: South America’s surging demand for digital solutions presents an opportunity
OVER the past decade, South America’s middle class has grown by over 50 per cent, or more than 50 million people, resulting in higher purchasing power and consumer demand. As the region urbanises, internet and mobile penetration rates have risen – and so have digital solutions in e-commerce and areas such as agritech and fintech.
Private sector firms are also looking to invest in digital analytics to optimise work processes, enhance supply chain visibility, and improve customer engagement.
For all these reasons, Singaporean e-commerce and tech companies should consider expanding into South America.
South America presents growing digital opportunities in three key areas.
First is e-commerce, which has an expected compound annual growth rate of 25 per cent from 2021 to 2025. There has been a corresponding rise in demand for digital payment, adtech and video analytics solutions, as companies aim to create better experiences and vie for customer attention.
Second is agritech. With South America being a key exporter of agricultural produce, many businesses are looking for innovative agritech solutions to increase yield and improve supply chain traceability.
One Singaporean firm that has tapped on this growing demand is ST Engineering Geo Insights, which partnered a Brazilian cotton producer to monitor a 5,000-ha cotton plantation using satellite imagery and data analytics.
By turning data into insights to inform decision-making, this solution enabled the cotton producer to lower operational costs and improve crop quality and yield.
A third area is promoting inclusion through tech. Finance services are an example, as the region’s population has limited access to traditional establishments such as banks or credit-based, cross-currency payment platforms.
With help from Enterprise Singapore (EnterpriseSG), Singapore fintech company PundiX set up a base in Brazil to provide borderless payment solutions. Its customers can use digital currency, thus overcoming issues such as foreign exchange rates or the instability of fiat currency.
Why South America?
South America is increasingly important given its relatively strong growth, and there are good reasons for Singapore companies to consider this region.
One of these is its large addressable market. The Mercosur trade bloc – comprising Argentina, Brazil, Paraguay and Uruguay – has a combined population of about 300 million people, and individual gross domestic product growth rates of up to 10.4 per cent.
Furthermore, when the Mercosur-Singapore Free Trade Agreement (MCSFTA) is eventually signed and ratified, Singapore companies will benefit from lower tariff rates, enhanced market access, and opportunities for government projects. Negotiations on the FTA were substantially concluded last July.
In addition, as most of the countries in the region are developing ones, there are opportunities for Singapore companies to work on large infrastructure projects, given their experience in the development of other markets.
Then there is the region’s growing talent pool and competitive cost base. Countries in South America continue to see an increase in tech graduates who specialise in web or application development and programming, and can work remotely at a lower cost, presenting tech companies with a strong talent pool.
For startups, there is good infrastructure and in-market support for co-innovation and partnerships. Sao Paulo, Brazil, rose to be among the top 30 on Startup Genome’s 2022 startup ranking; Argentina’s capital of Buenos Aires, known for its new generation of e-commerce startups, is among Startup Genome’s 2022 top 100 emerging ecosystems.
South America also shares some similarities with South-east Asia: a rising middle class and growing consumer market backed by digitalisation, as well as diverse markets with abundant natural resources. Singapore companies that have successfully expanded into South-east Asia can tap on their experience there to avoid similar pitfalls in South America. They can also adapt existing digital solutions rather than starting from scratch, as both regions have similar digitalisation needs.
Tapping existing initiatives
Singapore companies interested in South America can work with EnterpriseSG’s Overseas Centre in Sao Paulo, which can share insights on the latest regional developments and connect businesses to potential partners and business leads.
EnterpriseSG also works with partners such as accelerators to help younger firms looking to enter South America. The ScaleUp InBrazil Programme, organised by various government agencies, provides access to business development services and market entry strategy support.
Participating Singapore companies such as JA Secure, Tookitaki, Graymatics, and Shareit have seen promising business outcomes from the networking sessions and educational workshops.
Singapore companies can also collaborate with local partners to tap their strengths. South American companies are increasingly looking beyond their traditional partners to explore new solutions and partnerships.
For example, Singapore company ProfilePrint.AI worked with multiple corporations with a large presence in Brazil, to supply its proprietary artificial intelligence solutions for food ingredient analysis and offer recommendations for the optimal blend for coffee products.
South America provides fertile ground for firms looking to diversify their markets and revenue. By establishing strong partnerships and leveraging EnterpriseSG’s support, Singapore businesses have successfully made inroads to capture emerging tech and digital opportunities. To those considering South America – now is the time to do so.
Source: The Business Times © Singapore Press Holdings Limited. Reproduced with permission.