In recent years, the concept of ‘Nearshoring’ has become very popular in international trade. Due to its privileged conditions, Colombia is an ideal destination in the region for this new bet of companies with production centers located in markets that are losing competitiveness as localization headquarters due, among other factors, to the trade war between the United States and China, the global supply chain crisis, and the Covid pandemic.
Nearshoring seeks to attract to the countries those companies that are interested in bringing their production centers closer to consumer markets, in order to generate benefits in logistics and transportation.
The peculiarities of this commercial model have made Colombia and Latin America in general more attractive for Asian and North American companies -for instance-, which value the geographical, logistical and human resource characteristics offered by coastal cities such as Barranquilla, Cartagena or Santa Marta.
Along these lines, for North American firms, Nearshoring with this part of the continent is also very beneficial in terms of physical proximity, which facilitates the movement of clients and suppliers, time zone coincidence, access to a bilingual workforce, cultural affinities, maturity of the IT user and technological infrastructure with the ability to provide quality at favorable costs, due to foreign exchange aspects.
The commitment to this trade mechanism is so clear in the country that during the seventh edition of the Colombia Investment Summit 2021 (an event organized by ProColombia), the Minister of Commerce, Industry and Tourism, María Ximena Lombana Villalba, invited potential investors to invest their resources in Colombia, taking advantage of the benefits that the country offers, especially in agribusiness, metalworking, the ICT services industry, tourism, cosmetics, chemicals and life sciences, renewable or alternative energies, and creative industries.
Lombana highlighted that there were already 49 investment announcements in the country, corresponding to deals for more than US$848 million in the agribusiness, industry 4.0, metalworking and chemical, and life sciences sectors.
“Colombia offers a strategic geographic position, a dynamic market of 50 million inhabitants; a competitive and qualified workforce; a business-friendly government and economic stability. We are a country of opportunities committed to social and environmental sustainability,” said the head of the Trade Ministry, who emphasized on the advantages of being the third market receiving investment in Latin America, after Brazil and Mexico; the positive economic growth forecasts for 2021 made by international entities such as the World Bank and the OECD (7.7% and 7.6%, respectively) and the 17 current trade agreements that allow access to a market of more than 1.5 billion consumers.
Added to this is the joint work that the National Government has been doing with the support of the Inter-American Development Bank (IDB) in leading the Nearshoring or relocation strategy for the country, cementing it in the issuance of a series of measures and actions planned to increase their competitiveness and thus guarantee the use of this reconfiguration of global value chains.
With this objective, the IDB carried out an in-depth study of Nearshoring opportunities in Colombia, which was based on three components: firstly, an analysis was carried out on the starting situation of the country, the status of foreign trade, the regulatory and political framework, and a study on competitiveness factors.
Second, an analysis of Nearshoring opportunities for the country, sectors and products was made. And, finally, a characterization of the existing gaps or bottlenecks was carried out to take advantage of the potential of said sectors and products, and a series of proposals aimed at correcting them were established.
“The IDB Group is focused on results and impact on development. Nearshoring brings more than fresh investment; it allows small and medium-sized companies in Latin America to access financing to get into new supply chains. Added to this is the potential for well-paid jobs, the transfer of capital and technology, the development of qualified human capital and productivity, and economic growth driven by exports,” said Mauricio Claver-Carone, president of the IDB, after a meeting with business leaders from the Americas in December 2020.
Xtrategy has an outstanding track record connecting entrepreneurs and supporting them in finding new suppliers, willing to face the challenge of relocation and continue promoting the attraction of foreign direct investment, thus generating new business opportunities in other markets, which is why it is an important ally in advising in terms of internationalization strategies, trade missions, business roundtables and corporate visits.