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DECISIONS: BRAVO BUSINESS AWARDS' 20TH ANNIVERSARY ISSUE
Public Pri vat eP
TWO DECADES OF
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INTERVIEWS WITH THE E CORPORA CORPORATE, POLITICAL EADERS W AND SOCIAL LEADERS WHO MADE THEM
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CELEBRATING ATING THE TH
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BRAVO BUSINESS AWARDS 20TH ANNIVERSARY CONTENTS
NOVEMBER/DECEMBER 2013 VOL. 21 No. 6
Editor’s Letter
Opinion
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12 The Contrarian 2014: Rising investor risk in South America
A new angle for a story
By John Price
The Scene
46
10 The number of Latin globals will triple before 2025 10 South-South trade on the rise
A different game for the region Columnist: Marcelo Bucheli
Events 77 BRAVO Business Awards 2013
Highlights from the Latin Trade Symposium and BRAVO Gala
FEATURES 14
BRAVO Feature: Decisions
30
that changed Latin America
Ricardo Gutiérrez Muñoz CEO, Grupo Empresarial Kaluz
Public Policy The man who forged his era
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32
Ricardo Lagos Escobar Former Chilean president
Multilatinas Carlos Slim Domit Grupo Carso and América Móvil
Alejandro Ramírez Magaña
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Juan Benavides Feliú Partner & CEO, Glasstech, former CEO, Falabella
Blanca Treviño 34
Marcelo Odebrecht CEO, Odebrecht
Lorenzo Mendoza Giménez 36
Enrique Cibié Bluth
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A game-changer of family enterprise Ricardo Obregón Trujillo Former CEO of Bavaria and Grupo Carvajal
Mauricio Botelho President, Mogno Consulting, former CEO, Embraer
The triple result Director of Masisa
A miracle made by engineers
28
Commitment to country and core business CEO, Empresas Polar
Lessons from the leaders
26
The value of having tough customers CEO, Softtek
The transformation of retail
24
Passage to India CEO, Cinépolis
How the Slim group decides
22
Vertical integration
40
Timeline: Trends in the expansion of the multilatinas
BRAVO BUSINESS AWARDS 20TH ANNIVERSARY CONTENTS
NOVEMBER/DECEMBER 2013 VOL. 21 No. 6
Multinationals The best product of the reforms
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Trade The architect of NAFTA
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Andrés Gluski CEO, AES Corporation A smarter planet
44
Herminio Blanco Former Chief Trade Negotiator, Mexico
“Latin America is a region divided in two”
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Bruno Di Leo Senior VP of Sales and Distribution, IBM 48
BRAVO Business Awards: List of past winners
José María Aznar Former Prime Minister of Spain
One voice for the South
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Celso Amorim Defense Minister of Brazil
Financial Sector How to build a megabank
53
69
Roberto Setúbal Founder of Banco Itaú The internationalization of banking
54
Chart: The signs of change
Social Multilatinas A social multilatina
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Albina Ruiz Ríos Founder and President, Ciudad Saludable
Luis Carlos Sarmiento Gutiérrez CEO, Grupo Aval
A distant mirror
72
Cashless payments
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Richard Hansen President, Foundation for Anthropological Research & Environmental Studies
Eduardo Eraña VP for Latin America and the Caribbean for Visa International A transformation in savings
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David Bojanini CEO, Grupo Sura
eements e Agr Trad
Political Risk
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Expansion: Another financial case
Public Pri vat eP
The Ri
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Enrique García CEO, CAF
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Web Find us online at www.latintrade.com
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Changes at the bank
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Luis Peña Kegel President, HSBC Mexico
64 Timeline: 20 years of politics
in Latin America
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CELEBRATING ATING THE TH
ANNIVERSARY OF THE
BRAVO BUSINESS AWARDS YOUR BUSINESS SOURCE FOR LATIN AMERICA » WWW.LATINTRADE.COM
NOVEMBER/DECEMBER 2013
Cover: 20th anniversary of the BRAVO Business Awards
BRAVO BUSINESS AWARDS 20TH ANNIVERSARY
EDITOR’S LETTER
A NEW ANGLE FOR A STORY
O
ver the past three months, I have had the marvelous privilege of speaking with several dozen of the most important businessmen and political leaders in Latin America. I would say that even after years of being in this position of mixing economics and business with information, it was the most interesting intellectual pilgrimage I have experienced in my life. Mexican businessmen, Chilean politicians, Brazilian directors, American environmental leaders, Colombian financiers, a succession of people who, one could easily say, have rewritten the history of the region, because many of them were key actors in some of the most important events of the last 20 years. The reason for all these conversations was the 20th anniversary of the BRAVO Business Awards that the magazine Latin Trade gives out, and that will be celebrated in 2014. As the articles show, all of those whom I interviewed have won this distinction at one time or another since its creation.
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LATIN TRADE NOVEMBER-DECEMBER 2013
This edition is, then, the result of those chats in which we tried to review how, or why, they made some of the most important decisions of the two previous decades. No doubt all the actions to which I refer have one characteristic in common. Because of them, in one way or another, Latin America is today a very different place from what it was in the ’80s. We at Latin Trade are very pleased that now we can tie these articles to the offices and cities where the strategies or business plans were forged. We hope that you will find there is enough information to better understand the dramatic change that is taking place in this region, and perhaps gain a sense of those that are going to happen in the years to come. And so, welcome to this excursion through the world of high-level decision-making in business and politics. To visit together those who, from the most diverse situations, have drawn the map of the entrepreneurial and political geography of Latin America.
ILLUSTRATION: © ISTOCKPHOTO.COM /WILDPIXEL
Santiago Gutiérrez, Executive Editor sgutierrez@latintrade.com
NOVEMBER-DECEMBER 2013 LATIN TRADE
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LATIN BUSINESS CHRONICLE
CEO Rosemary Winters EXECUTIVE DIRECTOR & PUBLISHER María Lourdes Gallo EXECUTIVE EDITOR Santiago Gutiérrez DEPUTY EDITOR Mark A. Keller ART & PRODUCTION DIRECTOR Manny Melo GRAPHIC DESIGNER Vincent Becchinelli
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CONTRIBUTING EDITORS Gabriela Calderón (research), Mark Ludwig COLUMNIST John Price CORRESPONDENTS Argentina: Élida Bustos, David Haskel, Charles Newbery • Brazil: Taylor Barnes (Rio de Janeiro), Vincent Bevins, Thierry Ogier, (São Paulo) • Chile: Gideon Long • China: Ruth Morris • Colombia: John Otis Mexico: Arturo Franco (Mexico D.F.), Nancy Ibarra (Monterrey) Peru: Lisa K. Wing, Ryan Dube Spain: Sergio Manaut • U.S.: Alejandra Labanca, Joseph Mann Jr. , David Ramírez, Álvaro Moreno, Jaime Mejía (Miami), Mark Chesnut (NY) • Uruguay: Diego Stewart • Venezuela: Peter Wilson TRANSLATION: Ken Emmond, Élida Bustos, Alejandra Labanca COPY EDITING: Millie Acebal Rousseau (English), Adriana Camacho, Élida Bustos (Spanish) MARKETING MARKETING MANAGER Gina Ortela EVENTS & CONFERENCES PROGRAMS & CONTENT ADVISOR Victoria Kenny PROGRAM MANAGERS Yndira Marín, Drew Westervelt EVENTS EXECUTIVE Ileana Cutié
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Latin Trade Group CHAIRMAN Richard Burns CHIEF OPERATING OFFICER Joanne Harras ACCOUNTS MANAGER Kathy Pollyea, kpollyea@manhattanmedia.com Latin Trade Group is a division of Miami Media, LLC, an affiliate of Isis Venture Partners Executive, Editorial, Circulation and Advertising offices are located at: 75 Valencia Avenue, Suite 1000, Coral Gables, Florida 33134-6135, USA. CUSTOMER SERVICE AND SUBSCRIPTIONS: Please visit www.latintrade.com to order online or call +1 (305) 749-0880. Latin Trade (ISSN 1087-0857, USPS 016715) is published bimonthly, with editions in English and Spanish, by Miami Media, LLC. All rights reserved. Reproduction in whole or part of any text, photograph or illustration without written permission of the publisher is strictly prohibited.
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BRAVO BUSINESS AWARDS 20TH ANNIVERSARY
THE SCENE
THE NUMBER OF LATIN GLOBALS WILL TRIPLE BY 2025
I
t has become increasingly obvious since the financial crisis that the emerging markets have acquired greater dynamism and greater prosperity. However, the vast majority of the world’s largest companies are still based in the developed economies. This situation is about to change, according to a new study by McKinsey Global Institute (MGI). It predicts that more than 45 percent of the Fortune Global 500 companies will be located in emerging markets by 2025, an unprecedented increase considering that in 2000 they accounted for just five percent of that group. The region of Latin America is currently headquarters of just four percent of the 8,000 companies in the world with revenues of more than $1 billion per year. However, the MGI study shows, for example, that the number of these companies based in São Paulo, home to 23 percent of Latin America’s foreign subsidiaries, could triple by 2025. The study shows that the number of Latin American companies to make the Fortune Global 500 list will grow from the current 10 to 34 in 2025.
EVOLUTION OF THE FORTUNE GLOBAL 500 By 2025, emerging regions are expected to be home to almost 230 companies in the Fortune Global 500, up from 85 in 2010.
Notes: 1 The Fortune Global 500 is an annual ranking of the top 500 companies worldwide by gross revenue in U.S. dollars. 2 Shares of emerging regions excluding China and Latin America combined until 2000. 3 Fortune Global 500 share in 2025 based on projected revenue shares of countries in 2025. Numbers may not add up due to rounding. Source: MGI CompanyScope; McKinsey Global Institute analysis.
SOUTH-SOUTH TRADE GROWS Integration Monitor 2013, a publication of INTrade, which is a system of information from the Inter-American Development Bank on trade and integration. The report also highlights new opportunities provided through South-South trade (between emerging economies). With respect to Latin America and SHARE OF SOUTH-SOUTH TRADE IN TOTAL EXPORTS the Caribbean, it concludes that alPercentages for selected Latin America and the Caribbean countries, 2012. though trade in this region with traditional trading partners from the North has indeed decreased in both volume and in value, regional trading among the emerging economies of the South has grown and has characteristics that are qualitatively different from trade with developed countries. The report also states that exports from Latin America to the South offer opportunities for more diversification and participation in manufactured products, a possibility that’s even more pronounced within the framework of intra-Latin American trade.
T
he structure of the world economy has changed substantially in recent years and continues to do so. This changing economic panorama has sparked a decade of evolving trade models, according to Trade and
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Source: IDB Integration and Trade Sector based on INTrade/DataINTAL, COMTRADE, and IMF DOTS.
