The government tries to make the extraction of natural resources more efficient, however, due to a lack of innovation in the sector, it could potentially be a good opportunity for foreigners.
Background: Peru holds large natural resources (eg., copper, silver, gold, petroleum) and has an export-oriented mining sector.
Even though doing business in Peru is relatively easier in comparison to other emerging countries, it is important to keep in mind that the process is highly bureaucratic and many other aspects like recruiting qualified employees, taxes and protecting intellectual property can be complicated.
Background: Based on the World Bank ranking (2018), Peru scores 58 on how easy doing business is. The average for emerging countries is 83.
Although investments are needed, the main barrier has to do with the lack of human resources.
Background: The quality of education in Peru is significantly lower than in other countries in the region. In response to this challenge, the government of Peru has started various youth skills and entrepreneurship programmes, focusing on the biggest skill gaps and market needs.
If you don't have a well connected partner or someone to introduce you to the business world, it is difficult to start a business.
Background: In a country where clientelism is accepted, you must bear in mind that your partner must be a person connected to various companies and circles of influence. That is the way you will have to start the business. Also, to retain it, you must build a relationship of trust that goes beyond doing business.
In hierarchical societies, decisions are centralized. In business, you should always know who is the decision maker, otherwise, you can spend a lot of time before coming to a result.
Background: Peru is a highly hierarchical and centralized country that resembles the Inca structure. Bosses consider their employees as a different category of people.
Having a “micromanaging” boss means that he/she is interested in employee's work, while in the USA it could mean lack of trust.
Background: In societies like Peru, it is desirable for bosses to be benevolent and caring, visible all the time, asking employees about their work and checking if everything is complete and well done.
Time is less tangible and the emphasis is on engaging people and conducting transactions rather than schedules. You must be patient to achieve your goals. Interpersonal relationships are highly valued in polychronic cultures.
Background: "Peruvian time" is polychronic and it is something that can be found in most collectivist societies.
This implies that relationships are above individuals. In that sense, at work, is it desirable to have close people whom we trust. And who is better than a family member for this?
Background: For European / Western mentalities, it can be considered an act of corruption, however, this is a common and well-regarded practice in Peru, as it perpetuates the relationship of trust and loyalty.
In conversations, relationships can be affected by the volume and tone of voice, so stay calm. Although not recommended, when talking about politics, never participate in an ideological discussion. Any conversation about local or international politics should remain very superficial.
Background: Formality and harmony in meetings is something well seen by Peruvian society.
In this sense, it may be interesting to make investments to develop these growing areas. However, "classic" investments are still in the lead.
Background: Most foreign investment occurs in the sectors of mining, communications, industry, finances and energy, particularly due to low wages and favourable policies.
What is the major barrier for the development of Peru's innovation capacity? Is hiring a family member problematic? Take this quiz about Peru and learn more!