Argentina received substantial Foreign Direct Investment because of economic stability, Mercorus membership and a rapid re-entry into international capital supported by policies to convert foreign debt into capital. This also included special motivation and encouragement for foreign investors and inducements for the automobile manufacturing. The privatization of public sector companies in the country also helped foreign investment. The massive increase in the prices of commodities made the government modify its tax structure. The main sources of financing for firms in Argentina are the banks, equity markets and private and public financial institutions.
Argentine does allow foreign companies to repatriate profits, but a lot of them are absorbed in high taxes, legal and accounting issues and different tax structures than other countries and rising inflation. Taxes are much lower in Argentina as compared to the United States. That is one reason that the automotive sector of American has significant investments there. A presidential decree recently abolished regulation allowing companies to freely dispose off up to 72% of the income. The objective of the decree is to give equal treatment to all productive activities. Until recently most foreign companies had no foreign exchange restrictions and could repatriate all their profits.
Argentina is prone to natural disasters like earthquakes, windstorms and volcanic eruptions Doing business in Argentina involves building up a relationship and establishing trust so it is unwise to consider it acceptable to approach companies directly. Doing business in Argentina means knowing Spanish and addressing your business associates with their proper names or titles. Establishing trust and mutual benefit makes it easier when doing business in Argentina. Patience is the major factor success as it can often take several trips to the country to finalize any deal. Business is slow due to the several layers of decision making combined with miles of red-tape.
Always engage in small talk until the topic of conversation changes to the business. Do not be put off if phone calls are taken during a meeting – this is not meant to be rude. Avoid any sales tactics. If your company suddenly changes the representative dealing with Argentina, then expect to go back to square one, as a new relationship will have to be established. In Argentina the dates are written with the day first, then the month and then the year, i.e. January 1st, 2005 is 1/1/2005. It is important to make appointments to see prospective clients through a third party, who acts as a middleman with contacts within an industry.