Latin Trade (English Edition) - Nov/Dec 2012 by Latin Trade Group

LATIN TRADE

20 ANNIVERSARY ISSUE

LATIN TRADE 20TH ANNIVERSARY ISSUE NOVEMBER / DECEMBER 2012

YOUR BUSINESS SOURCE FOR LATIN AMERICA » WWW.LATINTRADE.COM

NOVEMBER/DECEMBER 2012

86%

of CFOs, Government Policy Makers and Energy Professionals

Agree that energy assessments should be mandatory for companies that use the most energy.

Energy

The financial, environmental and reputational benefits of energy efficiency are evident: businesses gain from lower energy bills, lower pollution and CO2 emissions – reducing the risk of suffering penalties from regulators – and better relations with employees, customers and other stakeholders. An energy assessment can spur a business into making positive changes, through optimizing energy use, acquiring new equipment and adopting new habits. Our survey found that 86% of respondents favored mandatory energy assessments for energy hungry industries, showing how seriously they view the need to become more energy efficient and boost productivity.

2011 ENERGY SURVEY Produced by Bloomberg Businessweek Research Services in partnership with ABB. For more Information visit www.abb.com/betterworld

Electric cars: 15 minutes charging, 200 km driving? Having to wait eight hours to fully recharge an electric car is the main reason for not buying one. But things have changed: With ABBâ&#x20AC;&#x2122;s direct current (DC) chargers charging time has been slashed to as little as 15 to 30 minutes. No wonder the Estonian government is relying on ABB to build Europeâ&#x20AC;&#x2122;s largest electric vehicle fast-charging network. By the end of the year the Estonian main roads will have fast chargers every 50 km. Once accomplished the goal to significantly reduce CO 2 emissions by 2020 moves a lot closer. www.abb.com/betterworld

Certainly.

CONTENTS

NOVEMBER/DECEMBER 2012 VOL. 20 No. 6

Editor’s Note

Opinion

12 The Contrarian: Searching for El Silicon Valley of Latin America

20 Years of History

The Scene 10 CFO World: Earnings & More

By John Price

Events 85 Special Event Coverage: BEST OF BRAVO 2012 Highlights from the Latin Trade Symposium and the 18th BRAVO Business Awards gala celebration.

Features Profile 14

The Multilatins Revolution

Sebastián Piñera

Innovation and Change

Latin America: 20 Years of Evolution

A New Region Luis Alberto Moreno

President Bancolombia 35

Agustín Carstens

The New Business Models 38

CEO Council of the Americas

Gerardo Mato CEO HSBC Global Banking for the Americas

Susan Segal

Woods Staton Chairman Arcos Dorados

Enrique García President CAF Banco de Desarrollo de América Latina

Pedro Heilbron CEO Copa Holdings

Governor Bank of Mexico 26

Juan Pablo del Valle Chairman Mexichem

President Inter-American Development Bank 24

Carlos Raúl Yepes

Frederico Fleury Curado CEO Embraer

New Enterprises

CEO AviancaTaca

Luiz Fernando Furlan

Member of the Board BRF Brasil Foods

Alessandro Carlucci

Germán Efromovich

A More Productive Region 44

CEO Natura

Juan N. Cento President FedEx Express

Andrew Vesey Executive VP AES Corp.

Luiz Meisler Executive VP Oracle Latin America

LATIN TRADE

NOVEMBER-DECEMBER 2012

CONTENTS

NOVEMBER/DECEMBER 2012 VOL. 20 No. 6

James Quigley

Executive Vice Chairman Bank of America – Merrill Lynch

Jaime Szulc

President for Latin America and the Caribbean, SAP 66

President Latin American Operations Goodyear President Emerson Latin America

HR & Demographics 68

Kirk Kinsell

President for the Americas IHG

Co-President for the Americas,Starwood Hotels & Resorts

Latam Tech to the World 72

Chief of Operations for Marriott International

Eduardo Eraña President for Latin America and the Caribbean, Visa International

The Secret Behind the Miracle 76

Consumer Banking and Executive Chairman of Lat Am and Mexico, Citi

Former CEO Canal de Panamá

President Latin America Microsoft

President Latin America and the Caribbean, Burger King

Pedro Pablo Kuczynski Former Minister of Economy of Peru

Ferdinand Kurt

Admilson Monteiro Managing Director of International Business and Affairs Banco do Brasil

José Tomás

Celso Amorim Defense Minister of Brazil

Hernán Rincón

Ricaurte Vásquez VP Government Affairs and Public Policy GE

Alberto Alemán Zubieta

Walter Bayly CEO Banco de Crédito del Perú

Manuel Medina-Mora CEO Global

Blanca Treviño CEO Softtek

Age of Services 56

Claudio Muruzábal CEO Neoris

Rob Steigerwald

Lucía Herrera President Pantaleón Foundation

Osvaldo Librizzi

Armando Laborde Co-Director for Latin America Ashoka

A New Frontier: Tourism 54

Stephen Fenwick CEO Americas DHL Express

Leo Rodríguez

Rodolpho Cardenuto

CEO for the Americas Panalpina

A New Concept 82

Alexia Keglevich CEO Assist-Card

Web Find us online at www.latintrade.com

Cover: 20th Anniversary Issue 4

LATIN TRADE

NOVEMBER-DECEMBER 2012

Juan Benavides Member of the Board Banco Falabella

EDITOR’S LETTER

Years of History A good magazine will always strive to portray current issues accurately. Its pages should reflect the points of view and events of the region that matter most to its readers. These are all strong reasons why a good magazine should keep up with the times. We believe that Latin Trade, over the last 20 years, has become an effective narrator of the region’s business stories. It began as US-Latin Trade, a magazine that focused on new business opportunities that were opening up for the United States in the rest of the continent. Back then, the magazine was written mainly for US-based multinational companies, covering every detail as they took their new products, technology and practices south. US-Latin Trade gradually turned into Latin Trade, and became the main point of contact and information for business, social and political leaders in Latin America. It took note of the awakening of South American-based international companies, now known as the multilatins. And of course the rise of Chile and Mexico, as well as Brazil, Peru, Panama and Colombia later. Along the way it has told stories of success and explained those of failure, all of which have had a profound impact on the

LATIN TRADE NOVEMBER-DECEMBER 2012

ever-changing region. Today, Latin Trade is a magazine for executives working in companies that have grown far beyond the horizons of their countries of origin; multinationals and multilatins that operate in the region as part of a global strategy. They share the same concerns, whether they are about human resources, infrastructure, economic stability or social issues throughout the region. They also see the same opportunities arising as the world’s economic powers shift and the middle classes in many of the region’s countries develop and grow. Latin Trade Group is a business dedicated to providing information, networking and intelligence services to companies operating regionally in Latin America. In addition to Latin Trade magazine, published as the leading source of information for Latin America and the Caribbean, online news and market intelligence Latin Business Chronicle and Latin Business Traveler, the Group offers networking opportunities through a series of events including private C-level roundtables and regional forums of discussion Trade Americas and the Latin Trade Symposium and BRAVO Business Awards. For our 20th anniversary, we have invited 40 special guests who have witnessed first-hand

the great changes that Latin America has seen in these past two decades. Each one of them, from their personal viewpoint and that of their companies will help us to paint a comprehensive picture of Latin America’s transformation. And that transformation, in the coming decade, will create new markets and new opportunities. The themes that run through this narrative are innovation and change: new business models, different ways of spotting opportunities and new leadership styles. This is are what Latin Trade will emphasize in this anniversary edition. We invite you to share with us this collection of business stories and visions of the future that show the road to development in the region, as related by 40 people who helped pave the way.

Santiago Gutiérrez, Executive Editor sgutierrez@latintrade.com

They’re constantly running at work, at home and with their children. And now they’re running on the streets too. They’re the 60,000 incredible women who ran in the McDonald’s 5K run.

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www w ww w ww w.ar arccos ar coos osdo doorraado dor add ss.c .com om

CEO Rosemary Winters

AN AFFILIATE OF THE LATIN TRADE GROUP

EXECUTIVE DIRECTOR & PUBLISHER María Lourdes Gallo EXECUTIVE EDITOR Santiago Gutiérrez

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THE SCENE

CFO World ISTOCK PHOTOS

Earnings and more

The youngest

are in Europe and South America, the biggest earners are in North America and, once again, the ones left behind are the women –in terms of the jobs they hold and the pay they receive. These are some of the results to come out of a survey carried out by Michael Page among 4,388 managers and financial directors from

around the world, 680 of whom work in Latin America. The Global CFO Barometer 2012 lifts a lid on numbers within the corporate world –for example, it reveals the financial service companies pay the highest salaries. The results also show that one out of four CFOs in the financial sector has an annual income of more than $255,000.

Compensation (gross annual pay packages, including beneﬁts and bonuses, in thousands of US dollars as a % per region)

SOUTH AMERICA Up to $ 80 $ 80-119 $ 120-154 $ 155-189 $ 190-254 $ 255 or more

Low proportion of women CFOs worldwide (percentage of women CFOs, as a % of those surveyed)

Paciﬁc Asia Europe North America South America

18 17 16 15 5

8% 14% 15% 16% 19% 29%

Up to$ 80 $ 80-119 $ 120-154 $ 155-189 $ 190-254 $ 255 or more

1% 7% 15% 12% 16% 49%

Women CFOs earn less (percentage of women in the income groups in thousands of US$, as a % of those surveyed)

Up to $ 80 $ 80-119 $ 120-154 $ 155-189 $ 190-254 $ 255 or more

Source: Global CFO Barometer 2012, Michael Page

NORTH AMERICA

LATIN TRADE NOVEMBER-DECEMBER 2012

25% 20% 15% 12% 9% 6%

EUROPE Up to $ 80 $ 80-119 $ 120-154 $ 155-189 $ 190-254 $ 255 or more

16% 21% 22% 15% 14% 13%

Europe and Latin America have the youngest CFOs (percentage of CFOs younger than 35 years of age, as a % of those surveyed by region)

Europe South America Asia Paciﬁc North America

49% 43% 31% 30% 21%

SEARCHING FOR EL SILICON VALLEY OF LATIN AMERICA BY JOHN PRICE

Politicians

across the globe are fond of touting their nation’s high-tech cluster as the next Silicon Valley. Few examples around the world, however, can stack up to the California original. None on that short-list can be found in Latin America. Modern Latin America can boast several fields of excellence but innovation is not one of them. Latin America continues to perform abysmally by one of the simplest measures of innovation– patent creation. Over the last twenty years, neither Brazil nor Mexico has accumulated more patents than companies like IBM or Siemens produce in a single year. Latin America, home to 6.5 percent of global GDP, publishes c. 400 patents per year, or less than 0.2 percent of the world’s total. More than half of the published patents in Latin America’s private sector are owned by foreign multinationals. A high proportion of homegrown patents are published by universities and have little or no commercial value. Taiwan’s Foxconn, the subcontractor of choice to Apple, HP and Dell, announced plans for a $12 billion investment in Jundiaí, near São Paulo. After much political glad-handing, a lack of skilled labor obliged Foxconn to reduce the plant to an assembly facility, adding marginal value to imported components, just enough to satisfy the demands of Brazil’s protectionist industrial policy. If it were not for import tariffs on assembled products and Brazil’s burgeoning consumer demand, how much IT invest-

LATIN TRADE NOVEMBER-DECEMBER 2012

ment would the country attract? Too often, “high-tech” parks in Latin America are thinly veiled sweat shops. Latin America competes with Guangdong province, not Silicon Valley. Even most multinational-funded R&D spending in Latin America is designed to comply with juicy tax breaks granted to greenfield investors, not “to tap the scientific talent” of the region. The crux of the matter is the lack of confidence in the region’s legal system and the ability of entrepreneurs (and their investors) to defend intellectual property rights. Without adequate legal protection, angel and venture capital financiers are scared to back new inventions. Without financial investors, Latin entrepreneurs have no recourse but to go to strategic investors for funding– the same investors who have the political clout and deep pockets to steal their ideas. Some argue that Latin America does not have the distribution and promotional channels to absorb new technologies ahead of more mature markets like Europe, the United States, Japan and Korea. Most backers of innovation in Latin America prefer to import proven intellectual property, negotiate the distribution rights to it across Latin America and tweak or tropicalize the product to better fit the middle income realities of the region. With the odds stacked against them, Latin inventors find their way to the original Silicon Valley where their ideas find a welcoming ecology of financial, technical and legal advisors. They are not alone. In 2011, 76

percent of patents published by the top 10 universities in the United States had at least one foreign-born author registered. Innovation in South America is making headway in two areas of natural competitiveness. Access to cheap commodities and energy gives Latin America a global advantage in the transformation and fabrication of secondary goods such as refined oil, glass and metals, as well as extraction machinery. In these fields, Latin inventors produce their most commercially viable patents. Capturing the imagination of global marketers is Latin America’s unique mix of middle-income consumer power, highly urban and reasonably efficient distribution networks and open trade access. An increasing number of multinationals that provide consumer goods and services see in Latin America a laboratory for the creation of tomorrow’s base-of-the-pyramid products which, once perfected in Colombia or Brazil, can be rolled out across Asia and Africa. In the past, the threat of globalization was the rallying cry of those who argued for weaker patent protection. Going forward, it may be the very motive that strengthens enforcement. John Price is the managing director of Americas Market Intelligence and a 20-year veteran of Latin American competitive intelligence and strategy consulting. jprice@americasmi.com

ISTOCK PHOTOS

THE CONTRARIAN

PROFILE

PIÑERA T

The remarkable career of the President of Chile and winner of the BRAVO Leader of the Year Award 2012 BY SANTIAGO GUTIÉRREZ

he man: Sebastián Piñera Echenique. The job: President of Chile. It would be hard to find a more interesting post in Latin America than Piñera’s. He leads a country which not only has the sixth largest economy in the region, but also the most competitive. In addition, Chile is likely to be the first in Latin America to join the ranks of the developed nations –the government aims to eliminate poverty by 2014. The presidency is every Chilean politician’s dream job but, for 63-year-old Sebastián Piñera, the achievement is not at all unusual. This native of Santiago is used to achieving his goals in life. He could have been a great academic economist. He was top of his business engineering class at Chile’s Catholic University. From there he went on to win a scholarship from the Fulbright Foundation that took him to Harvard. There he published a paper about the history of slavery in the United States in the Journal of Economic History. In just three years he finished a PhD in Economics –a feat in itself – having presented his thesis on education in Latin America. President Piñera confessed in an interview that he regrets having finished his formal studies so quickly. He continued his professional career having been hired by Richard Musgrave, the economist who at the time was advising several governments in the region on public spending. He became an adviser himself to the World Bank, the Inter-American Development Bank and the United Nations Economic Commission for Latin America, where he studied poverty in the region, while at the same time lecturing at the Adolfo Ibáñez and Catholic universities. But Piñera left economics for business, where he proved to be a great innovator, overcoming all types of obstacles. With the $50,000 he earned for working with Musgrave he founded a real estate company. However, after going broke during the 1982 Mexican crisis, Piñera managed to launch new construction projects and worked with the financial assessment company Infinco, where he had been a shareholder since 1978. As he built up his construction portfolio so, in 1997, he became a partner in Constructora Aconcagua. In 2008 he took over the assets of Constructora Fourcade. During his time in Infinco, Piñera developed the Bancard credit card business in Chile, as well as partnering with the Talca and Concepción banks. With these he held a small percentage of shares,

LATIN TRADE NOVEMBER-DECEMBER 2012

which gradually grew. In 1994, Piñera bought a 16 percent stake in the Lan Chile airline at a time when the share price was 80 pesos. Within 15 years, Lan Chile became the world’s fifth largest airline in terms of market share, boosted first by domestic growth, followed by an international expansion to Peru, Ecuador and Argentina. The share price reached 12,200 pesos by December 2011. At that point, Piñera held 26 percent of the company. During his business career Piñera brought Apple to Chile. He also became a shareholder in Chilevisión and the Colo-Colo soccer club, a small tribute to his passion for the world’s favorite game. After he was elected president, Piñera decided to sell his Lan and Chilevisión shares, as a gesture of transparency. That was when he decided to become a full-time public servant, his third major career move. Piñera has already said he has no wish to go back to business, although his personal fortune is reckoned to be close to $2.4 billion. If personal fortune is a yardstick for success, this number says it all. And success has continued to follow Piñera in his most recent career. During his time as a Congressman, from 1990 to 1998, his colleagues named him the best senator. He became president of the Partido de la Renovación Nacional from 2001 to 2004, presidential candidate in 2005 and again in 2009, when he won with 51.6 percent votes in his favor against Eduardo Frei. As President of Chile, Piñera has continued to deliver. He led the reconstruction of the country after the 2010 earthquake, one of the most devastating in Chile’s history. He aimed to conclude the reconstruction project within three years, and it is already 80 percent complete. Japan had estimated the project to last 10 years. Meanwhile, Piñera’s government generated 5.9 percent economic growth in Chile last year and is heading for close to 4.3 percent in 2012, a considerable achievement a country that has strong ties to what is a troubled global economy. Sebastián Piñera is a fighter. That much is for sure. He is also decisive, innovative and impatient. This potent mix has helped him to accomplish the goals he has set himself over the last 40 years. Piñera most certainly has a vital spark that will surely make him one of the most influential Latin Americans for decades to come. Santiago Gutiérrez reported from Bogotá

PHOTO: COURTESY GOVERNMENT OF CHILE

SEBASTIÁN

atin America is a far different place than it was back in 1992. In historical terms, the region has never been better in almost every way, nor does it offer so many opportunities for the achievement of prosperity. Information to support this claim abounds. A Latin American newborn child in 1992 had a life expectancy of up to 69 years, now the projected lifespan would be 74. That same newborn infant would have had an 86 percent chance of finishing primary school; now he or she would be almost certain to reach that level. If the child were Brazilian, he or she would only have had a 14 percent chance of owning a computer and 10 percent of having a mobile phone. Now, computer ownership has reached more than 50 percent, while mobile-phone penetration is practically 100 percent. In 1992, that same child would have had a 21 percent possibility of ending up living on the streets, and a 45 percent likelihood of living in poverty. Today, those figures have dropped to 12 and 30 percent, respectively. Population in the region has grown by 30 percent, and now stands at 600 million people, while the regionâ&#x20AC;&#x2122;s economy has grown by more than 50 percent, reaching almost $50 trillion. These significant changes point to a very relevant transformation â&#x20AC;&#x201C;one that was achieved by ordinary people, often confronting very extraordinary challenges. Some of these people were from private companies, others from governments, and all of them made the most of a more connected and open world. Innovation and change have been achieved in the way things are done. Changes in business models, in the perception of opportunities and in leadership. This special anniversary edition of Latin Trade aims to highlight this transformation in the words of a select group of people who have helped shape these changes from their workplaces.

LATIN TRADE NOVEMBER-DECEMBER 2012

TWO DECADES that shook Latin America

NOVEMBER-DECEMBER 2012 LATIN TRADE

INNOVATION AND CHANGE

NEW BUSINESS IN THE

ISTOCK

BLINK OF AN EYE

The Internet provided mass access to information and enhanced many services. Online banking was born, logistics were improved by the ability to track packages in transit in real time; and even more creativity resulted in an explosion of new uses and services through the “world wide web.” n 1992, just as Latin Trade was taking its first steps, two historic events were in the making. The first was obvious. The signing of the NAFTA agreement between the United States, Mexico and Canada was destined to reduce trade barriers and promote business. As for the second, no one could imagine how it would transform the world of business and daily life itself: the fledgling services of email and the Internet became available in United States. Three years later there were 16 million users. Today there are 2.4 billion users throughout the planet, 34 percent of the world’s population. In 1992 the first short message service (SMS) was sent from a computer to a mobile telephone in the United Kingdom. Years later, this technology would bring the world of finance to people in the

LATIN TRADE NOVEMBER-DECEMBER 2012

most remote corners of the world – for example, by sending prepayments of money using mobile telephones. The Internet provided mass access to information and enhanced many services. Online banking was born, transforming many banking services; logistics were improved by the ability to follow packages in transit in real time; and even more creativity resulted in an explosion of new uses and services through the “world wide web.” Today in Latin America, almost 230 million people –almost 40 percent of the region’s total estimated population of 580 million– are Internet users. The following tables show some of the many economic changes the region has undergone.

