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Colombian construction sector: Opportunities for Caribbean exporters

| April 22, 2019 | Articles

Growth projections for Colombia’s construction industry in the upcoming years are very encouraging thanks to the national government’s spending programs aimed at building affordable housing. Today, the government has implemented four housing programs with a measurable impact on the industry’s activity; Casa Ya, Casa Ahorro, Casas Gratis Program and loan subsidies. Combined, they represent the most important actions taken to date, ensuring great dynamism in the construction market.

According to Asogravas’s calculations, the production of construction materials will double to reach 320 million tons in 2025. Similarly, according to Business Monitor, cement consumption in Colombia is expected to rise from 15.6 million tons in 2018 to 19 million tons in 2022.

Currently, there are local companies that specialize in raw materials, including sand, cement, as well as important inputs like aluminum windows, doors and frames, and ceramic and porcelain products. Many of these companies also export their products, however, there is a high number of companies that have not yet exploited their potential, which more often than not translates into low competitiveness in terms of added value, leaving a space for imports from the international marketplace.

So, what are the specific imported products with the greatest potential in Colombia’s construction market?

Overall, since 2013, the demand for imported products is concentrated in three large groups:

– Sector of non-metallic mineral products, such as glass, ceramic items, bricks, cement, plaster, concrete products, marble, slabs, paving stones, and plasterboard.
– Basic metallurgical products, iron or steel laminates, and structural metal products.
– Non-metallic minerals based on the decoration sector, mostly stones, marble, granite, sand, gravel and gravel.

The industry faces logistical infrastructure problems and access to several areas, which is a concern given that they are heavy and bulky products with particular transport and distribution requirements, in addition to tight construction schedules. For these reasons, importers assessing the Colombian market should find a specialized distributor with the right distribution network for their product and a proven track record for meeting established deadlines.

In terms of the structure of the distribution channels, there are multiple players that channel products to the end consumer, but the most traditional channel in the market continues to be an importer who also acts as a distributor. In that case, a supplier should evaluate the importer/distributor’s prior experience and the product portfolio handled.

Another alternative is the sale of products through retail stores. Small shopping centers located in urban areas that specialize in construction, home repairs and other related activities handle the distribution. The use of this channel marks the trend in the sector toward specialization. This network of stores consist mainly of franchises or specialized subsidiaries dedicated to construction and hardware segments targeting small builders.

Of course, large home improvement stores like Homecenter and Home Sentry are also widespread, but they are located mainly in large cities and are aimed at a less specialized consumer, rather than the one in charge of remodeling a home who are seeking very competitive prices. They also tend to offer a smaller product rotation.

Online sales channels are used mainly by the leading multi-product sales companies, and although their use is still very new, greater use is expected.

A last but no less important alternative are sales through opinion formers, this group includes developers, construction companies, renowned architects, construction managers, renowned designers, or partnerships with government entities for remodeling or decoration of historical cultural places or recognized tourist attractions to position a product before the general population.

Colombia’s construction sector in undergoing an expansion with a clear trend of projected growth and continued consolidation, representing an interesting opportunity for foreign investment. At MasterCardBiz, we want to help your company explore the sales prospects for your export products. Among the free foreign trade services available to you as a Mastercard Business Cardholder, we can identify customers who can distribute your products throughout Colombia.

Source: ProColombia Colombia’s official investment and export promotion agency.  Description of the construction sector. Retrieved from   https://www.inviertaencolombia.com.co/como-invertir-test/33-sectores/manufacturas/materiales-de-construccion/400-descripcion-del-sector.html

 

RGX Online
RGX Online
RGX is an international consulting firm with presence in 53 countries worldwide working to assist exporting companies in their process of internationalization. Our global presence and our knowledge of each market allows us to work with companies in the country of origin and in the destination country, accompanying companies throughout the process and facilitating their negotiations. With 17 years of experience, our access to the SMB segment is due in large part to our work as partners and suppliers of content, training, and consulting services for more than 700 chambers of commerce and business associations and different areas of government to implement projects and growth strategies for small and medium-sized exporting companies. Our extensive knowledge and access to SMBs and our close relationship with governments, chambers of commerce and business associations is the reason why multinational companies choose us to assist them with the creation, development, and implementation of various projects for the acquisition, understanding and conversion of the segment.

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