LATIN TRADE NOVEMBER-DECEMBER 2013
BRAVO BUSINESS AWARDS 20TH ANNIVERSARY
RISING INVESTOR RISK IN SOUTH AMERICA
S
ince protests in Brazil took its leaders and the world by surprise in June 2013, many have wondered if the political frustrations of Latin America’s largest nation might soon spread elsewhere. The safe bet is yes. There are four worrisome trends at play in the region that together foretell a period of rising political risk. The commodity boom that has lifted every economy in South America over the last decade peaked in late 2012 and will continue a gradual decline over the next few years. China’s shift from an investment driven infrastructure economy to one more balanced with domestic consumption has slowed their demand for industrial metals. The expansion of energy supplies in North America and the mid-East will soften oil and gas prices going forward. The anticipated “levelling off ” of U.S. and Chinese quantitative easing will further erode gold prices. South American governments are vulnerable to falling commodity prices because they have learned to tax the commodity boom. Mining and energy royalties, state oil companies, export taxes and concession sales all help stuff government coffers. Since 2003, South American public spending has grown (in USD) at close to 15 percent per year, an astounding figure in a world replete with austerity. The regional spending spree was designed in part to modernize South America’s moribund infrastructure and raise productivity. Instead, South America’s competitiveness rankings have dropped, education remains accessible, but unreformed and public infrastructure achievements are, at best, mixed with too many projects compromised by nepotism and corruption. In fact, according to Transparency International, corruption is worse today across the region than it was a decade ago. The 2003-2012 period was supposed to be the decade when Latin America caught up with emerging Asia thanks to high commodity prices, low interest rates, and favorable demographics. Instead, the region has fallen further behind. Colombia, Peru and Uruguay should be commended for remaining committed to reform in spite of comfortable times and political obstacle. However, the pace and scope of reform in Brazil, Argentina, Chile and Venezuela has proven disappointing. Going forward, South American governments must learn to do more with less. Dropping commodity prices will shrink their tax bases. Prudent
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governments will cut spending (and waste) in an effort to match falling revenue streams. Others will seek new sources of taxation or the removal of costly gasoline and electricity subsidies, which have grown exponentially. Several Latin American governments have succeeded in recent years at negotiating higher royalty agreements with mining investors, but that well is running dry thanks to declining metals prices. Increasingly, governments face the unenviable choice of scaring off investors or disappointing voters. In Brazil, rising bus fare hikes while footing the bill for the most expensive World Cup in history was too much for voters to bear. In 2011, Chilean students protested vigorously when government tried to raise tuition fees. In late 2012, when the Medina administration in the DR rammed through tax hiking fiscal reform, the middle class took to the street. Over the last decade, voters in South America have heard repeatedly that their region is enjoying a renaissance, a period of abundance but then ask themselves, why are they not much better off ? That realization will become more acute as governments are forced to cut costs or raise taxes. Further exacerbating the issue of political risk is next year’s electoral calendar. Brazil and Colombia both face national elections and both countries are vulnerable to declining commodity prices. In Colombia, most analysts focus on the Farc peace negotiations as the determinant factor of the election. However, voter frustration stems, in much larger part, from the perceived lack of fulfillment of government promises in areas such as infrastructure, education, and basic utilities. 150.0 140.0 Oil (Brent) price/barrel
130.0
Gold ($/troy oz)
120.0
Copper (cents/lb)
110.0
Industrial metals
100.0
Coffee arabica (cents/lb)
90.0
Agricultural combined
80.0 70.0 2010
2011
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Holding government to task through protests, investigative journalism, and a robust social media embracing middle class is largely a positive step in the evolution of Latin American democracy. Governments across the region must be more accountable in the future than they have been in the past and likely will be as Latin America’s middle class continues to expand and the median age grows. While democracy is not at risk, the investment climate is. Governments struggle to cut costs. In countries like Brazil where it is illegal to cut government wages, cutting costs is next to impossible. InJohn Price is stead, governments pursue new the managing forms of taxation and generdirector of Americas Market ally prefer to go after business, Intelligence and a especially the extraction sector, 20-year veteran of ahead of consumers. Mining Latin American and energy companies can excompetitive pect new rounds of negotiation intelligence and strategy consulting. from some of their host governjprice@americasmi.com ments in South America.
PHOTO: © ISTOCKPHOTO.COM / -1907-
2014
CONTRARIAN
NOVEMBER-DECEMBER 2013 LATIN TRADE
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FEATURE
DECISIONS THAT CHANGED LATIN AMERICA
BY SANTIAGO GUTIÉRREZ VIANA Executive Editor, Latin Trade
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FEATURE
I
t doesn’t matter how you look at it: the Latin America of 2013 is a different place from that of 1994. It’s not a question of ideology, but of facts and figures. Today, a child born in the region can expect to live for 74 years, and not the 69 years of 20 years ago. There’s a better than 75 percent chance that he was born in a city, where access to public services, education and health care are more easily available than in rural areas. There’s less chance that he’ll live in destitution or that he’ll be vulnerable to poverty. Of course, they’re still a long way from the developed countries, and in places like Haiti, the distance is painfully long. But in general, the region is much better off today. There are many explanations given for the transformation. Some of them are the usual ones. There’s more macroeconomic stability, built though it may be, on the ruins of countless Latin American economic disasters. The 31 financial crises and the catastrophes that caused the deterioration of the terms of trade, have obliged governments to get serious about monetary policy and, at last, to tighten up the state coffers. The supercycle of a boom in commodity prices, created by demand in China, is another reason the countries have become richer. But there are other, less well known explanations. One is the noteworthy success of
public policies in reducing poverty in some countries. Another is the tremendous importance of the opening up to international trade. It was responsible for the growth of Chile and of northern Mexico, as well as in Peru and to a certain extent in Panama. Although it seems obvious, it’s a lesson that hasn’t been learned by everyone. Contrary to the opinions of people like Ricardo Lagos, Herminio Blanco and Celso Amorim, countries like Brazil and Colombia are sticking with very timid levels of opening, and maybe they are failing to take advantage of growth opportunities. Another explanation is that the largest companies of the region have grown much faster than the countries where their head offices are located. Just in 2012, the region’s 500 largest companies increased their incomes by 6.5 percent in real dollars, double the rate of GDP growth of Latin America. The multilatinas took advantage of the privatizations of the nineties, and then the global economic conditions of the 2000’s to embark on a phase of spectacular expansion that made some of them global enterprises, like América Móvil, Mexichem, Alfa, Embraer, and Cemex, to mention a few. Those companies have defied the forces of gravity that their home countries had created, pulling them to underdevelopment.
BRAVO BUSINESS AWARDS 20TH ANNIVERSARY
Behind all these changing of models, attitudes and results, are decisions. They come from people of flesh and blood who value the enormous power of organized, tightly-focused action. Those actions include mergers, purchases, the opening of markets or of new fields for social initiatives, and the designing of economic policies that facilitate entrepreneurial action. The celebration in 2014, of 20 years of the Latin Trade’s BRAVO Business Awards, which recognize leadership in government, business and social services, provided us with an excuse to find people who made decisions that transformed the region. In exclusive interviews for this special edition, a group of BRAVO Award winners told us how they came to make those decisions, and what results they produced. Readers will find many surprises like, for example, the fact that in Latin America knowing the people is almost as important as knowing the financial condition of their companies, so that the largest deals can be made without legions of investment bankers and lawyers. Like this one, we believe we have put together an unprecedented collection of data and opinions, offered by first rate personages, that will help us understand the Latin America of today, and give us a glimpse of the Latin America of the next 20 years.
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PUBLIC POLICY
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THE MAN WHO FORGED HIS ERA Ricardo Lagos Escobar FORMER PRESIDENT OF CHILE
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he most complex decision former Chilean President Ricardo Lagos Escobar made during his six years in power was saying no to president George W. Bush about his decision to start the war against Iraq. Chile was a member of the United Nations Security Council. “I knew that President Bush had to get Chile’s vote to arrive at the nine votes he needed. That’s why I was involved in the issue. We had a cordial relationship with the president. He called me Ricardo, and I called him George. We spoke often,” he told Latin Trade. During the time leading up to the conflict, Ricardo Lagos was working tirelessly with British Prime Minister Tony Blair to try to reach an amicable agreement at the United Nations. “The war and peace decisions in the world are made at the Security Council,” he said. However, the solution didn’t look so simple. Lagos Escobar began to receive calls from President Bush, and he confessed that he had given his teammate Tony Blair the
job of convincing him. “I was aware that they were giving me a full court press,” he joked. In a last ditch call, the President of the United States wanted to know whether he had the deciding vote. “I said to him, President, let’s wait one more month. Hans Blix, (the inspector of the United Nations commission of oversight, verification and inspection,) needs to know whether the weapons of mass destruction exist. If they do, we’ll be with you. You’ll have my vote,” the former president said. Bush insisted that he couldn’t wait. “President, I think another month is indispensable,” replied Lagos Escobar. The American president repeated that it was urgent. “Under those circumstances, I had to say no.” Then he had to repeat his negative reply. After Bush decided to invade, he asked the Chilean president to join the coalition of the willing, which consisted of some of his allies. “I had to say, President, we are good friends, but this is outside of the Security Council. I cannot go to war.”
PHOTO: COURTESY OF F UNDACIÓN DEMORACIA Y DESARROLLO
2002 & 2005 LEADER OF THE YEAR
PUBLIC POLICY
“I was aware that he didn’t like my answer. He told me, Mr. President – and this time he didn’t call me Ricardo – I thank you for your frank response. And I told him, Mr. President, friends speak frankly. Because I consider you my friend, I can speak frankly and tell you what I think.” The story has a happy ending for Chile. “This conversation was in March 2003. We had finished negotiating the free trade agreement with the United States in December 2002. We were in the process of doing the translations.” But despite what some feared, the accord was signed in June 2003. “In honor of the truth, I never received any pressure from anyone who told me that we had to say yes to the war in order to approve the treaty. I understood that free trade was free trade, and this was a mutual understanding.”
TRADE AGREEMENTS Ricardo Lagos places a high value on international trade. He believes that, without a doubt, the policy that most strongly boosted Chile’s economic growth in the last two decades was
the signing of free trade agreements. He recalled when he signed the pact with the European Union in 2002, “not a single cold storage plant in Chile passed the quality standards they had to meet in order to export meat to Europe.” Today, Chile has a 40,000-ton export quota for high quality meat. “A free trade agreement is an incentive to add value to primary products and thus to create the potential for more production and jobs,” he said. During Lagos Escobar’s presidency, his country signed nine trade agreements, including those with the United States, China, Korea and the European Union - which opened up the markets of 27 nations. “Ninety-five percent of Chilean trade is done under the wing of a free trade agreement. Our average tariff is two percent,” he said. Former President Lagos Escobar has always been a friend of great changes. Before he became president, as minister of public works, he succeeded in convincing his officials about the need to create public-private partnerships to develop the infrastructure his country needed.
BRAVO BUSINESS AWARDS 20TH ANNIVERSARY
“Bringing in private capital to the main highways enabled us to double the level of investment in infrastructure,” he said. Even more interesting, the money that wasn’t used in large public works due to the arrival of private funds was used for social infrastructure. “Upgrading the modest secondary roads, which were dusty in summer and muddy in winter, was what was done with public funds,” he explained. It was hard to sell this decision because private participation had opponents, even among the leaders of his own political group. “This is to catch-up, I told them.”
POLITICIANS AND TECHNICIANS It would appear that Chile has done everything right. It’s just a few years short of becoming the first developed country in Latin America. Its income per capita almost quintupled between 1993 and 2012, rising from $3,417 to $15,356. Additionally, it is the region’s most competitive country and the second best with human capital. Chileans made their policies foster growth.
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PUBLIC POLICY
PHOTO: TIAGO PETINGA/EPA/NEWSCOM
2002 & 2005 LEADER OF THE YEAR
Portuguese Prime Minister, Pedro Passos Coelho (R) speaking with Chile’s former President, Ricardo Lagos Escobar.
Lagos Escobar thinks that in the last 20 years there have been big shifts that have modified the region’s economic make-up. How did they do it? “The important thing is to have an idea of where do we want the country to be in 20 years. The problem with politicians, by definition, is that they only look ahead as far as the next election. But you have to look at the needs of the next generation, not the next election,” he said. For that, he proposed to the politicians that they use their leadership to explain why, sometimes, they have to take measures which, although they may not be popular, have to be seen from a long-term point of view. As an example, he mentioned the decision that forced Chile to save part of its revenues in times of high copper prices, so that it could spend more when times were hard. “We learned that we had to have countercyclical policies. As politicians, we lack this long-term view to be able to understand how to serve our country better,” he said. When asked whether the technocrats should therefore educate the politicians, the former Chilean president didn’t completely agree. “I think there has to be reciprocal education, because the technocrats sometimes don’t understand that there are also political demands that are needed.” They need to understand that
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the politicians, like democracy itself, have to show results. But there’s more. “The technocrats can say the country is growing marvelously well at five percent. But if the citizen sees that his street still has the same potholes, that the neighborhood is insecure, that public transportation is bad, that the desks in the school are in bad condition, then he will not see any of it.” These are situations that justify education in the other direction. “Sometimes we have to tell the technocrat: let me show some of this five percent to the ordinary citizen.”