INNOVATION AND CHANGE

MOBILE CELLULAR SUBSCRIPTIONS (per 100 people)

EXPORTS OF GOODS AND SERVICIES AS % OF GDP

(on the domestic stock exchange)

1995 (N/A 1992- 2011 94)

Argentina Brazil Chile Mexico US

1 1 1 1 13

135 123 130 82 106

NUMBER OF LISTED DOMESTIC COMPANIES

Argentina Bolivia Brazil Chile Mexico

MARKET CAP

1992 7 20 11 30 15

2011 25 42 13 44 28

Argentina Brazil Mexico Peru

1992 175 565 195 287

2011 99 366 128 202

FOREIGN DIRECT INVESTMENT (Net inďŹ&#x201A;ows)

Argentina Brazil Mexico Peru

1992 $18.6 billion $45.3 billion $139 billion $2.6 billion

2011 $43.60 billion $1.2 trillion $408 billion $79 billion

Argentina Brazil Mexico Peru

1992 $4.43 billion $2.06 billion $4.39 billion -$79 million

2011 $7.24 billion $66.66 billion $19.43 billion $7.32 billion (2010)

Source: World Development Indicators

NOVEMBER-DECEMBER 2012 LATIN TRADE

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A NEW REGION

LUIS ALBERTO

MORENO PRESIDENT INTER-AMERICAN DEVELOPMENT BANK

Having learned from the lessons of the past, Latin America will confront the challenges of improving education and infrastructure and building efﬁcient and sustainable cities BY SANTIAGO GUTIÉRREZ

“

Over the last 20 years we have learned from so many errors and For Moreno, the next 20 years will be full of interesting transso many crises,” said Luis Alberto Moreno, president of the Interformations. For one, the commodities bonanza, which has created American Development Bank, referring to what he believes is the the curse of imbalances for some countries, can be converted into most important development in Latin America in recent history. an opportunity. Moreno expects that commodity prices will stay Learning those lessons was painful. They were paid for in blood. high for the next 15 years, due to the process of urbanization that “In 25 years we have had 31 financial crises and in each one of them will bring 50 percent of the population of China and 70 percent poverty in Latin America increased,” he told of the population of India to the cities. These mega-cities, he believes, will require huge Latin Trade in Bogota. But the price paid amounts of materials from the region. did bring about some good results at the end Latin America’s middle class will keep of the day. Poverty has since been reduced on growing over the next 20 years. Seventythrough enrichment of nations and their ﬁnancial crisis in five percent of Latin America’s 500 million middle classes, and through the success of Latin America in 25 years inhabitants will earn more than $10 per day, some social policies, especially subsidies, that he predicts. As well, the number of cities proved very effective. Twenty-five years ago, with 1 million to 2 million people will grow 45 percent of the population was mired in substantially, and this will force countries to take on the challenge of poverty. Today that’s been whittled down to 31 percent, he said. making cities that are more efficient at providing services, and also Over the last 20 years the most important social indicators have immore sustainable. proved, “not in all countries, but we have advanced,” Moreno said. He He also expects a considerable increase in the number of Latin mentioned those that cover basic health care and secondary education. “Now we have the enormous challenge of producing better professionals, American companies that figure among the world’s 500 largest. There will be Mexican, Brazilian and Chilean companies on the list, he said, better adapted to the needs of a changing labor market,” he added. However, in other areas time was squandered. Manufacturing produc- but at the same time Colombian and Peruvian firms will also be in the big leagues. tivity, for example, was stronger 20 years ago than it is now, he said. The Lastly, there will be a growing group of medium-sized companies problem has to do with inflexible labor markets that perpetuate informal labor, and a lack of efficient infrastructure. The region needs port services, that venture outside the region, and a good part of the investment within the region will be done by Latin American companies. Even airports, highways, and energy at competitive prices. “Energy rates are now, 25 percent of the investment flowing into Latin America comes very high compared with those of India or China,” he said. from multinationals based in the region. The quality of education also must be improved. “It’s hard to These trends are proof of a promising future for Latin America, and be more productive than China if barely 1 percent of 15-yearshow that in the end, yesterday’s lessons are being taken to heart. olds in Latin America understand mathematics as well as students in Shanghai,” he said. Santiago Gutiérrez reported from Bogota

LATIN TRADE NOVEMBER-DECEMBER 2012

PHOTO: COURTESY OF IADB

AGUSTÍN

CARSTENS

MEXICO’S CENTRAL BANK GOVERNOR BY DAVID AGREN

t was almost 20 years ago that Mexico was looking down the barrel of a peso crisis. Lax banking, declining dollar reserves and low oil prices, among other factors, had conspired to push the economy to the brink, and the peso came crashing down. Today, though, there are analysts who point to Mexico as a model of macroeconomic management. And they credit Agustín Carstens, Mexico’s central bank governor, as one of the main contributors to crafting the policies that will hopefully make calamities like the peso crisis a thing of the past. So stark is the turnaround that Carstens now measures his country’s economy, not against his southern neighbors, but against some of the biggest players on the world stage.

LATIN TRADE NOVEMBER-DECEMBER 2012

“The advanced countries have problems with large deficits, with debt-to-GDP that’s very large,” he says. They face “problems in their financial systems, of monetary policies that have had to be oriented to attend to objectives that are not traditionally those of central banks.” But in Mexico, “the reality is that we’ve not had any of these problems.” Indeed, Mexico is expected to generate economic growth approaching 4 percent this year, while interest rates have remained unchanged at 4.5 percent. Mexico’s debt-to-GDP ratio rests just north of 30 percent, and the banking system, Carstens notes, is well-capitalized, extending credit. Reserves have reached record levels. Carstens has held senior positions in the Central Bank and International Monetary

Fund, and put forward a credible bid last year for the IMF’s top job. He also served as Mexico’s finance minister in the cabinet of Felipe Calderón. Since he became Mexico’s central bank governor in 2010, his country has emerged as a bright spot in an otherwise gloomy global scenario. “It’s gratifying that this recognition is being given to Mexico,” Carstens says. “The reality is that we’ve worked to reach this place so that... Mexico is one of the most solid economies, not just among emerging countries, but the whole of the G-20.” Mexico wasn’t always such a sexy selection for emerging markets investors, though. In 2009, the economy contracted nearly 7 percent, having been hit hard by the world economic downturn and H1N1 viral outbreak. Carstens, then the finance minister, acted in advance of the crisis with aggressive hedging of oil sales– Mexico’s main income source. But Carstens credits the country’s comeback to having pursued sound fundamentals since the peso plunge of 1994, with low inflation, low interest rates and low debt-to-GDP ratio. That era, the so-called Tequila Crisis, put Mexico’s back to the wall and forced officials to come up with some sobering solutions, like strengthening the banking system. “After our own crises... Mexico made strong, conservative decisions,” Carstens says. The result, he adds, was a fiscal regime that was even stricter than systems in place outside of Mexico. Other risks remain, though, and many must be resolved in the political realm. One is achieving structural reforms in labor markets to incentivize hiring. Another is overhauling the tax system through fiscal reforms so Mexico can increase revenues. “For many decades the main stumbling blocks were macroeconomic topics, which we’ve overcome, establishing a trustworthy platform,” Carstens says. “Now the next step is how to take advantage of this platform to be able to generate more growth,” which he says can reach 6 percent and be encouraged by healthy banks having optimal conditions in which to operate. Carstens, for his part, intends to keep to his cautious approach. He quotes from Napoleon to make his point, recalling a phrase the emperor told his butler: “Go slow because I’m in a hurry.” “It’s better to go slow, but steady because you’re in a hurry,” Carstens says. “I think that applies to the financial system.” David Agren reported from Mexico City

PHOTO: COURTESY OF MEXICO CENTRAL BANK

A NEW REGION

said. “We saw that there was a need for development finance, especially in infrastructure.” Focusing on transportation and energy projects, CAF began extending credit to its sovereign shareholders. Attracted by its early successes, more countries applied for membership, which boosted the company’s capital, allowing it to expand lending. As of Dec. 31, the bank’s loan portfolio totaled $15.1 billion. “The mix between public and private sector loans is about 70 percent to 30 percent,” García said. The bank’s success has occurred in spite of regional credit crises, and the troubles of individual members, who have weathered devaluations, foreign exchange controls, and radical shifts in economic policies since the bank’s creation. For García, the most difficult challenge came when Venezuela’s banking system melted down in 1994-1995, threatening to undermine that country’s private borrowers and their ability to repay CAF. “We were meeting non-stop with members of the Venezuelan government in a bid to avert a crisis,” said García. “It was a tiring time but we succeeded.” The bank has also successfully overcome ideological differences among its members, some of whom embrace neo-liberal economic systems, while others tend toward a more active state role in their economies. “We are very respectful of the different cultures, the different countries who are our shareholders,” said García. “They may have different ideas of the role of the state, but there has never been an ideological impasse.” García, who is starting his fifth five-year term as president, said the words that will guide CAF’s future are growth and consolidation. “Assets of the bank should double in the next five years to more than $40 billion,” García said. “In 20 years, our assets should be above $100 billion.” The bank forecasts increased lending throughout the region. “Our objective has always been to provide financing for development projects that are sustainable, high quality and spur economic growth,” García said. “We see that continuing in the next 20 years.” Peter Wilson reported from Caracas.

ENRIQUE

GARCÍA PRESIDENT OF CAF

BY PETER WILSON

oody’s Investment Services downgraded 15 of the world’s largest banks, including Barclay’s and Citigroup, on June 15. The same day, CAF Banco de Desarrollo de América Latina, received its 16th credit upgrade. The juxtaposition of events isn’t surprising, said CAF President Enrique García, who has led the Caracas-based development bank since 1991. “Non-performing loans make up zero percent of our portfolio,” García told Latin Trade in an interview from his office. “We have been very careful in what we do.” Credit agencies have taken note. The bank’s long-term debt currently carries an A+ investment grade rating from Standard & Poor’s and Fitch Ratings, and an A1 investment grade rating from Moody’s Investment Services. CAF was a small regional trade bank when it began operations in 1970. Assets were less

LATIN TRADE NOVEMBER-DECEMBER 2012

than $1 billion, and it had five shareholders– the governments of Bolivia, Colombia, Ecuador, Peru and Venezuela. Today the bank, formerly known as Corporación Andina de Fomento, has more than $21 billion in assets. The number of shareholders has now grown to 18 countries, including Brazil, Spain and Portugal, as well as 14 private banks. Garcia said innovation and sound banking principles were key to CAF’s growth. “To be relevant, I knew we had to be more than just a bank for five countries,” said García, a former vice president of the Inter-American Development Bank (IADB). To grow its operations, CAF focused on three key areas: credit expansion, membership, and funding, all of which were intertwined. “The bank’s original role was in trade finance and we knew we had to broaden that,” García

PHOTO: COURTESY OF CAF

Assets should double in ﬁve years to more than $40 billion

A NEW REGION

SUSAN

SEGAL

Mexichem and Gerdau. She also speaks enthusiastically about the growing percentage of Latin Americans involved in entrepreneurial ventures like Argentine companies Mercado Libre and Globant, thanks to the development of an ecosystem that is increasingly supporting entrepreneurship in the region. “I get inspired when I think that very soon, some big innovative technology will come out of Latin America,” she says. Still, Segal recognizes that there are many challenges, and insufficient infrastructure is one of the largest. “People forget that what converted the United States into a real union was the railroad connecting the Atlantic with the Pacific,” she says. “In Latin America a huge percentage of goods travel by road. Talking about social inclusion… if you can’t connect one side of the country with another and then the entire continent, it makes it difficult to have social inclusion as well as regional competitiveness. Infrastructure continues to be a phenomenal challenge in Latin America in the 21st century as it was in the past.” Challenges apart, Susan Segal considers herself an “optimist” and believes that Latin America is strong enough to withstand slowdowns in China, the United States and Europe. “Of course there are cycles and no country is an island… in a global economy we are all connected. But I don’t believe there is a possibility of an implosion like happened in the 80s and 90s. The growth of the domestic consumer markets partially shelters some of the countries from outside downturns.” Segal is a strong advocate of the economic empowerment of women, from the ones who own microbusinesses to CEOs and women on boards. “This is a huge cultural and practical challenge for Latin America. But it is critical and makes absolute economic sense, as women make up 50 per cent of the population, 50 per cent of the voting power and 70 to 80 per cent of the purchasing decisions. Growing economies like the Latin Americans can’t be competitive if they leave half of the work force outside and for me that is one of the biggest challenges, biggest issues and biggest opportunities in the region.” Isabel Piquer reported from Nueva York

PRESIDENT AND CEO

AMERICAS SOCIETY AND COUNCIL OF THE AMERICAS

BY ISABEL PIQUER

usan Segal has been travelling all over Latin America since 1976, first as a banker, then as a venture capitalist, and for the past nine years as President and CEO of Americas Society and Council of the Americas, a hemispheric organization whose members include some of the most important global companies. Segal has seen the continent evolve from a region swamped by the debt crisis of the 80s and 90s to where it is today– a dramatic transformation that, despite the threat of a possible slowdown, “will not turn back.” Segal gets excited when she talks about the changes that have taken place in the region in the last two decades, many of which are still underway. “Twenty years ago countries such as Chile, Brazil, Mexico, Colombia and Peru were just focused on the macro-economic reforms. Much of that has changed,” she said during a recent interview in her New York office. “The policy focus has widened to include challenges like education, social inclusion, and quality employment. Latin America is at a totally different stage of reforms and regional and global integration, through agreements like NAFTA and the Pacific Alliance, have played an important role in that process.” Transformation has also come and it’s being reflected in the private sector. As a growing trend, the executive cites how “Latin American companies are investing all over the region and buying other companies in the United States, Europe and Asia.” She points to examples in Brazil and Mexico such as Grupo Bimbo,

LATIN TRADE NOVEMBER-DECEMBER 2012

PHOTO: COURTESY OF COUNCIL OF THE AMERICAS

I get inspired when I think that very soon, some big innovative technology will come out of Latin America.

NEW ENTERPRISES

FURLAN Member of the Board

BRASIL FOODS BY ALEJANDRA LABANCA

uiz Fernando Furlan doesn’t believe that innovation only means applying new technologies or inventing new processes. For the former Brazilian minister of Development, Industry and Trade, innovation also means a new way of thinking. In the case of Brazil, he says, “innovating was about understanding what was possible to build the future.” With former President Luis Inácio Lula da Silva, “there was a very important change (in thinking) that is called self-esteem,” Furlan said in an interview with Latin Trade. This executive isn’t easy to label. Over the course of his 65 years, the grandson of the businessman who founded Sadia, one of the most important food companies in the history of Brazil, has been

a military cadet, a chemical engineer, a businessman, a board member at several multinational companies and a cabinet minister. One of his achievements was guiding Sadia through the worst crisis in its history, which ended in a merger with Perdigão, to create Brasil Foods (BRF) the nation’s biggest food processing company. Furlan is currently an independent member of the company’s board. Furlan speaks almost reverently of the achievements of Lula, even as a corruption scandal has threatened to stain Lula’s legacy. Several weeks ago, Lula’s one-time right-hand-man José Dirceu was found guilty on a corruption charge related to a widespread scheme to buy votes from legislators to secure their

LATIN TRADE NOVEMBER-DECEMBER 2012

What also helped Sadia was what Furlan calls the “common sense” of its shareholders and their ability to accept a new idea. “The shareholders understood what was needed to save the company,” says Furlan. Facing three alternatives –to seek investors to recapitalize the company, to sell it, or to try for a merger– Sadia’s shareholders chose the latter, an option that certainly wasn’t the easiest. “The last option was the hardest, because the (potential partner) was the competition, Perdigão. The employees hated the competition, and all of a sudden they had to accept that now we were all part of the same thing,” said Furlan. The merger created Brasil Foods (BRF), which last year had almost 119,000 employees and net sales of 25.700 million reais ($12.7 billion), and produced more than half of Brazil’s processed food. Ironically, the board of Sadia had been playing with the idea of the merger for at least

There was a time when Kirk Kinsell Brazilians felt small when they went abroad. Today that is not the case. inadequate education system and corruption. Nevertheless, the former Lula minister insists that the country’s sound management in 2008 helped save Sadia, which suffered enormous losses due to a series of bad bets made by the company’s financial department during the international market crisis. “If Brazil hadn’t sustained itself as it did during the crisis, the company couldn’t have come out of it,” says Furlan, who had retired from Sadia but was called back to help resolve the crisis.

a decade. “The dream was always to join with the competition to create a company with enough muscle to compete and become a multinational,” says Furlan, who nevertheless made it clear that, at the time of the crisis, the decision appeared more of a risk than a vision. “When the bingo game ended, everyone knew the numbers had been right. But at the time it was hard to know for sure what the best answer was,” he says. Alejandra Labanca reported from Miami

PHOTO: COURTESY OF BRASIL FOODS

Luiz Fernando

support in Congress. “There was a time when Brazilians felt small when they went abroad. Today it’s the other way around; people have recovered their national pride with Lula because Lula always treated international authorities as equals,” he said. “Lula always presented himself as the president of a great country that was progressing.” Furlan is proud of his country, which delivered 40 million people out of poverty in just ten years, and which today has the lowest level of unemployment in its history. He is especially proud of the fact that Brazil has “enough reserves to pay its public and private debts, and no longer depends on the IMF, Washington, London, or the Pope,” to manage its economic policy. But as a businessman he admits that Brazil has yet to solve many problems that affect the competitiveness of its companies, such as a lack of infrastructure, a bloated bureaucracy, high tax rates, an

NEW ENTERPRISES

ties had claimed, obtaining a constant flow of raw materials to maintain industrial production, adjusting logistics to conditions dictated by nature, and working with authorities on the new regulations. “We had to develop a new internal corporate culture,” says Carlucci. He recounts how they had to reorganize their procedures starting with the most basic of all: changing their way of thinking to solve the unique problems that arose each day. “Before, everything was easy. We’d call up a supplier and tell him, ‘I want a ton of such and such,’ and he would send it the next day. With a community in the middle of the jungle you can’t call anyone because there are no telephones. And if there’s a downpour and the rivers are in spate, you can’t get there at all.” You need to develop a different kind of supply chain and accept that it simply isn’t stable, he adds. Innovation was matched with tenacity, and at last the project began to show results. Dozens of families from remote villages joined the production chain, improving their quality of life, while Natura created the unique products known as the Ekos line, on sale throughout Latin America and France. The Ekos line of creams, essential oils, deodorants, soaps and shampoos “bring the aromas of the Amazon, along with the tradition of the communities and the respect that comes from the sustainability of the way the products are made,” explains Carlucci. The successful outcome of the Amazon project has given Natura a competitive edge. “No other company in the cosmetics world has the credibility and know-how to obtain ingredients from the Amazon’s biodiversity in a sustainable way,” claims Carlucci. Sales in France constitute a real challenge because France is the mecca of cosmetics and “we come from a region that doesn’t have much of a name in the cosmetics business.” Before the Amazon adventure, Natura was no upstart. Throughout its history, the company’s growth was always tied to being one step ahead of the competition in innovation. During the 1970s it was a pioneer in using a direct sales network, and in the 1980s in promoting refillable containers. BY ÉLIDA BUSTOS In the 1990s it discovered the Amazon. Nowadays Natura is a multilatin with he biodiversity of the Amazon region offers an unbeatable wealth of aromas, textures 2011 revenues reported at 5.591 billion customers and essences. By the end of the 1990s, the reais (US$2.751 billion) and profits in the and beauty management team at Natura knew that. neighborhood of 830 million reais (US$408 They also knew that no other cosmetics million). The workforce consists of 1.4 million consultants only in company in the world could compete with their beauty consultants who serve 100 million know-how in harvesting the Amazon’s bounty. customers in every corner of Brazil, as well as a On top of that, the Brazilian company’s chiefs hatched a sustainable full-time staff of 6,800. production plan that would help to improve the quality of life of particiNatura is a remarkable company in many ways, not least in the training pating indigenous communities. of its salesforce. Every three weeks the company organizes get-togethers Executives, chemists and technicians set out, all full of enthusiasm. attended by 450,000 to 500,000 beauty consultants. New products Their aim was to get to know the native cultures and traditions, but are presented and the information about them passed along. Some the road to knowledge was at times a rocky one. “It was a very difficult 100 million Brazilian customers get the message from the formidable learning process,” Natura’s chief executive, Alessandro Carlucci, tells salesforce. But that’s not all. Far from resting on its laurels, Natura’s management continues to push on. Carlucci notes that Latin America Latin Trade. has 600 million inhabitants, a potential market half as big as China’s. It’s To begin with, people work hard in the Amazon. But modern capitalnot enough for Natura to increase sales in Brazil – where the brand has 60 ism –its demands in terms of commitment and its rewards in terms of percent penetration – it has to expand in the rest of Latin America. money– was alien to the villagers. Natura had to teach new values and Within its home territory as well, increasing sales means launchlearn traditional ones.The Natura teams had to find the villages, interest ing between 250 and 300 new products per year and cutting delivery the residents in the project, determine which ingredients each one could times to the bone. The logistical challenge is formidable in a country produce, and then educate people to achieve continuity and commitment as huge as Brazil. to production. Then came the tasks of verifying in the laboratory that the harvested plants really had the properties the indigenous communiÉlida Bustos reported from Buenos Aires

Alessandro

CARLUCCI CEO, NATURA

Natura brings glamour from the heartbeat of the planet to millions

100 million 1.4 million

LATIN TRADE NOVEMBER-DECEMBER 2012

Brazil.

