PERU AND THE SMALLER REPUBLICS.
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Growing Markets for British Commercial Motors That Should be Investigated Now.
By a Special Correspondent.
THE market for commercial motor vehicles in Peru is steadily increasing. During the past 12 months the number in use in the republic has doubled. According to the latest estimates, there are about 3,000 vehicles in use at present, the majority of which has emanated from the United States. It should be noted that last year Peru held its first motor show. The class of vehicle mainly in demand is that having a small load capacity—less than a ton in most cases.
Vast reaches of the country are being opened up by means of good main roads. The first of these arteries to come into being is the circular Lima-Chosica-CantaLima road. This highway is later to strike off at Canta and will be carried farther to Huaras in Ancash, a distance of 762 kilometres from Lima. There is also the great scheme, in which the Peruvian Touring Club is so enthusiastically interested, of restoring the Great North Road of Peru which threads the territory to its northernmost confines.
A further impetus has been given to Peru's foreign commerce by the completion and inauguration of the new Argentine-Bolivia-Peru transcontinental railway, which opens a new epoch of development for all three countries_ In other parts of Peru, however, railways and roads are still awaited, and there is little doubt that they will be built in the near future. These, with the great trunk roads, will enormously increase the momentum of progress and bring to the world's industrial centres the immense natural wealth possessed by this geologically remarkable land.
A Knowledge of Credit Terms in Peru Necessary.
It is well that manufacturers and exporters should know the credit terms which prevail here. In this market it is only possible to do business on the basis of liberal credits, which in no case should be Jess than from 60 days' to 90 days' sight, on arrival of goods at destination. Failing such terms, it is useless trying to introduce any goods into this market. The keen competition on the part of other European manufacturers and those of,the United States, and their extension of liberal credits, will not permit of business being done on payment at sight terms, and much less on the basis of part payment in advance, with credits opened at British banks.
There is a tendency for the British maker, entering the South American market for the first time, to concentrate his attention upon one of the larger republics— usually. Argentina or Brazil, with Chile, Peru or Uruguay as second favourite. Argentina, to take but one example, is depicted in the British newspaper Press as having a practically illimitable purchasing power, and is frequently regarded by newcomers to LatinAmerican markets as being an Eldorado of the export trade.
This view-point is deprecated by competent observers who have an intimate knowledge of local conditions. Whilst it is certainly true that saturation point in Argentina and the other large republics is not even within sight and that great expansion is bound to take" place as immense nautral resources are gradually exploited, it is equally true that these are the most highly compel itive markets in South America.
Therefore, the British maker first entering these markets, although he may be assisted to a limited extent by a local predilection for British goods, is confronted at the start with an abunclance,of foreign competition organized with a very high degree of efficiency. This means that (in addition to a price difficulty with which he will probably be faced) he will be obliged to adopt the most modern and efficient selling methods and engage seriously in an extensive advertising campaign.
This is not to say that judicious advertising is not a necessity in the smaller markets. It is. Our competitors in all Latin-American markets (particularly the United States) utilize its advantages to the full. It is a curious fact that a large number of British firms, including many which would not think of neglecting their propaganda at home, appear to expect that in Latin-American markets goods will sell themselves without publicity's aid.
The fact is that, in the majority of Latin-American markets, not excluding many of the smaller, selling conditions have changed. The old non-competitive, haphazard methods of selling have had their day. Nowadays price is an important factor and goods will not sell themselves merely because they emanate from any particular country—however favourably that country may be looked upon. Where it is not possible to compete upon a basis of price, competition must be upon a basis of quality, and this absolutely necessitates vigorous propaganda.
Probable Expansion of the Markets.
The time to investigate the possibilities of some of the smaller markets is obviously now—before foreign competitors have obtained a foothold from which it may be difficult to dislodge them. Even though the existing business may be small, it is worth supplying in expectation of a greater volume in the future. The possibilities in a number of the lesser-known republics are distinctly encouraging.
It is not possible within the scope of this article to state in detail the requirements of, and possibilities for, British trade in all the smaller republics, but an indication may be given of some of the more obvious opportunities. One of the markets to which British makers might, with profit, turn their attention is Venezuela—a republic which, at the present time, shows every promise of gradual expansion and is in a sound financial position.
The growth of the petroleum industry has considerably hastened the country's development, and, when the two principal obstacles in the way of more rapid progress—a shortage of labour and inadequate road facilities—are removed, then the purchasing power of this market will be increased to a great extent. In view of the fact that the development of the country up to date is largely due to the investment of British capital, it is extremely desirable that Britain's interest in the country's imports should be increased.
There is, at the present time, a growing demand for automobiles, chiefly supplied by the United States.
Lorries and Buses Increasing in Numbers.
Every day the number of lorries coming into the country is increasing, principally owing to the improving condition of the roads. Motor omnibuses are also being Introduced.
The republic of Colombia is equally worthy of attention, on the part of the maker looking to Latin-America as an outlet for his products. According to all wellinformed authorities, the country is in a reasonably sound financial position and is expected to become stronger. The purchasing power of the market is dependent chiefly upon its exports of coffee and secondarily upon its mineral wealth, an important feature of which is the mining of emeralds—a Govern merit monopoly. The principal demand at the moment is for everything in connection with the improvement of existing means for transport. Although the market is, as yet, in a comparatively undeveloped condition, competition is remarkably keen.
In spite of inadequate road facilities, the demand for motor vehicles has increased to a marked extent during recent years. The old story of United States supremacy as the main supplier again holds good. In 1922 there were 281 motorcars and lorries in the town of Bogota. This figure had risen in 1924 to about 650. In the same year the approximate number of motor vehicles in use in the chief towns of Colombia was as follows :—Barranquilla, 380; Cartagena, 325; Medellin, 120.
Credit in this market is upon a basis of 90 days to 120 days' terms from date of invoice. In this, as in other matters, the practice of chief foreign competitors should be studied. The discounting facilities offered by the presence in the country of a number of reliable banks should be borne in mind in this connection. The British banks in Colombia may be relied upon to supply accurate and up-to-date information on the limits within which credit may safely be allowed in individual eases. It is of interest to note that consignments have to be transferred no fewer than seven times between an Atlantic port and the capital of Colombia, including discharge at both ends.
There are many other republics to which similar attention might be drawn; but enough has been said to indicate that there exist undoubted possibilities—present and potential—outside the large and well-developed countries. It is too little realized that the Latin-American continent consists of 21 different countries and therefore presents 21 different markets for British products.