CHANGE OF FOCUS How does Ricardo Lagos view the economic changes in Latin America? He thinks that in the last 20 years there have been big shifts that have modified the region’s economic make-up. One of the first of these is that “after so many crises we have learned to manage macroeconomics. We have learned that the financial accounts have to be in order, that inflation is a scourge that we have to fight, that monetary policy is important.” He added, the region has learned to make democracy and issues like hu-
man rights compatible with economic growth. As well, Latin America has come to understand the need to “incorporate certain social policies that are focused so that we can be sure that if our macroeconomic measures are successful and there has been growth, that this growth reaches all sectors.” Also, he said, more and more countries understand that globalization will not go away. “Globalization is here to stay. Whether we like it or not, it’s a fact of life.” On the continent, he continued, it has become better understood that economies can open up to have larger markets, and it’s essential to take measures to have a more global economy. Lastly, he mentioned Asian growth. It wasn’t shaped by Latin America, he said, but the region has taken good advantage of it because it has known how to prepare for the boom times. Independent, disciplined, serious, a promoter of free trade and investment, and well respected in his country, Ricardo Lagos Escobar is not only a man of his time, but also the one who has transformed it in such a way that one could say, without exaggerating, that he is also one of the ones who has forged his time.
NOVEMBER-DECEMBER 2013 LATIN TRADE
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Federico Spagnoli Latin America & Caribbean Consumer Head
With a clear understanding of customer needs and following a disciplined product development process, we have more than 150 products under development and launched 33 products this year alone. These solutions help to address from simple situations such as ticket reimbursement in the case of an event cancellation or the new “Multi-appliance” coverage, in which home appliances are protected as if they were by the manufacturer warranty to more delicate situations such as Cancer.
Our goal to protect families and their assets can only be achieved if everyone regardless of their income level can have access to insurance solutions at a reasonable price. AIG has been investing in micro-insurance solutions and developing multiple distribution channels that allow offering affordable solutions for those in need. For instance we are partnering with utility companies leveraging their billing platform allowing the offering of comprehensive but affordable solutions.
At AIG we believe in the concept of Fluidity. Fluidity is life moving on, opportunities appearing and disappearing, choices being continually made.We can influence the course of things around us, but no one has total control. For this reason, the function of insurance and the role of AIG are to support life even in the face of adversity and the unexpected. As such we are also developing innovative solutions focusing on the ‘customer experience’ making out of negative situations (i.e. having an accident) the most positive experience possible. As part of our studies we have identified that for customers dealing with a claim, it is critical to provide constant communication regarding the status of the claims process. In Mexico we recently launched a claims service solution in which customers can track on the web the state of the repair of their vehicle looking pictures of their car being repaired.
Web-based solutions is another key area of innovation for AIG, we have recently launched a Center of Excellence based in Houston and Guadalajara that support the development of various innovative services across Latin America. For instance AIG Mexico customers now count with an emergency assistance application that can be downloaded on the mobile phone. In summary Bring on Tomorrow showcases how we help our customers feel about the future: confident, prepared, and protected. It focuses on our spirit of inventiveness – shown in our investment in talent, technology, product development and in our work to provide the best service to our customers. These are the attributes that since 1937 have allowed AIG to successfully position itself as one of the most innvoative and reliable insurers in Latin America.
El Salvador
AIG Seguros, El Salvador, S.A. Calle Loma Linda No. 265 Col. San Benito San Salvador, El Salvador Main Tel: 503+2250-3200
Guatemala
AIG Seguros Guatemala, S.A. 7a. Avenida 12-23 Zona 9 Edificio Etisa, Level 3rd Guatemala, Guatemala 01009 Main Tel: 0050222855900
Honduras
Chartis Seguros Guatemala, S.A., Sucursal Honduras Co. Edificios Los Castaños, 4th Floor Boulevard Morazan Teguzigalpa, Honduras Main Tel: 0050422028300
Jamaica
Chartis Jamaica Insurance Company Limited The Towers, 5th Floor, 25 Dominica Drive Kingston, 5 Jamaica, West Indies Main Tel: 876-926-2074
Mexico
AIG Seguros México, S.A. de C.V. Ave. Insurgentes Sur, #1136 Col. del Valle D.F, Mexico 03219 Main Tel: +52 55 5488-4700
Panama
AIG Seguros Panamá, S.A. Edificio Torre de las Americas Mezanine A Punta Pacifica, San Francisco Panama, 0816-07854 Main Tel: +507 302-5010
Puerto Rico
AIG Insurance Company - Puerto Rico 250 Muñoz Rivera Avenue Suite 500 Hato Rey, PR 00918 Main Tel: 787-767-6400
Uruguay
AIG Seguros Uruguay S.A. Colonia 999 Montevideo, 11100 Uruguay Main Tel: +598 2 900-0330
Venezuela
C.A. de Seguros American International Av. Principal La Castellana con calle Blandin Torre Digitel, Piso 7 y 14, oficina 7C;14A Y 14B Urb. La Castellana, Caracas, Venezuela Main Tel: +58212-3188400/+58212-3188401
BRAVO BUSINESS AWARDS 20TH ANNIVERSARY
MULTILATINAS
HOW THE SLIM GROUP DECIDES Carlos Slim Domit GRUPO CARSO AND AMÉRICA MÓVIL
F
or some years now, Carlos Slim Domit has been the helmsman of the most important businesses of the Slim family firm– Carso, Telmex and América Móvil, to name a few. He is one of the main decision-makers in the spectacular growth of the conglomerate. Slim doesn’t think there’s been one single decision responsible for the group’s recent growth. “In one way or another, all have been important,” he said in an interview with Latin Trade. “There’s no one decision that was water parting. Rather, it’s been a gradual achieving of goals that has enabled the development. It’s more a process than an isolated event.” The decision that triggered the group’s expansion, in Slim’s opinion the most difficult one he ever made, was the purchase of Telmex in December 1990. “At the time of the bidding, it was a very difficult task. We had very little time to learn about all the challenges it posed.” From that point on, growth has been enormous, but at the same time respectful to the way the conglomerate conducts business. They have never lost sight of the 10 principles that guide the companies’ actions, and that are a kind of creed that Carlos Slim Domit learned at the knee of his father Carlos, and that he in turn learned from his father, Julian. They also maintain uniformity when making decisions. “We always see the worst-case scenario. Instead of looking at rosy figures for the future, we look at the risk in a decision. If one evaluates risk, it’s easier to make it (a decision), and if a bad situation arises, one knows how to respond.” That method of taking the risk into account has helped them minimize their errors. “We have the philosophy that it doesn’t matter if we make mistakes. The important thing is that they be small mistakes. When we make decisions, we don’t have all the variables under control. Having understood the risk of the worstcase scenario helps us to move quickly on the mistake,” he said.
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The Slim conglomerate is institutionally well organized, and as a result there are no autocratic moves. “We are an institutionalized group with a deep-rooted corporate governance. We have an extraordinary team and for many years, boards of directors, like publicly listed companies.” That’s why they follow a clear-cut process in which the operating decisions are made by management and the strategic ones by the boards of the companies with their independent directors. Only when necessary do they bring issues to the Carso holding. In times of crisis, there are many opportunities, but even so, the group maintains discipline in its analysis. When someone proposes the acquisition of a company, said Slim, they evaluate the strategic reasons for the purchase, the opportunities that it would generate, and the risks. They make their decision with as much information as possible. At that point, they can also verify whether the new company would complement the group, and analyze in detail the way in which they would implement absorption after the eventual purchase. Only after making sure that it has strategic value, do they evaluate the amount of the investment and how much they can obtain in terms of revenues or synergies. Finally, the proposals are evaluated by the board of directors of the companies in the group. There are no conflicts during this review, but there are many questions to clarify the benefits to the group, Slim explained. There is a lot of communication. They are constantly calling extraordinary board meetings. “We just met with the directors of Telmex and América Móvil to study investments in Europe,” he said as an example. Not even acquisitions like the one involving the New York Times of Citigroup deviate from the central vision of the businesses of the conglomerate. “There are two types of investments. Some are strategic operational ones, and others are financial, to take advantage of financial opportunities,” said Slim. Those American purchases would fall into the second group. “In particular, we saw interesting potential in the The New York Times. It had a solid, important brand, the most significant one as a media company. We are not on the board, and we’re not involved in the company’s operations,” he said. In the case of Citi, they saw at the time of the purchase that its shares were undervalued, and also calculated its great potential for growth. In any case, the purchases were not made on a whim of the conglomerate’s owners. They were evaluated just like the others. “There’s no personal taste in this,” he said. And so that’s how Carlos Slim Domit, the man who leads Latin America’s largest conglomerate, thinks and decides. Faithful to the 10 principles, he acts with a long-term vision, is flexible and quick to analyze, and make or walk away from opportunities to remain aligned with his values and within his area of business. Thus, even in the worst-case scenario, the Slim family’s group will be the bestknown actor in the region for many years.
PHOTO: AGENCIA EL UNIVERSAL/EL UNIVERSAL DE MÉXICO/NEWSCOM
2012 INVESTOR OF THE YEAR
BRAVO BUSINESS AWARDS 20TH ANNIVERSARY
MULTILATINAS 2012 CEO LIFETIME ACHIEVEMENT
THE TRANSFORMATION OF RETAIL Juan Benavides Feliú PARTNER AND CEO, GLASSTECH FORMER CEO OF FALABELLA
O
ne person, Juan Benavides Feliú, has spearheaded two of the most important changes in the Latin American retail sector. These changes happened while he held management positions in the Chilean chain Falabella, the country’s second largest retailer by revenues, and one of the largest and the most profitable in this category in Latin America. In the first change, as general manager of CMR, in 1996, he initiated the strategic plan for establishing the group’s finance business, and in the second, as CEO, he promoted its international expansion starting in 2004. In addition, he managed the merger of Falabella with Sodimac in 2002 and 2003, which was one of the most important transactions in the sector in recent decades because it brought together a huge number of synergies between the corporations, and increased the size of the company, which was essential for it to prosper. These strategies, together with being in the real estate business, which Benavides also promoted, have converted it from being a typical company to being one of the most successful players in Latin American retail. Offering credit through credit cards, for example, is a way to make consumption easy, generate loyalty and, for the business, it’s a great way to increase the margin. Business establishments can make use of some of their advantages over banks, such as location or sometimes hours of business, but above all, precise knowledge of consumption habits and the way their customers make payments, a fundamental element for making the right credit decisions. Today, revenues from the banking operations represent about 17 percent of the group’s total revenues, and it has loans outstand-
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ing of more than $5.7 billion with its 4.2 million cardholders, an amount that lands the financial arm of Falabella on Latin Trade’s list of the 100 largest banks in Latin America. Internationalization was also vital. “In retail, the size of the market is absolutely crucial,” said Benavides Feliú. Group Falabella opened in Argentina and Colombia in 1993, in Peru in 1995, and in Brazil in 2013. Unlike the commercial chains in Brazil or Mexico that are supported by their internal markets, the Chilean companies have no other growth option but to go beyond the country’s borders. Chile provided almost 80 percent of the group’s revenues in 2006, and just 65 percent in June 2013. But perhaps the success of this CEO was due to having maintained financial order at all times, together with the geographical expansion. This enabled him to maintain the difficult balance of having new proposals for customers, taking advantage of market opportunities and maintaining reasonable levels of risk. The results of these strategies are there to be seen. The share price has risen by a factor of 15 since 1996 when the Solari family – who have controlling interest in the group – decided to list on the stock exchange. Benavides Feliú also helped to construct what might be called the Chilean school of retail, which he has done using the experience of those who work in the sector. “We have achieved good development in every sense of the word: brands, design, product, logistics, and access to the best suppliers of India, China or Malaysia. Today, the disadvantage is in size more than in knowledge,” he said. This sophistication has served the sector in attracting talent. “In all of the surveys among graduating professionals, the sector is among the most admired.” This is vital for companies like Falabella, which is number 18 among the best employers of Latin America. He believes that the electronics business is still lagging in the region, and that to make it work, it must develop its logistics. He said it still needs two things: “Investment in distribution logistics companies so that goods can arrive at customers’ homes at the precise time and with the merchandise in good condition, and development of infrastructure that will require government support.” For Benavides Feliú, the next move for Latin American retailers would have to be “developing abilities to make up for the volume of the large chains.”The issue is very important because the largest companies can operate with lower average costs, and because they can often more easily amortize the enormous investments in information technology that they require. To deal with this he proposes, for example, the integration of businesses to achieve synergies on smaller scales, and broadening the firm’s presence in the region before seeking other markets. Coming from a generator of change in the industry, it’s a prediction worth listening to carefully.