PHOTO: COURTESY OF NATURA

CARLOS RAÚL

YEPES

PRESIDENT BANCOLOMBIA

A tale from recent ﬁnancial history. How the ﬁnancial sector has aided regional development. Bancolombia’s new strategy for creating a more humane bank. BY SANTIAGO GUTIÉRREZ

anking has undergone a very important transformation over the last twenty years, mainly in connection with the way banks relate to their customers, says the president of Bancolombia, Carlos Raúl Yepes. Bancolombia is Colombia’s biggest bank and came in at No. 19 in Latin Trade’s regional ranking. Yepes, meanwhile, is surprisingly young for a post typically held by executives of 50 years or older. But he knows recent banking history backwards and he has no doubt as to the transformations his sector has undergone. At the beginning of the 90s, he says, banks offered basic services and tried to build a transactional banking operation. At about that time, telephone and digital channels were introduced to complement the work of branches. Later, the emphasis shifted to full-service banking, or financial supermarkets. The use of technologies like Customer Rela-

LATIN TRADE NOVEMBER-DECEMBER 2012

GROWTH

1995-2011

Assets Proﬁts Share Price ADR Price

53 times 27 times 8 times 4 times

tionship Management programs (CRMs) made it possible to personalize financial offerings and hone in on the needs of each customer, making the bank more relational, he said. During the last few years the banks’ business model has focused on making access to the bank easier. “We were looking for what was convenient for the customers anytime and any place,” he said. He characterized this period as more relational still, because customers’ experience improved substantially, thanks to increased use of mobile, digital and telephone channels, in

supermarkets and in non-bank outlets. Yepes indicated that advances in banking have also served nations, because they promoted improvements in other key areas. In the 80s, with the introduction of electronic banking, many telecommunications problems were also solved, such as incompatibilities between hardware and software, as well as legal vacuums. In the 90s, online banking helped highlight and solve other problems related to personnel qualifications, as well as security issues tied up in legal loopholes. Finally, starting in 2000, the so-called Generation C (connected consumers) arrived on the scene. Their arrival coincided with the adoption of new models for interacting with customers that rendered obsolete earlier, non-digital means. Now Bancolombia is preparing for what Yepes calls the consumer era. “Now customers have more ways to compare, comment and recommend products or a company; social media and communications media make this easier,” he says. “Customers are changing their habits and they are very demanding. They want things to be immediate, easy, and intuitive,” he adds. That’s why he’s looking to technology to transform the customer experience by providing services whenever, however and wherever they’re needed. To date Bancolombia has operated like the region’s other banks, riding the same trends, and following more or less the same path as other institutions. But in this new hyper-connected environment, with less distance between the client, the producer and the product, Bancolombia has found a way to differentiate itself. “We want to be the best example of a more humane bank,” said its president. This explains, for example, its company slogan: ‘We add soul.’ Its internal campaigns are also designed to cultivate more respect, closeness, warmth and inclusion in labor relations. This direction would appear to signal a new direction from the usual path followed by banks—a model more concerned with offering a broad and efficient portfolio of services. Time will tell if Yepes’ bet pays off. For now, Bancolombia, with its strategy of organic growth and acquisitions, will take its idea of humanizing banking to more people in Latin America. Those who know the region understand the power of this proposal. Santiago Gutiérrez reported from Bogotá

PHOTO: COURTESY OF BANCOLOMBIA

THE MULTILATINS REVOLUTION

Growth has sometimes gone against the grain. But the bets have paid off.

JUAN PABLO

DEL VALLE CHAIRMAN, MEXICHEM BY DAVID AGREN

PHOTO: COURTESY OF MEXICHEM

nnovation for Mexichem emerged a decade ago from a mine in the central state of San Luis Potosí, where the Mexican chemical concern had the world’s largest reserves of fluorite. The fluorite’s quality was high, but it had some impurities. “We said, ‘If we find a way to remove the impurities, we’re going to see a great growth opportunity,” Mexichem chairman Juan Pablo del Valle recalls. A team of engineers went to work to solve “a question that seemed impossible because big chemical companies in the United States couldn’t do it.” But Mexichem engineers did find a solution, and their innovation cut Mexichem’s costs by 90 percent, “detonated” growth and transformed the company. “We were a company in fluorite that used to sell rocks,” del Valle says. But “upon defining a strategy of vertical integration and synergies, we began to compete with our customer and... become a supplier of value-added products.” That was the first step to becoming the sucessful multilatin Mexichem is today. Over the past decade, the company consolidated its position in the chemical industry in Latin America and emerged as a global player. Sometimes, it’s gone against the grain, such as its 2007 purchase of Colombian PVC pipe-maker Amanco. At the time, few Latin American companies were buying other companies in the region, and in effect, Mexichem paid a premium for growth potential in an emerging market. But Mexichem’s bet paid off, and it has not been drawn into a bad deal, or allowed its balance sheet to be blemished.

The company has found ways to carve out profits from it core products of vinyl chloride and fluorine by lowering costs and adding value. Outlining a corporate vision and staying the course has helped too. “We have two (lines of business) that are easy to understand,” del Valle says. “We don’t move from these businesses.” Investors have understood the approach, or at least the company’s record of stellar results: Mexichem’s stock price has surged 400 percent over the past five years. A September bond offering raised $1.15 billion and was 16 times oversubscribed. “It’s recognition of the company’s track record, of which we’re very proud,” del Valle says. Growth has characterized Mexichem since Antonio del Valle, Juan Pablo’s father, became the controlling shareholder in 2002. More recently, Mexichem purchased Dutch pipe-maker Wavin. Europe may be considered an unattractive market by many, but del Valle sees potential, especially in countries like Poland, the Czech Republic and Turkey. Like the bond offering, the purchase speaks to Mexichem’s stature. “Wavin was our technology supplier,” del Valle says. “The opportunity to buy the leading pipe-maker in Europe… when we bought Amanco, this was unthinkable.” Mexichem also recently signed a memorandum of understanding with Occidental Chemical Corp. to build a “cracker”– a distiller for producing ethylene. “Those that are doing big business right now are those who own the crackers,” del Valle says. “It’s going to supply 50 percent of our need for resin,” along with providing “spectacular savings” over the long-term. Savings in Mexichem come from its vertical integration model and “adding value,” to its raw materials– fluorspar and salt. Mexichem wasn’t always so single-minded, though. The company, previously known as Camesa, made steel cables for the construction sector and had a chemical component. The cable part of the company was sold to pursue the chemical business, which del Valle says had better growth potential. Its purchase of Amanco was another example of pursuing better growth potential. Mexichem paid $600 million for Amanco, more than double what it would have paid for a U.S. competitor that it was also interested in buying. The U.S. company served the more established North American market, so buying Amanco was somewhat counter-intuitive. But it turned out to be a well calculated bet for Mexichem on long-term growth in Latin America. “We saw the possibility to grow in Latin America justified paying double the price,” del Valle said. Thanks to the purchase, and to the company’s decision to turn down an innovative path, Mexichem now is growing in markets outside Latin America too. David Agren reported from Mexico City

NOVEMBER-DECEMBER 2012 LATIN TRADE

THE MULTILATINS REVOLUTION

road transportation. And as trade and investment expanded, there was new demand for air connectivity. This year alone Copa, with an enviable on-time performance of over 90 percent, added flights to Las Vegas (USA), Recife (Brazil), Liberia (Costa Rica), Willemstad (Curaçao) and Iquitos (Peru), and now flies to 64 cities, including North America, Central America, South America and the Caribbean. Copa has also increased the frequency of departures from its Panama hub. The payoff is in the numbers. Last year the airline’s parent company, Copa Holdings posted net income of $310.4 million, representing 17 percent of its $1.83 billion in operating revenues.

We were ahead of the curve. We connected the dots for intra-Latin American travel.

PEDRO

HEILBRON CEO, COPA HOLDINGS BY JOSEPH A. MANN, JR.

rom quiet beginnings as a small domestic air carrier, Panama’s Copa Airlines has rocketed. Now it plays in the big leagues, and has become one of the fastest growing airlines in Latin America, adding new planes and capacity, tacking more and more destinations onto its map, and steadily attracting more passengers. For Pedro Heilbron, 54, CEO of Copa Holdings and Copa Airlines, it has been about building the foundations to deliver. “What we see today has happened over the last 20 years,” said Heilbron, of the airline’s strong and sustained growth. “This year and last marked 20-plus years of capacity growth... We adopted world-class standards and service and a small airline became world class.” Heilbron pointed to several factors that helped lift Copa: innovation, new technology, a well trained and committed workforce, and robust economic growth in Panama, Copa’s home base. Other parts of Latin America also surged economically, creating greater demand for better connectivity and direct flights among the 29 countries Copa serves. Copa, which celebrates its 65th anniversary this year, responded by purchasing new planes and expanding its network. “We were ahead of the curve,” said the businessman. “We connected the dots for intra-Latin America travel.” Before Copa developed the Hub of the Americas, travelers had to take multi-stop flights, he noted. A trip from Panama to South America often meant a stopover in Miami. Meanwhile, there were no good alternatives to flying, like rail and

Profits in 2011 increased by more than 22 percent over the previous year. In the first half of 2012 Copa Holdings, which is traded on the New York Stock Exchange, logged net income of $127.9 million on operating revenues of more than $1 billion. In 1998, Copa agreed to a strategic alliance with Continental, at the time a leading international airline based in the United States. “We adopted their service standards, their frequent flyer program, shared flights and offices, co-branded our presidential clubs and adopted their livery under Copa’s name,” Heilbron said. Then in 2005, Copa acquired Aero Republica in Colombia. Implementing the new standards and operating Copa’s expanded system required investment in recruiting and training, as well as high quality employees at all levels. Today, it has over 8,000 employees, with about 6,500 based in Panama. Technology also plays a critical role in the success of Copa. The airline currently operates a fleet of 83 planes, including the most modern Boeing 737s (700s and 800s) and Embraer 190s, and is acquiring 11 more latestgeneration 737s in 2013 and 2014. The company invests $250 million to $300 million a year, mostly in new planes. It has one of the most modern fleets in the world. These modern, fuel-efficient planes mean Copa has lower maintenance and fuel costs and can use satellite approaches to airports. Copa was also a pioneer in offering its clients Web-based check-in and is the first Latin American airline to offer passengers check-in via their mobile devices. Looking forward, Heilbron said airlines need to make the airport experience easier for passengers. “After 9/11, traveling by air –which used to be a romantic experience– became a hassle. I think technology will change that by making it easier to pass through security,” he said. And after the Panama Canal expansion is completed, Heilbron expects Panama to increase its capacity as a major logistics center, which means new business opportunities for Copa. Copa carried 8.7 million passengers in 2011, up from 8 million in 2010. It’s forecasting 10.3 million this year. Joseph A. Mann, Jr. reported from Miami

LATIN TRADE NOVEMBER-DECEMBER 2012

PHOTO: ANA BERGER

8.7 million passengers to 64 destinations

THE MULTILATINS REVOLUTION

CHAIRMAN AND CEO OF ARCOS DORADOS

WOODS

STATON BY ÉLIDA BUSTOS

PHOTO: COURTESY OF ARCOS DORADOS

s it possible to innovate within the standardized parameters of a franchise? Arcos Dorados, the biggest McDonald’s restaurant operator in Latin America and the world’s biggest franchisee of the brand, offers plenty of examples of just this. Among its innovations, it opened a kosher restaurant in Buenos Aires, installed dessert centers in most of its Latin American locations, adapted McCoffee to local tastes (using real crockery, rather than paper) and offered young people with Down’s syndrome a chance to work in the restaurants. Now it’s set on becoming a more eco-friendly company. “The McDonald’s system has three fundamental rules on which everything it does is built: offer good food, hire good people and be good neighbors,” says Woods Staton, chairman and CEO of Arcos Dorados, from his office near Buenos Aires. Within these rules, you can innovate and still maintain the franchise parameters. “We can serve kosher food or dulce de leche desserts here, arepas in Venezuela, chicken with hogao in Colombia, Mexican meals in Mexico. But we have to keep the main menu, the Big Mac, the Quarter-Pounder. So long as we are faithful to this, we can also have some local content,” he says. On the topic of being a good neighbor, he says, “If a neighborhood wants kosher food... I can offer it without abandoning the essence of McDonald’s.” To this end, Arcos Dorados executives went to Israel, saw how the restaurants were operated there, spoke with a rabbi in Argentina, and soon afterward opened the doors of Latin America’s first kosher McDonald’s restaurant in the Abasto district of Buenos Aires. It was a complete success. Something similar happened when the company incorporated young people with Down’s syndrome into the powerful machinery that is Arcos Dorados’ 90,000-strong regional workforce. At first there was reluctance,

Staton admits, but the end result was positive for everyone– for the youths who now had a chance to work, and for their colleagues who had the chance to learn from them. And so this program that began in Argentina more than 20 years ago was repeated in Chile and Brazil. The next step will be to expand it into Mexico and Colombia. With all these innovations that Staton has been introducing in the restaurants since he joined McDonald’s in the 1980s– first as an employee and then as a partner– the business has flourished in Latin America, especially over the last two decades. McDonald’s was launched cautiously in the 1970s in Brazil, Puerto Rico and several Central American countries, but it began to grow steadily after 1986, under Staton’s stewardship, with three new locations in Argentina. “They sent me here to be the regional director of Chile, Argentina and Uruguay,” he tells Latin Trade. And, he adds, he started literally from scratch: “looking for land, suppliers and people.” From then on, the chain grew and restaurants multiplied, despite the region’s volatility. In 2007, McDonald’s decided to sell its businesses in Latin America. There was an international bidding process and Arcos Dorados, a company formed by the region’s operations managers, won. Thus the new company, headed by Staton, took charge of the chain in 19 Latin American countries and became the world’s largest franchisee of the American brand. The numbers for this multilatin company (with American roots) are awesome: it serves 4.3 million customers per day in 1,840 restaurants all over Latin America, with 2011 revenues of more than $3.65 billion. Another interesting aspect of the work plan is that most of Arcos Dorados’ employees are under 25 years of age. “Every restaurant sells almost $3 million a year and they are managed by people who are 22 or 23 years old, with 60 or 70 people reporting to them,” says Staton. Insisting that

per day 4.3 million customers in 1,840 restaurants meritocracy rules at Arcos Dorados, he adds, “We have people who manage country operations who started out as cashiers.” Staton says Arcos Dorados is always innovating in new areas. It may be looking for healthier food, incorporating new products, or introducing changes in daily operations to become more environmentally friendly. As for the green initiatives, Arcos Dorados already has three internationally certified ecological buildings in Latin America, uses energyefficient lighting and recovers condensed water from air conditioners to water the grounds. Now the company is looking to convert used oil from its kitchens into fuel for its fleet of vehicles in Argentina and Brazil. “Being good neighbors means recycling, reusing and reducing consumption of certain things,” says Staton. The businessman believes that encouraging creativity and innovation among personnel means allowing people to have a level of freedom while doing their job. And they have it, even within the parameters of a franchise. Elida Bustos reported from Buenos Aires

NOVEMBER-DECEMBER 2012 LATIN TRADE

A NEW BUSINESS MODEL

MATO

CEO HSBC’s Global Banking for the Americas BY PABLO CALVI

t’s no wonder Gerardo Mato is enthusiastic about emerging economies. As CEO of HSBC’s Global Banking for the Americas– a region that comprises all of Latin America and Canada– he believes that over the next twenty years a crucial part of HSBC’s business will be associated with these new global growth centers. Developing efficient mechanisms at the local or international level to finance corporations, and even at times to help governments get financing, is one of the tasks that has occupied Mato since he began leading this area of HSBC a little more than two years ago. “The only way to develop the corporate sector is through low-interest loans and medium- to long-term financing,” said this United Statesbased Argentine, who in the past has also worked with Merrill Lynch. “This can be done locally with some limitations,” he said, “but if it’s a question of financing large corporations as Brazil did, corporations with global penetration, outside financing is needed.” The results don’t lie: between 2010 and 2011 before-tax profit of HSBC Global Banking for the region grew by almost 30 percent, from $1.8 billion to $2.3 billion. The growth is even more dramatic if you consider that in 2009 the sector generated barely $1.1 billion, less than half of the 2011 result.

LATIN TRADE NOVEMBER-DECEMBER 2012

When you build long-term relationships, business follows naturally the Olympics and for the World Cup, and the raw materials and financing are all internal,” says Mato. “They want financing in reais with payment in reais, and obviously the banks that have the ability to do local bonds or local financing have an advantage over banking institutions that don’t have a local presence.” This hinge role between developed economies and developing ones will be the key to success for the next few years. “It’s crucial to maintain this double role that enables us to develop not only our local presence– which is very strong in places like Brazil, Argentina, and Mexico where we can offer financing in reais, Mexican pesos or Argentine pesos—but also the international presence, which enables us to help export companies to finance in dollars or any other international currency whenever they need it.” Pablo Calvi reported from Nueva York

PHOTO: COURTESY OF HSBC

Gerardo

“HSBC’s business of global banking, corporate banking and investment banking was very limited in 2002,” Mato explains. “We began to focus our efforts on developing key relationships, which helped us develop these areas, starting with focusing more on the debt issue. But our approach is to build lasting relationships. When you build long-term relationships, business follows naturally.” Innovation was key to many of the businesses Mato is referring to, especially as relates to consolidating the “south-to-south” axis– that is, the commercial and financial relationships between Asia and Latin America. “We opened the Asian market using perpetual bonds,” he says. “We reopened the pound sterling market, and recently we were first with a “dim sum” bond for América Móvil, which became the first renminbi bond in the history of the region.” Through HSBC, América Móvil became the first company ever to issue debt in the local currency of the China market. “We have also done 30-year europeso bonds for Televisa and América Móvil– that is, transactions in pesos purchased by foreign investors. We specialize in finding whatever is going to be the most efficient denomination in terms of costs for the company, and that’s how we differentiate ourselves.” Mato adds that the presence of HSBC at both the global and regional level in Asia and Latin America has been central for consolidating this trend. At the same time, management has paid careful attention to the China-Brazil corridor, which, thanks to the enormous demand for infrastructure in China, grew by more than 30 percent in 2011. Trade between China and Brazil totaled $77 billion last year, and among the 6,250 Brazilian companies whose trade with their Chinese counterparts required financing, more than half turned to HSBC. As for the region’s stars of the future, Brazil is the runaway leader. “In Brazil, many companies have started construction projects for

NEW BUSINESS MODEL

FREDERICO FLEURY

CURADO

Embraer’s CEO explains the strategy behind the company’s success

rederico Fleury Curado is a high-flying executive with simple manners and, as the thinking (and talking) head of the world’s third largest aircraft manufacturer, he makes it plain that innovation is part of Embraer’s DNA. For one, the company has had to diversify its range of products to adapt to market forces, while maintaining its focus on regional aircraft. It has also been experimenting with biofuels, as pressure intensifies around the world to find alternatives to fossil fuels. Curado joined the São José dos Camposbased company in 1984 as an engineer and has been at the helm of the prominent Brazilian multinational company since 2007. That put him in the driver’s seat during the prolonged financial crisis, which he admits has taken a toll. Embraer has had to reinvent itself, invest again in the defense industry and diversify into executive jets. From his office in São Paulo, Curado says 2008 “was a big blow. We felt the impact in 2009 in terms of delivery and since then we have not yet recovered.” The company’s delivery fell by 20 percent that year. In the second quarter of 2012, Embraer’s profits dropped by 25 percent (year on year), to 114 million reais ($56.2 million). Over 90 percent of Embraer’s sales come from exports (9.85 billion reais last year, $4.86 billion).

