Home to some of the most beautiful places like Medellin, Cartagena, Bogota, and the Sierra Nevada de Santa Marta mountain range, Colombia is like none other. Yet, while many are soaking up the sun and enjoying the vast landscape and night rhythm, many others use it as a gateway to South America and the entire world.
The United States holds solid diplomatic relationships with Colombia and free trade with around a dozen other countries. Its resilience over hardship and political instability has caused Colombia to bounce back with a growth rate of 2.4% from 2010 to 2024. With a forecasted rate of 3.8% from 2010 to 2025, according to Statista. Some of its more profitable areas include oil and gas with incentives for infrastructure developers and sizable tax breaks for investments. However, as companies grow and spread globally, leaders need to be aware of the cultural differences and backgrounds to appeal to new places and know the right time to create a new endeavor.1 Therefore, we have compiled numerous Latin American country reports to help better understand each area, such as Colombia.
Most consumers live in Bogota, whose population is larger than the overall higher city GDP than the regional average.2 The population is projected to increase to around 55.3 million by 2040.3 Approximately 60.4% of the population is aged 20-40, half identifying as women. Most employees work in the services sector.
Colombia is all about human development and providing a long healthy, decent living standard. According to the United Nations Development Program, when comparing human development levels globally, Colombia ranks 83 out of 189 and has an index of 0.77.
The local consumers mostly spent on food and non-alcoholic beverages 20.5%, followed by housing, water, and electricity (18.8%), and hospitality (4.6%), including hotels and restaurants. People are also primarily interested in clothing (86%), shoes (83%), and electronics (74%). Consumers value smartphones more than any other good when it comes to consumer brand awareness.4
Besides the beauty of Colombia, it takes just ten days to start a business instead of the regional average of 42.6 days.5 The score for starting a business there was regionally higher. Colombia has natural resources such as oil reserves, gold, silver, emeralds, platinum, and coal. Real GDP is forecasted to grow by 3.8% p.a from 2020-to 2025. Sectors such as services rose by 57.6%GDP in 2019, followed by industry (27.7%) and agriculture (6.6%). In addition, some of the main U.S export to Colombia include coffee, cut flowers, and oil.6
According to the International Trade Administration, “With a broad portfolio of infrastructure projects, Colombia is a strategic market for developing new business opportunities in construction, architecture, and engineering. The U.S. Commercial Service has partnered with Colombia’s Construction Chamber of Commerce (CAMACOL) on a series of opportunities to connect U.S. companies with local construction companies to develop infrastructure projects in Colombia. The first opportunity will focus on the expansion of Medellin’s Light Rail. The project will connect 32 neighborhoods across 8 miles with 17 stations and three road bridges.”
In 2019, the most prominent manufacturers and their merchandise export were higher than the regional average. Said merchandising exports mounted to a whopping USD$39.5 billion, placing them at a more increased export trade flow.7 In 2020, experts related to services totaled an impressive USD$4.8 billion. Studies show that the Colombian government has made every effort possible to establish and develop capital markets, draw in investment, and employment creation.8
In a positive light, the retail market in Colombia is maturing at a healthy pace. Global grocery store chains operate in large cities.9
According to the International Trade Administration, “Colombia’s extensive ongoing infrastructure projects will generate demand for project financing, design, logistics, as well as equipment for construction of public roads and airports, water treatment, water supply, electric power generation, oil and gas exploration, pollution control technologies, port security, railway construction, transportation, security and defense items and services, and mass transit systems. The Fifth-Generation Infrastructure initiative will bolster demand for these services and create demand for services related to river dredging, airport master plans, urban planning, and other construction and design services.”
Electronic mobile payments are now commonly used with major global grocery stores opening. As a result, the revenue in the eCommerce market totaled USD$5,393.6m just in 2020. On the other hand, the eServices market brought in over USD$435.6m in 2020. Following the very positive numbers is eTravel by USD$801.4. Altogether, the digital market had one of the highest revenues in 2020. However, the numbers are only expected to grow annually by 8.2% by 2025.10
The digital infrastructure in Colombia is wildly growing, with FinTech transactions forecasted to grow by 14.9% from 2020-to 2025. One of the most significant segments expected to grow is digital payments transaction value by USD$28,521.8m by 2025.11 Rightfully so, Colombia is the 75th highest internet user globally in 2020 alone.12
Internet users for mobile cellular subscriptions added up to 69.6%, with Claro Mobile offering an optimized 5G network.13
Colombia is embracing sustainability and fighting to reduce emissions by 20% in 2030. According to the Bogota Post, Colombia plans to tackle deforestation, increase energy efficiency, create renewable energy sources, and upgrade public transport buses with hybrid vehicles. The government also suspended the aerial spraying of glyphosate to kill coca plantations.
Places such as Cartagena rely on tourism alone. Therefore, they are embracing sustainable tourism. Such tourism can help the locals, the economy, and the environment. The local government also uses tourism as a powerful tool to generate job opportunities in rural locations. Therefore, they are now part of the Orange Economy Policy, TourCert, and the Rainforest Alliance to help development and preservation.
Tips on the Business Culture:
. Clear and direct communication is preferred via Skype, Zoom, e-mail, and telephone.
. Punctuality is highly appreciated, but don’t be surprised if the locals arrive late to a scheduled meeting.
. Hierarchy is essential, and executives in senior management are usually the moderators for any conflicts.
. Personal and professional networking and contacts are measures of success and trust in doing business with anyone.
. Speak the language and give documentation in Spanish beforehand.
Despite its past of political turbulence, Colombia is booming with numerous opportunities! Aside from its excellent digital infrastructure that harbors eCommerce opportunities, exporters and businesses can find a way in agricultural products, auto and aviation parts and accessories, IT and computer equipment, safety, food and beverages, medical field, oil and gas, and mining equipment.
Leveraging our partners in the Worldcom network, we offer companies the option to outsource their international marketing communications strategy and execution to our team of Advisors. To learn more about how we companies go global and reach their goals, feel free to contact our team of trusted advisors.
*This market profile was written by Gabriel Marrero Girona, Lead Intelligence Advisor at DuartePino, in collaboration with Eduardo Avella from Worldcom’s partner firm Grupo Albión in Colombia.
- https://www.bbc.com/news/world-latin-america-19390026,https://www.worldbank.org/en/country/colombia/overview#1, https://www.heritage.org/index/country/colombia
12. Statista, based on ITU and national statistical offices, as of Q4 2020
13. Statista 2021