainty of currency devaluations is a matter of history. In the longer term, President Correa has indicated that he wants to move Ecuador away from the US dollar towards a regional currency, and he is forging the means to do this through active promotion of a Bank of the South and a virtual regional currency (Sucre) for trade settlements. The latter began in January 2010. President Correa, a critic of liberal economy, increased social spending by the government, from 5.4 percent of GDP in 2006 to an estimated 8.3 percent of GDP in 2008. Spending increased again substantially in 2009, though it is expected to slow as a result of the global economic downturn. The increases included a doubling of the cash transfer payment to the poorest households, including a $474.3 million increase in annual spending on housing, mainly for low-income families, as well as
numerous new programs in areas such as education, training, and micro-finance. The government doubled spending on health care, as compared to past levels, to 3.5 percent of GDP (about $1.8 billion). Free health care spending has been expanded especially for children and pregnant women. The government maintained an expansionary fiscal policy even as inflation rose from 2.7 percent when Correa took office to 10 percent in the fall of 2008, before falling back to the current levels of 4.4%. Fulfilling an electoral pledge, Correa’s government defaulted on $3.2 billion of foreign public debt in 2008, and then completed a buyback of 91 percent of the defaulted bonds, at about 35 cents on the dollar. The default has apparently been very successful for the government's finances. In addition to clearing off a third of the country's foreign debt and much of its debt service, at a huge discount, the debt reduction appears to have convinced foreign investors that Ecuador's ability to repay its nondefaulted debt has increased as the country has freed some cash. However the future does not look quite so rosy. There has been almost no foreign investment in the oil sector by private companies (which operates 9% of the fields and produces half of the oil) because the government are insisting on changing the rules of the game, so production is stagnant. Unemployment is rising and government infrastructure investment is struggling, due to the lack of capacity to implement all the proposed projects. Ecuador is also dithering over the negotiations with the EU for an association agreement, while its neighbours Colombia and Peru are probably heading to a conclusion of an agreement. Both the latter countries already have agreements signed with the US. Without trade agreements Ecuador will find itself at a disadvantage against its two most important competitors and in competing for the most important markets. In the last quarter of 2008 the economy was affected by the world recession, mostly in the form of lower oil prices and declining remittances. This led to a reduced current account surplus, and a growing trade deficit. In January 2009, the government implemented import restrictions, which contributed to a reduction in the trade deficit. In order to compensate for the budget deficit Ecuador secured one credit with FLAR for USD 500 million and one with CAF (Andean Finance Corporation) for USD 500 (million). The Government also secured with China an facility of US1.000 billion, but at a high 7% annual interest rate and secured by oil exports. With reduced international credit ratings, and a substantial part of it its oil exports committed to the Chinese Ecuador faces a challenging. The government has passed an increased budget and predicts growth close to 7% of GDP while accepting a US4.1 billion deficit. This optimism is not shared by the international financial institutions, which forecast growth at under 2%. Ecuador continues to suffer from the destabilising effects of the drug trafficking activities in neighbouring countries and the collateral effects in security. Destruction of natural ecosystems is threatening Ecuador’s impressive biodiversity. Ecuador has one of the world’s richest biodiversity centres, but also has the second highest deforestation rates in South America. Chronic corruption and bureaucratic inefficiencies in all sectors of Ecuadorean society continue to affect the country, and Transparency International’s corruption index consistently places Ecuador near the bottom of its list. Population Ecuador population is about 13 million from which half of it leaves in urban centres. The Capital Quito has about 1.5 million inhabitants. The main city and Port Guayaquil has around 2 million inhabitants and Cuenca the third city in population has 300 thousand inhabitants. The erratic economic policies have obliged to more than 2 million Ecuadorians to migrate to the US, Spain and Italy.