LATIN TRADE NOVEMBER-DECEMBER 2012

But a relaxed Curado says Embraer is doing alright. “We have never been afraid of investing. We have consolidated a respectable position in the marketplace. We have more than 65 customers in over 40 countries. Margins are not great, but we are running a stable business… It’s been rewarding.” The history of Embraer, born as the state-owned Empresa Brasileira de Aeronáutica, combines scientific innovation and entrepreneurship. “In Brazil we had a long-term project that dates back from WWII, which was to generate knowledge in aerospace, technology and science, rather than trying to acquire technology. In the 1950s, the Brazilian government launched an engineering school, and also established a research center for aerospace sciences. So the country went from books and academic knowledge and science to industrial capability. Embraer only exists because there is a very solid foundation of knowledge: thousands of engineers, graduates over a period of 60 years. It’s something very unique in Brazil. It’s a model that worked: technology associated with the Brazilian spirit of entrepreneurship.” The company almost went bust in the 1990s, then took off after its privatization in 1995. Segmentation was part of the new commercial

vision. “Embraer had the strategic view to go for market segments where we can differentiate ourselves, where we have opportunities for tailor-made products.” Curado says the company saw an opportunity a few years ago in regional e-jets– a range of Embraer jets that are bigger than executive jets but smaller than regular regional jets, with between 70 and 120 seats. “So we came into that segment and made it flourish,” he says. But then the global crisis hit. In order to compensate for the slump in civil aviation markets, Embraer has invested in reconnaissance and military aircraft. “We have been in the defense market from Day 1, but it became a very small part of the business until a few years ago. We are trying to reinvent that business with very encouraging results. This year it will reach $1 billion in revenues for the first time,” says Curado. Looking forward, Curado believes the use of bio kerosene could be a way for the industry to show its concern for the environment. “The technology to transform oil from plants into kerosene is there. But the scale and the cost just don’t work at the moment,” he says. “It works perfectly. Is it commercially viable? I don’t have the answer to that, but it’s not something short term. It’s more like 10 years or more.” Thierry Ogier reported from São Paulo

PHOTO: COURTESY OF EMBRAER

BY THIERRY OGIER

THE NEW BUSINESS MODEL

GERMÁN

EFROMOVICH CEO, AviancaTaca

As Latin America adopts a new way of doing business, glance the future through the eyes of an entrepreneur with a Midas touch.

wenty years ago, in 1992, Germán Efromovich and his brother José were just beginning to set forth the structure of Grupo Synergy. They had started up with the production of hydrocarbons and they had already consolidated their off-shore construction, medical services and inspection businesses. But they had not yet waded into the aviation business with AviancaTaca-- today one of the biggest airlines on the continent. Skip forward two decades and Efromovich has transformed a mid-sized family business into a vast conglomerate with interests in areas like agriculture, petroleum and mines, aviation, tourism and services. It’s a sign of the times, where local companies blossom into multilatins... and global players. There are plenty of tools available that make life easier for today’s businessman, but the method of identifying opportunities hasn’t changed during those twenty years. Even though rotary dial telephones and faxes have been replaced by teleconferences and the internet, Efromovich says he still makes decisions the way he did when he became a partner of the super-successful Pacific Rubiales, or when he decided to create a hotel chain. Efromovich only does what “smells right,” he says, touching his nose with his index finger for emphasis. This formula, which would

LATIN TRADE NOVEMBER-DECEMBER 2012

be looked upon with suspicion by almost any business school graduate, has nonetheless yielded extraordinary results. He notes however that during this time the region has changed radically. “The political stability generated an economic stability and

Airlines that will prioritize market participation over efﬁciency will disappear. growth never seen before,” he says. At the same time, other conditions favorable to growth have been established, he says. Legislation has permitted the opening of markets and the arrival of foreign investment. Monetary and fiscal discipline has lowered the threat of hyperinflation and flexible exchange rates have eliminated currency black markets. The new danger, he says, is that the markets move on speculation. “Some people want to sell smoke, businesses with no base.” He thinks tracking the tangible value of projects is a basic element for returning sanity to investment, while speculation has the capacity to turn the region’s business environment into a big casino.

He thinks that in the next twenty years the region’s new businesses will be closely linked to infrastructure, given that all countries have to invest heavily to catch up in this area. Meanwhile, he predicts that airlines will consolidate into large groups, and that there will be less space for small ones. He thinks that airlines that prioritize market participation over efficiency will disappear. “This has already happened to the state airlines. This formula leads to bankruptcy,” he said. Efromovich was born in Bolivia, and is citizen of Brazil and Colombia. He thinks of himself as an innovative entrepreneur who “evaluates risk differently from all other mortals, who defines opportunities differently from all other mortals.” In any case he has built his business empire by accepting bets that others wouldn’t take. He sees opportunities beyond the ups and downs of economic cycles and short term obstacles, makes decisions quickly and thinks beyond his borders. In this, he resembles other successful Latin American businessmen. That’s why his vision of the region and its development is so interesting. Because surely it’s Efromovich and people like him who will mold the region’s reality in the next twenty years. Santiago Gutiérrez reported from Bogotá

PHOTO: COURTESY OF AVIANCATACA

BY SANTIAGO GUTIÉRREZ

THANK YOU FOR

YEARS 20 OF

INSPIRATION

PROVIDING US EVERYTHING WE NEEDED TO KNOW ABOUT

BUSINESS

IN LATIN AMERICA we CONGRATULATE LATIN TRADE MAGAZINE for THEir 20th anNiversary

A MORE PRODUCTIVE REGION

Juan N.

CENTO, regional President for FedEx Express Latin America and the Caribbean

or FedEx, innovation and technology have been key elements in building the company’s fast-growing operations in Latin America and the Caribbean into a service network that links regional customers large and small to business opportunities in the global marketplace. “I’ve been in Latin America for over 20 years and I’ve seen us go from a company that introduced time-sensitive parcel service to one that has become a pillar for economic growth in the region,” said Juan N. Cento, the Miami-based regional president for FedEx Express in Latin America and the Caribbean. “We have evolved into a solution-specific company to meet growing customer needs,” added Cento, who joined FedEx in 1989 when the company took over the Flying Tigers Line and added a large international network to its system. “Not only have we built a physical and technological infrastructure in the region, but now we have become a company that can build ‘me’ a solution,” meeting and anticipating a wide range of services needed by new and

LATIN TRADE NOVEMBER-DECEMBER 2012

operation before sending the merchandise. Innovation also extends to management and human resources, Cento noted. “We used to import expertise into the Latin American market,” he said. “Over the years, we stopped bringing in executives from the U.S. and invested in our own people to develop a pool of executive talent from the region. Today, all key executives in our markets are local staff.” As part of FedEx’s commitment to innovation, Cento and his team spend considerable time watching for new business developments in the region and working to meet emerging needs of new and existing businesses. In Mexico, Cento and his team also provided new services for the growing aerospace industry in Querétaro. As Brazilian and Canadian aerospace companies began planning new manufacturing operations in Querétaro, FedEx met with company officials to anticipate their needs and offer solutions as they move raw materials and parts to facilities making passenger planes.

We stopped bringing in executives from the U.S. and invested in local talent. Cento also saw an opportunity to move fresh cut flowers from Colombian producers to FedEx’s U.S. hub in Memphis, where they could quickly be dispatched to customers in Los Angeles and other parts of the country. This initiative provided FedEx with new business and offered Colombian flower producers an alternative to moving their flowers through Miami, the main entry point for most cut flowers from Latin America. Since the flowers reach dealers quickly, they don’t have to be stored in Memphis (as they are in Miami), thus increasing shelf-life. Joseph A. Mann, Jr. reported from Miami

PHOTO: COURTESY OF FEDEX

BY JOSEPH A. MANN, JR.

existing businesses and providing each client with the specific services they require. FedEx began operating in Latin America and the Caribbean in 1989 and today has about 17,000 employees in the region serving 50 countries and territories. It offers express, air and ocean freight, with options for standard or expedited delivery, as well as logistics and trade consulting. The company has an air fleet of 40 planes in the region and some 1,900 trucks. In terms of technology, FedEx uses one of the world’s largest computer and telecommunications networks for real-time package tracking of each shipment. Aside from the hand-held computers used by FedEx employees, Cento said the company introduced mobile tracking access to customers in Latin America about two years ago, so clients can follow their shipments from anywhere on their mobile devices, and in their local language. Cento pointed to other innovations in Latin America and the Caribbean. Beyond time-sensitive parcel service, FedEx developed the Global Trade Manager program, an online tool that permits small- and mid-sized businesses in the region to reach unfamiliar and complex foreign markets. “I’m a small company in Argentina that makes pens. I know how to ship my pens from Buenos Aires to Rosario, but I don’t know how to reach the German market,” Cento said. “We have the expertise at FedEx.” Using Global Trade Manager, the customer can learn about documentation and regulations for shipping from Argentina to Germany, as well as shipping options, costs and other details. This way, they can fully prepare for the export

A MORE PRODUCTIVE REGION

methane gas collected at the country’s largest landfill. It’s a first generation project of AES in El Salvador, and the first of its kind in Central America. In Brazil, AES Eletropaulo distributes electricity to more than 6 million customers in 24 municipalities in the metropolitan region of São Paulo. Because the plant provides electricity to low-income communities, where reliable service and affordable energy are critical to improving security and social development, the company established a program to transform consumers into clients– working to improve power supply and also disseminating knowledge on the safe and efficient use of electricity.

ANDREW

VESEY

EXECUTIVE VP AES CORP

BY ÁNGELA MARÍA RIAÑO

f energy equals mass times the speed of light squared, at AES Corporation the energy business is multiplied by the speed of innovation squared. According to executive vice president Andrew Vesey, “innovation is to trust people. If you ask me what I prefer, I prefer small everyday innovations of our people.” And that, for Vesey, is where the power of innovation lies. Examples abound in the company’s two decades of operation in Latin America— among them the award-winning Angamos project in Chile, the first hybrid coal plant in the world that uses a bank of batteries. The system eliminates the need for reserves and increases total plant production, and came about as the solution to a gas supply shortage from Argentina in 2008. For this project, AES Gener received the international EEI Annual Edison Award, the highest honor in the electricity industry. Another example is AES Nejapa in El Salvador, a 6 MW plant that can serve up to 12,000 families. The plant generates electricity from

LATIN TRADE NOVEMBER-DECEMBER 2012

Since 2004, this program has benefited nearly 2 million people in over 1,100 communities. Vesey says innovations like solar panels and wind turbines are crucial, but he also sees innovation in daily operations: from formalizing service in Brazilian favelas, to increasing consumer awareness of the importance of paying energy bills to obtain a reliable and safe service, to working with Panamanian authorities on environmental solutions for the proposed construction of a hydroelectric plant. Vesey also says one of his main endeavors is to get a team of 27,000 employees to live a culture of innovation in day-to-day operations. “First, try to make each person feel proud of the results of the company, feel that their work contributes to achievements,” he says, outlining his strategy. “Second, it is vital to listen to the opinion of each person who works in the company, customers, and stakeholders. And third, promote performance excellence in all operational processes.” These three pillars of innovation have enabled the company to enter Latin American markets and overcome what Vesey sees as the most important change of the energy industry in the last two decades in the region: the privatization of the sector. “We entered the Latin American market with the first wave of privatizations, starting in Argentina. It was our second investment outside the United States. And for us it was our first investment in a non-English speaking country. Today the most common spoken first language in our company is not English. It says a lot about our investment in Latin America,” says Vesey. After two decades of learning about Latin American markets, politics, economies, governments and communities, Vesey believes that the main innovation in Latin America over the next 20 years will be to achieve regional integration in the electrical energy sector. In other words, integration would be the multiplier to transform rich natural resources into energy for the region. Ángela María Riaño reported from Arlington, Virginia, US

PHOTO: COURTESY OF AES

Innovations every day from providing services in favelas to major hydro plants.

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A MORE PRODUCTIVE REGION

JAMES

MEISLER

QUIGLEY

EXECUTIVE VICE CHAIRMAN, BANK OF AMERICA – MERRILL LYNCH

EXECUTIVE VP

ORACLE LATIN AMERICA

BY VINCENT BEVINS

rying to summarize a recipe strategy for success in an industry which by its very nature constantly revolutionizes the way we do things is no easy task. ”You have to have a clear, complete strategy at any given time that revolves around the task at hand and engages with the tools available today,” says Luiz Meisler, executive vice president at Oracle Latin America, the computer technology company, from his São Paulo headquarters. ”You adapt this as needed to the era you are in and the space you occupy.” Meisler, now at the head of one of Latin America’s most important companies in a competitive growth sector, seems to have beneﬁtted quite well from this approach. After 12 years at the company, he oversees relationships with clients throughout Latin America, as well as innovating new methods for project management. More broadly, he is involved in the industry’s current shift toward cloudbased computing, which he says should yield huge results in terms of data security and computing efﬁciency, and sooner than many realize. “Now all of these various technologies and devices, such as smartphones, computers, data centers, the cloud, etc., all are separate,” he says. ”In ten years, everything will be integrated. In most cases there have not even been standards across platforms and systems. We have to sell solutions now that maximize potential at all times.” Meisler is also keenly aware that we rely more and more on technologies that we understand less and less. ”It’s fundamental to our work to understand that there is much more technology being made available than people know about or know how to use,” he says. One project quite a few people know is a recent collaboration between Oracle and the Discovery Channel for the Spanish-language show, ’2111,’ in which the company uses its expertise to draw a picture of the world a century from now. Meisler makes one more prediction: as technology revolutionizes, he says, ”technology will be more and more transparent.”

Vincent Bevins reported from São Paulo

LATIN TRADE NOVEMBER-DECEMBER 2012

BY JOHN T. SULLIVAN

uccessful international banking is a craft that requires not only a gift for math and credit analysis, but also an understanding of cultural nuances and business habits. James Quigley, executive vice chairman at Bank of America – Merrill Lynch, brings these diverse talents to his role. Quigley joined Merrill Lynch in December 1982. He started within the New York Syndicate Group where he received his first opportunity to work on Latin American credit– the first global bond issuance for the Republic of Argentina. Twenty years ago, Merrill Lynch was a typical securities dealing house. Bank of America on the other hand, provided a host of banking services ranging from trade finance to foreign exchange trading, as well as structured lending to sovereign and corporate debt trading. On January 1, 2009, Bank of America and Merrill Lynch merged to become Bank of America – Merrill Lynch (BAML). Quigley oversaw the transition in Latin America. “The cultural cross-currents (in) Latin America dictated that our strategy should not be a country-centric one, but a well diversified one across geographies, industries, asset classes and market capitalizations,” Quigley told Latin Trade. Looking forward, BAML is on target to grow the lending and securities underwriting aspect of its business model. In 2011, the Debt Capital Markets Group (DCM) underwrote 47 transactions totaling $10.4 billion, capturing 13 percent of all Latin American transactions. Aggregate BoFA credit exposure to Latin America was approximately $13.9 billion as of June 30 this year . BAML has also garnered awards recognizing its cash management services and its Latin American Research division. These strengths provide the platform for BAML to grow region-wide. Vibrant markets throughout Latin America and the Caribbean are being evaluated, with Colombia, Panama, Costa Rica and Trinidad identified as countries that might provide future opportunities.

John T. Sullivan reported from New York.

PHOTOS: COURTESY OF ORACLE AND BOFA-MERRILL LYNCH

LUIZ

A MORE PRODUCTIVE REGION

resource handling, won the Utah State University’s prestigious Shingo prize for operational excellence. “We’re the only Goodyear plant in the world that won it,” Szulc says proudly. Technological innovations are also developed for use within production plants and company processes. Goodyear plants in Brazil have not dumped any residues into the natural environment for the last seven years. In addition, 100 percent of the water used in production processes is recycled. The spirit of innovation is not limited to the laboratory, adds Szulc. It has reached the management process, creating “solutions that are different business models”. Szulc is still surprised by how much has changed in the region –including fabulous levels of growth in gross domestic product– when he returned a couple of years ago after working for several years in Europe. Those last 15 years of change also include radical changes in the way of doing business in the tire sector, he adds.

JAIME

SZULC

PRESIDENT OF GOODYEAR LATIN AMERICA BY ÉLIDA BUSTOS

oads that are poorly constructed or badly repaired --no roads at all in some cases– extreme topography and temperature ranges, a huge extension of terrain for off-road driving… it all makes Latin America a difficult region. And not only for logistics, but for tires too. “The conditions on our highways are very different from those of Europe and the United States,” Jaime Szulc, president of Goodyear Latin America, tells Latin Trade. And thinking of the region Goodyear has met these very special challenges by designing some special products. Tires using AquaMax technology include a composite that improves adhesion and improves maneuverability whether roads are wet or dry. FuelMax tires, which are new to Latin America, save fuel as a result of their low-rolling resistance. Goodyear reckons that what one of these tires saves in a lifetime amounts to the equivalent in fuel of what it costs to buy a full set of tires. Szulc explains that Goodyear has a history of innovation. It has always been on the lookout for the latest material or product, and the Latin American subsidiary sticks to that tradition. Latin America was, in fact, the first region of the multinational to set up an innovation department. That achievement, together with others in terms of management and

LATIN TRADE NOVEMBER-DECEMBER 2012

“With the latest cars came a new degree of complexity,” he says. “It used to be that each market was straightforward. With a limited production range you could satisfy all your consumers’ needs”. Not any longer. Szulc reckons that the number of cars in Latin America has grown over the past seven or eight years, and will grow by just as much in the next five years. On top of that, the increase in the variety of cars has directly affected tire factories, not necessarily because of the need to increase production volumes, but also because the factories have to invest more in order to keep pace with the number of product lines that are needed. A specific example is the surge in the number of compact cars over the last five years. Diversity means having to increase stocks, which in turn means having to invest more money on different tire models. With a wider range of cars, and consequently a wider range of tires, the market can no longer be a monolith. “Goodyear’s strategy is to be the leader in target market segments. The company can’t make all the tires people want. It has to choose”, says Szulc. To make things in the business even more complicated, “the amount of information to which people have access has grown exponentially” and that affects the way that people buy the product. Customers are much more demanding nowadays. The Internet allows them to compare quality, characteristics, durability and price. “Consumers have become more demanding, the market has become more complex, there are more people who scrutinize the cost per kilometer, and who will think not only about the tire itself but in its maintenance”. Szulc predicts that “performance labeling” is the next step in innovation. Performance labeling, which reveals such key characteristics of the tire as fuel saving, noise and braking ability, is already being tried in Europe. As is the case with other new concepts, it won’t be long until it arrives in Latin America. Élida Bustos reported from Buenos Aires

PHOTO: COURTESY OF GOODYEAR

Maintaining a grip on tough terrain and even tougher markets.

