International Marketing plan of exporting casumina tire to Peru

CHAPTER I: CASUMINA’S BRIEFT INTRODUCTION
I.1. THE INTRODUCTION TO CASUMINA JOINT STOCK COMPANY
I.1.1. THE OVERVIEW
-

Name: The Southern Rubber Industry Joint Stock

-

Abbreviate: CASUMINA

-

Headquarters: 180 Nguyen Thi Minh Khai, Distreet 3, Ho Chi Minh city.

-

Charter capital: 422.498.370.000

-

Mission Casumina: Dedication to social security, happiness, efficient and friendly

-

Vision Casumina: Leading tire manufacturers in Southeast Asia.

I.1.2. BRIEFT HISTORY OF FOUDATION AND DEVELOPMENT PROGRESS
-

1976 - Company Southern Rubber Industry was established on 19.04.1976 by the State of

Vietnam.
-

1997 - Establishment of Joint Venture Yokohama Tire Vietnam with partners: Yokohama

and Mitsuibishi Japan to manufacture automobile tires and motorcycle.
-

1999 - Investing in a factory specializing in the production truck tires with modern

technology. - The company received ISO 9002-1994.
-

2000 - The company received product certification motorcycle tires standard JIS K6366

Japan / JIS K6367.
-

2001 - The company received ISO 9001 - 2000

-

2002 - Company received product certification standard car tire Japan JIS K4230. 2003 -

Manufacture of radial car tire V13, V14. Certificate ISO 14001-2000. 2005 - Manufacture of radial
car tire V15, V16. - CASUMINA contracting co-produced light truck tires with the company
CONTINENTAL Germany (4th corporate world to produce the kind of car tires) - On 10/10/2005
Change of Corporation Southern Rubber Industry under Decision No. 3240 / QD-BCN of the
Ministry of Industry.

-

2006 - Casumina officially put into operation with the initial charter capital of 90 billion.

11/2006 increase its charter capital to VND 120 billion.
-

2007 - 59/75 CASUMINA was ranked the largest tire manufacturers in the world. 03/2007

increase its charter capital to VND 150 billion. - Certifies Business prestigious 2007.
-

2008 - Signed contract with Philips Carbon Black.LTD joint venture to produce carbon

black. - Increased capital to VND 200 billion.
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MARKETING PLAN FOR SELLING CASUMINA RADIAL FULL STEEL TIRE TO PERU


-

2009 - Increased capital to VND 250 billion. - May 08/2009, the company officially listed

25,000,000 shares on the HCM City Stock Exchange, stock code CSM.
-

2009 to present: Signed contracts for technology transfer company Gaoce Qingdao - China;

signed a business cooperation contract with JSC strategic investment advice and build Ba Dinh;
increased capital to 422,498,370 thousand dollars.

I.2. BUSINESS FIELD AND ORGANIZATION STRUCTURE
-

Production and sales of industrial rubber products, rubber consumption.

-

Trading, import and export of raw materials, chemicals, equipment and rubber industry.

-

Services Commercial Business

-

Trading in real estate.

-

Other business sectors in accordance with the provisions of law.

I.3. PRODUCTS
-

Car Tires:
Over 120 kinds, including gong tires sold Radial full

steel

and

tires, these are two types of products helps companies drift

into

a

manufacturer of automotive tires and tubes light trucks in

steel

leading
Vietnam.
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MARKETING PLAN FOR SELLING CASUMINA RADIAL FULL STEEL TIRE TO PERU


Casumina is the first enterprise in Vietnam to develop this product.
-

Motorcycle tires
Tires motorcycle, scooter: 200

different products specifications, size,

inflatable maximum speed, the

shipping.

enterprise

supply

products to the market since 2000. In

early 1009 the company has

added product lines far scooter tires

premium

branded

EUROMINA the domestic market and

quality

standards errant

export

to

caaos

nature

Casumina

is

the

first

E-Mart.

-

Industrial tires

Tires Car industry: more than 90 kinds of

-

products.

Agricultural tires

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MARKETING PLAN FOR SELLING CASUMINA RADIAL FULL STEEL TIRE TO PERU


-

Bicycle tires: 80 types, the traditional products of the company

Casumina. The company has a policy to reduce the bicycle tire to

focus

on

products with higher value.

-

Other products: in addition, the company also manufactures a

number of

ancillary products such as rubber His technique (used for

transmission

of water, oil, gas in the car), gloves, .However, the
proportion of these products contribute very little in
revenue.

I.4. BUSINESS RESULTS

-

4/2011 received the "Medal 3rd Independence" by the Party and State awarded.

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MARKETING PLAN FOR SELLING CASUMINA RADIAL FULL STEEL TIRE TO PERU

-

Rating 59/75 tires manufacturer in the world

-

The "Export prestigious" 2008-2011

-

As one of the 11 major product of Ho Chi Minh City

-

6 years hold the GOLD STAR VIETNAM 2002-2007

-

The title "Hero of Labour in the reform era" in 2005

-

As one of the 200 largest enterprises in Vietnam

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MARKETING PLAN FOR SELLING CASUMINA RADIAL FULL STEEL TIRE TO PERU


CHAPTER II: PERVIAN BUSINESS ENVIRONMENT ANALYSIS
II.1.MARCO-ENVIRONMENT ANALYSIS

II.1.3. DEMOGRAPHIC ENVIRONMENT
-

Population: 30,147,935 (July 2014 est.)

-

Median age: total: 27 years
male: 26.3 years
female: 27.7 years (2014 est.)

-

Population growth rate: 0.99% (2014 est.)

-

Birth rate: 18.57 births/1,000 population (2014 est.)

-

Death rate: 5.99 deaths/1,000 population (2014 est.)

