Because Bolivia is landlocked, merchandise must be delivered by air, or by ground from seaports in Chile, Peru, or Argentina. The most common method of distribution of goods is via a qualified representative. Appointing an agent or distributor is advisable for companies seeking to develop a market on a sustained basis. Wholesalers (distributors) often import directly, and then distribute goods through urban retail outlets, frequently making use of small, often family-owned operations, and informal distribution channels. An alternative approach to distribution is to establish a local subsidiary or branch office. To distribute goods, many firms establish offices in La Paz, Santa Cruz, or Cochabamba, with sales agents in other major cities.
It is very common, especially in the case of machinery and industrial supplies, for Bolivian buyers to contact producers directly. Bolivian buyers often prefer direct purchases to eliminate additional costs associated with distributors. Direct buyers generally have established means of arranging for transportation and processing importation paperwork.
Using an Agent to Sell U.S. Products and Services
Bolivia is considered a small market, where some international companies operate directly. Foreign firms typically sign agreements with local agents or distributors, which often have offices in one or more of the major cities in Bolivia (La Paz, Santa Cruz, and Cochabamba). When designating an agent or distributor, it is important for businesses to seek counsel from a Bolivian law firm to ensure appropriate protections and that any contracts include an arbitration clause as a means of resolving any potential disputes. Under Bolivian law, the agent or distributor assumes the duty of promoting and exploiting business opportunities in a specific sector and region of the country. They can act as an intermediary between businesses, with freedom to develop other commercial activity. The Bolivian Commercial Code also establishes that all contracts for distribution or agency signed outside of Bolivian territory but with execution in Bolivia are subject to Bolivian laws, without restriction. Agents must register with the National Commercial Registration Service (SEPREC).
The U.S. Embassy in La Paz is an official Commercial Partner Post with the U.S. Department of Commerce and can assist with obtaining good partners and representation. The Embassy offers a full range of Commercial Services at the same prices as other Partner Posts. More information can be found at https://www.trade.gov/bolivia or by contacting commercelapaz@state.gov.
Establishing an Office
It is strongly advised to seek legal and local representation to assist with the bureaucratic systems in place. Businesses can find information and register with SEPREC at https://www.seprec.gob.bo. Registration with SEPREC must be updated annually to avoid expiration. Businesses in Bolivia must register with the National Registry Service for Tax Contributions to obtain a tax identification number (NIT) https://www.impuestos.gob.bo. Businesses will also need licenses to operate in the corresponding municipality. Employers and employees must join the National Health Fund (CNS) https://www.cns.gob.bo and the Pension Fund Administration (AFP) (https://www.afp-futuro.com/siswww/es/adt/bienvenida/bienvenida). Employers must register with the Ministry of Labor, Employment, and Social Security https://ovt.mintrabajo.gob.bo/#/loginRoe. Businesses planning to export abroad will register and get certification from the National Export Verification Service (SENAVEX) https://senavex.gob.bo. In general, businesses should consider registering with the National Intellectual Property Service https://www.senapi.gob.bo/ to protect against infringement.
Franchising
Bolivia has no specific legislation governing franchising. A foreign firm wishing to grant a franchise must first register the brand name with SENAPI. The lack of specific legislation governing franchising in Bolivia gives those entering the franchise agreement the opportunity to determine their own conditions for the contract if the contract respects the Bolivian Commercial and Civil Codes. Franchise operations have become more popular in the last few years, mostly with fast food, delivery services, clothing, and hotels. International franchises are still relatively expensive given the size of the Bolivian market, but fast-growing cities with higher acquisition power, like Santa Cruz, have motivated Bolivian businesspeople to acquire new franchises. There are several franchises in Bolivia including Hard Rock Cafe, Starbucks, TGI Fridays, KFC, Cinnabon, Papa John’s, Sbarro, Burger King, and Subway. U.S. franchises, although a relatively newer concept with Bolivian consumers, are popular and continue to be embraced by the Bolivian public.
Direct Marketing
The biggest markets for foreign products and services are in Santa Cruz, La Paz, El Alto, and Cochabamba. The rest of the departmental capitals in Bolivia are also important, but the market share and size in those cities are smaller.
Many Bolivian consumers prefer to browse in shops instead of purchasing goods through catalogs or online. Shopping in stores gives consumers the opportunity to bargain for lower prices, a common practice in Bolivia. Customers also prefer stores that can provide after sales service or can directly address problems that might arise. The exchange of products in Bolivia is complex due to the Value Added Tax (IVA). Most store policies will provide store credit, rather than cash refunds. Catalog and online sales are not generally used by the average Bolivian consumer, but such sales are growing rapidly among the middle to upper classes, young teens, and internet users. The cosmetics and clothing sectors have grown because of the success of catalog sales among the middle and lower classes of Bolivian consumers. Other sectors have not been successful with this type of marketing, largely because there is a high degree of suspicion regarding the quality of products and difficulty in obtaining warranty support.
Handing out flyers and leaflets are common practices in Bolivia, especially along busy streets and commercial areas. Newspapers are widely circulated in Bolivia and are a traditional method of advertising. Telemarketing and direct mail are also ways businesses promote locally. Facebook is a popular social media platform for individuals and local businesses, providing an opportunity for private and public entities to advertise economically. Commercial information can be obtained through local chambers of commerce, local trade associations, and the U.S. Embassy’s Commercial Office.
Joint Ventures/Licensing
The National Trade Registry Service (SEPREC) regulates all commercial registration, including joint state enterprises and joint ventures. You can refer to their website for detailed instructions and can complete the application and registration process online at https://www.seprec.gob.bo. A legal representative completing the application will need to provide power of attorney documentation, or such proof. The company will also need to provide a copy of their public deed, company statutes, and proof of publication in the government’s gazette of commercial registry.
Express Delivery
DHL, FedEx, UPS, and USPS are reliable methods of shipping to Bolivia. Express delivery can take 5-6 business days or longer. Bolivia does not have a minimis value. There is a value added tax and a customs tax, making the effective rate 14.94 percent. The process and cost vary based on type, size, and method of shipment. Please refer to Bolivia’s National Customs page for details on specific shipments at https://www.aduana.gob.bo/aduana7.
Due Diligence
U.S. businesses considering investing in Bolivia should investigate potential clients, associates, and partners before entering into agreements. The U.S. Embassy offers a due diligence service for U.S. companies wishing to learn more about a potential partner. The U.S. Embassy in La Paz, Bolivia, is a partner post of the U.S. Commercial Service. They can also provide background reports on foreign companies through their International Company Profile service (ICP). With their various services, the U.S. Commercial Service Partner Post in Bolivia promotes commerce between Bolivia and the United States and helps to connect U.S. and Bolivian companies. https://www.trade.gov/bolivia.