Work Abroad but earn in USD

Wednesday, February 13, 2008

Trust in Argentina

Business and Trust in the Argentinean Community

One of the things I have learned about running a business in Argentina is the necessity of community involvement and building trust. For myself, an expat entrepreneur who exports wine from Argentina, I must involve myself with local media and businesses, tourism, and the expat community on a regular basis to build relationships. Unfortunately, Argentina is an extremely distrustful society and because of this, more attention must has to be paid to forming relationships.

My company, Anuva Vinos, makes continuous contact with wine shops, wineries, customs brokers and publicity agencies in order to outreach directly to the local business community. We obviously buy wine from the wineries, help the wine shops send wine to foreigners, use customs brokers to get those wines out of the country, and do interviews, attend events and generally promote the wine club and tastings that we do here in Buenos Aires with publicity and the media. It struck me about a month ago, that ramping up the frequency of these activities can only help. But one must know how to speak about one’s product to these different entities. For wineries I am a customer. For wine shops, I am a partner. For the media, I am a source of information and news, and they are a source of publicity for me.

It almost always comes down to hand-shakes and smiles. These two things build trust. Trust, in Argentina is hard to come by. I was first exposed to “gente de confianza” (trustworthy people) when I started my first business here in student exchange. Argentineans were and are obsessed with this phrase, mostly because no one here trusts one another. Ice cream shops make you pay first, hold your receipt, turn in your receipt to the ice cream server and get it stamped to prove the sale was made and the ice cream served. Bars routinely have one line where people pay for drinks and receive a ticket which they then turn in for their beverage. This is because no one trusts one another with money. Thus meeting people in person is very important here.

I practice this belief with the tourism industry. I routinely visit, in person, 15-20 hotels per week where I speak with the concierges and managers about the wine tastings that Anuva Vinos offers. They would never have thought to call me if I had just sent and email or made a phone call. On the contrary, in the U.S., our dealings have been virtually 100% phone and email based. I only met my logistics and website people for the first time 9 months after we set up. There was an unspoken trust between us that does not exist in Argentina. This type of trust is quite evident among the expat community here in Argentina.

Going to events sponsored by Expat-Connection and other expat groups is really good for networking. Many Europeans, Americans, Canadians and Australians come to these gatherings to socialize, learn about procedures in Argentina (like buying property and bringing in money), and experience Argentine culture with other foreigners living here (like polo). Many of these people have a wide range of experiences in business, living abroad and language which makes them great resources and many of them have great connections that they willingly will share because of the trust among this group. This trust comes from an almost instantaneous bond between one another because they are all English speaking foreigners who decided to leave their home countries for a new country where they find themselves in the minority. I have found great connections by going to these types of events and doing these types of activities and I will continue to do so with more frequency as the power of an abundance of trustworthy relationships cannot be underestimated.

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9 Comments:

Anonymous gian said...

While surfing on the Net I found your blog, I stopped at it to have a rest and I explored it. There is interesting stuff displayed. Now I continue my surfing…
Make a stop at my blog, if you wish. Ciao.

2/15/2008 03:34:00 PM  
Anonymous Anonymous said...

If this is such (the distrust), why do you business in Argentina? Are the profit margins larger in Argentina than in the U.S.? Are there more opportunities? Why would you go to Argentina to do business if you recognize the country as very complex to establish business relationships.
I just can't understand and the answer is not explicit or implicit anywhere in this post.
I happen to agree with the distrustful nature of Argentineans in general, I just happen to not understand why you would fly thousands of miles to get start a business in a difficult business environment.

2/18/2008 01:10:00 AM  
Blogger TropicGirl said...

I love your blog! As I'm planning to move to BA in a few months, I've found it very helpful. Thanks and keep writing!

2/29/2008 12:16:00 AM  
Blogger Don Gonzalito said...

Daniel,

By now you probably know that the degree to which every citizen is controlled and laws enforced on him varies from the USA to Argentina.

