El Salvador

Overview

• In the1980s, the country suffered a civil war for twelve years. However, the country is shifting away from the military and towards social goals.
• Economic reforms such as the privatization of state-own industry and actively seeking foreign investment are taking place.
• El Salvador’s currency is pegged at about 8.7 colones to 1 dollar, and the currency is stable and totally convertible. Inflation fell to 7.8% in 1997.
• In order to attract more foreign investment, a tariff-cutting program is taking place and has the goal of reaching a tariff ceiling of 15% for finished goods.
• El Salvador has a great relationship with the U.S.; leaders of the country get along with the U.S. government very well, most El Salvador citizens think of America in a very positive way, as a matter of fact, 1 million El Salvadorans live in the U.S. The political environment is likely to remain stable for the next ten years.

Opportunities

• Automobile parts and service equipment
• Processed foods
• Architecture, Construction and Engineer services (ACE)
• Telecommunications
• Electric Power Generation and Distribution Equipment
• Plastic Materials and Resins
• Paper and Paperboard

Marketing Tips

• The government of El Salvador (GOES) invested 13.4% of its’ total budget to invest in their infrastructure in 1997.
• The greatest obstacle for doing business in El Salvador is poor telecommunications, but privatization will change that soon. In two to four years, more extensive services are expected.
• There are lots of opportunities for new or lesser-known products. Distributors usually move slower than the demand of the market for new products, and can’t usually cover the lesser-known ones.
• There has been a great increase in U.S. franchising over the past 5 years. Due to poor telecommunications, door-to-door sales and TV sales are the major way to do direct marketing.
• Except for subsidized diesel fuel and liquid propane gas, prices are not controlled in the whole country.
• It’s recommended to hire a local attorney for doing business.

Business Culture

• Spanish is the official language, although many educated Salvadorans speak English.
• First business meetings in El Salvador are very formal. Proper titles such as doctor, engineer, and college graduate are commonly used. Handshakes before and after the meeting are strongly recommended. Business cards are important and should be printed in Spanish.
• There is a growing trend of business to be done at meals. Breakfast meetings are expected at 7:30am, lunch at 12:30, and usually last for two to three hours; dinner generally starts at 8 or 9pm.
• Business travelers should keep in mind the high crime rate in El Salvador.
  

  Do’s Do use proper titles followed by the last name at meetings. Do carry plenty of business cards printed in Spanish

  Don’ts Don’t use first names at the first business meetings Don’t plan tight schedules around lunch meetings, it can take a while

Legal Environment