-

Net migration rate: -2.69 migrant(s)/1,000 population (2014 est.)

-

Urbanization: urban population: 77.3% of total population (2011)

Infant mortality rate: total: 20.21 deaths/1,000 live births

-

Life expectancy at birth: total population: 73.23 years

-

Major cities - population: LIMA (capital) 9.13 million; Arequipa 804,000 (2011)

-

Languages: Spanish (official) 84.1%, Quechua (official) 13%, Aymara (official) 1.7%,
Ashaninka 0.3%, other native languages (includes a large number of minor Amazonian
languages) 0.7%, other (includes foreign languages and sign language) 0.2% (2007 est.)

-

Ethnic groups: Amerindian 45%, mestizo (mixed Amerindian and white) 37%, white 15%,
black, Japanese, Chinese, and other 3%

-

Religions: Roman Catholic 81.3%, Evangelical 12.5%, other 3.3%, none 2.9% (2007 est.)

-

Health expenditures: 4.8% of GDP (2011)

-

Education expenditures: 2.8% of GDP (2012)

II.1.4. ECONOMIC ENVIRONMENT
II.1.4.1.

Overview

The Peruvian economy, which is the seventh largest in Latin America, has experienced a
structural change in the past three decades. Currently, the services sector is the main contributor to
the country’s GDP, with nearly 60% of GDP stemming from this sector. Telecommunications and
financial services are the main branches of the services sector; together they account for nearly 40%
of GDP. However, the country still has a long way to go toward the modernization and
competitiveness of its service sectors. Industry, which represents around 35% of GDP, has undergone
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MARKETING PLAN FOR SELLING CASUMINA RADIAL FULL STEEL TIRE TO PERU


a process of modernization, which has translated into increased employment in the country’s primary
industrial areas.
The combination of economic modernization, natural resource abundance and continued
improvements in economic governance and political stability that have been taking place, are helping
Peru to emerge as one of the most stable economies in Latin America.

II.1.4.2.

Peru Economic Data
2009

2010

2011

2012

2013

Population (million)

29.1

29.6

30.0

30.5

30.9

GDP per capita (USD)

4,177

5,029

5,705

6,316

6,557

GDP (USD bn)

121.5

148.6

171.2

192.5

202.9

Economic Growth (GDP, annual variation in %)

1.0

8.5

6.5

6.0

5.8

Consumption (annual variation in %)

4.3

8.2

5.8

6.4

5.5

Investment (annual variation in %)

-1.6

23.1

6.0

16.3

7.6

Manufacturing (annual variation in %)

-6.7

10.8

8.6

1.5

5.7

Retail Sales (annual variation in %)

-0.5

12.5

8.9

7.2

5.9

Unemployment Rate

8.4

7.9

7.7

6.8

6.0

Fiscal Balance (% of GDP)

-1.4

-0.2

2.0

2.3

0.9

Public Debt (% of GDP)

27.2

24.3

22.1

20.4

19.6

Money (annual variation in %)

10.6

33.8

13.7

25.3

5.9

Inflation Rate (CPI, annual variation in %, eop)

0.3

2.1

4.7

2.7

2.9

Inflation Rate (CPI, annual variation in %)

2.9

1.5

3.4

3.7

2.8

Inflation (PPI, annual variation in %)

-1.8

1.8

6.3

1.8

0.4

Policy Interest Rate (%)

1.25

3.00

4.25

4.25

4.00

Stock Market (annual variation in %)

99.3

66.4

-16.7

5.9

-23.6

Exchange Rate (vs USD)

2.89

2.81

2.70

2.55

2.80

Exchange Rate (vs USD, aop)

3.01

2.82

2.75

2.64

2.70

Current Account (% of GDP)

-0.5

-2.4

-1.9

-3.3

-4.5

Current Account Balance (USD bn)

-0.6

-3.5

-3.2

-6.3

-9.1

Trade Balance (USD billion)

6.1

7.0

9.2

5.2

0.0

Exports (USD billion)

27.1

35.8

46.4

46.4

42.2

Imports (USD billion)

21.0

28.8

37.2

41.1

42.2
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MARKETING PLAN FOR SELLING CASUMINA RADIAL FULL STEEL TIRE TO PERU


Exports (annual variation in %)

-12.6

32.1

29.6

0.1

-9.1

Imports (annual variation in %)

-26.1

37.1

29.0

10.3

2.7

International Reserves (USD)

33.1

44.1

48.8

64.0

65.7

External Debt (% of GDP)

28.9

29.4

28.1

30.8

30.0

-

Exchange rates: nuevo sol (PEN) per US dollar - 2.699 (2013 est.)

-

Exports from Peru
In Peru, ores and minerals exports make up over 50% of total exports, food accounts for 21%

and mineral fuels account for 12%. As in many resource-rich countries with a traditional export-led
growth model, international trade and financial conditions have largely affected the performance of
the external sector. In fact, the economy as a whole has been affected by these conditions, even
considering that domestic demand has been the main driver of growth in recent years.

Due to favorable conditions in international trade, the country has experienced growth in real goods
and services exports of 6.3% annually since 2000. That said, in the same period, imports have
expanded at an average 8.5% annually, thus outpacing the strong performance in exports. In nominal
terms, merchandise imports have reached the size of exports, which caused 2013 to close with a zero
trade balance surplus.
According to FocusEconomics Consensus Forecast panelists’ projections from June 2014,
Peruvian exports are expected to expand in the coming years following a contraction in 2013.
Panelists see exports increasing to USD 43.7 billion in 2014 and tallying an annual growth rate of
3.5%. For 2015, panelists expect exports to increase to USD 47 billion. In 2018, panelists expect
exports to reach USD 63.6 billion and to record an annual growth rate of 12.1%.
-

Imports to Peru
Peru’s imports are mainly composed of final and intermediate goods, as opposed to exports,

in which minerals and ores account for the majority of overseas sales. Imports of machinery account
for roughly a quarter of the total value. Whereas these figures suggest the modernization of the
national industry through private investment, they have not yet weighed on the trade balance.
Since 2002, imports have not offset exports, although they have been expanding at a faster
level since then. In fact, given the weaker performance of exports in the first half of 2014, imports are
likely to outweigh exports and drive Peru’s trade balance to the first deficit since 2001.