Political Overview Civilian governments have held power in Ecuador since 1979. Powerful interest groups and public sector unions have all played an influential role in the political process. Since the 1990s, indigenous groups have also begun to exert greater influence on the political scene. Rafael Correa took office on January 15, 2007, pledging to reform the constitution through a Constituent Assembly, replacing liberal with socialist economic practices. He has generally aligned Ecuador with the governments of Venezuela, Cuba, Nicaragua and Bolivia. Correa also pledged to renegotiate Ecuador's US$ 10.2 billion foreign debt, increase social spending and to push legislation to make foreign oil companies turn over majority interests in their oilfields. On September 28, 2008, 64% of Ecuadorians voted in favour of approving a new constitution. The new constitution called for general elections, including for president, vice president and a new National Assembly. In April 26 Rafael Correa, won re-election keeping him in office until 2013 and securing 59 of the 120 seats for Alianza Pais (AP) at the National Assembly. President Correa inaugurated his second Presidency in 10 August 2009 celebrating the 200 years of the country independence day promising to reinforce the so called Revolution of the 21st century. Though his popularity has fallen, President Correa still holds the support of about half of Ecuador’s voters.. His main opposition comes from Guayaquil. Getting here and advice about your stay
FCO Travel Advice The FCO website has travel advice to help you prepare for your visits overseas and to stay safe and secure while you are there. For advice please visit the FCO Travel section Getting here By air KLM and IBERIA are currently the only European passenger carriers landing in Quito and Guayaquil. Both airlines have daily flights to/from Amsterdam and Madrid respectively. Other options are American, Continental and Delta which operate regular flights via the US through Miami, Houston and Atlanta. Some Latin American airlines such as LAN and Avianca offer also direct flights to Europe. At the airport Quito and Guayaquil airports are located practically in the centre of the city. Thus commuting to from the airport is very easy. Taxis are plentiful and inexpensive and can be taken at the airport. Alternatively all main hotels operate their own shuttle service. Visas EU residents do not require a visa to enter Ecuador but should hold a valid passport.
Your stay Quito and Guayaquil are attractive cities to visit and Ecuador´s landscape is beautiful. Visitors may change from high Andean mountains to tropical rainforests in less than an hour and some may have difficulties in adaption to the changes in altitude. Ecuador is a tourist destination and therefore finding hotels of any standard is easy. The Quito British Embassy website www.ukinecuador.fco.gov.uk has useful information for your stay. 2.
Preparing to Export to Ecuador
Get a local agent: this is a requirement of Ecuadorian Law if you are dealing with the Government. The Embassy’s Commercial Section menu of chargeable services caters exactly for this and we are ready to help you find the right one. Ecuador is a legalistic country. For companies wanting to establish long-term relationships, a good lawyer is invaluable. The appointment of a local partner/representative isl only the first step. Ecuador is a market in which family structures predominate in the business environment, and where personal relationships are vital. This requires an investment primarily of time and personal presence. Likewise, product training for the agent's workforce is essential, as are regular updates on developments, modifications, competitor activity etc. Therefore regular visits to the market, especially during the early phase, are an important part of a successful interaction with the agent/distributor. We strongly advise British companies wishing to approach the Ecuadorian marketto commission as much market research as possible before arriving in the maket. UKTI’s team in Ecuador is geared to provide you with a comprehensive range of services when you decide to grow your business in the Ecuadorian market. This includes the provision of market information, validated lists of agents/potential partners, key market players or potential customers; establishing the interest of such contacts in working with the company; and arranging appointments. In addition, we can also organize events for you to meet contacts or promote your company and your products/services.
You can commission these services under which are chargeable and operated by UK Trade & Investment (UKTI) to assist British-based companies wishing to enter or expand their business in overseas markets. Under this service, the Embassy's Trade & Investment Advisers, who have wide local experience and knowledge, can identify business partners and provide the support and advice most relevant to your company's specific needs in the market. To find out more about commissioning work, please contact your local UKTI office. See www.ukti.gov.uk
3.
How to do business in Ecuador
What companies should consider when doing business Ecuador offers good opportunities for exporters. However a good knowledge of the market is essential in order to save time, effort and money. Contact UKTI´s Quito Team: we may charge you a fee for some of the services we offer, and this will be refundable if you are not satisfied with our service.