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A MORE PRODUCTIVE REGION

LEO

RODRÍGUEZ PRESIDENT OF EMERSON LATIN AMERICA

BY DAVID HASKEL

LATIN TRADE NOVEMBER-DECEMBER 2012

proach to production? “Is it?” says Leo Rodríguez, president of Emerson Latin America. “I’ve been with Emerson for 37 years and in the past 20 years a lot of things have happened. What I’ve seen is a huge transformation.” The big oil companies are a good example, Rodríguez told Latin Trade. “These companies

design to engineering to manufacturing. Emerson now has more than 30,000 employees throughout Latin America, with a local presence in every single country in the region. In Mexico alone they have 39 fully-owned plants with 17,000 employees. Other operations with a strong headcount include Brazil, Venezuela, Colombia, Chile and Costa Rica. “As our customers become very global, we become a global solution provider from Latin America,” Rodríguez says. This in turn has prompted the company to get in close touch with Latin American universities. “To build up these facilities and solutions at the local level, you have to go out and find the engineering power. You have to work with those who develop the talent.” Another complementary element Rodríguez sees in the advent of major Latin corporations is the rapid growth of the middle class. Other business areas where Emerson has a strong presence include mining – where it provides industrial solutions to Barrick Gold for example, which has major operations in Chile, Peru and Argentina— pharmaceuticals, car making, and the food and beverages industry. So next time you have a beer or a burrito or fill up the gas tank, chances are Emerson has been busy behind the scenes making the drink colder, the fuel more efficient, and the snack tastier. David Haskel reported from Buenos Aires

Custom-made and home-grown solutions for any problem. used to be very regional. Now they’ve become truly multinational and very powerful on a global scale.” Playing in the major leagues has led them not only to expand their domestic operations but also to become more demanding as well. Yes, they still want their state-of-the-art solutions. But they want them now, and they want them here, in their own language, delivered and run by locals, and with as much domestic content as possible. So gone are the days when “solutions” would be brought in from outside. “You can’t export these things from the United States or Canada or Europe anymore,” Rodríguez stressed. “Our customers, as a result of being global, now expect us to have very strong operations on a local scale.” And that includes all areas, from

PHOTO: COURTESY OF EMERSON; ISTOCK

hink of them as your nervous system. The bones, flesh, inner organs, muscles and skin would be of little use without a driving force to organize, optimize, synchronize and monitor each and every movement and function. At Emerson, a $24 billion-revenue company based in St. Louis, MO, they think in terms of “solutions.” And every solution is innovative, custom-made and one-of-a-kind. Let’s say Mexico’s Pemex, Venezuela’s PDVSA, Brazil’s Petrobras or Argentina’s YPF want to boost output at a plant, beef up safety standards, improve quality, or perhaps come up with some new product, such as high-viscosity lube oil. Or maybe they suspect that the pressure drop in that gas duct means there is a leak somewhere in the system. Lower temperatures in storage-vats would also be desirable, not to mention faster conveyor belts or better ventilation and illumination and communications systems, they say. Or, more likely still, any combination of the above. In comes Emerson and presto! They’ll design a “solution,” bring in the parts, the software, the equipment (which can be either custom-made by themselves or off-the-self ), the technicians and engineers. And they will install and run the operation. Oh, you wanted it fully automated? They can do that too: they’ll put in place not just the nervous system but the e-brains on top of it. Hmm, sounds a bit Jetsons-ish. Is corporate Latin America ready for this space-age ap-

A NEW FRONTIER: TOURISM

Kirk Kinsell, president of IHG for the Americas. “Hotels in the past were full-service, luxury properties located in a central city,” said Kinsell, who has worked for IHG for 16 years and took over the Americas presidency in 2011. “Today we are building more select– or limited– service hotels located in big cities and other parts of these countries.” In other words, IHG continues to expand its portfolio of large, full-service hotels and spas in major cities. But it’s making a big push to add service hotels like the Holiday Inn and Staybridge Suites brands in provincial cities with strong growth potential. Kinsell attributed the uptick in demand in part to a growing middle class that is acquiring the means to travel more often. Demand is especially strong in Brazil, Colombia, Chile and Peru. He also said the company was training new employees to offer the best hospitality experience, and working with new private sector investors under management and franchise agreements. This model speaks to a major shift in how the

President IHG BY JOSEPH A. MANN, JR.

HG Group, the parent of InterContinental Hotels and other famous brands in Latin America, is moving aggressively to meet burgeoning demand in the region, especially in mid-scale hotels for underserved cities, said

OSVALDO LIBRIZZI

BY ALEJANDRA LABANCA

ig international luxury hotels were relatively scarce in Latin America a decade ago. There were at best a few in the main cities, and the service there wasn’t on a par with that of grand hotels in the great capitals of the world. Today, thanks to the region’s huge economic growth, which is at-

CO-PRESIDENT FOR THE AMERICAS OF STARWOOD HOTELS & RESORTS

tracting business people and investors from all over the world, as well as policies that have generated greater purchasing power at home, Starwood, one of the leading chains in the luxury hotel industry, is launching an expansion. “From the standpoint of our industry, we continue to lead in the upper, upscale segment, with innovations from the point of view of (the growing presence in the region of more of ) our brands,” Osvaldo Librizzi, co-president for the Americas of Starwood Hotels & Resorts, told Latin Trade. “This enables us to position ourselves in various cities with distinctive hotels that are very dif-

LATIN TRADE NOVEMBER-DECEMBER 2012

ferentiated, and each one responds to a different lifestyle.” Starwood, owner of the brand Sheraton, currently manages a portfolio of several brands that it refines to capture specific niches. The company now has 71 properties in operation in Latin America and 16 more planned or under construction, under eight different brands. St. Regis is the most exclusive of the Starwood brands. The company aspires to position it as a hotel “for connoisseurs who want to experience the best expressions of luxury.” Next in line is The Luxury Collection (“unique hotels that offer exceptional service for an elite clientele”), then W (“hotels with an iconic design and a vanguard style that open their doors to exclusive and extraordinary experiences”), and Westin (“providing innovative programs

and distinctive services that transform all aspects of the stay into a revitalizing experience”). Starwood sees a segment of luxury travelers in Latin America that’s wide enough to fill all these slots. “The Latin American economies are solid and have proved that they were better prepared to withstand a crisis. This is a competitive advantage,” says Librizzi, who has been with the company for more than 30 years. Starwood is preparing the 2013 launch of an app that will allow guests to book hotels from their smartphones in Spanish and Portuguese— an option already available in English. “We think mobile technology will transform the hotel business.” Alejandra Labanca reported from Miami

PHOTO: COURTESY STARWOOD HOTELS

Kirk KINSELL

industry is developing in Latin America. Whereas hotels were often owned by high net-worth individuals in the past, and were located in a single country or market, today institutional investors own properties dotted across the map. “They are sophisticated investors who hire professional managers,” Kinsell said. Another shift has come with ownership trends. Kinsell notes that just ten years ago, the IHG group owned more than 600 hotels. Today, it owns nine or ten properties worldwide, focusing instead on managing and franchising hotels. The group’s business partners own the properties. Looking to the future, IHG will be introducing hotels catering to healthy lifestyles, with de-stressing sleep environments and in-room “brain spas” to stimulate the intellect. Joseph A. Mann, Jr. reported from Miami

PHOTO: COURTESY OF IHG

The focus now for IHG is on managing and franchising. Business partners own the properties.

A NEW FRONTIER:TOURISM

ROB

STEIGERWALD

CHIEF OF OPERATIONS MARRIOTT INTERNATIONAL

BY ALEJANDRA LABANCA

arriott, the American hotel chain, is betting that the greater social mobility of Latin Americans will be a blessing for its sector. It’s preparing for the rush with a plan to build new hotels and to adopt new techno-logy that will enable guests to make hotel reservations from a simple mobile phone. “When people leave poverty behind they do two things: ﬁrst they buy a mobile phone, and second they travel,” Rob Steigerwald, chief of operations for the southern region of the Americas for Marriott International, told Latin Trade. To take advantage of this expected growth, Mar-

PHOTO: COURTESY OF MARRIOTT

riott plans to open 71 new hotels in Latin America and the Caribbean over the next few years– part of a plan to double the number of properties the company has in the region. Last November the company also launched a Spanish-language app that enables people to make reservations at any of its hotels from a Smartphone. “We chose to launch our second app in the world in Spanish because we found that it’s the second most popular language for making reservations, after English,” Steigerwald said. The region’s current expansion strategy is consistent with the Marriott culture. According to the executive, Marriott has sought to grow continuously ever since it was founded. “When I started out (at the company) in 1981 we had 60 hotels throughout the world. Now we have 3,800,” he said. “Now, looking at the long term, we think Latin America offers us a world of opportunities.” The Latin American country in which it’s expanding most aggressively is Mexico, where it now has

22 hotels, with plans to open 30 more in the next three years. Since the 1980s Marriott has followed an aggressive strategy to broaden its market by launching new brands (Courtyard Marriott, Residence Inn, Autograph Collection) and by acquiring others (Ritz-Carlton). The brand on which Marriott is placing its biggest bet in Mexico is Fairfield Inn, a middle-class hotel chain designed to take advantage of Latin Americans’ new social mobility. To expand in Mexico and in Brazil, the company’s second largest growth market, it decided not to replicate the brands already operating in other parts of the world, but rather to adapt to local tastes. “Our strategy is to go ’glocal’,” said Steigerwald. “For the Fairfield group we spent a lot of time studying local travelers in Mexico and Brazil and developed our models based on local needs. For example, our Fairfields in the United States don’t have restaurants, but they will have in Brazil,” he said. Alejandra Labanca reported from Miami

NOVEMBER-DECEMBER 2012 LATIN TRADE

THE AGE OF SERVICES

mobile transactions for individuals, companies and governments. Businesses and governments use Visa prepaid or debit cards to pay bonuses and meal plans to employees and to make payments to people who lack bank accounts. Visa also offers express payments (no signature for amounts less the $25) at gas stations, fast food outlets and for taxis, and is rapidly expanding its reach in mobile payments. This “technology explosion” has also created new expectations among consumers, the Visa executive said. “Consumers now expect to use their mobile devices to carry out financial transactions anytime and anywhere for almost everything,” Eraña said. By constantly investing in new technology, an expanding network and innovative products, Visa aims to satisfy this burgeoning demand not only for traditional credit and debit transactions, but also for mobile products that reach tens of millions of unbanked and underbanked individuals in Latin America. In Mexico, for example, the government’s largest social program, Oportunidades, uses Visa prepaid cards or debit cards to make payments directly to poor families. The government-owned bank Bansefi deposits funds for 4.5 million families into Visa debit card or prepaid card accounts every two months. These transfers, to be used for purchasing food and other necessities, mean that money is readily available to families. And it does away with the need to stand in line at bank branches or government offices to obtain payments. More than 800,000 people in the Dominican Republic also receive government subsidies through a Visa card, which can be used to pay for food, fuel and medicine. Visa is also moving ahead with its “electronic wallet” , which will allow

341 million

Visa cards in the region

President of Visa International for Latin America and the Caribbean

BY JOSEPH A. MANN, JR.

“R

emember those manual machines we used to use for processing credit cards?” asked Miami-based Eduardo Eraña, president of Visa International for Latin America and the Caribbean, when asked about how things had changed for Visa in Latin America over the last few decades. “Today, we swipe our cards electronically and it takes about three seconds to obtain approval,” he said. Eraña, who has more than 40 years of experience in Latin American banking and credit cards and 28 years with Visa, has seen the payments industry evolve from one where Visa and its client financial institutions had to send magnetic tapes with information on transactions back and forth across the region, to one where credit and debit transactions are transmitted at the speed of light. “The driving force behind this has clearly been people and the level of globalization that we’ve reached,” he noted. “But what really has allowed these changes to occur is technology.” Today, the payments industry continues to evolve, driven by the Internet and mobile technology, as well as the shift from paper money to electronic payments for many of our banking needs. Over the years Visa has expanded its products to include credit, debit and prepaid cards as well as

LATIN TRADE NOVEMBER-DECEMBER 2012

“Consumers now expect to carry out ﬁnancial transactions anytime and anywhere” holders of Visa and other major cards to make electronic payments on their mobile devices. The company is testing this service in the United States, and eventually plans to extend it to Brazil and Mexico. To support this service, Visa launched a new online site called V.me Visa has been operating in Latin America for over 40 years. The company today works with some 557 financial institutions and has more than 3.7 million merchant customers in Latin America and the Caribbean. There are over 341 million Visa cards in Latin America, of a worldwide total of more than 1.8 billion, and the region accounts for total transactions– in payments and cash– of more than $682 billion. Joseph A. Mann, Jr. reported from Miami

PHOTO: COURTESY OF VISA

EDUARDO ERAÑA

THE AGE OF SERVICES

Manuel

MEDINA-MORA

CEO Global Consumer Banking and Executive Chairman of Latin America and Mexico, Citi BY DAVID AGREN

PHOTO: COURTESY OF CITI

arrying a Banamex-branded credit card could be considered cool in the Mexican capital. Here, Banamex card holders can cut in line for concert tickets and are even offered the opportunity to purchase seats for shows by performers like U2 and Madonna two days in advance of anyone else. “We try to lead the entertainment dimension,” Citi’s CEO of global consumer banking and executive chairman of Latin America and Mexico, Manuel Medina-Mora, tells Latin Trade. “It is access– access to something special, to privileges, and that is the way you position your credit card business.” This approach is an example of the innovation in consumer banking that Medina-Mora has overseen in his native Mexico for years. This third-generation banker originally led Banamex, which was purchased by Citi in 2001, growing the venerable Mexican bank by concentrating on customer service and relationships. It’s also an approach he is attempting to extend throughout Citi, which has operations in more than 100 countries, and is coming back to a core philosophy: “Banking is not

Even in the corporate electronic banking, online banking has changed the way we do things. about transactions, it’s about relationships,” he says. “In Banamex we have always had a philosophy ... that banking has to be about relationships with our clients, that banking is client-centered.” Many banks had abandoned this attitude until the financial crisis forced them to rediscover old ways of doing business. Medina-Mora cites two other trends in banking: digitalization and globalization, which he says Citi is also embracing. Bana-

mex, for example, launched a digital transfer platform with cellular giant Telcel and Inbursa (both owned by Carlos Slim) to allow anyone with a mobile phone to access banking services. “It is probably much clearer in the consumer dimension,” Medina-Mora says of digitalization. “But even in the corporate electronic banking, online banking has changed the way we do things… in trading, in capital markets, in the way transactions are executed, in cash management, trade finance and supply-chain finance.” Globalization also has brought about change in the banking sector– a trend Medina-Mora anticipates will accelerate in coming years. “More and more, globalization is becoming part of the daily life of mid-size companies because they are part of the supply chain to global companies and Latin American champions,” he says. Medina-Mora sees Citi as well-situated to succeed in an increasingly globalized world, in part because of its global reach. That reach includes 23 Latin American and Caribbean countries, a number unrivaled in the region. “We are the only truly global bank present in the region,” he says. Citi executives recognize the region’s importance for the company, he says. Citi reaped 7 percent of its profits from Latin America in 2002. That’s surged to 21 percent in 2011. In consumer banking, the number of clients has increased from 18 million in 2002 to nearly 30 million today, without “any significant acquisitions” , Medina-Mora says. Naturally, Medina-Mora is bullish on the region, and on specific countries within it. His bank forecasts growth for the region of between 4 percent and 5 percent over the coming decade, “if nothing extreme happens.” He expresses some short-term concerns about the state of Brazil’s economy, “which are natural given the very rapid growth over a multi-year period,” but remains optimistic over the medium term. Mexico, he says, “now represents one of the few countries in the world with the best combination of growth and not a significant economic risk in front of it: low inflation, not an over-expansion of credit lending.” “Our future lies more and more in the emerging markets, especially the Asia-Pacific region and Latin America,” Medina-Mora says. “Those are our two priorities.” David Agren reported from Mexico D.F.

NOVEMBER-DECEMBER 2012 LATIN TRADE

SPECIAL ADVERTISING FEATURE

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From the 180 degree full flat seats and sommelier selected wine list in LAN’s Premium Business cabin, to the exclusive complimentary airport transfers and international menu developed by Brazilian chef Belo Coelho offered in TAM’s Business class cabin, your South America experience begins before you even step onboard. “The airlines that comprise the LATAM Airlines Group connect South America to the world and offer the best choice for passengers traveling to, from and within the region,” said Pablo Chiozza, Vice President North America and the Caribbean, LATAM Airlines Group.

LAN Boeing 787 Dreamliner

LAN Airlines Premium Business Class

For more information about LATAM Airlines Group please visit www.latamairlinesgroup.net.

SPECIAL ADVERTISING FEATURE

TAM Boeing 777-300 aircraft

BENEFITS FOR OUR PASSENGERS LAN and TAM will continue to operate under their existing brands, with the same excellent service and quality that characterizes them today. Customers can continue to interact and travel with LAN or TAM just as they always have done with more access to more destinations and options than before. Together, LAN and TAM, and their respective affiliates, have a dream of working to make the flying experience safer, simpler and more accessible by helping to connect people, integrating trade in our region and expanding our culture beyond borders. The mission of the more than 51,000 employees who comprise this new alliance is to offer the best travel experience for the thousands of passengers that we will transport daily.

TAM Business Class

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THE AGE OF SERVICES

Alberto

The Panama Canal’s construction was an epic that pitted the human spirit against nature. More recently, the problems haven’t been ﬂies but internal resistance to change and the need to face competition.

BY ÉLIDA BUSTOS

lberto Alemán Zubieta is an engineer, a very feisty one. And very political too, despite his claims to the contrary. Alemán twice headed the Panama Canal Authority; his two terms lasted for a total of 17 years, and in both of them he confronted major challenges. The US withdrawal in 1999 from the administration of the Canal meant that Panama recovered its sovereignty of the waterway. But the country needed the Panama Canal Authority to generate earnings too. Its non-profit status had to be dead and buried. The first task was to transform the Authority’s management from a statist mentality to one of a company without fear of competition. The next was to solve the problem that two studies of the time had posed: by 2012, the Canal was going to reach full capacity. “They handed me over a company that had a death sentence hanging over it,” Alemán told Latin Trade shortly before retiring as Administrator of the Panama Canal. “How was it going to compete? The world wasn’t prepared to wait for me.” The post-Panamax ships were about to be built. Something had to be done. That “something” was going to be costly and it had to be big, but first the Authority’s finances had to be put in order. During the 85 years in which it administered the canal, the United States never aimed to earn profits. Instead the objective was strategic control of the waterway. Washington had no interest in making money; all that was required was self-sufficiency. “It was a break-even operation,” said Alemán. Now it had to be transformed into “a company with profits -- which amounts to a 180-degree turn.”