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MARKETING PLAN FOR SELLING CASUMINA RADIAL FULL STEEL TIRE TO PERU


II.1.5. INFRASTRUCTURE
Peruvian government has prioritized the development of transport infrastructure (road, rail,
ports and airports) to increase competitiveness and set up a logistics hub that integrates Latin
America, with the Asia – Pacific economic region.

During the period of 2005-2010, Peru had a slight improvement in some sectors such as
water, sanitation and electricity, but there is a big gap in vial projects, railways, health, among others.
As an example, nowadays there are only four railroads in the country, mostly used to transport
minerals or for tourism. Peru requires more investment in roads and railway infrastructure to serve
the transport of persons, facilitate trade and the connection between remote places and main cities.
During the period of 2003-2012, the Transport Sector began to improve its investment rates with the
following results: Railways 3%, Airport 10%, Ports 11%, ;Roads 76%
One of the current requirements of infrastructure is to pave the roads of the national network
and connect the country. These projects were improving the infrastructure sector and the possibilities
for international companies.
II.1.6. POLITICAL – LEGAL ENVIRONMENT
-

Government type: constitutional republic

-

Capital: name: Lima

-

Administrative divisions: 25 regions (regiones, singular - region) and 1 province*

(provincia); Amazonas, Ancash, Apurimac, Arequipa, Ayacucho, Cajamarca, Callao, Cusco,
Huancavelica, Huanuco, Ica, Junin, La Libertad, Lambayeque, Lima, Lima*, Loreto, Madre de Dios,
Moquegua, Pasco, Piura, Puno, San Martin, Tacna, Tumbes, Ucayali
-

Independence: 28 July 1821 (from Spain)

-

Legal system: civil law system

-

International organization participation: APEC, BIS, CAN, CD, CELAC, EITI (compliant
country), FAO, G-24, G-77, IADB, IAEA, IBRD, ICAO, ICC (NGOs), ICRM, IDA, IFAD,
IFC, IFRCS, IHO, ILO, IMF, IMO, IMSO, Interpol, IOC, IOM, IPU, ISO, ITSO, ITU, ITUC
(NGOs), LAES, LAIA, Mercosur (associate), MIGA, MINURSO, MINUSTAH, MONUSCO,
NAM, OAS, OPANAL, OPCW, Pacific Alliance, PCA, SICA (observer), UN, UNASUR,
UNCTAD, UNESCO, UNIDO, Union Latina, UNISFA, UNMIL, UNMISS, UNOCI,
UNWTO, UPU, WCO, WFTU (NGOs), WHO, WIPO, WMO, WTO.

-

Flag description
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MARKETING PLAN FOR SELLING CASUMINA RADIAL FULL STEEL TIRE TO PERU


II.1.7. NATURAL ENVIRONMENT
-

Location: Western South America, bordering the South Pacific Ocean, between Chile and

Ecuador.
-

Climate: varies from tropical in east to dry desert in west; temperate to frigid in Andes

-

Deforestation (some the result of illegal logging); overgrazing of the slopes of the costa and

sierra leading to soil erosion; desertification; air pollution in Lima; pollution of rivers and coastal
waters from municipal and mining wastes.
-

Natural resources: copper, silver, gold, petroleum, timber, fish, iron ore, coal, phosphate,

potash, hydropower, natural gas
-

Natural hazards: earthquakes, tsunamis, flooding, landslides, mild volcanic activity.

II.2.MIRCO-ENVIRONMENT ANALYSIS
II.2.3. COMPETITORS:
II.2.3.1. Group Neuma Peru:
Function: Neuma Peru imports, distributes and sells tires for mining, construction and
transport in line

Michelin,

world

leader

market

enterprise. We
experience
technical

have
in

control

in
extensive

monitoring

and

tire

and

management
enllante in mines,

the

workshops
Tire

Repair

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MARKETING PLAN FOR SELLING CASUMINA RADIAL FULL STEEL TIRE TO PERU


Giants in fixed, mobile and in-situ mining workshops.
Target: The aim of Neuma Peru is to eliminate, minimize, and control losses caused by any
process, condition or action, thus increasing the quality of services rendered, the productivity of the
company and the development of new projects through continuous improvement.
Mission: "Contributing to the progress of our customers by providing the highest quality and
excellence in selling tires and the use of advanced technology in the delivery of our services."
View: "Consolidate as the best company sales and tire repair and a strategic partner for the
development of maximum cost / benefit our customers."
Corporate Values:
-

No activity takes precedence over the health and safety of people.

-

Treat people with respect, dignity and integrity.

-

Include all staff in troubleshooting Health, Safety and Environment, motivating their
contribution and participation by exposing their ideals and vision.

-

Providing our customers with effective support to keep the long-term performance Loss

Prevention.

-

Demonstrate leadership and innovation, developing opportunities and creating a work
environment with prospects for continuous improvement.

