Identifies common practices to be aware of when selling in this market, e.g., whether all sales material need to be in the local language.
When selling in Honduras, U.S. exporters must consider that for marketing purposes, the country is divided into two regions; the North Coast, which includes San Pedro Sula, the country’s commercial and industrial capital; and the Central region, where Tegucigalpa, the political capital and largest city, is located. Large importers and distributors in Honduras usually have offices in both cities to take advantage of market opportunities.
Price is among the most important selling factors in Honduras. Consumer product categories such as electronics, appliances, automobiles, and food are highly competitive. In these cases, sales promotion and customer service efforts by U.S. companies are extremely beneficial. Sales and promotional materials should be in Spanish. U.S. products are often preferred based on quality, technology, reliability, and availability. Adapting products and sales materials to Spanish and the local culture is an important factor in remaining competitive.
Importers and distributors, as well as Honduran government agencies, often have problems in securing the funds to purchase imports due to high local interest rates which are generally offered only for short-term loans. For most industries, U.S. exporters that offer attractive trade and financing terms on sales to Honduran traders have the best chances of gaining market share and competing in the local market. This is also true for large-scale projects. It is important to emphasize, however, that international firms must exercise due caution when granting credit to Honduran trading partners. Firms should take care to investigate the creditworthiness and reputation of potential partners. For background and credit check information on prospective Honduran partners, the office in Tegucigalpa offers the International Company Profile (ICP) service. For more information about the ICP and other services, U.S. exporters visit https://www.trade.gov/perform-due-diligence.
As in most Latin American countries, a good personal relationship with prospective customers is essential for penetrating the Honduran marketplace. While it may take longer to develop a business relationship than is customary in the U.S., the investment in time can pay off in long-lasting and mutually profitable relationships.
Trade Promotion and Advertising
Most advertising in Honduras is conducted through newspaper, TV, and radio. There is a also sharp increase in online marketing, digital platforms, and social media options. Billboards are also a strong medium for reaching customers and publicity campaigns, especially in the main urban areas. U.S.-style (advertising sign) structures are common in the local market, especially for those companies interested in increasing brand awareness or launching a new product. Several advertising agencies are available to guide companies through the process of developing promotional activities and choosing the most appropriate media strategy. A list of broadcast media (television and radio) contacts can be provided upon request.
In addition to television and radio advertising, Honduran newspapers are one of the leading advertising instruments in the local market for products and services. Many media groups also circulate information online and advertise via “online banners” on social media sites. There is not a wide variety of specialized industry publications. Major local print and digital newspapers include Diario El Heraldo, La Tribuna, La Prensa, Hondudiario, and Proceso Digital. Among the local and regional business journals are “Hablemos Claro Financiera,” Estrategia & Negocios,” and “Mercados y Tendencias.”
The U.S. Commercial Service (USCS) provides the Featured U.S. Exporters (FUSE) program, a directory of U.S. products presented on local USCS websites. It gives U.S. companies an opportunity to target markets in specific countries in the local language of business. This service is offered free of charge to qualified U.S. exporters seeking trade leads or representation in certain markets, such as Honduras. For more information on FUSE, please visit: https://www.trade.gov/colombia
U.S. exporters should keep in mind the relatively small size of the Honduran market and the high elasticity of demand for consumer products when devising marketing strategies. Price is one of the most important factors in Honduran buying behavior. In many cases, Honduran businesspeople buy directly from abroad if they feel that the cost of imports available in the local market is too high. U.S. exporters should carefully analyze both consumer and wholesale costs when making pricing decisions.
Price escalation represents another important consideration in terms of export retail pricing. Products imported into Honduras are usually priced based on the cost, insurance, and freight value, import duties, in-country transportation costs, and distributor margins.
The Honduran government controls the prices for coffee, medicine, cement, and steel products and regulates the prices of gasoline, diesel, and liquid propane gas. In addition, the government pressures producers and retailers to keep prices of staple food products such as milk and sugar as low as possible.
The local sales tax is 15 percent for most goods. Products exempted from the 15 percent tax include staple foods, purified water, medicines and pharmaceuticals, agrochemicals, educational materials, electrical power generation machinery and equipment, agricultural machinery and tools, handicrafts, capital goods such as trucks, tractors, cranes, computers, and equipment used for the maquiladora industry. A 15 percent sales tax is also assessed on new cars, alcohol, cigarettes, and tobacco products. Taxes on fuels, particularly gasoline, are among the highest in the Central American region, 36% for gasoline and 25% for diesel.
Services exempt from the sales tax include utilities (electrical power and potable water), educational services, professional fees (legal, accounting, engineering, etc.), clinical and medical services, land transportation services, banking, insurance, and financial services. Tourism services are subject to a four percent tax with air transportation subject to a 10 percent tax.
Sales Service/Customer Support
The availability of adequate service and support frequently makes the difference in purchasing decisions, especially by the government. In general, it is important to secure sales through an established, reputable distributor that offers an adequate service infrastructure. U.S. companies should consider providing training, technical assistance, and sales support to their local counterparts, particularly for products that require periodic maintenance and service.
Local Professional Services
Selecting a competent and reliable local attorney with experience in local trade law is an important first step to doing business in Honduras. The advice and counsel of a local attorney is essential to opening a business and to understanding Honduran judicial and administrative systems, as well as the local commercial environment. The Commercial and Consular Sections maintain a list of attorneys that have experience assisting U.S. firms. There you can find information on legal firms and other local Business Service Providers in Honduras.
The Embassy assumes no responsibility for the professional ability, reputation, or the quality of services provided by the lawyers on the list.
Principal Business Associations
The American Chamber of Commerce (AmCham), established in 1982, accepts U.S. company membership and is one of the leading organizations promoting trade and investment between Honduras and the United States. Other principal business associations with a strong role in promoting private sector interests that contribute to economic growth and prosperity include the Honduran Private Enterprise Council (COHEP), an umbrella organization for industry associations, and large chambers of commerce with strong voices, such as the Chamber of Commerce of Tegucigalpa (CCIT) and the Chamber of Commerce of Cortés (CCIC), among others.
Limitations on Selling U.S. Products and Services
According to Article 7 of the Investment Promotion and Protection Law, natural or legal persons that establish their investments in Honduras are guaranteed that they will not be limited in access to markets regarding:
- The number of services and establishments
- Limitations on the total value of assets or transactions
- Limitations on the total number of operations or the total amount of production
- Limitations on the participation of foreign capital in terms of a maximum percentage regarding stock holding or the total value of individual or additional foreign investment
- Measures that restrict or prescribe the specific types of establishments by which a foreign investor may conduct an economic activity
Exclusions to this law include the following sectors:
- Remains of toxic, dangerous, or radioactive waste
- Activities that may affect public health
- Small scale industry and commerce in compliance with article 337 of the Honduran Constitution
- The manufacture, import, distribution and sale of weapons, ammunition, and related articles in compliance with article 292 of the Honduran Constitution.