Visit the market: the UKTI runs sponsored missions to Latin America. UKTI can advise you about this year’s programme. If possible approach this market as one of the 5 Andean Community countries: Colombia, Venezuela, Bolivia, Peru and Ecuador. (Venezuela has resigned from the Andean Community, though for technical and legal reasons it will remain under its umbrella for another four years.) Gateways/Locations – Key areas for business Quito and Guayaquil are the two largest commercial centres (with a population of over 1.5 million and 2.5 million respectively). Both cities are the leading political centres of the Sierra and Coastal regions. Both regions are different in culture and in economic structure. While Quito is home to most of the oil company headquarters and is the government seat, Guayaquil is the main port and industrial centre of the rich agribusiness sector dominated by the banana and shrimp exporters. This difference has historically generated a rivalry between both cities. Market entry and start up Considerations British companies can approach the Ecuadorean market in several ways: • • • • •
Export direct; Set up an agency; Appoint a distributor; Open a branch Form a joint venture
In the case of direct exports it is advisable to have a local representative either on a commission basis or as an importer/distributor. Joint venture partnerships and acquisition options are chosen by many foreign companies seeking a market share. The success in this form of relationship will very much depend on the nature of the product/service and the level of domestic competition. Ecuador is a small market so personal acquaintances are important. Having Ecuadorian partners is recommended in establishing your own business. Personal contact with potential and existing clients and regular visits to the market are vital. In most cases doing business in Ecuador requires local representation in the form of an agent or distributor. The appointment of a local partner/representative will only be the first step. Ecuador is a market in which family structures predominate in the business environment, and where personal relationships therefore are important. This requires an investment primarily of time and personal presence. Likewise, product training for the agent's workforce is essential, as are regular updates on developments, modifications, competitor activity etc. Therefore regular visits to the market, especially during the early phase, are an important part of a successful interaction with the agent/distributor. In order to do businesses with government agencies or a government owned company you have to have a local agent or a subsidiary/branch in the country. Requirements to open a branch office: 1. Written Consent of the Board of Directors of the company (legalised by the Ecuadorian Consulate) • •
To operate overseas To assign US$2,000 (To open the branch)
2. A power of Attorney granted in favour of an Ecuadorean person or foreigner residing in Ecuador who will represent the Company. In the beginning the agent may be an Ecuadorean lawyer. 3. Proof of existence of the Company issued by the Ecuadorean Consulate in the country of origin. 4. The opening of a “capital integration account” with $2,000. 5. The Company’s Bylaws. The documents must be legalised by the Consulate of Ecuador in the place of origin of the company. Advertising & Sales Promotion The most successful types of advertising available in Ecuador are television and radio commercials, advertisements published in daily newspapers and magazines and in specialised trade directories. British Exporters should consult their Ecuadorian representative before embarking on a comprehensive advertising campaign. There are several advertising agencies in Ecuador, some specialising in television, others in radio commercials and direct mailing. Ecuador advertising standards are not properly regulated. British exporters are advised to consult their advertising agents before embarking on an advertising campaign. Internet usage has been increasing considerably in recent years, especially with the investment being made by both the private and public sector in broadband services. Customs and Regulations Import controls An import licence is required (documento unico de importación DUI) and issued for most categories of goods without difficulty. There is a small list of prohibited items, currently including used motor vehicles. Spirits and other products listed in the tariff customs duties book require previous approval by the MICIP (Ministry of Industries). Applications for import permits must be accompanied by a copy of the order showing the name of the importer and shipper, the class of the merchandise and its quantity, weight, measurements and FOB and CIF values. Permits are valid for one shipment only, with the exception of merchandise of big volume that requires many shipments or because of lack of space in vessels and aircrafts. Trade regulations For foodstuffs, personal care products, pharmaceuticals and medical supplies it is compulsory to register each product with a Sanitary Registry number, which expires seven years from the year of registration. This obligation has become a real trade barrier because products may be imported only from the country of origin of the products registered and not from other countries where the company produces the product. The process of obtaining a Sanitary Registry number can be complicated and difficult. Commercial Samples and Temporary Imports Samples of no commercial value sent by sample post (limit 1 lb) are admitted duty free and are exempt from documentation requirements. Other samples are subject to duty and the same documentation requirements as ordinary commercial consignments. They may be imported temporarily, however, without payment of duty, by posting a bond for the amount of the duty and undertaking to re-export the samples within three months. Samples brought into Ecuador by British commercial visitors are governed by a special agreement under which: 1. Samples which are liable to import duty are, when introduced by commercial visitors, admitted temporarily free of duty, subject to the deposit of the amount of the import duties or to the giving of security for payment. These provisions do not, however, apply to samples which do not have a