PHOTO: COURTESY OF GLASSTECH
Falabella has loans outstanding of more than $5.7 billion with its 4.2 million cardholders.
NOVEMBER-DECEMBER 2013 LATIN TRADE
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BRAVO BUSINESS AWARDS 20TH ANNIVERSARY
MULTILATINAS
I
n 1979, Grupo Odebrecht completed an expansion of its construction Marcelo Odebrecht and engineering business, supported CEO, ODEBRECHT mainly by the Brazilian domestic market. At the time, that market seemed to lack the size, experience and technology needed to further grow its businesses, Odebrecht CEO, Marcelo Odebrecht, told Latin Trade. This limitation drove the company’s decision to explore new markets abroad. “We thought that internationalization would not only facilitate economic growth, but growth in competences that were not easily gained on our home turf,” he said. The company began its internationalization with Chile and Peru, and initiated a process that has taken the conglomerate to 26 countries. Odebrecht entered Africa in 1984 with the Capanda hydroelectric project in Angola. “We went to Africa because we found opportunities, just like the ones we had in the United States. Africa is a great continent. There is a lot to do in a massive market like that one.” In 1988, Odebrecht acquired Portuguese José Bento Pedroso & Filhos, which was renamed Bento Pedroso Construções. This firm became the flagship for Odebrecht’s European operations. In 1990, the conglomerate partnered with Petrobras on a Singapore project, spearheading its foray into Asia. This international expansion made it easier to weather the recent recession of the developed world. “We have been very lucky. We concentrated in Latin America and Africa, two areas which have grown and will continue to grow in the coming years.” Back in 1979, the group made another key decision: to diversify. Odebrecht transformed itself from a construction and engineering company, into a diversified conglomerate operating in oil and gas, petrochemicals, infrastructure, real estate, transportation, logistics and investment
LESSONS FROM THE LEADERS
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funds which, for instance, invest in mining and agriculture in Africa. Multilatinas in general initiated their geographic expansions in the late ‘80s and ’90s. Odebrecht’s early lead on internationalization was instrumental in making it the ninth-largest company in Latin America with posted revenues of $37.3 billion in 2012. It could jump higher in the ranking: it recently announced a $20 billion global investment plan for the next three years focusing on Peru and Mexico. The company’s expansion in the last 20 years demonstrates discipline and consistently good execution. They have made mistakes, but never a major one. “It’s always better to make a decision than to never make it. A bad decision is an opportunity to learn,” Odebrecht said. Its clean record could be explained by the fact the company abides by strongly-held principles, a constant reminder of its family-owned past. The company is very conservative when moving into a new business, making an extra effort to have the resources required. “Not only the capital, but the people,” Odebrecht said. It is not a matter of having the skill to run a new firm. The condition is to have the helmsmen in-house. “Not only to have the competence, but the people in the company.” Surprisingly, the company has opted to grow organically. “Acquisition is not a part of our strategy. We never contemplate acquisitions as part of our strategy,” Odebrecht said. But when they decide to acquire, they act on another principle: “Odebrecht is not a financial investor. We want to control companies.” Long-term actions and daily operations are guided by the Tecnologia Empresarial Odebrecht (TEO), six principles written by Marcelo’s grandfather, Norberto Odebrecht, which are the company’s cultural and ethical foundations. “The TEO emphasizes the willingness to serve, the capacity and desire to evolve and the will to surpass expected results. It also involves a planned delegation process, one based on trust and partnership between the leaders and the led,” reads an explanation of the principles by the group’s affiliate Braskem. “These are standards we preserve and always practice,” Odebrecht said. An orderly, disciplined, principled growth process seems to be the lesson to be learned from this multilatina that led the pack of the internationalization of Latin American companies. Expect other teachings as it opens new avenues for expansion over the next decade.
PHOTO: COURTESY OF ODEBRECHT
2011 CEO OF THE YEAR
NOVEMBER-DECEMBER 2013 LATIN TRADE
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BRAVO BUSINESS AWARDS 20TH ANNIVERSARY
MULTILATINAS 2001 CEO OF THE YEAR erating. We faced enormous uncertainty, with confirmed orders and thousands of dollars of supplies. We were producing 10 aircraft per month – the highest production in history – and the goal was to manufacture 22 by the end of the year. In August, we had already delivered 18 planes.” “Everyone was confused, but Embraer was one of the first companies to react. In two weeks, we had evaluated the situation. We knew how it would be reflected on the company and what steps we needed to take at once. We renegotiated with the suppliers and with the workers, and by the end of September we were in control.” It was very painful, recalled Botelho.
Embraer has 4,000 engineers, 1,000
A MIRACLE MADE BY ENGINEERS Mauricio Botelho PRESIDENT, MOGNO CONSULTING FORMER CEO, EMBRAER
T
he recession of the 1980s put the Brazilian aeronautics company Embraer in a difficult situation that seemed insurmountable. “The situation was dramatic. Total revenues were $170 million, losses were $300 million, and the debt was $700 million,” recalled Mauricio Botelho, a mechanical engineer and the CEO and president of the company from 1995 to 2007. In 1994, with bankruptcy threatening, the company was privatized after six failed attempts to sell it. For Botelho, this sale was the most important decision the company had made in the last 20 years because it eliminated the obstacle that had stymied its international growth: the fact of it being a state-run company. A trip outside Brazil required the signature of a minister. “To open an affiliate would have required the approval of the senate. It was a nightmare. It couldn’t respond to the global market,” he said. Since 1996, with Botelho at its head, the company correctly read the change in direction the regional aviation industry was undergoing, moving from turboprop engines to jets. International sales of regional jets became the program that redeemed Embraer. By 1999, Botelho had converted the company into Brazil’s largest exporter. September 11, 2001 marked another company milestone, when it learned to always stay close to the customers and to act quickly to defend the company’s interests. With the attacks on the Twin Towers in New York, the market literally disappeared. “Thousands of airplanes were left on the ground. Flights were cancelled, but we had the supply chain still op-
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They let 2,000 people go, 15 percent of the plant. But, they prioritized the company’s need to stay liquid. “To have been conscious of what could be done and what was necessary proved to be fundamental for the progress of the company,” he said. Other companies in the same circumstances did not do that and sustained irreparable losses. When the financial crisis of 2008 struck, Embraer already knew that the best way to manage severe problems was to focus on the customers and to understand how they would be affected. For that, what they saw coming was an enormous impact on revenues and they adapted quickly to the new reality, he said. They adjusted all the models they had been developing to the new conditions. “Most traditional companies that didn’t react on time had to restructure from the bottom up and others, like the business jet segment, are still suffering,” he said. One last key characteristic of the company is its enormous capacity to generate aeronautical technology. Embraer does not import its technology. Its developments are in large measure, local. “There is a very limited foreign contribution. Now there are many foreigners in the company, but they are more involved in the commercial side than the technical one,” he said. Right from the company’s beginnings, its engineers have trained at the Instituto Tecnológico Aeronáutico, (ITA), which, with courses similar to that of MIT, has served Embraer’s human resource needs. With expansion, they trained the staff they needed but could not find, contracting between 100 and 200 engineers per year, and these engineers continued studying for another year and a half. The courses were given by foreign professors and the best technicians available, and the program ended with a master’s degree from ITA. In the 12 years the program has been operating, it has trained 1,500 professionals. Embraer has 4,000 engineers, 1,000 of them with a master’s degree or a doctorate. “It is a tremendous strength. They are well-trained people with the skills the company needs. In the program, they know what is required.” Embraer also has a clear vision of the scope of its academic training. “We don’t develop science. We transform the science into usable technology,” Botelho concluded. Embraer has gone from bankruptcy to sales of $6 billion per year, and to being number 101 among the biggest companies in Latin America in sales. This could be the proof that development can be designed by good engineers. See more at www.latinbusinesschronicle.com.
PHOTO: COURTESY OF MOGNO CONSULTING
of them with a master’s degree or a doctorate, and has gone from bankruptcy to sales of $6 billion per year.
