1. Cultural i. Dos and Don’ts DOs | DON'Ts | Titles: It is important to respect the titles that your colleagues have earned. "Señor" or "Señora" are also acceptable. | Rude gestures: Keep your gestures open, friendly, and inviting. Quick, short gestures are considered rude by Peruvians. | Dual language on business cards: Print both English and Spanish on your Business cards. Though many Peruvians speak English, it is best not to assume so. | Gift knives or odd numbered things: Be careful with your gifts! Knives are interpreted as cutting the relationship and odd numbered things are ill-luck. | Make Eye Contact: Although Peruvians favor indirect styles of communication with words, they favor direct eye contact which creates an atmosphere of trust and respect. | Personal bubble: Be aware that Peruvians tend to speak closer to whom they wish they speak with than Americans are used to. Kisses on the cheek and speaking very closely are normal. | Small talk: Small talk helps establish a base for the relationship. Business matters should follow, but allow your host to initiate the business conversation first. | First names: Only use first names when the other party has invited you to do so. If you haven't, use other formal ways to address them. | "DO" conversation topics: Soccer, family, places to visit in Peru, and local food. | "DON'T" conversation topics: Politics, religion, terrorists, and a person's ancestry. | Bring a gift: If invited to a Peruvian home, it is appropriate to bring flowers (avoid black & purple), wine, good quality liquor, or chocolates. Wrap your gifts and expect that they may be opened right away. | Taboos: Don't refuse dinner invitations, don't refuse to eat something when you're the guest, don't put your feet on a chair, desk, or table, don't put your elbows on the table while eating, don't place your hands in your lap (keep your hands on the table!) and don't cross your legs by resting your ankle of one leg on the opposite knee. | ii. Famous/notorious for (quality of work, corruption) Researchers indicate that, “it is hard to enter this market, most of the time you require a third party to introduce you to the company”, (Koc, 2010). This means that, if not personally introduced through inside contact or networking, Peruvians will not conduct business with the interested party. Without an introduction by someone familiar with the business, a new entrant or even an investor, will be denied. In addition, Peruvians as a culture have a relaxed concept of time. They called this, “la hora peruanna or Peruvian time.” Although Peruvians are likely to be late for a meeting, foreigners are expected to be punctual. For the foreigner to be late for a meeting is considered rude. However, once the meeting begins there is no time for chit-chat. The meeting will go fast and there is no beating around the bush. Peruvians go straight to the order of business, conducting business in a brisk, efficient manner. Peruvians typically do not trust foreigners and are cautious of them, (Rushton, 2010). Because of this, negotiation between Peruvians and foreign businesses can be competitive and often take time. Negotiations can occur over a significant period and requires patients. Meetings will happen and negotiations will follow without any agreement being made. Peruvian businesses practice a top-down model of hierarchy in terms of business structure. Consequently, all items of business are conducted with CEOs and members of top management. They conduct all levels of negotiations and will take the time they need, when it comes to making important decisions for business. Corruption is a serious problem for businesses in Peru, with irregular payments, bribes and the favouritism of government officials in awarding contracts being particularly common. Corruption is criminalised through Decree No. 635 of the Peruvian Penal Code (in Spanish), which covers attempted corruption, extortion, passive and active bribery, money laundering and bribery of foreign officials. The official procedure of accepting gifts and small courtesies is not specified, so it also represents a risk. Peru’s Penal Code does not criminalize facilitation payments. Corruption index: Peru – 85/175 Colombia – 94/175

2. Economy and Infrastructure Economic dynamism | Peru is classified as upper middle income by the World Bank and is the 40th largest in the world by total GDP | Nominal GDP GDP per capita GDP by sector | $206.54 billion (2013) $6.674 (2013) agriculture: 6.2%; industry: 37.5%; services: 56.3% | Unemployment rate | 3.6% (2012) | Import/Export | Exports: $73.50 billion Export goods: copper ore, crude petroleum Major partners: Chile 10%, Japan, Mexico, UK, Bolivia 5% Imports: $68 billion Import goods: petroleum and petroleum products, chemicals, plastics, machinery, vehicles, iron and steel, wheat, corn, soybean products, paper, cotton, vaccines and medicines Major partners: Chines 2%, US, EU 15%, Brazil, Japan 10% | Currency Inflation rate | The nuevo sol 1 USD = 3.09 Sol 2.8% | Disparity rich/poor | Gini coefficient: 48.1 (2010) | Transportation capacity, physical connectivity | In early 2000, urban transport in Lima had become unsustainable and required a major restructuring. Congestion, average travel times, and public transport expenditures were high. This Global Environment Facility (GEF) project helped Peru establish a foundation for more efficient, and safer urban transport in Lima and Callao. This GEF project was fully blended with the Bank loan, which financed the implementation of the first bus rapid transit (BRT) corridor in Lima. | Electric capacity | The current electricity generation capacity is evenly divided between thermal and hydroelectric sources. However, several challenges remain. Chief among them are the still very low level of access in rural areas and the untapped potential of some renewable energies, in particular wind and solar energy, due to an inadequate regulatory framework. Electricity coverage (July 2011): 89% (total), 61% (rural); (LAC total average in 2007: 92%) | 3. Risks (financial and political risks) Economic Risk: Moderate Peru’s economy experienced strong growth between 5-9% in the last few years, driven by increased investment and rowing consumer demand. While GDP per capita remains low at USD 6,674, it continues to improve. The economy has benefitted from market liberalization reforms in recent years which have helped to support economic expansion and reduced poverty rates. Poverty rates have improved from 48.5% in 2004 to 23.9% in 2013, but extreme income inequality persists. Peru relies heavily on its commodity exports as it is rich in natural resources (gold, copper and silver as well as oil and gas and mineral deposits) and construction. Foreign direct investment inflows into mining and energy projects are strong. Political Risk: Moderate There is some social opposition to certain market liberalization efforts, especially regarding the extraction of natural resources in the southern region of the country. Environmental activism, as well as indigenous resistance to development projects, has been on the rise in recent years. President Humala’s administration is aiming to improve security as well as address issues of education, health and inequality in the VRAE region, which has lagged in development and historically has been the world’s largest producer of coca crops for cocaine. The government is attempting to crack down on drug violence and corruption. Weak infrastructure and lengthy business procedures continue to present challenges.

Financial System Risk: Moderate The Superintendency of Banks, Insurance and Private Pensions is responsible for supervision of the insurance sector. Capital markets have been gradually expanding as reform measures are implemented. Inefficient bureaucracy, however, somewhat hinders investment. The Central Reserve Bank of Peru continues to successfully use inflation targeting at 2% as the primary strategy for monetary policy. There are ongoing plans to implement Solvency II standards.