commercial value, for example, because the quantity or volume is too small or because the sample has been altered in such a way as to make it valueless. 2. The Ecuadorian Customs authorities recognise as sufficient for future identification of the samples the marks which have been affixed by British Customs, provided that the samples are accompanied by a descriptive list drawn up in accordance with the tariff regulations of Ecuador and certified by British Customs. 3. A maximum period of six months is allowed for re-exportation; after that time duty is payable on samples that have not been re-exported or placed in bond; and 4. The refund of duties deposited, or the release of the security, is effected at any Customs House in Ecuador, subject to the deduction of the duties payable on samples not produced for re-exportation or placed in bond. This refund of duties does not, of course, include any refund of various other charges such as warehousing dues, port dues, etc; these must be paid by the commercial visitor. Anti Dumping/countervailing Drawback and bounties Special Customs regimes: There are two types of regimes. 1. Those in which customs payments are suspended. * Temporary imports * Temporary exports * Goods in Transit * Customs warehousing * Maquila regime * Goods imported for International fairs 2. Those in which customs are exempted. * In bond or Duty Free stores * Free Zones Drawback: To obtain drawback of custom duties the importer must request within the thirty days after arrival of goods the intention of re-exportation. In all cases a guarantee for 120 per cent of the customs duties is required. Customs duties In January 1995 the Common External Tariff (CET) between Ecuador, Colombia and Venezuela became effective. Approved by the Commissions of the Andean Pact in 1994, the CET has effectively transform the Andean Pact Free Trade Zone into a Customs Union. As part of the Andean Pact's economic integration process, Ecuador currently maintains import tariffs, which range from 5% to 20% with the exception of the importation of automobiles, which are subject to a tariff of 40% when imported from countries outside this Andean Region. Duties on all goods are paid on an ad valorem basis on the CIF price. In addition there is a value added tax of 12 per cent of the duty paid value on most goods. Excise or special consumer taxes are levied on alcoholic beverages and tobacco. There is a range of customs services charges covering inspection, warehousing, verification and security. In January 2009 Ecuador announced a series of stiff import restrictions on 630 tariff lines, affecting 8.7 percent of its ‘tariff universe’ and 23 percent of the volume of imports. Duties were raised on 369 tariff lines and quota restrictions imposed on 271 others for a one-year period. They cover products ranging from processed foods and shoes to cars, mobile phones and sunglasses, as well as many other goods that can be manufactured in Ecuador. The measure will be dismantled during 2010. Legislation and Local Regulations
Companies are always advised to seek legal/taxation advice before entering into a joint venture or similar type of partnership. Lists of local lawyers and chartered accountants are available on request from the UKTI Section of the British Embassy in Quito. 'Honeymoon' periods of between 6 months and 1 year are recommended prior to signing lengthy agency contracts. The legal system is complex and slow. Responding to Tenders In Ecuador all major public projects select their suppliers of products and services through public tenders, published in the main newspapers El Comercio and El Universo. In order to be invited to bid for Government projects Companies must be registered at “Compras Publicas” web site http://www.compraspublicas.gov.ec/ (In Spanish only) Projects which are considered an opportunity for UK companies will be published in the UKTI portal, under the ‘Business Opportunities’ section. Recruiting and Retaining Staffing The local recruitment industry is reasonably well developed. Companies such as, Manpower, Delloite and Touche, and Price Waterhouse have a permanent base in Ecuador. Ecuadorian workers are known for their dedication, flexibility and hard work. They are also skilled workers, highly productive and receptive to innovation and change. Local labour costs in Ecuador are below those of other Latin American countries the average minimum wage is around US400 including benefits and Social Security. The normal social security rate is 11%. The local labour law is protective of the worker and not very flexible apart from the main salary. Workers are entitled to the 12th part of their yearly income every December and two basic salaries currently US 250 in July and September. Workers are entitled to 15% of the yearly company profits. Outsourcing is prohibited by law except for a few certain exceptions. Documentation 1. COMMERCIAL INVOICE: Original and one copy • • • • • • • •
Name and addresses of buyer and seller Number and description of packs, quantity of goods per unit. Size of pack Unit price Total quantity and value of goods Invoice terms, e.g. CIF Weight, gross, legal (including package) or net Number of Import Permit (DUI) 2. TRANSPORT DOCUMENTS: Original and one copy of Bill of Lading or Air waybill signed by carrier.
• • • • • •
Number of packages, quantity, description, weight, etc. of the goods Name and address of consignor Name and address of consignee Routing Statement of the party by whom carriage is payable Freight value certified by carrier 3. Certificate of Origin: Not indispensable for products imported from the UK 4. Shipping marks - Consignments to Ecuador should be carefully and strongly packed and preferably waterproofed since, because of the lack of efficient facilities at ports and airports, packages generally receive rough handling and are likely to be stored in the open air, even during the rainy season.
