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Colombia 2016 | INDUSTRY | B2B

Manufacturers in Colombia are taking advantage of the opportunities presented by recent changes in the global economic landscape and the increase in technical knowledge in the country to enhance the competitiveness of their operations.

John Matallana
JOHN MATALLANA
President
Indufrial
Sakae Machida
SAKAE MACHIDA
President
Electrojaponesa

How has recent macroeconomic volatility affected your operation here?

John Matallana In the local market, prices rose due to the increased price of raw materials following the depreciation of the peso. However, in terms of exports our prices were much more competitive. One of our main allies in Colombia is Postobon, a soft drinks producer that we support in cold chain services. If Postobon increases its sales, it has to sell its products cold, so we have to be behind it, providing it with fridges when necessary. Another positive factor is the strong campaign that we launched to encourage SMEs to buy or renew refrigeration equipment. In Colombia, businesses are growing day by day, and we closed 2015 with 43% growth in sales in COP compared to 2014.

Sakae Machida The exchange rate had always been stable, but this year the COP dropped by 40% against the US dollar. Normally, we import some products from the US from brands such as Sony, LG, or Samsung, so it affects us. In order to find a solution, we started to import from China, but the project did not work. Colombians want well-recognized brands for their home appliances. It is difficult to import at those prices, and major international companies have their own stores in Colombia as well.

Which segment of the market does Electrojaponesa target?

SM We sell home appliances, televisions, audio products, smartphones, tables, PCs, and more. We target the middle class in Colombia, providing it with basic home appliances; the middle class in Colombia is growing and the market is changing, which is why we are constantly adapting our business strategies. In Colombia there are six different social classes according to income. For the majority of our 45 years here, our market was exclusively the high-income segment, but there are important market niches to be filled in the lower economic classes.

Do you have plans in place to expand beyond your current markets?

JM We are interested in Florida in the US and Central America. We are not interested in Mexico because it is a country where there are many big players already. To be competitive there we would need a local factory, whereas other countries can be accessed from here, such as Ecuador and Chile. It is important to highlight that our location in Cartagena is close to the port, a factor that helps us distribute our materials efficiently.

SM We do not have expansion plans at the moment, but if the economy improves, we would like to open new stores in other regions. In terms of internationalization we do not have planned strategies, we prefer to put all our effort in one country rather than expanding our business abroad.

What is the production capacity of your manufacturing plant?

JM We can manufacture around 10,000-12,000 refrigerators a month. This year we are exporting three times more than in 2015. Also, we are renewing the plant to reduce our carbon emissions and improve our energy efficiency. Our new products are not harmful to the environment; for example, old refrigerators needed around three years to be degraded, now all of the dangerous gases can be removed in two weeks.

What unique advantages does your company leverage?

JM One of our main advantages is our location in Cartagena, specifically its port. It helps to develop the local economy and for our business it is cheaper to deliver products through the port than via the road network. It provides direct access to Central America and the east coast of the US. For example, this month 80% of our goods were delivered though the port. The key point is to optimize all the options and see the opportunities that the location offers to organize production processes.

SM We have had an online presence for three years, but we are still making improvements. Online demand in Colombia is slow in comparison to other countries. Colombian people are much more traditional; they prefer to see items in the store before buying them and the culture is distrustful of online platforms and even banks, but the mentality is changing.

What are your expectations for 2016?

SM Our main focus is constant innovation. Our purpose is to improve our products that we sell and improve the customer service that we provide. We aim to be different due to our service and learn how to advise people according to their necessities. Another goal is to have a faster logistic process with effective delivery to the client. We also aim to offer high-quality technical service and everything related to reinforcing the costumer service.