In today’s climate, it is crucial to fully understand how leaders can support a company’s ongoing growth. Broadening into new markets can help businesses adapt to evolving consumer needs and industry trends. As companies grow and spread globally, leaders need to be aware of cultural differences and backgrounds to appeal to new places and know the right time to create a new endeavor. Therefore, we have compiled numerous Latin American country reports to help you understand each area better, such as the Dominican Republic.
The Consumer
The population in the Dominican Republic is steadily growing by 1% above the regional average, with an outlook of 12.4 million people by 2040. Its population comprises 56.2% of people between the ages of 20 and 64, more than half of the said population identifies as women. More importantly, according to the United Nations Development Program, in 2019 the Dominican Republic had high levels of human development, ranking 80 out of 189.
The retail market in the Dominican Republic is vastly maturing, which means that grocery store chains (e.g., Carrefour) are starting to open in large cities. In addition, electronic mobile payment methods are now commonly used, and opportunities like labor and finance are growing.
The average consumer in the Dominican Republic spends most of their money on food and non-alcoholic beverages, 25.1%, followed by house maintenance (6.8%) and recreation and culture (6.2%). They are also most interested in clothing, shoes, and consumer electronics and value smartphone brands the most by 81%.4
The Economy
Their real GDP is expected to grow at 4.8% annually by 2025, and it only takes around 16.5 days to start a business as opposed to 38.8 days for the rest of the Caribbean. With a population of 10.8 million and a GDP of USD$82.67 billion in 2020 alone, the Dominican Republic has a real GDP per capita of USD$7,800, ranking 63 out of 149 countries. In addition, during 2019, services accounted for more than 58.3% of DGP and over 72.4% of employment.
The economy comprises tourism, agriculture, real estate, free trade zones, mining, and service industries. According to International Trade Administration, duties on import goods from the United States have been eliminated or are scheduled for elimination within the next two years. The trade sector has a strong relationship with the United States (U.S.) due to its proximity, history, and reputation in part of the Central America-Dominican Republic Free Trade Agreement (CAFTA-DR).
As one of the most visited destinations, 6.6 million tourists visited the Dominican Republic in 2018, representing a vital sector of the local economy. This significant growth generates opportunities for U.S. exporters, construction, medical equipment, renewable energy, security, telecommunication equipment, hospitality and restaurant world, and agriculture. The Central Bank of the Dominican Republic (BCRD) reported in May 2022 that inflation for April was 0.96%.
Business Climate
As stated above, Dominican Republic is a great place to start a business. Their annual rates for beginning a business were higher than the regional average in 2020. According to government reports, “The Dominican Republic, an upper-middle-income country, enjoyed stable, consistent growth in a relatively diversified economy in 2019, as it has over the past decade. Foreign direct investment (FDI) provides a key source of foreign exchange for the Dominican economy.
The Dominican Republic is one of the main recipients of FDI in the Caribbean and Central America. The government actively courts FDI with generous tax exemptions and other incentives to attract businesses to the country. Historically, the largest FDI recipients are the tourism, real estate, telecommunications, free trade zones, mining, and financing sectors.”
The Dominican Republic promotes investments in infrastructure and tourism and more digital opportunities for everyone. Their current laws and Fair Trade agreements make it easy for businesses and investors to enter the Dominican Republic. In addition, the CAFTA-DR offers its members and foreign investors protection and dispute resolutions despite its rocky past.
In May 2022, the World Tourism Organization (UNWTO) recognized the Dominican Republic as the number one country in tourism recovery.
Digital Infrastructure
Consumer behavior shines a light on digital expenditures showing us that in 2020, Dominican Republic consumers generated the highest digital revenue with USD$952.4M and a 70.7% share of total digital revenues, which amounts to 2.2% of consumer spending per capita, the same as the rest of the Americas. In contrast, eCommerce flourished and is expected to grow by 8.7% by 2025. FinTech is also booming! With a transaction value forecasting over 18.8% from 2020 to 2025, one can expect transaction volume to reach USD$5,942m by 2025. With DR’s current 5G tech embracement, opportunities for many companies are growing. Over 78.4% of people used the internet and the 46th highest internet usage globally in 2020.
Tips on the Business Culture
Dominicans want to get to know someone through small talk before jumping into business deals.
Eye contact and a firm handshake go a long way in communication.
Bargaining on both sides and in every aspect is a common practice.
Schedule meetings 2 to 3 weeks in advance and be punctual. Time management is crucial for locals.
Make sure to maintain a strong business network and an excellent work-life balance.
Be careful with non-verbal communication such as gestures, facial expressions, and bodily movements.
Locals are direct communicators and appreciate directness as well.
The Dominican Republic comprises three constituent powers, the Executive, Legislative, and Judicial branches, which make up its parliamentary and presidential systems. According to the World Bank, the Dominican Republic ranks 122 out of 209 countries in the Rule of Law indicators. These indicators categorize places accordingly, of which the Dominican Republic ranks as a medium. Therefore, the risk of political violence and terrorism is reasonably low. The country also ranks 69 out of 160, improving from previous years. Even though there is still much progress in regulatory quality and corruption control, both have a very low score ranking. While the Dominican Republic might have a turbulent political past, they are constantly positively growing and full of opportunities.
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