Cardboard packing, when used externally, does not generally stand up to the handling received Packages may be marked by stencil or by hand. The gross weight in kilos must be shown on each package, written in indelible figures at least six centimetres in height. 5. Insurance of imports from the UK - Special regulations govern the insurance of imports. Importers are legally obliged to insure their imports with local insurance companies. Importers usually cover themselves for freight and customs duties in addition to the invoice value of the goods. The policy should, however, state that the insured value included a certain percentage over the actual cost of the merchandise, if that is the case. The usual warehouse to warehouse cover should be obtained. Goods susceptible to damage by water or exposed to pilferage or breakage should be insured against these risks. Goods arriving between December and May should also be insured against damage by rain. Goods destined for Quito should be insured to cover handling and transport from Guayaquil to Quito including breakage and pilferage (and damage from rain in the wet season). 6. Parcel post import regulations - Every item sent by parcel post has to be inspected by customs authorities. Parcel post cargo manifest will list in detail the bill of landing number, name of the remittent, name of the addressee, product weight and declared value of goods. Guidelines: Please provide advice on procedures including duplicate & triplicate invoices / packing lists / bills of lading/ import declaration forms / certificate of origin / health & weight certificates / shippers letters of instructions / dangerous goods notice / specialist certificates (e.g. kosher food) / shipping marks. Standards and Technical Regulation The Ecuadorian Standards/Technical regulatory authority is the INEN Instituto Ecuatoriano de Normalizacion. http://www.inen.gov.ec/site Labeling and Packaging Regulations Labelling regulations are described in Ecuadorian Standards at INEN. The following information in Spanish is required for foodstuffs: name of the product, commercial trademark, batch number, manufacturer’s name, contents, information on artificial products, sanitary registration number, expiry date, ingredients, country of origin, technical regulation number for reference. Getting your Goods to the Market Air Freight: There are no direct flights to and from the UK. Quito and Guayaquil International airports have warehouses and full service facilities for cargo shipment. Sea Transport: Travel by sea takes between 20 to 30 days. Main ports are Guayaquil, Manta, Esmeraldas and Puerto Bolivar. Guayaquil port facilities include container, multipurpose and grain storage and roll on/roll off docks. There are good sea transport links between Ecuador and Europe (Ecuador is the world’s largest exporter of bananas.) As an exporter of goods you need to develop an understanding of various issues such as the legal and regulatory requirements your consignments have to comply with; paperwork involved; choosing the right mode of transport, i.e. road, air rail sea transport; protection for your goods; packaging; labelling; how freight forwarders can help you; rules for dangerous goods etc. Intellectual Property Rights The Ecuadorian government passed an Intellectual Property Rights Law on 22 April 1998, establishing that the State recognises and guarantees the intellectual property acquired in accordance with the law, the Decisions of the Andean Community and the international agreements in force in Ecuador. Inventions in all fields of technology are protected by the concession of patents of invention, and the ones named models of utility. Any protection to industrial property shall guarantee the guardianship of
the biological and genetically patrimony of the country; by virtue of which, the concession of patents of invention or procedures involving elements of such patrimony must be based on the fact that they have been legally acquired. A patent may be granted for any invention, being of products or procedures, in all fields of technology, provided it would be new, possesses an inventive level and lends itself to industrial application. The diverse terms established to protect the copyrights, radio broadcasting works, interpretations, performances, productions and radio emissions exceeds those already established in the ADPIC (Agreement of Intellectual Property Aspects related with Commerce of the WTO). The terms established in this Agreement provide a minimum margin of protection, the terms of which are envisaged as being extended by national or community laws. In practice, however, there is little policing of the laws and piracy is widespread.
4.
Business Etiquette, Language and Culture
Language Spanish and Quichua are the official languages. The later is only spoken in the rural zones of the highlands. English is spoken by most businessmen however Speak Spanish: if not, ensure that promotional material is in Spanish (Spanish inserts will suffice). The Embassy can help in finding a suitable translator and interpreter as part of its In-Market Help Service. Meetings and Presentations Observe social niceties: Ecuadorians are polite and well mannered people and formal when engaged in business relations. Respond to enquiries: there is nothing worse for an agent or prospective customer that to send E-mails, faxes and letters without receiving a reply. The use of a title such as Doctor, Engineer or Economist is common. Try to use this when addressing them. Business meetings are conducted in offices or restaurants. The latter are often used in order to get better acquainted with a working partner. Meeting often start somewhat after the appointed time. Negotiations Be persistent: do not be discouraged by what might appear at first to be a lack of enthusiasm. Ecuadorians like to be convinced. Be aware that Ecuadoreans prefer to deal with people they know and have built up an acquaintance with. The Embassy can help make introductions or suggest possible contacts. Entertain lavishly: Ecuadorian lunches normally last from 1330 to 1600, dinners from 2200 onwards. Quote prices FOB and C&F Ecuadorean port or airport in US$: (insurance must be Ecuadorian). Always be ready to negotiate and perhaps consider barter or counter trade deals. Be prepared to provide “loss leaders” on initial contracts, to win market share.