The same holds true for business deals. With large chunks of the population out of the credit snare and hence virtually out of the economic system, many trust-based activities that Americans take for granted are hard to reproduce in Argentina. Would you lend a U-Haul truck or rent a video to someone that does not have a FICO score to go after? The VERAZ in Argentina is almost toothless compared with the power of the 3 big credit bureaus in the USA.

My point is, you are describing Argentines as pathologically mistrustful, while in fact it is quite the opposite, if you make the "correction" of the environment they live in.

Argentines instinctively mistrust two things: government and financial institutions, and given their past they can hardly be blamed for either mistrust. As hard as that makes doing business, your own experience demonstrates that they do build trusting interpersonal relationships.

3/06/2008 09:15:00 PM  
Blogger danielkarlin said...

Hi, this is Daniel responding to the comments posted: For ANONYMOUS, who asked why do I do business in Argentina my response is that 1) My fiancée is Argentine and for now life needs to be here. 2) Opportunities are more accessible in the sense that you need less start up capital to begin a business and 3) I fell in love with the wine here. I love this product so much that I have decided to dedicate my professional life to it.

For Don Gonzalito, I have written another blog.

3/12/2008 03:13:00 PM  
Anonymous Anonymous said...

Hi, Daniel,

Thanks for your thoughtful, accurate observations, shared by me here in the "interior." My Argentine husband, an architect and farmer (berries, soy), would also include other differences folks might want to know. For agriculture, there are no subsidies, few loans, and lots of taxes, which are hiked the moment there's a chance of making a profit to pay off the loans for capital improvements. Making it here requires optimism, persistence, and private access to capital.

Thanks for recommending the Expat Connection activities; I'll hop in my car and drive the 2 hours to participate in the next couple months. Meanwhile, you might want to hop on a bus and visit the interior, with a slower pace and friendly folks. Just last Sunday I was wandering in a park in Ramallo and was invited to join a local group, with live music & singing, wine-drinking from styrofoam cups (could you handle it?), and making fresh fried cakes. They even offered us a tent if we wanted to stay the whole weekend. This kind of warmth makes up for all the tortures of the Registro Civil.

I look forward to updates on your business and a chance to visit a wine tasting.

Warmly,
Gayle, the Positive Expat Coach
(and Californian)
San Nicolas, Bs. As.

3/19/2008 12:06:00 PM  
Anonymous Rafael said...

Hi, I'll be moving to BsAs towards the end of the year and I have a question regarding the taxation system in Argentina. Here is my situation:

a) I have dual citizenship, Uruguay and US.
b) I'll be working as a consultant from the US and thus I'll have no economical activity in the country
c) I can get a "Ciudadano Mercosur" visa which grants me the argentinan residences for two years (DNI included) for the fact of being born in Uruguay.
d) I'll file my tax declaration in the US.

My question is: Do I have to pay taxes in Argentina? Please advise.

5/21/2008 05:03:00 PM  
Anonymous Anonymous said...

Doing business in Argentina is ALWAYS at your own risk. This is a country where fraud is institutionalized at every level. I know people who committed suicide after getting reamed financially and losing everything they had thru no fault of their own. Hello!. This is the country that STOLE everybody's bank savings when it froze their accounts during the corralito. Only an absolute FOOL would tie his/herself financially to Argentina. If you want to live in a shithole go ahead and do it, but make sure your money is tucked away safely somewhere else.

7/23/2008 06:50:00 PM  
Anonymous Anonymous said...

Anonymous, I lived in Canada, USA and Argentina. For the past year I was in Argentina twice. Argentina is no different in trust then American's and Canadian have towards their government and financial institutions. You said Sh@thole? try being in the US now.. they are in their 10 trillions debt and counting. In Argentina, NO one buys anything on credit. If they don't have cash, they don't buy. If US would have used some of this wise advice, they would not be, where they are today.

10/27/2009 06:54:00 PM  

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