Newcomer US company considering moving Argentinian sub

[KurtCoue]

During my recent flight, I had the chance to chat with the executive of an Argentine subsidiary of one of the prominent US companies, although I won't disclose specific details to respect privacy and confidentiality.

Our conversation revolved around the challenges posed by the decisions of the Kirchner administration over the past year. I shared my family's exit plan, and the executive revealed the frustrations felt by the parent corporation. One significant issue was the difficulty in creating accurate financial forecasts due to the unpredictable economic environment. Moreover, they expressed disbelief at the hurdles preventing them from regularly repatriating profits from Argentina to the US.

Despite obtaining all the required approvals for dividend payments, the central bank frequently intervened and canceled these transactions. The executive disclosed that they are actively exploring options to relocate the entire operation to another Mercosur country. This move would allow them to sidestep some of the challenges related to importing goods into Argentina and potentially find a more favorable business environment.

This narrative highlights the tangible consequences of economic policies on foreign businesses, extending beyond reduced foreign investment to the actual relocation of major companies, impacting not just financial institutions but also those involved in the manufacturing sector.

 

[MDirtBoy]

Yep. I work for a sub for a North American company. We are seriously looking at expanding across the river to Uruguay as a hedge (in more ways than one) against the insanity.

 

[TechNow]

You can still get profits out, but at 6.8 ARS/USD using blue chip swaps. At some point they will devalue officially and that will take some of the pressure off and we'll be able to pull cash out again.

But forget about getting cash out of Argentina at 4.6. It is better to just reinvest locally at the moment.

 

[earlyretirement]

This is absolutely true. Most of the smart money has already exited Argentina or is in the process of doing it now or strategizing their exit strategies for leaving Argentina.

CFK is a fool. Not only will this hurt with all these companies leaving but also there are MANY companies that will stay out of Argentina until things there stabilize which could take a long while.

Other countries like Uruguay are very pro-business and also has a solid and functioning banking system. I don't blame all of these companies and individuals leaving for other friendly countries.

I love Buenos Aires but at some point people have to ask "at what cost?".

 

[WesterCarlson]

The cost benefit ratio has been exceeded!

 

[Mart]

The cost benefit ratio has been exceeded!

I would tend to agree, at least from a business perspective.

Between the high cost of doing business here, both in hard currency and time spent on staying in compliance, the anti-business climate, the adversarial relationship between employee and employer, the very real and continual threat of lawsuits, the ineffective banking system and the currency restrictions - there really is very little reason to stay here.

Too many better business options in SA that provide the same near-shore benefits, lower costs, a more "universal" Spanish if your employees are working in Spanish, a better business climate, less restrictions, etc.

 

[earlyretirement]

I would tend to agree, at least from a business perspective.

Between the high cost of doing business here, both in hard currency and time spent on staying in compliance, the anti-business climate, the adversarial relationship between employee and employer, the very real and continual threat of lawsuits, the ineffective banking system and the currency restrictions - there really is very little reason to stay here.

Too many better business options in SA that provide the same near-shore benefits, lower costs, a more "universal" Spanish if your employees are working in Spanish, a better business climate, less restrictions, etc.

Bingo! Living there still MIGHT make sense if you have on-going cash flow or income in foreign currency and it's stable and dependable and if you have a place paid purchased in the city. Although expenses keep going up, now with the informal blue rate, it definitely makes the cost of living cheaper.

But doing business there in Argentina is horrible! Especially when you do everything in white. It's a constant battle with the government, banking system or as Citygirl mentioned employees!

You can treat employees with respect, pay them well, give them extra benefits and they can still end up stabbing you in the back or when you are forced to fire them, they hire a lawyer and want to extract money from you that they don't deserve. Of course you can fight them with your lawyers but you will spend money on that option too.

The banking system is broken and the judicial system almost doesn't exist there.

Who knows...maybe it will make sense again after the next crash but right now it's a nightmare. But definitely not having a business there and only living there I'm sure is much less stress free vs. owning a business there.