5.
What are the challenges?
Getting Paid - Terms of Payment • • • •
Usual terms of payment Irrevocable letter of credit (recommended) Debt collection Exporters should take usual precautions, insurance etc
6.
How to Invest in Ecuador
In general terms investing in Ecuador is relatively straightforward but time consuming, and there are very few areas where foreign investment is restricted or barred. The World Bank report on international ease of doing business ranks Ecuador at place 136 in 2009 three positions less from 2008. Financial Assistance Currently there is no ECGD coverage for Ecuador. COFACE has offices in the country. Countertrade The government in the past has favoured barter and countertrade but it is becoming less important and very few transactions have taken place recently. Monetary Board regulation No. 638 issued in October 1989, was amended by regulation No. 755 of September 1991 regulates countertrade. Contracts have to be approved by the Ministry of Foreign Affaires and registered at the Central Bank. The import permit must be obtained within 60 days of the exports being shipped. The main products available for countertrade are oil, shrimp, bananas, coffee, sugar, tropical fruits and flowers.
7.
Contacts
If you have a specific export enquiry about Ecuador which is not answered by the information on this report, you may contact: UK Trade & Investment Enquiry Service Tel: +44 (0)20 7215 8000 Fax: +44 (0)141 228 3693 Email: enquiries@ukti.gsi.gov.uk If there is no London Desk add: You will be signposted to the appropriate section on our website or transferred at local call rate to the British Embassy in Ecuador If you prefer to contact the team in Ecuador direct, contact: Team/Post: British Embassy Quito Address: Naciones Unidas y Republica de El Salvador Citiplaza Building 14 Floor Contact Name: Sebastian Sauleo Role: Senior Trade and Investment Officer Telephone: (593) 2 2970800 Email address: Sebastian.Sauleo@fco.gov.uk UK Trade & Investment can help you make the most of these opportunities and help you plan your approach to the market. You may find out more about the range of services available to UK companies trading internationally through your local International Trade Team. We hope that you have found this guide useful. For further information, please contact your International Trade Adviser or one of the UKTI team in Ecuador.
8.
Resources/Useful Links
Business Link: International Trade Business Link’s International Trade pages provide an overview of export basics including licensing, customs procedures, classifying and movement of goods, other regulatory information and export paperwork issues. It also introduces exporters to the UK Trade Tariff. Essential reading for exporters! Find out more at: http://www.businesslink.gov.uk/bdotg/action/layer?r.s=tl&r.lc=en&topicId=1079717544
Country Information: BBC Website: http://news.bbc.co.uk/1/hi/country_profiles/default.stm FCO Country Profile: http://www.fco.gov.uk/en/travel-and-living-abroad/travel-advice-by-country/country-profile/ Culture and communications: CILT – National Centre for Languages - Regional Language Network in your area: http://www.cilt.org.uk/workplace/employer_support/in_your_area.aspx Kwintessential culture guides: http://www.kwintessential.co.uk/ Customs & Regulations: HM Revenue & Customs: www.hmrc.gov.uk Import Controls and documentation (SITPRO): http://www.sitpro.org.uk Economic Information: Economist: http://www.economist.com/countries/ Export Control Export Control Organisation: http://www.businesslink.gov.uk/exportcontrol Export Finance and Insurance: ECGD: http://www.ecgd.gov.uk/
Intellectual Property Intellectual Property Office: www.ipo.gov.uk Market Access Market Access Database for Tariffs (for non-EU markets only): http://mkaccdb.eu.int/mkaccdb2/indexPubli.htm SOLVIT – Overcoming Trade Barriers (EU Markets only) www.bis.gov.uk/EUMarketAccessUnit Standard and Technical Regulations: British Standards Institution (BSI): http://www.bsigroup.com/en/sectorsandservices/Disciplines/ImportExport/ National Physical Laboratory: http://www.npl.co.uk/ Intellectual Property - http://www.ipo.gov.uk/ Trade Statistics: National Statistics Information: http://www.statistics.gov.uk/hub/index.html UK Trade Info: https://www.uktradeinfo.co.uk/ Travel Advice: FCO Travel: http://www.fco.gov.uk/en/travel-and-living-abroad/ NHS: http://www.nhs.uk/nhsengland/Healthcareabroad/ Travel health: http://www.travelhealth.co.uk/