Market of the Month – Portugal
Bordered by the Atlantic Ocean and Spain, Portugal invokes a romantic notion of breathtaking scenery, rich history, beautiful tiles and cobble-stone streets. The small country of Portugal is one of the oldest countries in Europe, having essentially established its current borders in the 13th century. It joined the European Union in 1986 and is one of the founding countries of the Eurozone. Over the last two decades, Portugal has made various reforms, privatized and liberalized key areas of the economy, and has achieved a healthy level of growth.
The U.S. is currently Portugal’s top non-EU trading partner and a focus market for Portuguese foreign direct investment. As in many other southern European countries, personal relationships are a key component of doing business here. The U.S. Commercial Service can help your company build these personal relationships to successfully expand your international sales to Portugal. Portugal can also be an excellent base of operations for doing business in Brazil, Africa and in the rest of Europe.
Riding a crest of global economic expansion and EU investments in the late 1990s, Portugal’s economy boomed. The services sector, which includes public service, retail, tourism, and recreation, is now Portugal's largest employer, having overtaken the traditionally predominant manufacturing and agriculture sectors in the past decade.
For 2009, against the backdrop of a severe global economic downturn, Portugal faces a recession which may see the economy contract by up to 2% (Economist Intelligence Unit forecast). That said, the government has stated that it will prioritize large project investments such as a high-speed train link to Spain and a new international airport in Lisbon, which are anticipated to create diverse opportunities for technology imports and international service contracts as the increase in public spending helps deflect some of the economic contraction.
The United States ranks 5th among Portugal’s top export trading partners (1st place for non-EU countries), while Portugal ranks 53rd among U.S. export markets. Portuguese consumers bought approximately $2.4 billion dollars worth of U.S. goods and services in 2007, including electrical machinery, aircraft parts and components, machinery, grains and oilseeds, optical/medical equipment, and wood products. However, the total amount of U.S. goods sold into Portugal is undoubtedly larger as U.S. products arrive in Portugal via other EU countries. (It is common throughout the European Union for goods to be shipped to one EU location – often to take advantage of lower value added tax rates - and then to be distributed by ground transport to neighboring member state markets.)
The city of Porto
There are many industries where U.S. exporters have made great strides in Portugal. Top prospects in 2009 are:
Aeronautical Products and Services
Architectural/Construction & Green Building Services
Automotive Specialty Products and Accessories
Environmental Equipment and Technology
Renewable Energy Equipment
Security and Safety
Travel and Tourism Services
For U.S. companies doing business in Portugal, they will find business practices to be relatively similar to other European nations. However, there are a few key points that every U.S. business should keep in mind when working with Portugal:
Local Representative: Portugal is a small country and knowing people in your industry is important. Therefore, exporters need a local representative who must have good contacts in order to be aware of future contracts and to participate in tenders. The U.S. Commercial Service can help you find a local representative to increase your chances of success in this market.
Impact of the EU: If homework has been done for other EU markets it is basically done for Portugal. To look at it another way, if a U.S. firm starts with Portugal they are basically ready to expand into any other European Union country. Many projects are EU-funded, so an EU partner is desirable when bidding on these.
The Iberian Peninsula: Portugal and Spain is not one homogeneous marketing area. Normally your Spanish distributor should not be asked to cover Portugal unless the Spanish company is willing to set up a separate Portuguese entity to handle this. If Spanish distributors consider Portugal an extension of the Spanish market, they are largely ineffective in Portugal.
Slow Down: Business takes longer as compared to northern Europe because personal contacts are important. Your customers want to get to know you before they will trust you.
Dale Carnegie & Associates, Inc., a New York-based company, is recognized worldwide for their business training and management courses. The company is expanding internationally with the support of the U.S. Commercial Service. CS New York trade specialists worked with them for the past several years to develop the firm’s international strategy and encourage their participation in a multi-sector trade mission to Portugal last fall. The result was Dale Carnegie’s request to CS Portugal for assistance in identifying a local master franchisee.
CS Portugal provided detailed insight and guidance on the Portuguese market and agreed to provide customized matchmaking services for a fee to find and screen potential candidates in Portugal. In November 2007, CS Portugal organized two days of meetings for Dale Carnegie with 17 pre-screened business candidates. The company's Senior Vice President, Joseph Garcia, hailed the service as "excellent assistance in presenting a strong field of candidates."
As a direct result of CS Portugal's assistance, Dale Carnegie signed a master franchisee agreement for the Portuguese market with Luis Melo in March 2008, amounting to $50,000 with the tenure of the franchise agreement as 15 years.
The capital city of Lisbon
Population - 10.6 million
Capital - Lisbon
Languages - Portuguese
Government Type - Parliamentary democracy
GDP (2008 est.) - $228 billion
Primary Import Countries (2007)
Primary Industries - Textiles and Footwear, Wood Pulp, Paper and Cork, Metalworking, Oil Refining, Chemicals, Fish Canning, Wine, Tourism
CS Portugal produces market research reports to help U.S. companies determine market potential, market size and potential competitors. The latest market research includes:
Portugal Country Commercial Guide 2009
Automotive Aftermarket Accessories and Specialty Equipment (10/2008)
Renewable Energy and Micro Generation in Portugal (09/2008)
The Portuguese Tourism Trends (08/2008)
Green Building (08/2008)
Architectural and Construction Engineering Services (04/2008)
TEKTÓNICA - International Construction and Public Works Exhibition (May 19-23)
Expo Franchise - National Franchise Exhibition (May 30 – June 1)
AmbiEnergia - International Exhibition of Environment, Energy and Sustainability (June 4-7)
In 2008, the U.S. Commercial Serviced helped companies export over $39 million of goods and services to Portugal. Learn how we can help you today.
U.S. Department of Commerce
U.S. Commercial Service
American Embassy, Lisbon
Phone: 011-351-21-770 2528 / 727 3300
Dillon Banerjee, Senior Commercial Officer
Country Commercial Guide
CIA World Fact Book
US Department of State Background Notes
Map of Portugal