LATIN TRADE NOVEMBER-DECEMBER 2012

This meant transformation of the management objectives. “The new mandate for the canal was to be efficient. We had to bring about a cultural change in the authority, both from within and outside the organization.” The reorganization began with the management structure the Americans had used. It provided “a very sound foundation in legal and structural terms, as well as procedures and regulations”. As the first step in the change, the Authority had to learn how to manage its resources. It was accustomed to “redundancy –have two, three or four, just in case someone or something was needed.” That could no longer go on. At the same time, Alemán was well aware that one of the battles he faced was his staff ’s fear of change. The overwhelming mentality was that “if things are doing fine, why change? Don’t rock the boat! What I said was ‘The opposite is true. We really need to ‘rock the boat’ so as to make things get better.” Of course, the unions got wind of his plans, and they feared that the drive for efficiency would mean firings on a mass scale. Alemán had no fear of the unions, and he never closed his office door to them. Instead, he made the unions take part in the changes, while he personally got to know the situation first hand in the various areas of the operation. “I personally negotiated all the practices that were included in the collective agreement,” he said. “The leader in the negotiations was me, and that was something that the prevailing mentality didn’t understand. ‘How come the CEO is negotiating the collective agreement?’ It

PHOTO: COURTESY ACP

ALEMÁN ZUBIETA

THE AGE OF SERVICES

was a message to make sure that people knew that what was coming was a change for real. I was involved. I knew what was going on and they couldn’t spin me a yarn. I went to the manual workers, the ones who have to operate the Canal, and with the guys in dredging so I could find out about that line of business –and it’s a very complicated one.” While these very fundamental issues were handled, information technology had to be updated. The authority used a DOS-based system. “That was awful. The systems weren’t integrated,” said Alemán. At the same time, managers had to keep up-to-the-minute on what was going on in the Canal. “How can it be that I’m supposed to be running the Canal when I don’t know which ship is just around the bend?” That was how control by satellite was introduced. Not that everything had to be bought. A lot of the ad hoc solutions came from the experience of the staff. And there was another thing. Alemán was working on several fronts: management, legal, technological and financial. Now he had to “understand the business”. He got in touch with the Canal’s 40 leading clients to ask them what they thought about the service. “That marked a fundamental change: the CEO of one company was talking with another. That was a very big deal,” said Alemán. Not once in the 85 years of administration by the US did anyone speak with a client. The underlying aim behind the efforts to understand the business was the need to tackle tariffs, as part of the authority’s mandate to make pro-

fits. Alemán reckoned that the key was not to increase the rates but to set up a new scheme of differentiated tariffs. “The previous way was to charge all the ships the same. There was no segmentation, no understanding of the needs of the business. First come, first served, and that was all.” Alemán thought otherwise. “What’s our business about? Is it about the passage of ships or the passage of the cargo that they carry?” Meeting up with the clients was a tough experience, but it created more efficiency and it led to a range of prices based on the type of ship, the type of cargo, containers in vessels with above-deck capacity, and so on. The revolution in the Panama Canal Authority led Alemán to a second term as Administrator. He had previously served two years during the change from US to Panamanian administration. During those years, the bureaucratic mentality was buried. A year before the transition ended, the authority had a surplus of $41 million. Last year, 11 years later, the figure came to $1.2 billion. Meanwhile, expansion is prolonging the Canal’s life expectancy. And investment of $5.25 billion is mainly being provided from the authority’s own resources. Nobody yet knows which ship will be the first to open the expanded Canal within a couple of years, but Alberto Alemán Zubieta, who dedicated 17 years of his life to the Canal Authority, deserves to be on the deck.. Élida Bustos reported from Panama City

NOVEMBER-DECEMBER 2012 LATIN TRADE

THE AGE OF SERVICES

Other areas, like agriculture, education and healthcare, have lagged behind. With healthcare there is some investment in medical equipment, “but in the administration of patients, hospitals and medicines it has yet to be made,” he said. “Healthcare ranks back where banks were 20 years ago,” he says. He expects the next big step for the region to involve wide use of cloud computing. With the cloud, users can always be connected and have access to as much information and computer capacity as they require. “The cloud breaks forever the barrier that capital investment used to impose,” he said. “Now a family doesn’t need to spend much money, nor does a company have to install a computer center. All that’s needed is a communications device. The rest is in the cloud.”

Latin America is the region with the world’s highest growth rate in demand for technology.

RINCÓN

President of Microsoft Latin America BY SANTIAGO GUTIÉRREZ

“

The market has exploded in Latin America,” said Hernán Rincón, president Microsoft Latin America, describing the speed with which sales are growing in the region. He told Latin Trade that of the thirteen regions into which the company divides the world, his is the one with the highest growth rate, expanding by rates of 3 percent to 6 percent over the past 10 years. It hasn’t always been like this, says Rincón, who has seen the transformation of the technology market from the special vantage point of his Fort Lauderdale office. Adoption of computer technology over the last two decades has come in waves (see box). Financial firms were the first to invest in systems and communications, with ATMs and with the installation of new systems for processing and administering information. Governments and state-run companies followed. At that time, most of Latin America’s oil companies and public service operations were in state hands. Privately-owned Latin American companies started to compete on the world stage after 2000. They had to become more efficient to be successful against India and China, Rincón said. “It was (comparatively) easy to compete against the Europeans.” To do this they lowered costs by boosting productivity, which they achieved through investing in software, communications and manufacturing technologies. Some sectors, such as mining, made fast progress. Chile’s Codelco and some Peruvian mining companies have drilling and extraction technologies, as well as IT systems, that are on a par with the best in the world, he says.

LATIN TRADE NOVEMBER-DECEMBER 2012

Other future transformations in the region will involve applications that help governments to provide better service to their citizens– in education and health. “All governments understand that that is the next frontier,” he says. As a result, Latin America will continue to be one of the most interesting target markets for those offering such products. Today, for example, 45 million personal computers are sold in the region per year, a number that makes it the third biggest market in the world after China and the United States. For Microsoft, software sales in Latin America have grown between 2.5 and three times faster than the total market during the last seven years, he says. “We’re very optimistic about Latin America,” Rincón says. “In 20 years, Brazil and Mexico will be two of the five biggest economies in the world and they will be more sophisticated,” he says. “They will apply technology in everything they do.” The way it looks now, the trend seems unstoppable. Santiago Gutiérrez reported from Miami

THE THREE WAVES The ﬁrst major Latin American investors in technology were big companies and governments. Over the past 10 years, there has been another wave of investment from mediumsized and small businesses– those with fewer than 250 employees. Today their demand is growing twice as fast as that of large companies. The third wave, which has come over the last ﬁve years, is driven by consumers. They buy everything from smartphones to tablets and computers. In 2011 and 2012, their demand was double that of mid-size and small companies. This year, it is growing 34 percent faster than last year.

PHOTO: COURTESY OF MICROSOF T

Hernán

AGE OF SERVICES

WHOPPING RESULTS from social media ocial networks have transformed the way Burger King relates to its customers, especially in Latin America. José Tomás, president of Burger King for Latin America and the Caribbean, told Latin Trade the fast food chain’s promotional campaigns through social media are more successful in Latin America than in other regions. He attributes this to enormous growth in the number of people with smartphones, and the fact that the company’s franchisees are open to strategies that can be implemented using new technologies. The company’s latest social network campaign targeted customers in Brazil using Facebook. After hitting the one-million mark for people who registered as Burger King “fans” on the site, the chain gave away a Whopper (Burger King’s flagship sandwich) to every person who had signed up. The fast food restaurant’s page became the second most visited Facebook page in the country. Technology has also changed the way the company, which was acquired by the investment fund 3G Capital in 2010, interacts with its franchisees in different countries throughout the region. “In the last five years, our region has adopted a new way of thinking about how we communicate,” Tomás said of Burger King operations in Latin America. New communications technologies (webinars, videoconferences, Skype) have enabled the good ideas to flow more freely, the executive said. “If there is a good campaign in Argentina, no doubt someone will go there, will see how it works, and will bring it back to another country.” Interconnectivity has also contributed to lowering costs for the franchisees, said Tomás. He cited as an example a company initiative to make architectural plans for regional Burger King restaurants available on its internal web page, so that whoever wants to open a new restaurant doesn’t need to hire an architect to make a new design and a new floor plan. Thanks in part to these advances, and to Latin America’s explosive economic growth, Burger King’s progress has been spectacular in the last two years. In 2011 the company opened more restaurants in the region than in any other year (more than 80), and this year it expects to open another 175. “The economy has helped us a lot,” said Tomás.

PHOTOS: COURTESY OF PANALPINA; ISTOCK PHOTOS

Ferdinand

KURT

CEO of Panalpina for the Americas BY JOSEPH A. MANN, JR.

ifty years ago the Panalpina Group, one of the leading global providers Latin America and offer our of supply chain solutions customers specialized exand logistics services, pertise, know-how and solustarted developing its Latin tions,” said Kurt. American network with its Panalpina, for example, first operations in Colombia has state-of-the-art coldand Venezuela, said Ferdinand Kurt, the regional chain services for the healthcare sector’s delicate CEO of Panalpina for the air cargo shipAmericas. “We proState-of-the-Art ments that can be monitored for vide end-toin the temperature conend solutions trol. And recently to a variety began offering air of industries, freight customers faster turnincluding oil and gas, healtharound times with a twice care and high-tech throughweekly flight from Hong out Latin America,” said Kong to Brazil. To meet new Swiss-born Kurt, who has demand for air freight, the over 30 years of experience Switzerland-based company in the international freight this year added two new Boeforwarding and logistics secing 747-8 cargo planes to its tors. international network. These Kurt, who previously was advanced aircraft will form president and CEO of Kuepart of Panalpina’s “own conhne + Nagel for South and trolled network,” which has Central America, sees good been designed to offer solugrowth opportunities in tions for different industries markets such as Colombia, Brazil, Peru and Mexico, and that are not available from commercial carriers. particularly in the upstream

COLD-CHAIN

supply chain for oil and gas. “We have a long history in

Joseph A. Mann, Jr. reported from Miami

Alejandra Labanca reported from Miami

NOVEMBER-DECEMBER 2012 LATIN TRADE

THE AGE OF SERVICES

CARDENUTO President SAP Latin America and the Caribbean

BY JOSEPH A. MANN, JR.

“W

hat has changed in our industry in recent decades? Everything!” exclaimed Miami-based Rodolpho Cardenuto, an electronics engineer and president of business software giant SAP for Latin America and the Caribbean. “We were still programming with mainframes and using languages like COBOL. The IT user then had to be an IT expert,” said Cardenuto, a Brazilian whose region includes over 12,200 clients and 3,000 employees in 12 countries. As technology advanced, every aspect of the business changed, noted Cardenuto, whose company has been working in Latin America for 18 years. Information –previously stored on magnetic tapes, and before that punch cards-– had to be collected and processed overnight. Today, companies can process large volumes of data, access huge data bases and retrieve and analyze information in real time. If a customer two decades ago had a problem, SAP had to dispatch a technician to solve it. “Today, we can use new technology to manage customers from a distance,” said Cardenuto, who took over as head of Latin America and the Caribbean in 2008 following 25 years of experience in technology sectors, including 17 years at HP. At the outset, SAP did not work with business partners in Latin America. Now, the company has over 450 partners in the region and they represent an important share of total sales. “The way we work today would not have been possible 20 years ago. IT has developed from something used by a few, to something accessible

LATIN TRADE NOVEMBER-DECEMBER 2012

SAP has logged double-digit growth while Latin America is outperforming the rest of the world in software sales. customers throughout the Americas. In 2009, SAP invested about 15 million euros in a new R&D center in the Centro de Tecnología de Unisinos in São Leopoldo, Brazil (SAP Labs Latin America) and this year announced an additional investment to expand the facility. SAP is adding a new, LEED-certified building to the R&D center with a capacity for an additional 500 employees. Innovation has been a driving force in SAP since it was founded in Germany in 1972 by five engineers who had worked for IBM. SAP– which means Systems, Applications and Products in Data Processing– focused on business software and became the world’s largest supplier of specialized enterprise software to both large and small companies. In Latin America, SAP moved to advance its ability to serve the expanding mobility market by teaming up with Colombia’s UNEEPM Telecommunications. The carrier can now offer its corporate customers a cloud-based mobility platform to access business applications and systems. SAP previously partnered with Chile’s Entel to provide mobile services. Joseph A. Mann, Jr. reported from Miami

PHOTO: COURTESY OF SAP

RODOLPHO

to many, thanks to the Internet and now to something available to everyone via mobility.” Changes at SAP Latin America in recent years have been equally dramatic. The company, which is part of German-based SAP AG, an international leader in enterprise software, today principally works in five market categories: cloud computing, mobility, business analytics, data base and applications. “When I arrived at SAP in July of 2008, 95 percent of revenues came from classic ERP (Enterprise Resource Planning) and about 5 percent from analytics,” Cardenuto said. “Now about two-thirds of our revenues are derived from innovation and new applications while one-third comes from ERP. Everything has changed. The market has changed, we’ve changed. We’ve acquired companies and invested consistently in innovation.” This year, SAP has logged double digit growth while Latin America is outperforming the rest of the world in software sales. For example, SAP Latin America reported 23 percent growth in revenues for software and services in the second quarter of 2012, while revenues from software sales to SMEs (small and medium-sized enterprises) in the region increased by 44 percent. SAP has grown and prospered in the IT world as a result of its constant innovation, acquisitions and investments in R&D. The technology, innovation and experience gained from these acquisitions enhance SAP’s software and services in Latin America and the rest of the world. Cardenuto stressed that R&D is of prime importance for SAP in Latin America, in order to provide localized solutions and support

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Stephen

FENWICK

CEO DHL Express Americas BY JOSEPH A. MANN, JR.

HL was started by innovators and grew by using innovation to respond to customer demand all over the world, said Stephen Fenwick, CEO of DHL Express Americas. “Conceptually, DHL was a garage start-up. We started out with a few people sitting on planes flying documents from San Francisco (California) to Hawaii,” said Fenwick, who has worked with DHL for three decades and now runs a division that includes the United States, Canada, Latin America and the Caribbean, employing about 15,000 people in 57 countries and territories. DHL began in 1969 when three men, Adrian Dalsey, Larry Hillblom and Robert Lynn (whose last names provided the initials for DHL), established an air express business by personally delivering shipping documents by air. The documents arrived at customs offices before the freight, which allowed cargos to pass through customs more quickly and helped improve the flow of international trade.

LATIN TRADE NOVEMBER-DECEMBER 2012

“For years, our people carried documents on planes,” said Fenwick, an Australian who previously worked for DHL in Singapore as senior vice president of network operations for Asia Pacific, Eastern Europe, the Middle East and Africa. “Sometimes our people would take up a whole plane, and the airlines didn’t like us at the beginning. “That’s how we started-- through innovation. Offering a service that didn’t exist,” he added. “And we’ve grown over the years by using innovation to respond to customer demand.” DHL today is the courier service with the greatest international reach, serving more than 220 countries and territories worldwide. As its business expanded, DHL realized the value of computer technology and word processing. The company was a pioneer in using word processors, Fenwick noted, a step that sped up the handling of enormous volumes of paperwork previously done either with typewriters or manually.

As the company grew, it acquired its own planes and added more routes. Today it operates its own worldwide fleet of cargo jets and partners with regional airlines in order to extend its reach. In Latin America, DHL expanded its network far beyond capital cities, following international and domestic trade patterns and setting up service in provincial centers. The company built a regional hub in Panama and has quality control centers in Brazil, Mexico and Brazil. “Ten years ago the trend in Latin America was all North-South business,” Fenwick said. Trade patterns have changed and today the flow moves both directions along the NorthSouth axis as well as East and West. “As smaller companies get into the import/export business all over Latin America, this trend will continue.” Other important developments in the region that will impact DHL are near-shoring (moving manufacturing from China to Latin America as costs rise in Asia); increased online shopping among the growing middle classes in Mexico, Brazil and other countries; the growth of Latin multinationals and their use of Panama as a distribution point; and a continued expansion of trade. To improve performance and customer service in the Americas, all employees are required to take a training program that explains each aspect of the express business– customs, documentation, customer service, operations and finance. Everyone, “from airport workers to the CEO participates in this program,” Fenwick said. During Fenwick’s time at DHL, the company has used technology to shift from using paper bills of lading to worldwide electronic tracking. Now, Fenwick pointed out, DHL is raising the use of barcodes and tracking systems to a new level. “The customer– using a computer or mobile device– receives up-to-the-minute reports on where his shipment is and when it arrives.” DHL Express is a division of Deutsche Post DHL which is based in Bonn, Germany, and has about 275,000 employees across the globe. Other divisions are DHL Global Forwarding, Freight; Supply Chain and DHL Global Mail. Joseph A. Mann, Jr. reported from Miami

PHOTO: COURTESY OF DHL

THE AGE OF SERVICES

HUMAN RESOURCES & DEMOGRAPHICS

ARMANDO

LABORDE

DIRECTOR OF ASHOKA CENTRAL AMERICA AND MEXICO

ocial entrepreneurship has seen a surge over the past decade with the rise of social networking websites like Facebook that allow people to reach wider audiences and find more funding sources. Armando Laborde understands this well. The 47-year-old has been running the Central America and Mexico operations of Ashoka

and civic engagement, to training school children to use computers, to reducing greenhouse gas emissions. Alito Alessi, for example, is using a dance program in Mexico to help people on the fringes of society gain self-confidence and find jobs, or develop their own social projects. Nicaragua’s Flavio Bianchini helps equip communities and grassroots organizations to measure the harmful consequences of mining and other resource extraction efforts— data that can be used to bring lawsuits in cases of environmental degradation. El Salvador’s Julio Cesar Canizales, who lost his sight just before turning 24, helps the blind to develop job skills while pressing for legal changes to provide more social and economic opportunities for them. American-born artist and papermaker Mark Callaghan is helping the Maya population of Yucatán, Mexico, to develop a communitybased papermaking project as a micro enterprise. “The fellows look at things differently,” Laborde said. Asked if they can make a dent in the wide array of social problems the world faces, he says, they can help, but only so much. “We need a lot more (of them),” Laborde confides. Laborde was director of community finance at Mexican micro-lender FinComún, followed

The fellows look at things differently since 2006 and is also co-director for Latin America. Founded in 1980 by American social entrepreneur Bill Drayton, Ashoka identifies and invests in social entrepreneurs in 70 countries. It has grown into a global nonprofit organization with 3,000 social entrepreneurs as fellows; the third-largest concentration of fellows is in Mexico, after India and Brazil. The mission of the Arlington, Virginiabased nonprofit is to support entrepreneurs working to tackle problems in a way that produces social benefits, either through financial support, professional backing, or access to a global network of people and organizations that can help. Of the fellows, 200 are in Costa Rica, El Salvador, Guatemala, Mexico and Nicaragua. Programs range from promoting volunteerism

LATIN TRADE NOVEMBER-DECEMBER 2012

by a stint implementing sustainable, fair-trade coffee production in Mexico. He then ran ProMujer México, a nonprofit helping women pull themselves out of poverty through financial literacy, low-cost healthcare and microloans. Looking back, Laborde said his experience has taught him that there is “a continual need for... innovation so that you can find new ways to make more (of an) impact.” As an example, he cites bringing companies together to help finance small coffee cooperatives that otherwise might go bankrupt. After joining Ashoka, Laborde set out to rustle up local partners to finance an expansion drive. His division now gets 100 percent of its financing from within Latin America, compared with 5 percent before he took the job. Donors include Mexico City-based Compartamos Banco, the largest microfinance bank in Latin America, Brazilian cosmetics maker Natura, Danone, UBS, Santander, Walmart and Google. Another task, he said, was to identify programs that can help Ashoka reach more people. “We want to reach hundreds of thousands” of people, who could potentially become social entrepreneurs, he said. Ashoka also is pairing executives with social entrepreneurs on social causes. The aim, Laborde said, is to transform business leaders into “people of change” so that corporate responsibility becomes a core value of their businesses. Charles Newbery reported from Buenos Aires

PHOTO: COURTESY OF ASHOKA; ISTOCK PHOTOS

BY CHARLES NEWBERY

HUMAN RESOURCES AND DEMOGRAPHICS

LUCÍA

HERRERA PRESIDENT OF PANTALEÓN FOUNDATION

BY SANTIAGO GUTIÉRREZ

tudents at the Wilfrido Campos Poveda school, in Choluteca, Honduras, used to have no option but to have their lessons outdoors. It wasn’t until this year that they could study in classrooms with roofs, thanks to the work of the Pantaleón Foundation. The Foundation is one of the best examples of a corporate initiative aimed at changing social action, both for their employees and the communities near where their production is based. Created in Guatemala in 1993, the Foundation was created by Grupo Pantaleón, one of Latin America’s largest producers of sugarcane, sugar and its derivatives. The company decided to make a contribution to the Foundation’s programs based on the production of its sugar mills, the president of the Foundation, Lucía Herrera, told Latin Trade. The organization has launched a threepronged course of action –in education, health and environment. The results have made major contributions in these areas to Guatemala, Nicaragua and Honduras over the last 20 years. One of the most interesting projects is the provision of literacy skills and primary education for cane-cutters who have been with the company for at least six months during the sugarcane harvest. The cane-cutters attend school within the sugar refinery and are free to continue their studies within their communities. Several of those who have finished

the program have been promoted; others go on to study further, said Lucía Herrera. The Foundation has also established scholarship and student credit programs for those who finish primary education and wish to continue their studies. Some who have taken part in the primary education program are now studying in universities, Herrera added. According to experts in the field, this is something of a miracle in Latin America, where many people find education to be a major roadblock against their

series of programs aimed at children under six years of age. Over the years, the importance of education for this age group has been widely recognized throughout the region. As a result, educational programs for young children have been launched. This year, a daycare center service was opened for employees’ children who are aged under six, and will then be given the opportunity to study at the organization’s own primary school. The Foundation’s work has been internationally recognized, as has Grupo Pantaleón’s initiative in launching it. In 2007, the group was named Best Corporate Citizen by the Organization of American States for its “Visionary Schools” education project, which promotes values such as democracy and tolerance. In 2008, Guatemala’s Corporate Social Responsibility Action Center conducted a survey among 68 companies. Pantaleón was consistently among the top five in seven areas of social responsibility: governability, staff, environment, providers, marketing, communities and public policies. The Foundation has worked extensively across the three countries where it operates, and has already begun to export its model to others that have seen the results. The work of Lucía Herrera is an example of how corporate action can help shape a continent. Santiago Gutiérrez reported from Bogotá

LATIN TRADE NOVEMBER-DECEMBER 2012

hopes to achieve social and financial stability. Another interesting project is the vocational studies program. In Nicaragua, the Pantaleón Educational Center offers vocational high school courses to employees’ children and people who live near the company’s production plants. They can take courses in car mechanics, machine operation, welding, turning machines or, in the case of women, become sugar specialists. This training is obviously good for the company, although it has also proven beneficial for other sugar refineries and industries in the region. “We have raised the academic standard of staff in this area”, said Lucía Herrera. The Foundation is constantly developing its programs. Having improved the basic education of its employees, this year it launched a

PHOTO: COURTESY OF F UNDACIÓN PANTALEÓN

Cane-cutters smash roadblocks to social mobility through education.