BRAVO BUSINESS AWARDS 20TH ANNIVERSARY
MULTILATINAS 2010 CEO OF THE YEAR
year, maintain an Ebitda margin exichem had a of 20 percent, and net debt of no dramatic expansion more than double the Ebitda. over the last 10 years. That’s a very powerful limit that But the company did not we have never violated,” he exmove in the direction of plained. With that growth rate, most multilatinas. What Mexichem will be one of the 100 set Mexichem apart was largest companies in the region that it directed all of its within two years, even as it mainfinancial and operations tains its profitability and low debt artillery towards vertical level. integration. The company manages its risk For Ricardo Gutiérrez by being in several regions of the Muñoz, general manager world, and by setting the prices of Grupo Empresarial in its sector. “Diversifying risk Kaluz, the holding comhasn’t tempted us to enter other pany of the enterprise businesses that we don’t know and Mexichem, of which he where we aren’t the leaders.” is the former CEO, the At the same time, it raises a most important decision new problem. To sustain its goal of the last 20 years was of increased sales, it can’t do things to become an industry on a small scale. Being forced to consolidator, buying up do large operations increases opcustomers, suppliers and erating, cultural and market risks, competitors. Gutiérrez Muñoz said. It even The results have been obliges them to bypass markets positive. By bringing like Chile, Paraguay or Uruguay, together more than 24 which would be too small to serve companies in 39 counits growth plans. tries in the last decade, it That’s why the future plans of has become the world’s Mexichem are more complicated. largest producer of plastic Gutiérrez Muñoz doesn’t expect CEO, GRUPO EMPRESARIAL KALUZ pipes and fluorite. Meagrowth in Europe, and he sees sured in dollars, its sales problems expanding into China have doubled in the last and Russia. “In China, we see problems doing business. In Russia, we have five years, and its Ebitda has almost tripled. Returns for the shareholders looked at several companies. It’s a large and growing market, but everyhave been fantastic. The price per share has quadrupled in those five years. thing has to go through the government.” New possibilities such as Africa The strategy of vertical integration makes good business sense when are also on his radar. one considers that Mexichem (mehekem for foreigners who want to What does seem clear is that his strategy will continue to be acquisipronounce it correctly) is primarily a producer of commodities, as Gutiértions. He’s not interested in building plants from the ground up because, rez Muñoz said – basic chemical materials like chlorine and caustic soda. he said, the chemical industry is very cyclical and volatile. “It would be To move from primary consumption to end user, they provide added extremely dangerous to build 10 tubing plants.” value to these raw materials. In addition, scale is a barrier to entry for new As has happened in the last few years, Mexichem quickly introduces an competitors because it enables them to dilute fixed costs and thus obtain aggressive modernization plan for the operating, information and markethigher margins. With its larger size, it can set the price of the raw materiing systems once it has made an acquisition. The firm’s directors are given a als. “The most important thing in commodities is being able to set the kind of blank check to carry out their projects, which ultimately is a crucial price,” he explained. element for retaining talent. One of the things an executive appreciates In addition, it provides an advantage when it comes to buying commost is support for his projects, along with recognition, he said. panies. “Vertical integration creates important synergies that lower the The office of Kaluz in Mexico City has more of an air of austerity than multipliers (price indicator) for what we buy.” That’s why Mexichem is fast of opulence, although there’s no doubt it could afford the opulence. But and aggressive in its acquisitions. Even if the companies aren’t for sale, the that may be truer to the sense that it has to have the air of a headquarters synergies enable it to make very attractive offers that can convince even of a serious conglomerate, aggressive and tremendously successful in its those who are most determined not to sell. initial expansion, and this no doubt will set an example for those who Still, in this fast-growth era, the company imposes iron-clad limits that come here. ensure financial discipline. “This company has to grow by 20 percent per
M
VERTICAL INTEGRATION
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PHOTO: COURTESY OF GRUPO EMPRESIAL KALUZ
Ricardo Gutiérrez Muñoz
Anguilla: . . . . . . . . . . . . . . . . .+264-497-2656 Antigua: . . . . . . . . . . . . . . . . .+268-462-9532 Aruba: . . . . . . . . . . . . . . . . . .+297-583-4832 Bahamas: . . . . . . . . . . . . . . . .+242-377-8300 Barbados: . . . . . . . . . . . . . . . .+246-416-4456 Belize: . . . . . . . . . . . . . . . . . . . .+501-207-1271 Brazil: . . . . . . . . . . . . . . . . .+55-92-3584-1293 Chile: . . . . . . . . . . . . . . . . .+56-2-2232-5892 Costa Rica: . . . . . . . . . . . . . .+506-2257-3434 Curacao: . . . . . . . . . . . . . . . .+599-9461-3089 Dominican Republic: . . . . . . .+809-333-4000 Ecuador: . . . . . . . . . . . . . . .+5932-2-228-688
El Salvador: . . . . . . . . . . . . . .+503-2263-7799 Grand Cayman: . . . . . . . . . . .1-866-478-3421 Guatemala: . . . . . . . . . . . . . .+502-2277-9070 Honduras: . . . . . . . . . . . . . . . .+504-234-3183 Jamaica: . . . . . . . . . . . . . . . . . .+876-952-1126 Mexico: . . . . . . . . . . . . . . . .+52-33-3122-5551 Nicaragua: . . . . . . . . . . . . . .+505-2255-7981 Panama: . . . . . . . . . . . . . . . . .+507-204-9555 Puerto Rico: . . . . . . . . . . . . . .+787-253-2525 St. Kitts: . . . . . . . . . . . . . . . . . .+869-465-2991 St. Lucia: . . . . . . . . . . . . . . . . .+758-451-6150 St. Maarten: . . . . . . . . . . . . . .+599-545-2393
St. Thomas: . . . . . . . . . . . . . . .+340-776-1500 Tobago: . . . . . . . . . . . . . . . . . .+868-639-8507 Trinidad: . . . . . . . . . . . . . . . . .+868-669-0602 Turks & Caicos: . . . . . . . . . . . .+649-946-4475 Uruguay: . . . . . . . . . . . . . . . .+598-2481-8170 Worldwide Reservations: . . .1-800-367-2277
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NOVEMBER-DECEMBER 2013 LATIN TRADE
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BRAVO BUSINESS AWARDS 20TH ANNIVERSARY
MULTILATINAS 2012 ENTREPRENEURIAL CEO OF THE YEAR
WHAT HAS BEEN THE BEST DECISION THAT CINÉPOLIS HAS MADE IN THE LAST FEW DECADES? There have been two important decisions: the institutionalizing of a family business, which introduced better practices of corporate governance; and internationalization, given that in Mexico we faced a mature market in areas that were starting to show signs of saturation. Entering new markets with the experience of more than 40 years gave us an important advantage when starting up in other countries.
AND THE MOST DIFFICULT? Without a doubt, the process of institutionalizing the company, as mentioned before.
HOW COMPLICATED WOULD IT BE FOR A MULTILATIN COMPANY TO ENTER INDIA’S MARKET?
Alejandro Ramírez Magaña CEO, CINÉPOLIS
T
he emerging markets are a kind of Promised Land for the world’s businessmen: billions of consumers who are increasing their purchasing power every day. Tickets to the movie theater are proof that this is in fact happening. Data from the Motion Picture Association of America shows that between 2008 and 2012, ticket sales to movie theaters in the United States and Canada increased by 12 percent, and in Europe and the Middle East by 10 percent, while in Asia Pacific they grew by 53 percent, and in Latin American by 73 percent. But market growth isn’t enough. For the Mexican company Cinépolis to become the world’s fourth largest movie theater chain and the largest in Latin America, it had to make three far-reaching decisions. On one hand, as CEO Alejandro Ramírez Magaña said, the family company founded in 1971 in Morelia, 186 miles northwest of Mexico City, had to make its structure more formal. On the other, it decided to go international, and the company has arrived in 85 cities in Mexico, eight in Central America, 24 in South America, and three in the United States. In addition, it decided to open theaters in India, the fifth largest market in the world for the industry. India is a country with 1.2 billion people, where each person on average goes to the movies four times a year, the same as in the United States or Canada, but far higher than the 1.8 times per year for Mexicans, 1.9 times for Argentines, or 0.6 times for Brazilians. Cinépolis is proof that with entrepreneurial creativity and audacity, it’s often possible to write stories with a happy ending. Ramírez Magaña discussed his strategy with Latin Trade.
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IS THERE SOMETHING THAT THE REGION’S BUSINESSMEN MUST KNOW BEFORE TRYING TO GET INTO THE MARKET? In India, the rules are changeable and flexible. Contracts are little respected, and so you have to be able to adapt and to have a very flexible attitude. It’s necessary to have good legal advice in this type of environment.
WHEN ARE YOU GOING TO LIST CINÉPOLIS ON THE STOCK MARKET? We haven’t thought about bringing Cinépolis to the stock market at this time because we haven’t had any need for going public to finance our growth. When this need arises, we will consider it, but right now, I don’t see it happening in the short run.
WHAT WOULD HAVE TO BE THE NEXT STEP IN THE INTERNATIONAL EXPANSION OF CINÉPOLIS? Basically, it’s consolidating in the markets in which we are now operating, especially in Brazil, Colombia, Peru and India, and to continue exploring the market in the United States.
WHAT HAS BEEN THE BEST DECISION YOU HAVE MADE IN A LATIN AMERICAN COUNTRY TO MAKE THE BUSINESS OF ENTERTAINMENT AND CULTURE GROW? Understanding the reality of each country. Despite their similarities and the cultural affinity there is among the Latin American countries, there are also important differences in terms of tastes about types of films, and about which sweets to eat. The sensitivity to adapt our product to each market has been what has enabled us to be successful in the nine countries of the region where we have a presence.
PHOTO: ATONATIUH S. BRACHO
PASAGE TO INDIA
India is a very complicated market, over-regulated in many ways and also over-taxed, which makes it very challenging to enter. However, once one understands the complexity of the market and has patience – because everything in India goes much slower than in Latin America – at the end of the day, the market yields its fruit. In the case of cinemas, there is a very important neglected market that we have been able to penetrate with the knowhow we have acquired through more than four decades of experience in Latin America.
BRAVO BUSINESS AWARDS 20TH ANNIVERSARY
MULTILATINAS 2004 TECHNOLOGY LEADER OF THE YEAR
barely a marginal presence in South America. “They told me, you’re going to compete against a country and against companies ten times bigger,” she said. In fact, to compete against companies from India was to compete against the country that had converted support for IT companies into a national purpose. That’s why they didn’t pay taxes and were able to enjoy a clear leadership in pricing. The company couldn’t hope to match costs with India and knew that being close wasn’t a big enough advantage. Then they sweetened their offer with a proposal of more efficient and productive processes. It was in New York at GE, one of the most mature companies in contracting this type of services, where they made this aggressive business proposal. They promised to improve their efficiency every year and to share the profitability they produced with GE. “GE is a demanding customer. There was no rest. They told us: I’m going to open the doors, but you had better be on your toes. The Latin market is more tolerant,” she said.
Sofftek created “nearshowing” and now operates in 30 countries.
THE VALUE OF HAVING TOUGH CUSTOMERS Blanca Treviño CEO, SOFTTEK
PHOTO: COURTESY OF SOF TTEK
I
n 1997, the Mexican technology company Softtek signed a contract with a marketing firm to evaluate the viability of exporting its services to the United States. “It cost $300,000 that we didn’t have,” recalled Blanca Treviño, the company’s CEO. The outcome of the research clearly showed that the project wasn’t worth pursuing. Despite this conclusion, she stuck with her plan of conquering the biggest and most sophisticated IT market in the world. “Thanks for your study, but I’m going to disregard it,” she told the consultants. That’s the way Blanca Treviño is. Her energy seeps into all corners of her conversation. Maybe that’s why the Softtek decision was not only to enter the United States, but also to serve its 100 largest companies. “In 1997, I said I was going for the big market where only the giants play.” That’s why she looked for a way to differentiate. Her offer at the time was to provide IT services from a nearby location: they called it nearshoring. “It has the same advantages of price and talent as offshoring, but with the extra benefit of being nearby: the time zones and compatibility.” Nearshoring is a word that gets a lot of use in the business world, but it was a trademark that Softtek invented and registered, Treviño said. There were still skeptics. Softtek was dominant in Mexico, but had
She thinks that, more important than having gained the account, the most valuable thing was that Softtek was confronted with very high expectations and demands. “You’re forced to be better every day.” She believes that many Latin American companies offer ways of working that are convenient and simple for them. “They haven’t done a good job,” she said. “They don’t offer anything to differentiate themselves other than cost. They don’t understand that it is an extremely demanding market, that they can’t make the same offer as the one they make in their local markets.” She emphasized that no Latin American company has distinguished itself in this country. As a result of her efforts, today Softtek does business in 30 countries, including China and Brazil – which is a larger operation than the one in Mexico – but her proudest achievement is still the office in the United States where Softtek competes against the best in the world. There, her clients consist of 50 of America’s largest companies. More than 80 percent of her customers have been with Softtek for at least 10 years. “The good financial results are the payoff for what we have done,” she said. The future of Softtek appears more secure now. Treviño predicts changes in the perceptions of businessmen and governments. She believes that more of them understand that access to broadband is a right because it democratizes access of citizens to education and health. Also, there is more government support for technology exporting companies. There will still be new difficulties, but it’s a near certainty that Treviño will manage them. One can almost say that if challenges don’t arise, she will find them, because as she says, she needs challenges to maintain the high levels of adrenalin. “If you like challenges, you’re going to create them and you’ll work in an environment that has them,” she said. This ensures that the future of the largest Mexican IT services company will continue to be interesting and an attractive example to others, and for those who follow Softtek’s development, it will always be surprising.
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BRAVO BUSINESS AWARDS 20TH ANNIVERSARY
MULTILATINAS 2009 SOCIAL RESPONSIBILITY CEO OF THE YEAR To do that, Polar concentrated on food and beverages and divested from other sectors in an orderly fashion, or else changed from controlling to minority interests. Now he doesn’t expect to expand again without this focus. The hardest decision of all for the group in the last two decades was to stay in Venezuela. However, in spite of having other options, and unlike many others who left the country, they decided to stay, and today Mendoza Giménez thinks that was a wise decision. “It was the hardest one, but also the one that has given me the most satisfaction,” he said.