Policies (Safety, Health and Environment)
Neuma Peru is committed to a strong security program that protects its employees,
Contractors, Subcontractors, customers, the public and property of accidents and / or incidents.
Neuma Peru is convinced that all accidents are preventable. We strive for a goal of ZERO
ACCIDENT. Active participation of our organization at all levels ensure that our goals and those of
our customers are met.
Peru Neuma provide cooperation, consulting, continuous and relevant training to employees,
safe working methods and maintenance procedures and safety guidelines that focus on awareness
Management, Employees and Contractors reducing the risk of accidents and / or incidents in all
activities.
Neuma Peru, Contractors, Subcontractors are responsible for compliance with all standards
outlined in this program, and cooperate with management on continuous improvement of the
program.
Neuma Peru Management, Employees and Contractors are collectively responsible for
ensuring compliance with all regulations and laws
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MARKETING PLAN FOR SELLING CASUMINA RADIAL FULL STEEL TIRE TO PERU


II.2.3.2. THE PIRELLI
Introduction
Pirelli Starts Production in Peru The Italian tire company Pirelli announced the start of
operations in Peru, in Italy is a pioneer company in the production of tires for cars, SUVs and

commercial vehicles, with a wide range of solutions designed to Achieve the highest performance
and comfort on all roads and in all weather conditions.
The long experience in the tire's field, the unflagging commitment by the company During
research and development stage and the EXTENSIVE sales network enable to reach the top in every
single product. If you need to buy car, motorcycle, truck & bus tires motorsport
Company With sole shareholder - subject to direction and coordination by Pirelli & CSpA
The domain is registered pirellityre.com by Pirelli & CSPA
The Pirelli company specializing in the manufacture of tires for vehicles, announced the start
of its operations in the Peruvian market due to the growth experienced by the automotive market.
Business result
In 2013 reported 1.5 million of products for cars and 700,000 for buses and trucks.
In the remainder of 2014, Pirelli plans to add five new outlets in addition to the 40 that the tire
manufacturer already has in Peru until 2016, the plan is to double that number.
Pirelli's new office in Lima will be totally dedicated to managing brand presence in the
Peruvian market and will serve all customers supplying tires for passenger cars, motorcycles, trucks
and buses.
II.2.4. TIRE MARKET SIZE
Over 85,000 new cars were purchased in 2013 in Peru and this year 12% growth in sales is
estimated. It is projected that by 2020 300 thousand new units are purchased.

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MARKETING PLAN FOR SELLING CASUMINA RADIAL FULL STEEL TIRE TO PERU


The automotive sector began accelerating year. According to the Automotive Association of
Peru (AAP), a total of 19,964 new vehicles were sold and registered in January at the Land Registry
Vehicular, representing an increase of 39% compared to the same period of 2012 when 14,314 units
were registered.
According to the type of vehicle, 8,567 cars and 4,496 SUVs SUV, Pick Up and 2,451 vans,
2,037 trucks, 140 station wagon, 1,893 trucks and tractors, and 380 minibuses and buses were

recorded.
The registration of the top 10 brands was: Toyota 3,314 units (16.60%), Hyundai 3,060 pcs.
(15.33%), Kia 1,954 pcs. (9.79%), Chevrolet 1,880 pcs. (9.42%), Nissan 1,527 pcs. (7.65%), Suzuki
862 pcs. (4.32%), Volkswagen 742 pcs. (3.72%), Renault 398 pcs. (1.99%), Mitsubishi 340 pcs.
(1.70%) and JAC 322 pcs. (1.61%).
For registration area, Lima enrolled 14,129 units; Arequipa, 1,721; La Libertad, 827;
Lambayeque, Cajamarca, Amazonas, about 738; Cusco Apurimac-Mother of God, 621; MoqueguaTacna-Puno, 571; and Junin-Huánuco-Pasco, 442

II.3.PEST ANALYSIS
II.3.1. POLITIC AND LEGAL
II.3.1.1.

POLITIC

II.3.1.1.1. POLITICAL STABILITY

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MARKETING PLAN FOR SELLING CASUMINA RADIAL FULL STEEL TIRE TO PERU


Following economic chaos during the first presidency of Alan Garcia (1985-90), Peru started
recovering thanks to a combination of pro-business reforms and economic stability. Inflation reached
a whopping 7,481 percent in 1990 and an average of 2342 percent during Garcia’s five-year term.
Meanwhile, GDP fell on average by 1.6 percent in that period (and fell 13.4 percent in 1989).
Thanks to reforms during the first presidency of Alberto Fujimori and continued businessfriendly policies during his successors, Peru was able to recover and become a macro economic star.
Ironically enough, Garcia himself in his second term (2006-2011) followed those more business
friendly policies rather than the radical ones he had implemented in his first period. Garcia’s second
term became a positive surprise for many local and foreign investors. However, they grew nervous
when Ollanta Humala won the 2011 elections on a radical platform. Once in office, though, he
moderated his policies and assured investors by keeping the well-respected central bank president

Julio Velarde while appointing Miguel Castilla as economy minister. He had served as the vice
minister of economy under Garcia.
The macro economic success has largely continued during Humala, with GDP growth of 6.3
percent last year – more than twice the Latin American average. However, inflation did grow slightly
in 2011 and 2012. This year it is expected to reach 2.1 percent, the second-lowest rate in Latin
America.
II.3.1.1.2. Peru’s Fiscal Policy
Since 1998 when the country barely avoided bankruptcy by signing an agreement with the
IMF, Peru has followed a steady path of fiscal consolidation. The fiscal balance has registered only
four years of deficit in the last decade and those deficits have never been larger than 1.3% of GDP.
Furthermore, public debt was cut more than in half, from the 44.3% of GDP tallied in 2004 to just
19.2% of GDP in 2013. The economy’s overall stable and strong performance has allowed the
government to increase its revenues and, therefore, to balance the budget. Despite the fact that
government consumption has expanded faster than GDP in the last decade, the Humala
administration is committed to fiscal responsibility while simultaneously aiming at promoting social
development and productive public investment.
As of the June 2014 FocusEconomics Consensus Forecast report, panelists surveyed expected
Peru’s public accounts to be balanced by 2014. For 2015, the same result is expected; and in 2018,
the panel projects a surplus of 0.2% of GDP.
II.3.1.1.3. Peru’s Monetary Policy
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MARKETING PLAN FOR SELLING CASUMINA RADIAL FULL STEEL TIRE TO PERU


