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International Marketing Brief Two: Profile of Bolivia
Kellie West
Global Marketing MKTG450-H1WW (WI15)
Professor Bruce Trumm
11 April 2015

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Profile of Bolivia

In order to better understand opportunities for U.S. made chemical pumps in Bolivia, it is important to become familiar with the geography, culture, people, and economy of the nation.
With numerous indigenous tribes counted among the population and challenging geographic regions, Bolivia could make a challenging trade partner. Yet the economic outlook and wealth of natural resources make it a country worth considering when exporting and investing.
Geography
According to the CIA World Factbook, the South American country of Bolivia is a landlocked country bordered by Argentina, Brazil, Chile, Paraguay, and Peru (n.d.). It has mountainous regions with a high plateau as well as areas of hills and plains and there are plenty of waterways and fresh water resources located within Bolivia’s borders (Central Intelligence
Agency). There is potential for volcanic activity in the Andes, but no immediate threat exists at this time (Witze, 2014). Due to its proximity to other South American countries, Bolivia is not only a prime candidate for U.S. exports, but could also be considered for investment in local onsite facilities to service surrounding countries. Companies should also consider population centers and where industries served by chemical pumps are likely to exist.
Demographics
Though it neighbors five other South American countries, Bolivia still has some catching up to do to its neighbors. It ranks near the bottom in such socioeconomic factors as education, poverty, malnutrition, and life expectancy. It also suffers the highest income inequality in all of
Latin America (Central Intelligence Agency). The World Factbook notes that there is currently a noted lack of clean water and sanitation in rural areas (n.d.).

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The population is listed at approximately 10.5 million, almost evenly split between men and women (Central Intelligence Agency). Spanish is the predominate language, spoken in 60% of the population, but like many other South American countries, Bolivia has a large population of indigenous tribes (Muldoon & Mullkoff, 2012). These tribes each have their own language and culture. Companies wanting to business in Bolivia will need to consider not only the culture of the urban areas, but that of those tribes living in the more rural plains and mountainous areas.
These peoples have beliefs that may impede progress due to deep seated superstitions and ages old customs (Muldoon & Mullkoff, 2012). A majority of the population is split between two age demographics, with 33% under 14 years old and 36% aged 25 to 54 (Central Intelligence
Agency). Based on current information, the population is rather evenly split between male and female (Figure 1).

Figure 1. Population Pyramid. Adapted from “The World Factbook::South America::Bolivia”, by Central Intelligence Agency, n.d.
Due to such a diverse population and the blend of Spanish and native cultures, it is advisable that U.S. companies considering penetrating the Bolivian market should establish a

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relationship with a local representative (Embassy of the United States). There should be a high degree of research regarding cultural norms, religious or historical limitations, and protected areas of the country.
Economy
Resource rich Bolivia’s economy is steadily growing. Natural resources included silver, tin, zinc, gold, lead, iron, petroleum, natural gas, timber, and hydropower (Central Intelligence
Agency). Because of the abundance of these resources, Bolivia has enjoyed large trade surpluses in recent years with 47.8% exports and -38.4% imports (Emerging Markets Monitor, 2015).
These disparate numbers are mainly due to state-oriented policies that tend to deter foreign investment and growth. However, even though such a large gap exists between imports and exports, 10% of its imports are from the U.S. Overall, U.S. exports to Bolivia were up 31.5% over the previous year (Office of the U.S. Trade Representative).
The primary industries in Bolivia are mining, smelting, petroleum, food and beverage, tobacco, jewelry, and clothing (Central Intelligence Agency). Each of these industries require fluid transfer of some sort, creating opportunities for pump manufacturers and distributors to penetrate the market in Bolivia. Numerous regional trade events take place each year (U.S.
Department of State, 2014). The country recorded a 5.6% industrial growth rate in 2013 and recorded the highest growth rate in South America during the 2009 recession, indicating a strong ability to weather economic instability in the rest of the world (Emerging Markets Monitor,
2015).
With the reelection of President Evo Morales, it is expected that this political continuity will sustain confidence in investment in the region (Emerging Markets Monitor, January 2015).