COMMITMENT TO COUNTRY AND CORE BUSINESS Lorenzo Mendoza Giménez CEO, EMPRESAS POLAR
“I
don’t go through life asking for advice, but I look and listen,” said Lorenzo Mendoza Giménez, CEO of Empresas Polar. “I listen, and then it’s up to me to cut up the pie and be responsible. If one does well, fine, and if one does badly, he has to get up and leave,” he added. He doesn’t think there are jobs you can stay in for life, not even in a family business. “We’re here to give results to everyone: to the workers, the customers, the shareholders. If you don’t do that, you shouldn’t be here.” With that kind of vertical commitment, accompanied by the sensitivity and cordiality with which he approaches the officers in his organization, Mendoza Giménez has changed the direction of the group he joined in 1992 after his father died. He thinks the most important decision of the last 20 years at Empresas Polar was focusing on the core businesses. Like many Latin American conglomerates, his firm had gone into business in a variety of areas with local or international partners. The group was in petrochemicals, in the banking business when BBVA arrived in Venezuela, in trade with Makro and the Colombian company Cativen. “We decided to focus so that we would have clear capabilities, to enable us to operate in a Latin America that was moving toward integration and a higher level of competitiveness,” he said.
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His Venezuela operation hasn’t been easy. “We’ve had to struggle with a country that has been trying to find its way. But we are a company with deep roots in Venezuela. We are first and foremost a Venezuelan company,” he said. They have expanded quickly into other regions of Latin America – in Mexico and Colombia through acquisitions, although now Colombia has become less attractive for buying because companies there have risen so much in price. “One has to be disciplined and not think something that is extremely expensive is going to add value,” he said. All in all, they continue to take advantage of the possibility of exporting from Colombia, and from there, they serve 30 markets. They are also looking at the possibility of going into Peru, a country they see as having great potential. Still, Mendoza Giménez thinks that in the food and beverage sector, the best way to expand in the region is through local companies “with business models where there are neither conquerors or conquered.” With this type of plan, they identify the strengths of each one and what they bring to the partnership. The performance of food companies also depends on the prosperity of agriculture. Lorenzo Mendoza knows this and so Empresas Polar has established agricultural research centers. “We have some very successful models in Venezuela,” he said. He promotes the use of local seeds among groups of producers and commits himself to buying their products at fair prices, because he finds that the yields from local primary products are higher than those from imported ones. “I would, a thousand times, rather buy local corn than imported corn. That’s because the levels of productivity that I have with grains, of white Venezuelan corn for example, are far superior to those of corn imported from the American Sun Belt, or from Canada or Europe. He thinks that with the support of the private sector, the rural areas can become a competitive tool. Lorenzo Mendoza was born in 1965, and is very aware that people of his generation are starting to assume the presidencies of the largest Latin American companies. He believes the new leaders have good academic educations, are transparent and understand the need to be competitive. “They don’t depend only on their family names.” Mendoza Giménez’s academic - he is a MIT graduate - and business achievements provide a good example of the truth in this observation.
PHOTO: COURTESY OF EMPRESAS POLAR
Staying in Venezuela was the most difficult decision, but also most rewarding.
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BRAVO BUSINESS AWARDS 20TH ANNIVERSARY
MULTILATINAS 2007 DYNAMIC CEO OF THE YEAR last two decades was to merge with Forestal Terranova, a process that started in 2000. This enabled the firm to aggressively enter the lumber business throughout Latin America. The merger, which more than doubled the company’s size, enabled it to become a multilatina, with all of the concomitant prestige. The company places almost equal value on the fact that it can deliver its credo of sustainability to all of Latin America.
THE TRIPLE RESULT Enrique Cibié Bluth Director, Masisa
M
asisa, the Chilean lumber company, increased its year-to-year sales by 25 percent from the second quarter of 2012 to 2013, and its Ebitda went up by 50 percent during the same period. But, this isn’t the main source of pride for the company officers. They measure success differently. “At Masisa, we focus on a triple result: economic, social and environmental,” said Enrique Cibié Bluth, former CEO and now a board member. The firm is in the business of forest products and production of wood furniture, and operates in eight countries in the region. Masisa’s corporate culture places sustainability at the center of its business. For example, remuneration and bonuses are tied to achieving results on all three fronts. Its environmental practices go much farther than they have to. In their 740,000 acres of forest – an area that makes them one of the five largest in Latin America - they maintain about 148,000 acres as conservation zones that they never touch. They use the strictest standards in the world in their cultivation and industrial practices, which always exceed the national regulations. “Our company does what it believes: it regulates itself because the laws in our countries are still too lax,” he said. This responsible way of seeing things yields novel interpretations of entrepreneurial strategy. For instance, Masisa’s most important decision in the
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This way of doing business led to its being recognized by the World Economic Forum as one of the 16 “New Champions of Sustainability” in the emerging markets of the world, for its practices of sustainable development through innovation. Part of this innovation has to do with its work with more than 20,000 small furniture manufacturers, helping them expand their businesses and providing benefits that improve their quality of life. In this same line of sustainability, in spite of its own size, Masisa’s executives believe that agriculture should not be done only in large–scale operations. “Governments should be careful to ensure that there is free competition. It is extremely risky to think that all development will come from the largescale firms. It’s very important that medium-sized and small agricultural operations have space,” he said. Sustainability is an argument that differentiates its products and goes hand-in-hand with design, and that‘s another crucial differentiation strategy. “Every year, we go to the world’s design centers like Milan to see the trends. You might not believe it, but there is fashion in this,” he said. Masisa’s end products are materials for kitchens, bathrooms and interiors. “Our strategy for de-commoditizing products is innovation, being up-to-the-minute in what is happening in the world,” he added. Masisa has another singular competitive advantage. “We are blessed on the cost side,” he said. “We have a natural advantage due to soil and climate.” He elaborated by explaining that a pine tree that matures in 20 years in the region would take five times as long in the northern hemisphere. A eucalyptus tree that is ready to be harvested in seven years would take more than twice as long in other places. With a winning combination of sustainability, design, innovation, and leadership in costs, the next step for Masisa is regional expansion. “We have lots of space to grow within Latin America. There is all of Central America, for example. In some countries, we have commercial operations and we should also be having forest or industrial operations,” he explained. The opportunity lies in the huge housing shortage that prevails in most countries of the region. “We still have lots of work to do in Latin America before we start thinking about expanding into the rest of the world.”
PHOTO: © ISTOCKPHOTO.COM/ FILMWORK. ENRIQUE CIBIE’S HEADSHOT COURTESY OF MASISA.
For the World Economic Forum, Masisa is one of the “New Champions of Sustainability.”
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CRITICAL THINKING AT THE CRITICAL TIME™
BRAVO BUSINESS AWARDS 20TH ANNIVERSARY
MULTILATINAS 2002 CEO OF THE YEAR
A GAME-CHANGER OF FAMILY ENTERPRISES Ricardo Obregón Trujillo FORMER CEO, BAVARIA Y DE GRUPO CARVAJAL
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n July 2005, Ricardo Obregón Trujillo was president of the Colombian brewer Bavaria when it merged with SABMiller in a $7.8 billion dollar deal, the biggest in the country’s history. Before the merger, Obregón Trujillo had helped to transform the conglomerate of Julio Mario Santo Domingo – the owner of Bavaria – into a more modern operation. Ten years before that, Grupo Santo Domingo owned more than 40 companies in a wide scope of sectors that included aluminum, automobiles, communications media, petrochemicals, fishing, and it was even the owner of the airline Avianca. By the time of the merger, it was much more concentrated in the production of beer and other beverages. During the time of import substitution in Latin America, economic groups created large networks of companies shielded by tariff protection, Obregón Trujillo said. During the phase of the opening to international trade in the 1990s, the more intense competition forced them to become more focused, “and not think of so many businesses at one time.” Meanwhile, before the merger, Obregón Trujillo had made some major changes at Bavaria. Shortly after he arrived at the company in 2001, he had had to take on the most difficult job in his life, when it was clear that they had to close eight of the 15 plants the brewery had in the country. “We were operating at 55 percent of capacity, but after the closings, we ended up at 85 percent. There were many unproductive assets,” he said. He managed the staff layoffs with respect. “We paid them six years of salary, a demonstration that the company was conscious of the drama this meant for their families,” he said.
PHOTO: COURTESY OF INVERSIONES MUNDIAL
I
MULTILATINAS
What he did at the time was, in his own words, “accommodate the business circumstances to those of an environment in which inefficiencies were no longer permitted.” He closed the plants in three days. “When it came to the sales process, the added value we had achieved was enormous,” he said. The task of focusing an entrepreneurial conglomerate was repeated after 2008 in another large Colombian family business, Grupo Carvajal. The decision to change the nature of the group had been made several years before by his predecessor as president of the group, Adolfo Carvajal (winner of the International CEO of the Year BRAVO Award in 1997). Between the two of them, each in his own time, they transformed this family company into a firm with good corporate governance. “Even though there had been no outside investors, the family decided to prepare the company for a listing on the stock market,
BRAVO BUSINESS AWARDS 20TH ANNIVERSARY XXX
of losing control. Today, that’s wrong,” he said. He thinks that organic growth isn’t enough to adjust to such a competitive environment. “To survive, Latin American companies have to take drastic actions so as not to lose themselves in this world of economies of scale.” Over the last two decades, Ricardo Obregón Trujillo has transformed two large family enterprises into more institutionalized companies, focused them on their key businesses, and made them more profitable. That is a part of the map that has been laid out for small multilatinas that want to be successful.
To survive, Latin American companies have to take drastic actions so as not to lose themselves in this world of economies of scale. and it was up to me to arrange a bond issue,” he recalled. “The IFC helped a lot when they became creditors.” In addition to adopting this more institutional operation, it also led the group to focus on its most important and profitable businesses. Soon after it was done, they sold or liquidated 28 business units. In the new business environment, even the most traditional businesses of family enterprises have to be transformed. If they cannot change, any competent businessman will recommend to get rid of them, Obregón Trujillo believes. “The sentimental aspect is increasingly less evident in the world of business,” he said. Obregon Trujillo thinks the step that is missing for many Latin American businesses is listing themselves on the public exchanges. He remembers the case of Disney, which was founded in 1926, and in 1940 when it found opportunities for growth, it issued shares on the stock exchange. “That was 70 years ago. In these countries, families are reluctant to list their companies on the public markets because they have to comply with stricter regulations, and for fear
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BRAVO BUSINESS AWARDS 20TH ANNIVERSARY
TIMELINE
TRENDS IN THE EXPANSION OF THE MULTILATINAS 1994 - 2013 SOME RELEVANT CASES
INTERNATIONALIZATION IN THE REGION
1994 - 1998
1999 - 2003
Andina (Chile)/Rio de Janeiro Refrescos (Brazil)
Bimbo (Mexico)/Plus Vita y Pullman (Brazil)
Arauco (Chile) buys plantations in Argentina
América Móvil (Mexico)/Telecom Américas (Brazil)
Clarín (Argentina)/Cable Operators (Paraguay)
Cencosud (Chile)/Home Depot (Argentina)
Arcor (Argentina)/Dos en Uno (Chile) and Koppol (Brazil) Techint (Argentina)/Sidor y Tavsa (Venezuela) Ripley (Chile) opens in Peru Telmex (México) alliance with Sprint (United States)
Gerdau (Brazil)/Co-Steel (United States)
INTERNATIONALIZATION UNITED STATES AND CANADA
INTERNATIONALIZATION OTHER CONTINENTS
Bimbo (Mexico)/Mrs Bairds (United States) Bimbo (Mexico)/George Weston (Canada) in the U.S.