The Peruvian financial system became highly dollarized after the 1998 IMF intervention.
Since the 2000s, and given the increased stability in the financial and monetary sectors, the financial
system has been de-dollarizing progressively. In fact, credit denominated in soles is increasingly
gaining ground, a sign of both confidence as well as good management of the country’s finances and
monetary affairs.
In June 2014, Focus Economics Consensus Forecast panelists projected that the Peruvian sol

would be broadly stable versus the U.S. dollar for the foreseeable future. Panelists projected that the
sol would trade at 2.85 Peruvian sol (PEN) per USD by end of 2014. By the end of 2015, panelists
forecast the sol to be broadly stable and to trade at 2.86 PEN per USD. In 2017 and 2018, the sol is
expected to strengthen, trading at 2.79 PEN per USD and at 2.77 PEN per USD, respectively.
II.3.1.1.4. Peru’s Exchange Rate Policy
Despite that the Peruvian financial system has been progressively reducing its degree of
dollarization, the BCP is highly vigilant about the fluctuations of the sol.
The external sector’s strong performance in the last decade has allowed Peru to build a large
cushion of international reserves, which currently cover the cost of over five years of imports. The
increase in reserves has allowed the BCP to guarantee a stable sol in the exchange market and has
even allowed for a sizeable appreciation (from 3.41 PEN per USD in 2004 to 2.70 PEN per USD in
2013). This appreciation also has been prompted by the increase in the world supply of USD
following the Fed’s quantitative easing programs. Thus, the PEN has followed somewhat of an
appreciation path, although during 2013 and the first half of 2014 it remained broadly stable at
around 2.8 PEN per USD.

II.3.1.2. LEGAL
II.3.1.2.1. GUARANTEES FOR FOREIGN INVESTMENT
Investors are guaranteed the right to freely transfer abroad, in freely converted currency and
without any authorization whatsoever, the whole of their capital, dividends, profits, royalties and
consideration for the use and transfer of technologies and elements of industrial property. Where
appropriate to convert national currency to foreign currency, they shall be entitled to the most
favorable exchange rate. Investor rights can be stabilized by legal stability agreements meeting the
requirements established in the law. The automatic authorization of investments is established,
subject only to registration after their completion. The only restriction allowed by the constitution in
respect of foreigners is that they cannot acquire or possess, within 50 miles of the border, mines,
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MARKETING PLAN FOR SELLING CASUMINA RADIAL FULL STEEL TIRE TO PERU

lands, forests, water, fuels and energy sources, unless an exception is declared by Supreme Decree
based on a public necessity cause or because of national interest. Investors and corporations receiving
investment can enter into an agreement with the state, to guarantee that the basic rules (including
certain tax rules) in force at the moment of the subscription will freeze. Agreements cannot be
unilaterally modified by the state, allowing the investors certainty as to the rules governing their
investment during a reasonable term.

II.3.1.2.2. COMPANY STRUCTURES FOR ECONOMIC ACTIVITIES
The Framework Law for Private Investment Growth, adopted by Legislative Decree 757 in
November 1991, recognizes the freedom of investors to adopt for their economic activities the
business structure they may prefer.
To exercise on a regular basis acts within their social purpose they must conform to the requirements
established in Peruvian law. This means that, at least, they must register with the Public Registry,
indicating an address and a legal representative, who must be Peruvian or a foreigner residing in
Peruvian territory who should have an immigration card.
The General Law of Companies regulates the different types of companies that investors can use to
make their investments in Peru. The three types which are most commonly used are the corporation,
the commercial company with limited liability and the branch (which does not qualify as a legal
entity separate from the parent company). This law regulates three special forms of corporation: the
ordinary corporation, the closed corporation and the open corporation.
The shareholders or partners of any type of company may enter into agreements among themselves or
with third parties in order to regulate their rights and obligations in the company, agree on investment
obligations, minimum periods of permanence in the company, and voting syndicates, among others.

II.3.1.2.3. Corporations
The corporation is the type of legal structure most often used for doing business in Peru. It is a
limited liability company, eminently capitalist, whose structure enables distinguishing the
administration from the property administered. For its constitution, it requires a minimum of two
shareholders, which may be natural as well as legal persons. The capital will be split into transferable
securities referred to as shares. The transfer of shares in an ordinary corporation is free, unless

otherwise agreed. With regard to social capital, the law does not set a minimum capital, although in
certain industries, sector regulation, for example in the financial sector, does set some minimum
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MARKETING PLAN FOR SELLING CASUMINA RADIAL FULL STEEL TIRE TO PERU


capital requirements. The initial contribution for its constitution must be deposited in a local bank.
The governing bodies of the corporation will be the general meeting of shareholders, the board and
the general manager. The statutes are formalized by public deed and entered in the public registry. In
addition, two specialized types of corporations can be found under Peruvian law, which in addition
shall be subject to the rules of the ordinary corporation: closed corporations and open corporations.

