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Why Costa Rica is a Strategic Destination for Supply Chain Rethinking

Why Costa Rica is a Strategic Destination for Supply Chain Rethinking

The COVID-19 pandemic has promoted to rethink different processes in the "new reality". Transcending sectors, the novel coronavirus has touched on – and fueled – one of the key points in innovation: the adaption to change, because those who do not will suffer even greater consequences.

Industries that have led the charge –the process to rethink and analyze adjustments, given the situation generated by the pandemic and its impact on countries that produce raw materials, assemble products or provide services related to these– include logistical operations, supply chain management, and productive processes.

During a webinar organized by the Costa Rican Investment Promotion Agency ( CINDE) in early July, the former Minister of Foreign Trade in Costa Rica, Anabel González, pointed out, "The increase in China's costs, conflicts in international trade, the strengthening of new technologies, and the trade war between China and the United States were already driving change in the global supply chain."

In addition, González pointed to other disruptions caused by the pandemic, such as:

1. A forced decrease in production, due to restrictive measures.
2. A deep drop in demand, in sectors such as automotive and textiles; an opposite effect has been observed in other fields, including increased demand in personal protective equipment.

3. Disruptions in air, sea, and land transportation.
4. An unprecedented uncertainty in business and commerce.

According to former Minister González, these challenges drove rethinking processes in multinational companies, with a view to greater stability and protection against the implicit vulnerabilities in extensive supply chains and production networks highly concentrated within a specific region or country. Hence, reshoring – in other words, moving operations back to their country of origin – rose as an alternative to shortening supply chains and/or to diversify local production.

Costa Rica. So, what opportunities exist for multinational companies in countries like Costa Rica? Former Minister González reiterated that one of the country’s strengths is to offer a robust value proposition, comprised of its highly trained human talent, strategic location, excellent business climate, preferential access to primary markets, and quality of infrastructure.

Additionally, the country offers a key base in our era of greater environmental awareness and the development of human talent in answer to industry 4.0 trends. This is known as the triple bottom line: People, Planet, and Prosperity. These elements point to talent, development, and sustainability as key aspects for the nation’s growth – and for the companies that maintain a presence here.

Costa Rica has also proven itself capable of sustaining business continuity, despite the challenges brought about by the pandemic: During this time, 98% of companies in the services sector have completely converted to a work-from-home model. Likewise, 100% of manufacturing and life sciences companies have demonstrated no disruption and continue to comply with all corresponding sanitary measures.

Finally, former Minister González pointed out a key element for any country – and any company that does business there: Choose a reliable partner. Over the last three decades, Costa Rica has proven itself to be just such a partner, as evidenced by the establishment of the more than 300 companies attracted by CINDE.