BBVA (Spain)/Banco Provincial (Venezuela)
Embraer (Brazil) alliance EADS, Dassault
Concha y Toro (Chile) joint venture Rothschild (France)
Gruma (Mexico) Operations in England
BBVA (España)/Banco Continental (Peru)
Embraer (Brazil) joint venture with Harbin in China
Ferrocarriles (Mexico) Embraer (Brazil)
GROWTH THROUGH PRIVATIZATIONS
Vale (Brazil) Pension system (Chile) Empresa de Energía de Bogotá (Colombia) YPF (Argentina)
ENTRY INTO THE FINANCIAL MARKETS
Endesa (Chile)
Cemex (Mexico)
Ambev (Brazil)
CCU (Chile)
Companhia Brasileira de Distribuição (Brazil)
Embraer (Brazil)
Companhia Siderúrgica Nacional(Brazil)
América Móvil (Mexico)
Lan (Chile)
Oi (Brazil)
Gruma (Mexico)
Itaú Unibanco Holding (Brazil)
Bolivia/Entel
NATIONALIZATIONS
GOOD GOVERNANCE GENERATIONAL CHANGE 40
Global Pact of the United Nations Daniel Servitje, Grupo Bimbo (Mexico)
LATIN TRADE NOVEMBER-DECEMBER 2013
Luis Carlos Sarmiento, Grupo Aval (Colombia)
BRAVO BUSINESS AWARDS 20TH ANNIVERSARY
TIMELINE
Having Latin American multinationals in the lists of the largest companies in the world is clearly a recent and growing phenomenon. Multinatilatinas went from selling abroad to acquiring companies abroad. Global financial conditions facilitated this expansion, but it was the courage of entrepreneurs such as those interviewed in this issue, that finally jump-started the growth of these companies. This table highlights the main trends that characterized its development.
2004 - 2008
2009 - 2013
América Móvil (Mexico)/Telecom (Italy) in Peru
Avianca Taca (Colombia)/Aerogal (Ecuador)
America Móvil (Mexico)/Verizon (EU) in Argentina
Copec (Chile)/Terpel (Colombia)
Telmex (Mexico)/AT&T Latam. (United States)
Sura (Colombia)/pensionesING (Holland) in Latam
Fallabela (Chile) opens in Colombia
Aval (Colombia)/BAC Credomatic (C.America)
Cencosud (Chile)/Gbarbosa (Brazil) and Wong (Peru)
Fusión de Lan (Chile) and Tam (Brazil)
Techint (Argentina)/Imsa (Mexico)
Cencosud (Chile)/Carrefour (France) in Colombia
Vale (Brazil)/Inco (Canada)
Bimbo (Mexico)/Weston Food (Canada)
Argos (Colombia)/Southern Star(United States)
JBS Friboi (Brazil)/Pilgrim’s Pride (United States)
Tenaris (Argentina, Italy)/Maverick Tube(EU)
Bimbo (Mexico)/Sara Lee (United States)
Votorantim Metais (Brazil)/U.S. Zinc (United States)
Gruma (Mexico)/Albuquerque (United States)
Techint (Argentina, Italy)/Hydril (United States)
Nutresa (Colombia)/Fehrs Foods (United States)
Gerdau (Brazil)/Chaparral Steel and Quanex (EU)
Concha y Toro (Chile)/Fetzer (United States)
Grupo Gruma (Mexico)/Rositas (China). Malaysia, Italy
Gruma (Mexico)/Semolina(Turkey), Solnte (Russia)
Embraer (Brazil)/Ogma (Portugal)
Sadia BRF (Brazil) constructs plant in UAE
Bimbo (Mexico)/Beijing Panrico (China) BBVA (Spain)/Banco Granahorrar (Colombia) Cemex (Mexico)/Rinker (Australia)
Banco Bradesco (Brazil)
Santander México (Mexico)
Homex (Mexico)
Pampa Energía (Argentina)
Bancolombia (Colombia)
Arcos Dorados Holdings (Argentina)
Copa Holdings (Panama)
Cementos Pacasmayo (Peru)
Cosan (Brazil)
Cencosud (Chile)
Source: Juan Fernando Vélez-Ocampo and María Alejandra González-Pérez
Perdigão (Brazil)/Plusfood (Holland)
Ecopetrol (Colombia) Venezuela (Faja del Orinoco)/Exxon, Conoco (EU)
Venezuela/Cargill (United States)
Venezuela/Ternium (Luxembourg),Cemex (Mexico)
Venezuela/Smurfit Kappa (Ireland)
Venezuela/Santander (Spain) and Verizon (EU)
Bolivia/Abertis (Spain)
Bolivia/Repsol YPF (Spain), Entel (Italy)
Argentina/Repsol (Spain)
249 Latin American companies in the Global Pact
2,500 Latam companies in the Global Pact
André Gerdau Johannpeter, Gerdau (Brazil)
Alejandro Santo Domingo (Colombia)
Marcelo Odebrecht, Organización Obedrecht (Brazil)
Sandro Solari Donaggio, Falabella (Chile) NOVEMBER-DECEMBER 2013 LATIN TRADE
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BRAVO BUSINESS AWARDS 20TH ANNIVERSARY
MULTINATIONALS 2012 INTERNATIONAL CEO OF THE YEAR
large customers,” he explained. “It was a revolution that brought in better asset management and higher quality of service. Something similar occurred in the region’s telecommunications industry. People forget how bad telecommunications were,” he said. The AES strategy in the region focused on acquisitions, reaching a peak in 2000. Since then, its growth has been basically organic. In 2005, Gluski made what he calls the most important decision of his career at AES: to grow in Latin America. As president for Latin America, he decided to expand, and invited pension funds and other strategic partners to join in.
THE BEST PRODUCT OF THE REFORMS Andrés Gluski CEO, AES CORPORATION
D
uring the 1990s, AES Corporation decided to enter Argentina and then Brazil. The Venezuelan Andrés Gluski, CEO of the company since 2011, thinks this was a very wise decision and that the results are the proof. With an installed capacity to generate almost 15,000 MW of electricity across 59 plants, this American company with $10 billion in market capitalization today derives slightly more than half of its revenues from its Latin American operations. AES, which was created in 1981, has seen the potential of this market. “They needed technology, management and investment, but they had a growing population and a growing demand for energy,” said Gluski. The company identified an opportunity in the recovery of assets in which the necessary investments hadn’t been made, or in improving operating systems. To arrive at that point required the reforms in the electrical sector of the 1980s and 1990s that produced the most far-reaching institutional changes that occurred in Latin America in this activity. The reforms began in Chile in 1982, followed by Argentina in 1990, then Bolivia, Peru and later Colombia, Brazil and the countries of Central America and the Caribbean. The dozen or so reforms “broke the public sector monopoly and introduced elements of competition in the generation and distribution to
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A clear example of the success of this decision is that of AES Gener in Chile. The participation of AES in the company declined from 98 percent to 71 percent. “We opened the capital of these companies to local partners,” he said. At the same time, the price per share increased 257 percent between January 2007 and October of this year, and market capitalization has grown by a factor of five. They have also been divesting the shares in an orderly way where they don’t think they have advantages, as in Trinidad. Now they operate in 21 countries, down from 25 in 2012. Recently, the Venezuelan government bought the assets of AES in that country in a market operation on the Caracas exchange. Gluski found that the regional challenges are carrying electricity hundreds of miles to people who still don’t have it, and preparing for future demand. “In 2030, Latin America will need investments of $500 billion to meet this demand.” This huge number, which is equal to almost double Chile’s GDP, would be hard to find within the fiscal resources of the individual countries, he said, and that’s why they have to call on the private sector to make up the difference. Otherwise the growth and well being of the region would be restricted. “The quality of life depends on a reliable electrical service,” the CEO said. To attract private investment, it’s necessary to have clear rules of the game so the operators can make long-term projections. “The investments in the electrical sector are for at least 30 years.” With these projections at hand, it will be much easier to put together the money to finance the projects. “In many countries, the pension funds have grown dramatically. Now they are an excellent source of long-term financing.” With the current structure of generating revenues, the fate of AES is very closely tied to that of each of the countries of the region. “We can’t do well if the country in which we are located isn’t doing well,” he said. That’s why he thinks it’s time to think about fiscal discipline, so that the economies continue to be stable when prices of primary materials fall or international interest rates rise. “It’s very important to keep the gains of the last 10 years,” he said.
PHOTO: COURTESY OF AES CORPORATION
AES has 59 electric plants and half of their revenues come from Latin America.
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BRAVO BUSINESS AWARDS 20TH ANNIVERSARY
MULTINATIONALS 2003 INTERNATIONAL CEO OF THE YEAR WHAT ARE THE MAIN DIFFERENCES OF THE LATIN AMERICAN, AND OTHER FAST-GROWING MARKETS?
Bruno Di Leo SENIOR VP SALES AND DISTRIBUTION, IBM
I
n 1993, giant IBM witnessed one of the deepest strategic changes in its history. The company chose to shred low-margin business to concentrate on new areas like consulting and software. The change allowed the giant corporation to turn around its balance sheet, and to post profits in 1994 for the first time in four years. Peruvian Bruno Di Leo, now worldwide senior vice president of sales and distribution, has accompanied the company to grow, especially in emerging markets. He went from being general manager of IBM Brazil, to general manager for Latin America, to head the growth markets area, a position that he will assume again this year. These are his views on the last two decades.
WHAT WAS THE MOST IMPORTANT DECISION YOU TOOK AS HEAD OF IBM’S LATIN AMERICAN OPERATION? For years, IBM’s investment model in Latin America was to build manufacturing capabilities, and we had facilities in Mexico, Brazil and Argentina. Early in 2000, we recognized the strategic importance of services in the information technology industry. We decided to shift the focus of our investments to centers that we could use to deliver IT services to the region as well as export to the world. At the time, the local governments were skeptical because they feared the loss of manufacturing jobs. It took a considerable amount of effort to convince them that it was the right strategic decision, but we did it. As a consequence, we actually increased our level of employment in the region. For example, in Brazil we grew our employee base by 400 percent in a period of three years. We stimulated local industry, we developed the talent needed to sustain the growth of the IT industry, and most importantly, we created conditions that encourage local innovation that has value in these markets and the world.
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LATIN TRADE NOVEMBER-DECEMBER 2013
WHAT HAS BEEN THE MAJOR CHANGE IN ADOPTION IN LATIN AMERICA IN THE LAST 20 YEARS? The birth of the internet and later, the boom of mobile devices have created a world that is more instrumented, interconnected and intelligent. IBM calls this phenomenon a Smarter Planet, but the point is that all of these interconnected people and things are creating more data that we can comprehend. To put this into perspective, 90 percent of the world’s data was created in the last two years - this is what we mean by Big Data. The power is that if you can access it and analyze it, you can know your customers, employees and citizens in a much deeper way. The flip side is that these “connected consumers” demand a new level of speed, access and transparency, and as a result, businesses have had to reinvent their portfolio of products and services to appeal to them. You can imagine how important this is becoming in Latin America, where 47 percent of the population is part of the “millennial” generation. These are strong IT consumers and early adopters of IT. The mix is powerful, and the opportunities to serve this tech-savvy generation of consumers is exciting.
WHAT HAS BEEN THE MAJOR CHANGE IN THE WAY COMPANIES ARE MANAGED? We have seen greater integration of roles among leaders at the C-suite level [top management]. For example, as technology expands the way the consumer is understood, it affects the way marketing is led and practiced. This creates opportunities for chief marketing officers and chief information officers to collaborate in new ways. I go back to the point that I made about the amount of data that is now available because consumers are sharing information about what they like and value with their social networks. The IT department is able to help collect that data and analyze it, and turn it into insight about the consumer that the marketing organization can then use to understand their buyers on a much more personal and intimate way. This interplay is moving us to a point where a “marketof-one” is possible and scalable because it is all automated.
PHOTO: COURTESY OF IBM
A SMARTER PLANET
Look at the Bric countries as an example. In the last decade, China has developed mainly from an industrial base and exports, and is now trying to create a services economy. On the other hand, India has done just the opposite. It’s built a strong services sector, and it’s just recently that the country has been trying to recover the industrial sector it had in the ‘70s. Now Brazil - Brazil is really quite unique. It is actually one of the very few economies in the emerging world that is well-balanced. It has enough agricultural and commodity resources, a strong industrial base that started in the ‘50s, and a vibrant and very innovative services sector.