LATIN AMERICAN TECHNOLOGY TO THE WORLD

Claudio

MURUZÁBAL CEO, Neoris

BY JOSEPH A. MANN, JR.

LATIN TRADE NOVEMBER-DECEMBER 2012

“ This is the only industry where supply is always in high demand because of talent. intelligence firm. According to Neoris’ global report for 2012, practical visionaries develop “the art of being functional, grounded, reliable and realistic, yet possessing the foresight, drive and innovation to constantly convert aspirations into realities. At Neoris,” it continues, “we partner with our clients.” Another innovation was to embrace “nearsourcing” as an alternative to help centers based half-way around the globe. Muruzábal’s strategy involved establishing centers for IT services and software development in Argentina, Mexico, Hungary and Spain. These centers offered alternative solutions to clients that found disadvantages with outsourcing firms in India and the Philippines. Neoris also partners with a wide range of technology companies to provide the best options for its clients. In Brazil, Neoris

partnered with SAP, the German software company, to assist Usiminas, a major Brazilian steel producer, to develop and implement a system of monitoring and controlling all aspects of a steel mill. Neoris worked closely with the steel producer to understand how its complex plant worked and what the company wanted to achieve, while SAP developed software suited to the client.Looking ahead. Muruzabal said that attracting talent is one of the biggest challenges for his company. “This is the only industry where supply is always behind demand because of talent,” he said. “It’s what keeps you awake at night.” But, he added, Neoris is “blessed” with access to engineers and people with business and language skills throughout Latin America and the Caribbean. Joseph A. Mann, Jr. reported from Miami

PHOTO: COURTESY OF NEORIS

t Neoris, innovation means adopting an uncommon approach to IT consulting: working alongside clients in and outside their companies. Neoris’ strategy, according to company CEO Claudio Muruzábal, is to combine two elements – the practical and the visionary. “This is not just a nice marketing statement,” said Muruzábal, who has led Neoris since 2004. “The visionary always focuses on new ideas, technology and different ways of doing things. And we are practical. We’re a lean company, easy to do business with. We have a lot of visibility, we engage with our clients, get close to them and make decisions with them,” he said The approach may have been the key to success for this young company that in little more than 10 years evolved from being the IT branch of Mexican cement giant Cemex to one of the fastest growing business and IT consulting companies in the world. In 2000, the company separated from CEMEX, still its majority shareholder, and began working on its own. The company did consulting work in Mexico, then found clients in other countries in Latin America, as well as the United States, Europe, the Middle East, Africa and India. “We grew mostly by word of mouth,” Muruzábal said of the Miami-based business, which boasts more than 3,500 employees and 20 offices worldwide. “Industry notices companies that can get the work done.” Neoris is the largest IT consulting and systems integration company in Mexico and the second largest in Latin America, according to IDC (International Data Corp.), the worldwide IT and telecommunications market

LATIN AMERICAN TECHNOLOGY TO THE WORLD

BLANCA

TREVIÑO

CEO SOFTTEK

BY NANCY IBARRA

he woman has crisscrossed borders throughout the world with a technology company that boasts a worldwide staff of 7,000. But at the same time she modestly states that sharing the company was Softtek’s highest-yielding innovation. The algorithm is simple for CEO Blanca Treviño, the much-admired native of Monterrey, Mexico: “When we started the company we decided to share it. We were never open to receiving investment funds or selling it, only bringing in and nourishing talent. We said: join us and the company is partly yours. You too are building your dream.” That’s how Softtek, an information technology (IT) service provider, built a team of talented engineers who have helped the company to conquer markets that it hadn’t dreamed of when it was founded 30 years ago. “I think if we were to talk about an innovation model that enables us to be where we are as an organization, we undoubtedly would have to talk about our culture, our organizational structure and stock participation,” Treviño says. She doesn’t hide her enthusiasm for being part of an industry that she sees as fascinating and challenging. Talking about how the sector and the company she directs have evolved over the last 20 years, she says, “Just look

at the computers of that time. Today you have an iPad or a Smartphone. All the potential you have in these little devices was unimaginable before.” Not to mention online banking, a sector in which Softtek has played an active role. How does Blanca Treviño imagine technology in 20 years’ time? “I just expect it will be something that I can’t even imagine today.” Touché. What she can imagine is the future of the company she has directed now for more than 25 years: “I expect that Softtek will continue to be an important player in all of the industries it’s in, and will still be delivering value to the companies in these industries no matter what the technology of the day might be.” She emphasizes that Softtek is a global player hungry for challenges. So speaks the Monterrey native who led Softtek as it became Latin America’s leading IT company. In a telling detail, at each company anniversary, she invites its collaborators to celebrate the coming year and not the one just ended. What’s important is what comes next. Today Treviño is one of Latin America’s most celebrated businesswomen, but she never forgets the journey that positioned the company in the North American marketplace. “It was all an adventure, that a Latin American company could become a player in this sector,” she recalls. “There were companies that asked: ‘Will you use technology?’ They didn’t ask if you’d develop it, they asked if you’d use it.” Then came her Near Shore success, a system that revolutionized outsourcing services by offering them from countries close to the target market. What challenges a company so successful and thriving, then? “Making sure we have the best talent: attracting it, keeping it, and developing it.” The Softtek CEO has bet on linking up with universities, working with them to structure study plans that closely replicate the real world of industry, while also opening the company’s doors to senior students with the aim of “enamoring” them with the sector and, of course, the company. “Just as we have a value proposal for the customer, we have a value proposal for this human capital, so that they’ll say: ‘I want to be in Softtek,’” she says. Treviño says each night she notes to herself: “Be aware of the risk. Your whole team is going home, as if it were your machinery. What are you going to do so they’ll want to be with you tomorrow morning?” The company has 10 percent annual staff turnover, while at the same time it must grow by 20 percent. Even as she cultivates and attracts this human capital, Treviño could also be thinking about the inorganic growth that comes with acquisitions, as a means of expanding into new markets and industry sectors. Finding the economic resources is not the problem, but rather finding the right opportunity and choosing assertively, especially since she operates in an industry that changes so quickly. There’s no doubt that Blanca Treviño already has some acquisition prospects in her sights. Nancy Ibarra reported from Monterrey, Mexico

LATIN TRADE NOVEMBER-DECEMBER 2012

PHOTO: COURTESY OF SOF TTEK

“There were companies that asked, ‘will you use technology?’ they didn’t ask if you’d develop it.”

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THE SECRET BEHIND THE MIRACLE

As Peru’s economy began to open up, the banking sector was transformed. State-run banks were privatized and foreign financial institutions set up shop. Competition heated up. Banco de Crédito’s first move was to bring in a new set of managers, many of whom had international banking experience. “We began transforming the bank to be more competitive,” said Bayly, one of the new managers at the time. “What had made us successful in the past was clearly not what was going to make us successful in the future.” One of Bayly’s early positions at Banco de Crédito was to run the

New retail focus features mom-and-pop shops.

WALTER BAYLY

LLONA

CEO Banco de Crédito del Perú BY RYAN DUBE

PHOTO: COURTESY OF BCP

eru was in a tough spot 20 years ago. A violent insurgency by leftist rebels was threatening to topple the government, while the economy was coming out of a long stretch of hyperinflation that had wiped out the savings of local residents. Today, much has changed in the Andean country. It’s been one of Latin America’s fastest growing economies in recent years, helping millions of people escape poverty. Walter Bayly, the CEO of Banco de Crédito del Perú, the largest bank in the country, credits the return of political stability and government reforms in the 1990s for the turnaround. After living abroad for 13 years, Bayly returned to Peru in 1993, a year after the capture of Abimael Guzmán, the leader of the Shining Path insurgency. “One of the key elements that triggered my decision to return was the fact that terrorism was starting to come under control,” Bayly says. “It was a country after war. The country as a whole, I would say, had practically collapsed,” Bayly adds, remembering his first impressions of Peru after his return. “It was still a moment in time in which many of us Peruvians questioned whether Peru was viable.”

LATIN TRADE NOVEMBER-DECEMBER 2012

bank’s offices outside of Lima, a challenging task in Peru, since communication between vastly diverse regions could be patchy. To stay on top of local developments, Bayly formed relationships with community leaders who provided on-the-ground insight. “I formed important relationships with maybe 20 or 30 important business men in their own cities or regions and that is something that has remained over many years,” he said. After years of focusing on wholesale banking, Banco de Crédito’s new managers refocused the firm’s activities on retail banking, betting that continued economic growth would increase demand for consumer credit. That decision marked a major shift in Banco de Crédito. In the early 1990s, about 10 percent to 20 percent of the bank’s business came from retail banking, while today it accounts for more than 50 percent. Although the bank was initially focused on high-end retail business, for the last several years it has worked to increase the number of clients from low-income areas that have traditionally lacked access to banking services. This is part of a broader effort in the sector over the last few years to increase banking participation in Peru, which has one of the lowest participation rates in Latin America. Within this framework, one of Banco de Crédito’s most important innovations during the past 20 years has been to introduce ‘agencies’ in Peru— stripped down banking stations at mom-andpop shops, pharmacies and other small stores. The agencies offer fewer services than branches, but they are less expensive to operate. “They are used extensively and it is a relatively inexpensive way to increase our coverage and to reach places where branches or even an ATM is not profitable,” Bayly says. Bayly says technology will play a key role in growing service in remote and isolated Andean towns and jungle communities. “We are extremely focused on how technology can help us widen our reach,” he says. For example, mobile banking is expected to take off in the next few years in Peru. Ryan Dube reported from Lima

THE SECRET BEHIND THE MIRACLE

From Panama to Petrobras

PHOTO: COURTESY OF GE

technology in lighting, energy, health, jet engines, trains, manufacturing, nanotechnology and other areas. In Latin America, Vásquez said, GE is developing new technologies for jet engines, the oil and natural gas industry, environmental improvements, as well as energy production from biomass and other sources, to name a few. The company today has about 20,000 employees in the region. “We have a technology center in Querétaro (Mexico) that is working on new technology for jet engines,” Vásquez said. This part of Mexico has become an important aerospace manufacturing site, with companies such as Embraer, Bombardier, Hawker Beechcraft, Gulfstream Aerospace, Textron and Honeywell also operating there.

Ricaurte

VÁSQUEZ VP of government affairs and public policy for GE Latin America BY JOSEPH A. MANN, JR.

has been operating in Latin America for 115 years, having disembarked in the region 19 years after opening its doors in the United States, under the banner of Edison Electric Light Co. One sign of GE’s major innovative impact on the region is visible even today at the Panama Canal, said Ricaurte (Catín) Vásquez, vice president of government affairs and public policy for GE Latin America. GE designed and built the massive electro-mechanical control system that has opened and closed the Panama Canal locks since the canal was inaugurated in 1914. Even though the control system has been upgraded over the years, Vásquez noted, “You can still see the original GE logo in the canal control room.” GE, which has about 36,000 “technologists” in its global workforce, has been a world leader in developing innovative

In Latin America, GE is developing new technologies for jet engines, the oil and natural gas industry, environmental improvements and energy production from biomass. GE also is investing $100 million in a new research center in Rio de Janeiro. The multi-disciplinary facility, which will employ several hundred specialists when fully operational, is developing new technologies in biofuels, systems integration, process control and decision-making solutions for the oil and gas, aviation, transportation and electric energy industries. “A major goal will be to support Petrobras,” Vásquez said, “but the new technologies developed will be used throughout the region and worldwide.” GE invests about 5 percent of its revenues in R&D globally, Vásquez noted, with a focus on environmentally sound products under the concept of “ecomagination.” “Research is becoming very collaborative. By the time we have a product that goes to market– for example a stethoscope with a camera and a screen– it has been developed with collaboration from all over the world.” And emerging countries are increasingly playing a role in this process. Joseph A. Mann, Jr. reported from Miami

NOVEMBER-DECEMBER 2012 LATIN TRADE

THE SECRET BEHIND THE MIRACLE

AMORIM Defense Minister of Brazil

BY TEREZA CRUVINEL

elso Amorim, the current Brazilian defense minister who served as foreign minister during the eight years of the Luiz Inácio Lula da Silva government, brought innovative policies to each of the areas under his management. Now, his challenge is to bring in a national and regional security policy that’s consistent with the ideal of South American integration. Amorim, who won the Bravo Award in 2010 in the category of “Innovative Leader of the Year,” spoke to Latin Trade about the challenges that lie ahead.

Latin Trade was launched 20 years ago. How do you see the regional political panorama of that time when you look back today? Twenty years ago the trend toward democ-

LATIN TRADE NOVEMBER-DECEMBER 2012

racy was just getting underway. Local economies were facing monetary instability, and the rich were feeling vulnerable. Mercosur was taking its first steps and was being looked upon with skepticism. It has faced its problems and freed itself from the threat of the Free Trade Area of the Americas (FTAA), and now has just gained an important new partner: Venezuela. Why do you think the much-criticized incorporation of Venezuela into Mercosur is important? In addition to providing opportunities for trade, the arrival of this new partner reduces asymmetries. Before, there were two large economies, Brazil and Argentina, and two small ones, Paraguay and Uruguay. Now there is a middleweight in the balance, and this will bring more equilibrium to the bloc, strength-

ening continental integration. What were your work guidelines when you were foreign minister? The priority was to strengthen Mercosur, and efforts towards achieving integration; south-south relations, including Africa; and the search for new markets and partners in the international arena, with a view toward a more benign multi-polarity. Within the regional plan, we achieved extraordinary results that benefitted all countries, culminating with the creation of the Union of South American Nations (Unasur). I think this success came about mainly as a result of the maturing of an idea: that integration must focus on South America and not on Latin America. This hasn’t affected the concept of Latin American unity? We limited the process to the geography of what was possible, and this was imposed by reality. This doesn’t mean relations with Central America and the Caribbean no longer were important. They still are, but we must recognize that the economies of the Caribbean and Mexico are subject to a huge influence from the North, which of course is also natural, beyond barriers of a physical or cultural nature. Was breaking off the FTAA negotiations with the United States a good decision? Without a doubt. I was sharply criticized at the time, but now the critics can see that it was the right decision. If we had signed the agreement, it would have inhibited economic growth and we would not have obtained such positive results in the integration process. (NB: Over the last few years local economies have taken off and intra-regional trade has grown by 62 percent. Brazilian trade with its neighbors has quadrupled. Trade between the region and the rest of the world has doubled, with the trade surplus growing from $73 billion to $110 billion between 2010 and 2011–an increase of 50.6 percent.) Mercosur has spent 20 years putting itself together and it still has problems. Doesn’t continental integration require a much longer time to mature? Mercosur, with all its strengths and weak-

PHOTO: COURTESY OF MINISTRY OF DEFENSE, BRAZIL

CELSO

THE SECRET BEHIND THE MIRACLE

nesses, is set up as a customs union. Unasur isn’t a customs union. It’s based on free trade agreements. Thus, the process of integration moves at two different speeds. We will have Mercosur in front, with a more advanced integration, and we will have Unasur going forward at a slower pace. But in the medium term, I expect the two processes will converge. You are a diplomat, and now a leader in the military sector. How do you reconcile a strong defense policy with a push for regional integration? We are strengthening our national defense policy in close coordination with the integration project. In reality, we are encouraging a regional defense policy with the support of Unasur’s South American Council. How is this integration being built? We are trying, initially, to encourage the region-wide emergence of a strong industrial base in this (military) sector, which would allow purchases and exchanges among neighboring countries. Today this industrial sector is very fragile in the region, even in Brazil and Argentina, where it is most advanced, though we are starting to cooperate. For example? Brazil has sold Super Tucano military aircraft to Ecuador and has bought some big military boats from Colombia for patrolling the coast and the large rivers. Argentina provides parts for the new Embraer cargo aircraft. Peru is interested in military aircraft and can provide ships for the Brazilian Navy. This has barely started, but it was in this way, building integrated solutions, that we made other advances in the region. How do you think the international crisis will affect the region? I’m an optimist. It might seem everyone is saying the same thing, but I see this crisis as an opportunity for new advances, especially for increasing regional trade, within the scope of Mercosur and all of South America. I’m not talking about returning to import substitution or closing the economy… We must not, nor can we, isolate ourselves in South America. But we must protect each other. The sea is not for fish that swim off on their own.” Tereza Cruvinel reported from Brasilia

FIRST CHOICE BANK

for Brazilians and South Americans around the world BY DAVID HASKEL

“W

e’re following the leader wherever he may go.” This seems to be the dictum of Banco do Brasil’s foreign operations. Asked why the largest bank in Latin America and one of the oldest in the world has chosen to launch its apparently haphazard expansion in next-door Argentina, managing director of International Business and Affairs Admilson Monteiro does not hesitate: “We haven’t. Our customers have. We were naturally following them.” Argentina is not only South America’s second largest economy after Brazil, it is also Brazil’s partner in the Mercosur trading bloc. In this case, the leaders were 400 Brazilian companies that have set up shop in Argentina. This same principle also has led BB, founded in 1808, to target other regional nations like Chile, Colombia and Peru. “Our international strategy commitment is based on three drivers: the existence of Brazilian communities living

abroad, the growing presence of Brazilian companies in other countries, and Brazil’s foreign trade ﬂows,” Monteiro explains. “We aim to be recognized as the worldwide, ﬁrst-choice bank for Brazilians and South Americans.” These guidelines have led the state-run bank to launch operations in 24 countries and counting.