II.3.1.2.4. Closed Corporations
The closed corporation is quite similar to the commercial company with limited liability. It is
required to have a minimum of two and a maximum of 20 shareholders.
It carries certain limitations on the transfer of shares, such as those posed by stockholders’
preemptive rights (in this case, agreements to the contrary are allowed), and in some cases, the
consent of the company (this should be agreed in the statute). Shares may not be listed in the Public
Registry of the Securities Market. It is optional for this type of society to have a board, which is a
matter defined in its statute. Similarly, this type of corporation allows non-contact shareholders’
meetings. It is ideal for small capital companies or for those with few partners.

II.3.1.2.5. Open Corporations
A corporation is open when it meets one or more of the following conditions:
-

It has made a primary public offering of shares or convertible bonds.

-

It has more than 750 shareholders.

-

Over 35 percent of its capital belongs to 175 or more shareholders, excluding from this number
those shareholders whose individual holdings do not reach two per thousand of the capital or
exceed 5 percent of the capital.

-

It is constituted as such.

-

All shareholders with voting rights unanimously approve the adoption of that regimen.
The open corporation must register all its shares in the Public Registry of the Securities

Market. They are companies subject to supervision by the National Supervisory Commission of
Companies and Securities (Conasev).

II.3.1.2.4.

Limited Liability Companies

The limited liability company is constituted with a minimum of two and a maximum of 20
partners. It does not issue shares (but participations) and has no board. Its form of organization is
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MARKETING PLAN FOR SELLING CASUMINA RADIAL FULL STEEL TIRE TO PERU

similar to that of corporations. In this type of company, there are, necessarily, stockholders’
preemptive rights.

II.3.1.2.5. Branches
The procedures for forming a branch in Peru are similar to those for constituting a company.
It requires formalization through a public deed which must contain at least: a certificate of validity
and existence of the parent company; a copy of the statutes of the parent company; an agreement
indicating the social capital that is allocated for the operations of the branch; the objectives of the
branch; the business and operations that it will conduct; a statement specifying that the branch
operations are included in the objectives of the parent company; the location of the domicile of the
branch in Peru; the appointment of at least one permanent legal representative in the country; the
powers conferred; and their subjection to the laws of Peru to meet the obligations assumed by the
branch in the country. These documents must be legalized by the Peruvian Consul of the jurisdiction
of the parent company, and then his signature must be legalized by the Ministry of Foreign Affairs in
Peru.

II.3.1.3.

Powers

The different types of companies and contractual forms recognized by Peruvian law require
an effective regime of powers that enables their performance in the market. The General Law on
Companies (LGS) recognizes in the board and management, in their capacity as administrative
bodies, as appropriate, all the powers of management and legal representation necessary to achieve
the social objective of the company. However, the market needs require the implementation of
specific regimes invested with publicity, by registering in the Public Registry. The powers are
especially relevant with respect to those foreign companies that conduct business in Peru through
branches or subsidiaries.
These powers are equally important for those companies incorporated abroad that lack legal
representation in the country, in which case the appointment of a legal representative becomes an

indispensable requirement if activities are performed in Peru.
All appointments of agents and granting of powers made abroad must follow a specific
sequence of legalization with the relevant authorities, such as ministries of foreign relations,
consulates, notaries, apostils or similar, to acquire validity within the national legal system.

II.3.1.3.1. Associative Contracts
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MARKETING PLAN FOR SELLING CASUMINA RADIAL FULL STEEL TIRE TO PERU


Associative contracts are those that create and regulate relations of participation and
integration in businesses or individual companies in the common interest of the participants. The
associative contract does not create a legal entity, it must be in writing, and is not subject to
registration in the public registry. Associative contracts can be: joint venture contracts and
consortium contracts. In the Joint venture agreement, a person, referred to as the general partner,
concedes to another person or persons, called limited partners, a share of the profit or profits of one
or more businesses or companies of the general partner, in exchange for a certain contribution. The
consortium contract is one whereby two or more persons join together to participate actively and
directly in a particular business or company, for the purpose of obtaining an economic benefit.

II.3.1.3.2. Joint Venture
Although the national system does without the denomination of joint venture, this form of contract has
spread easily in the main national economic sectors. The joint venture creates a legal relationship between two
or more individuals or legal entities willing to develop a specific economic activity during a specific time.
Unlike other associative contracts, this figure can generate a separate legal entity. The joint venture is an
extremely versatile legal construct, on which there is no exact and final definition, and which can
accommodate a variety of situations

II.3.1.4. TAX REGIME
II.3.1.4.1. Single Registry of Taxpayers - RUC

Any subsidiary or branch incorporated or established in the country must obtain its Single
Registry of Taxpayer (Registro Unico de Contribuyentes - RUC) number. However, though from the
point of view of company law there are no restrictions to the general manager being a foreign
individual, the Tax Administration requires that the general manager of a Peruvian company be a
Peruvian citizen, or a foreign citizen but with an immigration card. This requirement is intended that
such person may be registered as the legal representative of the company in the Single Registry of
Taxpayers.

II.3.1.4.2. Personal income tax
The tax year in Peru follows the calendar year and income taxes must be declared within three
months of the end of the tax year. In Peru taxable income is classed as income from either selfemployment or employment. You will be fined if you do not file your tax return or you file it late.

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MARKETING PLAN FOR SELLING CASUMINA RADIAL FULL STEEL TIRE TO PERU


Peru uses progressive taxation on personal income. There are currently two tax brackets, 15%
for an annual income of up to 50,000 Soles and 30% for an income over 50,000 Soles. Peruvian
income tax is collected by the SUNAT (Superintendencia Nacional de Administración Tributaria).
Up to 20% of the salary paid to its employees by a company is exempt from tax. Non/residents
receive a tax rate of 30% and are taxed at a flat rate of an official tax unit known as the UIT (Unidad
Impositiva Tributaria) is used to efficiently calculate tax liability.

II.3.1.4.3.