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Though growth is expected to slow somewhat, Bolivia is still expected to end the year with reserves of 45% of GDP (Figure 2).

Figure 2. Forecast of Foreign Reserves. Adapted from “Reserves Position Remains Robust”, by
Emerging Markets Monitor, 2015.
Based on a report by the U.S. Department of State, the U.S. is one of Bolivia’s top trading partners (2014); however, there are currently no trade agreements in place specific to the
U.S. trade with Bolivia. This should not be a direct concern for those companies that wish to enter the market, yet should be consideration for the Chamber. Trade agreements could prove helpful to U.S. providers of manufactured goods in easing restrictions and tariffs as well as limiting competition from other countries, such as China.
Also, U.S. companies need to be mindful of export license requirements put in place by the Department of Commerce and administered by the Bureau of Industry and Security. These licenses restrict the sales of dual-use items, which include chemical pumps of a certain type

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made of certain materials (Bureau of Industry and Security). These restrictions include the limitation of sale to a pre-qualified end-user and the condition that pumps covered under a license be installed only at the physical location indicated by the end-user (Bureau of Industry and Security). These license can delay shipment of product by two to six weeks.
Infrastructure and Communications
According to the CIA’s The World Factbook, Bolivia has more unpaved kilometers of roadway than paved, but does have over 3600 km of railways. It is home to 21 airports with paved runways and has commercially navigable waterways (Central Intelligence Agency). The country also has free port privileges in Argentina, Brazil, Chile, and Paraguay (Office of the
United States Trade Representative).
Cell phone communications are over 9.5 million strong with just under one million landlines (Central Intelligence Agency). Radio, television, and internet are all available in
Bolivia, though predominately in urban areas. Some of the more rural areas lack access to some modern communications (Central Intelligence Agency).
Observations
Though the country is still developing, there is adequate infrastructure in place to transport goods. Unpaved roads may offer some logistical challenges, but should not be an impediment to trade. Modern communications are available, but again, in the more rural areas, there may be some limitations. The economic atmosphere is stable, mainly due to political stability in the country. The current government does have some protectionist policies in place, but they do not seem to prohibit trade as much as foreign investment in the region. Industry will likely be made up of local companies rather than foreign entities.

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Based on the United States position as one of Bolivia’s top trade partners, it is feasible to expect that the country will be open to sales of chemical pumps. Fluid transfer is a part of most industries and with the wealth of industries in Bolivia, U.S. suppliers of chemical pumps should find multiple opportunities for growth. As mentioned previously, it is recommended that a local representative be established and employed to offer insight into the market and the cultural norms of a specified region before entry. The number of indigenous tribes makes it imperative that U.S. companies are fully aware of the customs of each to ensure there is not encroachment on tradition nor any offensive behavior exhibited. Overall, Bolivia represents an excellent opportunity for growth and expansion.

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References

Bureau of Industry and Security. (n.d.). Export administration regulation downloadable files.
Retrieved April 10, 2015, from https://www.bis.doc.gov/index.php/regulations/exportadministration-regulations-ear
Central Intelligence Agency. (n.d.). The World Factbook. Retrieved from https://www.cia.gov/library/publications/the-world-factbook/geos/bl.html Embassy of the United States. (n.d.). Market entry strategy. Retrieved April 10, 2015, from http://bolivia.usembassy.gov/marketentrystrategy.html Emerging Markets Monitor. (2015, January 5). Emerging Markets Monitor, 21(1), 1-24.
Retrieved April 12, 2015, from EBSCOhost.
Muldoon C., Mullkoff L. (2012, December 1). Culture as a Movement Tool in Bolivia. Social
Policy, 42(4), 42-45. Retrieved April 11, 2015, from EBSCOhost.
Office of the United States Trade Representative. (n.d.). Bolivia. Retrieved from https://ustr.gov/sites/default/files/Bolivia_0.pdf U.S. Department of State. (2014, September 25). U.S. relations with Bolivia. Retrieved from http://www.state.gov/r/pa/ei/bgn/35751.htm Witze, A. (2014, July 8). Survey probes volcano’s depths. Nature 511, 136–137. doi:10.1038/511136a