The staterun bank has launched operations in 24 countries and counting. An open-minded approach helps it target the right niches in each country: • In Colombia, a ﬂourishing capital market means BB is now considering establishing a new unit or maybe acquiring a local bank to tackle this business arena. • In South America’s rising star Chile, the focus is on a thriving private pension

funds system that is luring foreign asset managers from around the world. • In fast-growing Peru, opportunities abound, from a strong inﬂow of investments generating all sorts of ventures, to a robust export drive, to remittances from Peruvians working in Japan. Seven BB branches in the Land of the Rising Sun mean Peruvian workers never have to go far to send their money home to their families. Back to Argentina, in 2010 BB acquired Banco Patagonia, Argentina’s eighth largest bank, with more than 180 branches, 500 ATMs, and 800,000 retail and wholesale clients, half of them in the public sector. Market orientation, open-mindedness, ﬂexible and innovative expansion strategies… not a bad repertoire for a public institution established in the early 19th century by Portuguese colonial authorities. David Haskel reported from Buenos Aires

NOVEMBER-DECEMBER 2012 LATIN TRADE

THE SECRET BEHIND THE MIRACLE

Pedro Pablo

KUCZYNSKI (Former Economy Minister of Peru)

BY LISA K WING

enowned Peruvian economist Pedro Pablo Kuczynski likes to keep things simple. This approach, which is even applied to his name –he is known simply as PPK– and his generally laid back attitude, have helped carry him through fifty-plus working years wearing numerous hats. A prominent international economist and pioneering emerging markets investor, his achievements also include presidential candidate, avid flautist and piano player, and philanthropist. “I have always followed the same general principles: One, try to learn something from whatever you’re doing. You’ve got to move on and move up, you can’t stay stuck. Two, be very simple and practical. And three, work with a small team. Don’t empire-build and do enormous schemes that don’t work,” says PPK, 74, in his distinctive unhurried speech. He brought his small-team philosophy to his 10-year stint at First Boston Corporation (today Credit Suisse) in New York City, beginning in 1982. “When I was on Wall Street, I had a little team of maybe 10 people, which was considered tiny by Wall Street standards, but I’d say we produced some pretty important results,” says PPK. “I opened up emerging markets (at the bank). I started out in South East Asia when very few people were going there. We worked hard on China, Taiwan,

LATIN TRADE NOVEMBER-DECEMBER 2012

Korea, and Spain, which hadn’t really been discovered until then.” His lengthy CV also lists top jobs in private equity, mining and hedge fund management. However, PPK’s involvement in Peru’s political scene –where he is known as “El Gringo” because of his U.S. citizenship– is what has garnered him most attention in recent years. He ran for president in Peru’s 2011 elections, arriving late to the race but quickly gaining ground. Despite an enthusiastic, well-strategized campaign –his campaign mascot was “PPKuy” in reference to the “cuy,” an Andean guinea pig native to Peru– he came in third place, losing to current President Ollanta Humala. (During the first electoral round PPK captured 19 percent of the vote to Ollanta’s 32 percent and Keiko Fujimori’s 24 percent. He did not advance to the run-off.) It was by no means his first run at public service. In 1967, PPK began working for Peru’s Central Bank. He returned to Peru 13 years later to serve as Minister of Energy and Mines under President Fernando Belaunde, and then served as Minister of Economy and Finance and as Prime Minister during President Alejando Toledo’s administration (2001-2006). “Because Peru is not such a big country, we were able to actually produce results, particularly from 2001 to 2006. We stabilized the economy, Enrique Garcia reduced debt, privatized, opened up trade, reached an agreement with U.S. on free trade, and so on. All of this resulted in the fastest growing economy in Latin America, along with Panama, and probably also the healthiest,” he notes. Although PPK does not consider himself an innovator or even a politician, most business and political leaders in Peru concur that he has been a driving force behind opening markets, bringing sound management to his country’s budget and fiscal accounts, and developing Peru’s oil, gas and electricity sectors. And while PPK says, “I am not in the legacy business,” he’s clearly proud of founding the Agua Limpia non-governmental organization in 2007. The NGO has helped provide about 350,000 people with clean water. “Peru has 10 million people –and Lima 1.5 million people– without water in their houses. In (the jungle town of ) Iquitos, where I lived as a kid, there are many, many people without water even though it’s on the edge of the world’s biggest river. So access to clean water is an issue I feel very strongly about,” says PPK, whose German-born father, a prominent tropical disease specialist, arrived in Peru in 1936 to set up public health services in the jungle region. Lisa K. Wing reported from Lima

PHOTO: COURTESY OF TRG MANAGEMENT PERU

We stabilized the economy, reduced debt, privatized and opened up trade. All of this resulted in Peru being the fastest growing economy in Latin America.

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amoa, Benin, the Comoros, the Maldives, the Kiribati archipelago, Tajikistan … places that are very distant to Latin America. But all of them are covered by the Assist-Card BY ÉLIDA BUSTOS travel care company, a multilatin of European origin that grew in Argentina’s Pampas. The company recently celebrated its 40th birthday and Alexia Keglevich, chief executive and the founder’s daughter, explained that in those days “there was no concept of travel care in Latin America”. Nor were there Latin American travelers who ventured into exotic destinations. Well-off Latin Americans traveled to Europe and the United States; few even traveled to the rest of Latin America. Although founded in Geneva, the company moved within

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LATIN TRADE NOVEMBER-DECEMBER 2012

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months to Buenos Aires and grew within the region while generating 65 percent of its revenues in the Argentine market. Expansion was steadily. Then two crises in quick succession shook up the company’s structure in 2001. The September 11 attack on New York’s Twin Towers paralyzed the international travel business. “All of a sudden, everything was up in the air,” said Keglevich. “The company was stopped in its tracks. The world was paralyzed.” It took three months for business to stage the beginnings of a return. Just when the company was getting back on track, Argentina’s economy collapsed and Assist-Card had to open its mind and get ready to look for more business in the region and the rest of the world. “There was a watershed. Assist-Card had to change its mentality,” she added. Just as these two crises hit, the Internet made its debut in the world of business. And it turned out to be an extraordinary tool to contribute for Assist-Card’s makeover. The Internet changed all of the company’s operations. It also turned the key to a door that opened up to exponential growth. “Technology was what changed Assist-Card,” said Keglevich. Now, the company has seven million clients of which 40 percent are corporate. It provides assistance in more than 100 countries. Élida Bustos reported from Buenos Aires

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Juan

BENAVIDES Member of the Board of Banco Falabella

BY JOSEPH A. MANN, JR.

he essence of retail business– supplying customers with a wide mix of products, good prices and good service– has not changed, said Juan Benavides, Member of the Board of Banco Falabella, the ﬁnancial arm of large regional department store Falabella. “What is different is the rate of change,” added

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Benavides, who oversaw the group’s rapid expanwhere it has offices that identify and purchase new sion over the last several years. “What used to products. “By the time a product hits the stores, happen in a year in retail now can happen in weeks it’s already history,” he added. Productivity is still or days. Fashion used to change on a seasonal very low in our countries, Benavides noted, and to basis, but today it changes every “Fashion used to change on a seasonal 15 days.” basis, but today it changes every 15 days” Benavides, a Chilean former CEO of Falabella department store, noted that the compete effectively, the company must invest in ability of consumers to find and compare products training and in finding the right people. online, and see reviews of what they are planning Benavides is an excellent example of how an to buy, represents “a gigantic change.” executive uses innovation to grow and strengthen Whereas stores purchase products and his company and compete effectively in a demandput them on display on their shelves, today’s ing sector. customer can also buy directly online, whether With extensive experience in banking and fithey’re interested in national products or even nance, Benavides started his career at Falabella imported items. At Falabella, only about 5 as head of its credit card, CMR Chile. Originally, percent of customers buy online, but this is the card could be used only in Falabella stores, but changing rapidly and could reach 10 to 15 percent Benavides extended its reach so that cardholders in coming years. Falabella and Sodimac home could use it at other outlets, thus generating specimprovement centers have operations in Chile, tacular growth in the group’s credit business. He Argentina, Peru and Colombia. To keep up, also was in charge of setting up the group’s retail company executives and store managers “have to bank, Banco Falabella, plus new businesses in be very aware of changes in consumer taste and travel and insurance. “Innovation is part of what we demand,” Benavides said. Falabella buys from do every day,” the CEO said. Joseph A. Mann, Jr. Reported from Miami Latin America as well as from China and India,

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NOVEMBER-DECEMBER 2012 LATIN TRADE

L A T I N T R A D E S Y M P O S I U M & T H E 1 8 TH A N N U A L B R A V O B U S I N E S S A W A R D S

THE

and the Every year Latin Trade Group gathers the Latin American and Caribbean most influential business and government leaders during the Latin Trade Symposium, a one day forum of discussion focusing on Building the New Latin America preceding the annual BRAVO Business Awards. The signature event has recognized excellence and leadership in government, business and social contributions in the region during the past 18 years.

Welcome reception

PHOTOGRAPHS BY ALEX GORT PRODUCTIONS

As in previous years, Latin Trade Group hosted a private welcome reception for the BRAVO Business Award honorees, past winners and special guests. The event was held at the Intercontinental Hotel in Miami. 1. Alia Orane, daughter of Douglas Orane, Douglas Orane, Non-Executive Chairman, GraceKennedy Ltd., Zahra Orane, daughter of Douglas Orane; 2. Andrés Otero, Market Leader Latin America, Kroll Advisory Solutions,;Robert Brenner, Senior Managing Director and Practice Leader, Kroll Advisory Solutions; Recaredo Romero, Colombia Country Manager, Kroll Advisor Solutions; 3. Juan Benavides, CEO, Falabella, María Angélica Jaramillo, Guest of Juan Benavides; Julio Velarde, Governor, Central Bank of Peru; 4. Pamela Cordova, Copa Airlines, Sales Manager; Patricia Roquebert, Copa Airlines Marketing Regional manager; Daniel Verón, Managing Director, Advertising International; María Cristina Restrepo, Sales Representative Colombia and Panama, Latin Trade Group; 5. Mario Pinasco, Executive President, Crowne Plaza Lima; Margot Pinasco, Executive Director, Crowne Plaza Lima, Clay Sawyer, Director of Marketing Latin America & Caribbean, InterContinental Hotels Group; 6. Andrés Gluski, President and CEO, The AES Corporation, Scarlett Álvarez, Vice President Chief Stakeholder, The AES Corporation; Nelson Ortiz, President, Galisteo Investments; Guillermo Zuloaga, President, Globovisión. NOVEMBER-DECEMBER 2012 LATIN TRADE

Latin Trade Symposium The annual Latin Trade Symposium begins with the private CEO Roundtable that brings together the presidents of some of the most important Latin American companies. The Symposium has become the venue par excellence through which to view regional problems and opportunities through the eyes of business and government leaders. This year the Roundtable discussed the avenues that can lead to the achievement of fully sustainable enterprises. The 2012 Latin Trade Symposium posed challenging issues for discussion on Building of the New Latin America. A first plenary panel addressed the question of how to become a winning multilatina in a new commercial landscape and in a highly competitive environment. A second panel identified ways to leverage the impact of global power shifts on Latin American growth. They underlined the changes required in leadership and the acquisition of corporate knowledge in order to profit from the new trends. In a mid-day keynote address Felipe Larraín, Chile’s Finance Minister, described the road that his country has followed in recent years to reach the goal of becoming Latin America’s first developed nation. The conference program was finalized with a lunch session that explored the future of governance in the region. The speakers discussed how the new political landscape and new political forces are changing the ways of doing business.

1. Attendees at the Latin Trade Symposium. 2. Luanne Zurlo, President and Founder, Worldfund; Jordi Soley Climent, Director General, Expresso Bibliográﬁco; 3. Jorge Becerra, Senior Partner and Managing Director, The Boston Consulting Group; 4. Damian Chan, International Director for the Americas, Singapore Economic Development Board; 5. Poul Hestbaek, Senior Vice President Caribbean and Latin America, Hamburg Sud; Mariela García, Hamburg Sud; Carlos José Fabri, Country Manager Caribbean and Latin America West Coast, Hamburg Sud; 6. Susan Segal, President and CEO, Americas Society/Council of the Americas; 7. Andrew Vesey, COO, The AES Corporation; 8. Richard Burns, Chairman, Latin Trade Group; Felipe Larraín, Minister of Finance, Chile; Jorge Rosenblut, President, Endesa Chile; Juan Benavides, CEO, Falabella; Juan Luis Nilo, Consul General of Chile.

LATIN TRADE NOVEMBER-DECEMBER 2012

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9. Fred Hochberg, Chairman and President, Ex-Im Bank; 10. Juan Pablo del Valle, Chairman of the Board, Mexichem SAB; 11. Enrique García, President and CEO, CAF - Banco de Desarrollo de América Latina; 12. Jerónimo Correa Braun, Senior Vice President, HSBC Private Bank; Jorge Escobar, Senior Vice President, HSBC Private Bank; 13. Felipe Larraín, Minister of Finance, Chile; 14. David Rothkopf, President and CEO, Garten Rothkopf; 15. Federico Restrepo Posada, EPM, Autopistas para la Prosperidad de Colombia; 16. Hans Hickler, CEO Asia Paciﬁc, Agility; Lorena García-Durán, Director South Florida, Ashoka; 17. Rosemary Winters, Executive Director, Latin Trade Group; José Tomás, President LATAM & Caribbean, Burger King; 18. Rob Steigerwald, COO Americas Southern Region, Marriott International; 19. José Luis Sánchez Castro, President Latin America North, SAS Institute; 20. Andrés Gluski, President and CEO, The AES Corporation; Gilberto Rivera, Vice President, Area Sales - Latin America Freight Forwarding, UTI; Nilda M. De Boyrie, Vice President and Branch Manager Latin America Center, Charles Schwab; 21. John Price, Contributing Editor, Latin Trade magazine; 22. Ferdinand Kurt, Regional CEO Americas, Panalpina. NOVEMBER-DECEMBER 2012 LATIN TRADE

The 18th annual BRAVO Business Awards ceremony The 2012 BRAVO Business Awards were received by an outstanding group of corporate and government leaders. Those recognized for excellence in business, government and social activities were Sebastián Piñera, President of Chile; Julio Velarde, President of the Central Bank of Peru; corporate presidents Juan Benavides of Falabella, David Bojanini of Grupo Sura, Raul Calfat of Votorantim, Andrés Gluski of AES, Alejandro Ramírez of Cinépolis, Carlos Slim Domit of Grupo Carso and Sanborns, and the social entrepreneur Douglas Orane. Al of the winners have a single trait in common: they brought dynamism to the growth of their countries, their companies and their projects. Sebastián Piñera and Julio Velarde deserve much of the credit for the economic success of their countries. This year’s distinguished honorees were represented by an outstanding group of corporate leaders that have set out on a path of internationalization that calls for higher levels of entrepreneurial sophistication. All have become true global players.

9 Latin Trade Symposium and 18TH Annual BRAVO Business Awards 1. Juan Benavides, CEO, Falabella; 2. Douglas Orane, Non-Executive Chairman, GraceKennedy Ltd.; 3. Alejandro Ramírez Magaña, CEO, Cinépolis; 4. Raúl Calfat, CEO, Votorantim; 5. Carlos Slim Domit, Chairman of the Board, Telmex, Grupo Carso, Grupo Sanborns, and CoChairman, América Móvil; 6. Andrés Gluski, President and CEO, The AES Corporation; 7. David Bojanini García, CEO, Grupo Sura; 8. Julio Velarde, Governor, Central Bank of Peru; 9. The winners of the 2012 BRAVO Awards. 88

LATIN TRADE NOVEMBER-DECEMBER 2012

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 18TH Annual BRAVO Business Awards Gala 10. Herman Bern, President, Bern Panama, Miriam Bern, wife of Herman Bern; 11. Alex Russell, Vice President Finance Latin America, Emerson Latin America; Juan Donoso, Strategic Planner Latin America, Emerson Latin America; Adriana Aristizábal, Guest of Anuar Barake; Anuar Barake, Vice President Latin America, Emerson Industrial Automation; Karina Bernoti, Guest of Alex Russell ; Lauren Donoso, Guest of Juan Donoso; 12. Ricaurte Vásquez, Vice President Government Affairs and Public Policies, General Electric; Amanda O’Mealley, Guest of Ricaurte Vásquez; 13. Guillermo Cortina, Managing Director Latin America, Bank of America; Astrid Carati, Guest of Guillermo Cortina; Carlos Ibáñez, Managing Director, Bank of America; Gerardo Obregón, Director, Bank of America; 14. Pamela Córdova, Copa Airlines, Sales Manager; Marvin Santos, Sales Executive, Copa Airlines; 15. Claudio Fiorillo, Partner and Human Capital Lead for Argentina, Deloitte; Michel Chancy, Secretary of State for Animal Production in the Ministry of Agriculture, Haiti; 16. Soraya Ramírez, Marketing Manager, ARES Distributors; Juan David Ariza, Vice President Latin America, ARES Distributors; Reyna Mora, Trade Marketing Manager, ARES Distributors; 17. Dolores Figueras Iraola, wife of Fernando Iraola; Fernando Iraola, CEO Latin America and Mexico, Citi Group; Paloma Blanco, wife of José Antonio Blanco; José Antonio Blanco, CEO, Citi Peru.

NOVEMBER-DECEMBER 2012 LATIN TRADE

6 18TH Annual BRAVO Business Awards Gala 1. Nelson Telemaco, Vice President Client Management Group, AIG; Mercedes Fernández, Business Development Manager, Latin Trade Group; Enrique García, President and CEO, CAF -Banco de Desarrollo de América Latina; Elzbieta Pruszynska, President, Ice Branded Content; Jaime Cohen Szulc, President, Goodyear Latin America; Emilio Fortou, Regional Business Leader Global Commercial Expansion Team, Visa; Luisa Fortou, wife of Emilio Fortou; 2. Clay Sawyer, Director of Marketing Latin America & Caribbean, InterContinental Hotels Group; Paula Casás, Manager Marketing Programs Latin America & Caribbean, InterContinental Hotels Group; 3. Jorge Becerra, Senior Partner and Managing Director, The Boston Consulting Group; Sonia Dula, Managing Director Latin America Wealth Management, Merrill Lync; David Bojanini García, CEO, Grupo Sura; María Cristina Restrepo, Sales Representative Colombia and Panama, Latin Trade Group; 4. Juliana Miranda, guest of Paul Adan; Paul Adan, Vice President Development Caribbean and Latin America, Marriott International, Inc.; Cristina Vyaina, guest of Javier Marquina; Javier Marquina, Partner, SMM Property Advisors; 5. Enrique Ramírez Villalón, Cinépolis, Alejandro Ramírez Magaña, CEO, Cinépoli; Bernardo Martín del Campo, Cinépolis; 6. Fernando Sánchez, International Regional Manager Latin America, Charles Schwab; Diana Jaramillo, guest of Fernando Sánchez; Emile De Boyrie, guest of Nilda De Boyrie; Nilda De Boyrie, Vice President & Branch Manager Latin America, Charles Schwab.

LATIN TRADE NOVEMBER-DECEMBER 2012

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18TH Annual BRAVO Business Awards Gala 1. Francisco Aristeguieta, CEO, Citi Group; Felipe Larraín, Minister of Finance, Chile; Enrique García, President and CEO, CAF -Banco de Desarrollo de América Latina; 2. Joseph Audi, Chairman and CEO, Interaudi Bank; Bishop Georges Abiyounes, Guest of Joseph Audi; Carlos Slim Domit, Chairman of the Board, Telmex, Grupo Carso, Grupo Sanborns, and CoChairman, América Móvil; 3. Silvia Clarke, Senior Account Manager, Latin Trade Group; Mary Anne Young, Senior Vice President, Hamburg Sud; Jeffrey Young, Guest of Mary Anne Young; 4. Scarlett Álvarez, Vice President Chief Stakeholder, The AES Corporation; Brian Miller, Executive Vice President, General Counsel, The AES Corporation; Andrew Vesey, COO, The AES Corporation; Adriana Gluski, wife of Andrés Gluski; 5. Barbara Haar, Guest of Jerry Haar;Jerry Haar, Director, Professor and Research Fellow, FIU, College of Business; Florencia Jiménez Marcos, Managing Partner, Biscayne Bay Group; Xavier GonzálezSanfeliu, Managing Partner, Alsis Funds; Carmen González-Sanfeliu, Regional Vice President of Sales Latin America, Intelsat; 6. María Lourdes Gallo, Publisher, Latin Trade; Raúl Calfat, CEO, Votorantim; Katia Bouazza, Managing Director, HSBC.

LATIN TRADE NOVEMBER-DECEMBER 2012

HELP BRAZIL REDUCE ITS OVERALL RELIANCE ON FOREIGN IMPORTS WITH THE LAUNCH OF THE COUNTRY’S LARGEST PETROCHEMICAL OPERATION.

IT’S NEVER BEEN DONE

BEFORE

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