VAT

VAT tax stands at 18%, however exporting goods out of Peru is exempt from this tax. Goods
classed as luxury goods in Peru can be subject to a tax as high as 118%.

II.3.1.4.4. Capital gains on property
Capital gains tax for non-residents who are selling property in Peru is set at 30%. This is
calculated by the difference between the investment capital and the market value of the property.

II.3.1.4.5. Corporate Tax Rate
In Peru, the Corporate Income tax rate is a tax collected from companies. Its amount is based
on the net income companies obtain while exercising their business activity, normally during one
business year. Revenues from the Corporate Tax Rate are an important source of income for the
government of Peru.
The basic Peruvian corporation tax rate stands at 30% however in the Amazon region it is
10%. Smaller companies that turn over less revenue can be imposed a tax of 2.5%. It is important to
note that Peruvian franchises or branches of international companies are subject to Peruvian tax rates
regardless of the location of their headquarters.

II.3.2. ECONOMY
II.3.2.1.

Peru’s Economic Policy

In the last decade, Peru has improved its economic governance and social integration
remarkably. Following the turbulent 1990s, the country’s institutions have improved, which has
produced positive spillovers to both fiscal and monetary policy implementation. However, poverty
and inequality are still spurring grievances among the poorest communities. Therefore, economic
policy in Peru needs to be analyzed on two fronts. On one hand, success in poverty reduction and
social inclusion is crucial to guaranteeing the stable development of the country. On the other hand,
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MARKETING PLAN FOR SELLING CASUMINA RADIAL FULL STEEL TIRE TO PERU


institutional and macroeconomic stability is seen as capital to allow for the country’s achievement of

its development goals.
II.3.2.2.

Peru Economic Outlook

GDP increased just 1.0% annually in Q4, which was weaker than the 1.8% expansion tallied
in Q3. As a result, the economy expanded 2.4% in the full year 2014, which was well below the 5.8%
growth seen in 2013 and marked the slowest growth since 2009. Falling investment and subdued
private consumption dragged on growth, although a large fall in exports was the main factor behind
the deceleration. Weak global demand and low prices for Peru’s commodity exports exerted
significant pressure on the external sector last year, although a modest recovery in the mining
industry is expected this year. Meanwhile, the government is hoping to boost growth with a series of
large public-private infrastructure projects, but it remains to be seen if this will fuel momentum.

II.3.2.3.

Peru’s Balance of Payments

In the last decade, Peru has changed its external position from being a net international
creditor to a net debtor. However, its external position remains solid. After registering surpluses
between 2004 and 2007, the current account balance has accumulated deficits since then. This change
has come on the back of the progressive narrowing of the trade balance surpluses that had been in
place since 2002. Whereas the service and the factor income balances have been broadly stable, the
transfers’ balance—which mainly accounts for international remittances—has remained in surplus,
although it has been narrowing in the last years.
The corresponding capital inflows benefit from a strong contribution from Foreign Direct
Investment (FDI), which has performed strongly in the last decade with a record of USD 12.2 billion
inflows in 2012. Among the countries that invest the most in Peru are Spain, the United Kingdom and
the United States. Nearly a quarter of the total FDI is attracted by the mining sector and nearly the
half

of

it

is

II.3.2.4.

split

among

the

financial,

communications

and

industry

sectors.

Peru’s Trade Structure

Despite the progressive improvement of internal demand, the external sector’s performance
continues to be of crucial importance to the Peruvian economy. As a country rich in natural
resources, it exports goods that are highly subject to price volatility, whereas it imports industrial

goods, prices of which are less volatile. Therefore, Peru’s external position remains vulnerable to
changes in the terms of trade (i.e., the relative price of exports over the price of imports). The country
has benefited from a steady improvement in its terms of trade since 2000, which helped keep the
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MARKETING PLAN FOR SELLING CASUMINA RADIAL FULL STEEL TIRE TO PERU


trade balance in positive figures up until 2013. The trade balance peaked at a record-high surplus of
USD 9.8 billion in February 2012. It has narrowed uninterruptedly since then and shifted to deficit in
December 2013. This trend has been driven by falling global demand and decreasing prices for
traditional Peruvian exports, such as copper, silver and natural gas. The increase in import volumes
has also affected the trade balance negatively.
Moreover, the country has engaged in several bilateral and multilateral trade agreements that
have opened new markets for its exports. Peru joined MERCOSUR in 2005, and between 2006 and
2013 it signed several bilateral treaties with other Latin American and Caribbean economies. In
addition, in 2006 Peru and the United States signed the United States-Peru Trade Promotion
Agreement (PTPA), which has been operative since 2009.

II.3.2.5.

Economic Freedom

Peru’s economic freedom score is 67.7/100, making its economy the 47th freest in the 2015
Index. Its score is 0.3 point better than last year, with improvements in freedom from corruption,
labor freedom, and monetary freedom outweighing declines in business freedom, the management of
government spending, and fiscal freedom. Peru is ranked 8th out of 29 countries in the South and
Central America/Caribbean region, and its overall score is above the world average.
Peru is committed to free trade. More than 80% of trade is covered by Free Trade
Associations (FTAs), including one with the European Union. Peru had a founding role in the freetrading Pacific Alliance bloc and participates actively in the Trans-Pacific Partnership negotiations. It
is also a member of the WTO, Andean Community and APEC.

II.3.2.6.

Peru has the following rankings in recent world economic surveys:

-

Peru was ranked 4th by Bloomberg among “best emerging countries for investment” in 2014.

-

Ranked by the World Bank as the 42rd easiest country to do business in (‘Ease of Doing
Business’ report), making it second in the region.

-

Peru tops Grant Thornton’s list of the best prospects among emerging markets (beating the
BRICs- Brazil, Russia, India and China). Peru has also topped the Global Microscope Ranking,
produced by the Economist Intelligence Unit, for the last six years, highlighting its sophisticated
legal and regulatory framework and competitive microfinance sector.

-

Peru also ranked 65th in the World Economic Forum’s Global Competitiveness Report. The
report highlighted that Peru continues to benefit from a very strong macroeconomic
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MARKETING PLAN FOR SELLING CASUMINA RADIAL FULL STEEL TIRE TO PERU

-

Performance and efficiency in goods, financial and labor markets’. However, Peru can benefit
from strengthening its institutions, by ‘increasing efficiency and infrastructure’.

These positive assessments reflect Peru’s strong legal framework, which promotes and
protects foreign investors´ interests. With a no discrimination policy between national and foreign
companies, the Constitution and associated legal framework guarantee private property rights, the
fulfilment of contracts, free capital transfer and remittance of earnings, unrestricted access to internal
and external credit and unrestricted access to most economic sectors with only a few exceptions.

II.3.3. SOCIATY
II.3.3.1.

POPPULATION

Peru has a growing population that since 1950 has increased 200%. In 2014, Peru’s
population is estimated at 30,911,183. Its current population density is just 24 people/km2 (or
59/square mile), which makes it the 191st densely populated country.
Peru is one of the 26 fastest growing countries, and its population is predicted to reach 42
million by 2050.
Peru Sex Ratio 2014: 50.115% Male / 49.885% Female
II.3.3.2.

LANGUAGE

Spanish is spoken by approximately 84% of the Peruvian population, making it by far the
most widely spoken language in Peru. It is also the main language of the Peruvian government, the
media, and the education system.
Quechua (13%) is the second most common language in Peru and the most widely spoken

native language. Quechua speakers are mostly in the central and southern highlands of the country.
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MARKETING PLAN FOR SELLING CASUMINA RADIAL FULL STEEL TIRE TO PERU


Only about 1.7% of Peruvians speak Aymara, but it remains the 3rd most widely spoken
language in Peru. In modern-day Peru, speakers of Aymara are located almost entirely in the deepsouth, along the border with Bolivia and around Lake Titicaca.
II.3.3.3.

MAJOR URBAN ARES

The largest city in Peru is its capital city, Lima. It is home to more than a quarter of Peruvians
and the country's largest city by far with a population of more than 8 million.
Lima's wider metropolitan area is home to 8,472,935 people, making it the 22nd largest city in
the world, equivalent more or less to London and the 6th largest in South America. The only larger
cities are Mexico City (Mexico, 22.6 million), Sao Paolo (Brazil, 20.5 million), Buenos Aires
(Argentina, 14.5 million), Rio de Janiero (Brazil, 12.1 million) and Bogota (Columbia (8.5 million).
II.3.3.4. Human Development Index (HDI)
With an average Human Development Index of 0.762, Peru comes mid-way in the world
ranking (79 out of a total of 177 countries). Of the Andean countries, Peru comes after Venezuela and
Colombia, and in terms of Latin America it comes after Argentina, Chile, Uruguay and Brazil. The
level of development indices are focused in Metropolitan Lima, in the provinces of Costa, in areas of
greatest demographic concentration, in the most urban areas, and in areas nearest the capitals.
Table A: Peru’s HDI trends based on consistent time series data and new goalposts

1980
1985
1990
1995
2000

2005
2010
2011
2012
2013

Life
expectancy
at birth

Expected Mean
GNI
per
years of years
of capita (2011 HDI value
schooling schooling
PPP$)

60.1
63
65.5
68
70.5
72.4
73.9
74.2
74.5
74.4

10.9

11.7
12
12.3
13.6
12.8
8.8
13.1
13.1
13.1

5.5
5.9
6.6
7.3
8
8.4
13.1
8.9
9
9

10,495
8,783
5.369
6.625
6.67
7.436
9.737
10.212
10.907

11.28

0.595
0.616
0.615
0.646
0.682
0.694
0.722
0.727
0.734
0.737

II.3.3.5. POVERTY RATIO
The percentages of the population living in poverty and extreme poverty in the last two
decades have remained practically constant, although in absolute terms the population in this
situation has increased considerably, especially in the cities. In 2003 around 14.7 million people, i.e.
54.7% of the population, were considered poor 56.8% in rural areas (8.34 million) and 43.2% in
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MARKETING PLAN FOR SELLING CASUMINA RADIAL FULL STEEL TIRE TO PERU


urban areas (6.35 million). An estimated 15.5% of the total population is in a situation of extreme
poverty, which is worse in rural areas (4.8 million people in rural areas and 1 million in urban areas).
The regions with the highest rates of poverty and extreme poverty are in the Central mountain
range (Huancavelica, Huánuco, Apurimac and Ayacucho). The rates are also high in Cajamarca,
Cusco and Puno and in the forest regions (Amazonas, Loreto and Ucayali). The relatively low
percentages of poverty in Lima nevertheless conceal a high incidence of poverty and extreme poverty
in absolute terms.
II.3.3.6. HOFSTED’S NATIONAL CULTURE DIMENSIONS

/>
II.3.3.6.1. Power distance
Superiors consider subordinates as being of a different kind and ask for respect – particularly
if the latter are of black or indigenous origin.

II.3.3.6.2.

Individualism

With a value of 16 Peru shows a very collectivistic score, in line with most other Latin
American countries. Among other consequences, it is interesting to highlight that in general people
here find large companies attractive and that, particularly among blue collar workers, the involvement
with the company is moral – and not calculative. Managers endorse more traditional points of view
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MARKETING PLAN FOR SELLING CASUMINA RADIAL FULL STEEL TIRE TO PERU