OPINION
A DIFFERENT GAME FOR THE REGION
the 1993 negotiations with the state which the politics of the industry played a central role. This was the same type of strategy used by Telefónica in Spain before going global. The contrast could not be stronger with Telefónica’s predecessor, the U.S. multinational ITT. Between 1927 and 1972, ITT had a board composed of members from the Chilean conservative elite. This provided excellent links with a Chilean corporate sector that benefited from protectionism, but also made the firm a political target by the Christian Democratic and Socialist Parties, which portrayed the firm as a relic of an oligarchic past. Before 1970, both parties called for an expropriation of the firm, which was eventually carried out by Allende in 1972. Telefónica’s strategy clearly helped to decrease alienating policymakers.
Marcelo Bucheli
BY MARCELO BUCHELI ince the 18th century Bourbon Reforms, the state in Latin America has continuously, and stubbornly, played a major role in the economy. During the 1990s, many predicted that the debt crisis, globalization, the subsequent adoption of anti-inflationary macroeconomic policies, and privatization were finally ending the state’s ever present role. The end of the Cold War and the democratization of the continent seemed to leave populism and left-wing ideologies without ground. Two decades later, we find a continent in which the left didn’t disappear, the Cold War was replaced by the battle between the West and radical Islam, the war on drugs became the region’s main destabilizing force, and the state remained a power player in Latin American economies. These factors have impacted the ways domestic and foreign investors behave, generating new opportunities and challenges.
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LATIN TRADE NOVEMBER-DECEMBER 2013
NEW TYPES OF CORPORATE GOVERNANCE Before the 1990s, foreign investment was dominated by traditional capital exporting countries such as the United States and Britain. After the 1990s, investment in Latin America brought capital and new types of corporate governance that adapted well to new social conditions. Consider the case of Spain’s Telefónica, which arrived in Latin America during the wave of privatizations of telecommunications in the continent. After starting operations in Chile in 1990, Telefónica opted for having a board of directors connected to the ruling center-left coalition known as Concertación. Some members had ties to the pre-Pinochet administration of Marxist Salvador Allende – and therefore were shunned by most of Chile’s corporate world – but they provided Telefónica with good communications channels with the government. This was particularly useful during
THE ROLE OF STATE-OWNED ENTERPRISES
For most of the 20th century, the growth of state-owned enterprises, particularly in the natural resource sector, was seen as detrimental to foreign investors. Corporations such as Pemex, Yacimientos Petrolíferos Fiscales, YPF, or Pdvsa, had been created or grown after government actions that suddenly limited, or eliminated, foreign participation in their industry. Some of these firms were often viewed as quintessential representatives of government inefficiency, corruption, and state-led protectionism. However, the new global scope of the continent’s state-owned enterprises have generated interesting results, even beyond the continent’s borders. One example is Brazil’s Petrobras. Much has already been said about how this firm operates at previously unthinkable levels of innovation and efficiency. Petrobras also differs from the way state-owned enterprises did business in the past in that it generates opportunities that fit within long-term economic plans of developed nations.
PHOTO: COURTESY OF UNIVERSITY OF ILLINOIS AT URBANA-CHAMPAIGN
BRAVO BUSINESS AWARDS 20TH ANNIVERSARY
OPINION
The discovery of the pre-salt deposits in the Brazilian Atlantic led to a rapid building of a close partnership between Brazil and Norway, a country with long offshore drilling experience. The approach started at the government level, and between two state-owned enterprises – Petrobras and Statoil, but soon (especially after 2010), many Norwegian oil firms went to Brazil to offer their services. The approach between the two countries generated opportunities for the Norwegian clusters that have emerged around the shipping and oil industries. One example is Ålesund, created by a private sector initiative around the fishing and shipping industries in the late 1960s, this cluster has evolved around vessel building and design, offshore technology development and oil shipbuilding. It includes cutting-edge innovation centers owned by firms like Rolls-Royce, and training and research programs created by a partnership between local schools and universities and the private sector. Concerned about the need to generate linkages around the oil industry, in recent years, the Norwegian government has paid special attention to the creation of these clusters. The rise of the Brazilian oil industry boosted this long-term project. The evercloser relationship has led Rolls-Royce to plan building a training center in Brazil similar to the one they have in Ålesund. Brazilian local content regulations also made Rolls-Royce import some components from Brazil to Ålesund.
ter of time before victims of the illegal groups’ actions sued Chiquita in U.S. courts. Others soon sued Drummond in Colombia for similar reasons. Chiquita has claimed it’s been unfairly punished for acknowledging its mistakes before the law. Regardless, these long legal battles showed having relationships with criminal groups in the post-9/11 order could carry more grave consequences than before.
THE DEFINITION OF ECONOMIC NATIONALISM The rise of the so-called “New Left” started a new period of hostile relationships between governments and foreign multinationals. As happened in the decades before the 1970s, leftwing governments have argued that too much foreign control of a particular sector of the economy hurts national sovereignty and impedes their countries from enjoying the benefits of said sector. This was the argument Cristina Fernández de Kirchner used in 2012 when expropriating Spain’s Repsol’s assets in the previously state-owned YPF oil company, bringing back state control of the firm. For many, the agreement signed between
BRAVO BUSINESS AWARDS 20TH ANNIVERSARY
YPF and Chevron in 2013 to jointly exploit the Vaca Muerta fields was surprising. The Argentine government justified this action saying it was still consistent with their economic nationalist agenda, which didn’t mean exactly government control, but output maximization. This is not new. In 1955, after having squeezed YPF for years to finance his social programs, Argentina’s president Juan Perón approached Standard Oil of Indiana to continue exploiting the country’s oil wealth. His argument? YPF couldn’t do it on its own, and nationalism meant output maximization. In this century, Chevron benefited from this change in definitions and played along with economic nationalism. In short, the post-1990s period probably didn’t bring the liberal economic system many dreamed of. However, this hasn’t meant that corporations developing the right strategy haven’t been able to reap benefits from the new political and economic environment. Marcelo Bucheli is an associate professor of business administration at the University of Illinois at Urbana-Champaign.
BUSINESS IN THE POST-9/11 WORLD The events of September 11th had a direct effect on the Latin American business environment. Shortly after the attacks on the U.S., then Secretary of State Colin Powell made public an official list of what the American government considered “terrorist organizations.” Providing any kind of aid to these groups – financial or otherwise – equated collaborating with the enemy. The list included illegal right-wing and left-wing Colombian armed groups, known for their human rights violations and participation in the cocaine trade. It didn’t take long for U.S. banana multinational Chiquita to admit having paid money to some of these illegal groups to protect its employees’ lives. It was a mat-
NOVEMBER-DECEMBER 2013 LATIN TRADE
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BRAVO BUSINESS AWARDS LIST OF PAST WINNERS YEAR
AWARD
NAME
TITLE
2004
CEO of the Decade
Carlos Slim Helú
President, América Móvil, Telmex, Grupo Carso, Grupo Financiero Inbursa
2013
CEO of the Year
Álvaro Fernández Garza
CEO, Grupo Alfa
2012
CEO of the Year
Raúl Calfat
CEO, Votorantim
2011
CEO of the Year
Marcelo Odebrecht
CEO, Odebrecht
2010
CEO of the Year
Ricardo Gutiérrez Muñoz
CEO, Mexichem
2009
CEO of the Year
Daniel Servitje
CEO, Grupo Bimbo
2008
CEO of the Year
Enrique Cueto Plaza
CEO, LAN Airlines
2008
CEO of the Year
Luis Fernando Santos
President, Casa Editorial El Tiempo
2007
CEO of the Year
Enrique Cibié Bluth
CEO, Masisa
2007
CEO of the Year
Roger Agnelli
CEO, Companhia Vale do Rio Doce
2006
CEO of the Year
Pedro Heilbron
CEO, Copa Airlines
2006
CEO of the Year
Constantino de Oliveira Junior
President, Gol Linhas Aéreas Inteligentes
2005
CEO of the Year
Gerardo de Nicolás Gutiérrez
CEO, Desarrolladora Homex
2005
CEO of the Year
Horst Paulmann Kemna
CEO & Chairman of the Board, Cencosud
2004
CEO of the Year
Roger Agnelli
CEO, Companhia Vale do Rio Doce
2003
CEO of the Year
Carlos Slim Helú
President, América Móvil, Telmex, Grupo Carso, Grupo Financiero Inbursa
2002
CEO of the Year
Ricardo Obregón
CEO, Bavaria
2001
CEO of the Year
Mauricio Novis Botelho
President & CEO, Embraer
2000
CEO of the Year
Lorenzo H. Zambrano
CEO & Chairman of the Board, Cemex
1999
CEO of the Year
Valentín Diez Morodo
CEO, Grupo Modelo
1998
CEO of the Year
Alfonso Romo Garza
CEO, Grupo Pulsar
1997
CEO of the Year
Antonio Fernández Rodríguez
CEO, Grupo Modelo
1996
CEO of the Year
Lorenzo H. Zambrano
CEO & Chairman of the Board, Cemex
2013
Leader of the Year
Otto Pérez Molina
President, Guatemala
2012
Leader of the Year
Sebastián Piñera
President, Chile
2009
Leader of the Year
Felipe Calderón Hinojosa
President, México
2008
Leader of the Year
Álvaro Uribe Vélez
President, Colombia
2007
Leader of the Year
Martín Torrijos
President, Panamá
2006
Leader of the Year
Leonel Fernández
President, Dominican Republic
2005
Leader of the Year
Ricardo Lagos
President, Chile
2004
Leader of the Year
Álvaro Uribe Vélez
President, Colombia
2003
Leader of the Year
Luiz Inácio Lula da Silva
President, Brazil
2002
Leader of the Year
Ricardo Lagos
President, Chile
2001
Leader of the Year
José María Aznar
President, Spain
2000
Leader of the Year
Leonel Fernández
President, Dominican Republic
1999
Leader of the Year
Armando Calderón Sol
President, El Salvador
1998
Leader of the Year
Ernesto Zedillo
President, México
1998
Leader of the Year
Teodoro Petkoff
Planning Minister, Venezuela
1997
Leader of the Year
Fernando Henrique Cardoso
President, Brazil
1996
Leader of the Year
Ignacio Santillana
CEO, Telefónica Internacional
2013
International CEO of the Year
Ignacio Antoñanzas
CEO, Enersis
48
LATIN TRADE NOVEMBER-DECEMBER 2013
BRAVO BUSINESS AWARDS LIST OF PAST WINNERS YEAR
AWARD
NAME
TITLE
2012
International CEO of the Year
Andrés R. Gluski
CEO, Aes Corp.
2008
International CEO of the Year
Subramaniam Ramadorai
CEO, Tata Consultancy Services
2007
International CEO of the Year
César Alierta Izuel
CEO, Telefónica
2006
International CEO of the Year
Craig Herkert
President & CEO for the Americas, Wal-Mart International
2005
International CEO of the Year
Thomas A. Gales
Vice-President, Caterpillar Latin America
2004
International CEO of the Year
Steven Shindler
CEO, NII Holdings
2003
International CEO of the Year
Bruno Di Leo
President IBM Latin America
2002
International CEO of the Year
Cesáreo Fernández González
CEO, Wal-Mart México
2001
International CEO of the Year
Dennis Bakke
CEO, AES
1999
International CEO of the Year
Charles Strauss
Vice President, Unilever Latin America
1998
International CEO of the Year
George Soros
President, Soros Fund
1998
International CEO of the Year
Gustavo Cisneros
President, Grupo Cisneros
1997
International CEO of the Year
Adolfo Carvajal
President, Grupo Carvajal
1996
International CEO of the Year
*Robert L. Crandall
President & CEO, American Airlines
2013
Dynamic CEO of the Year
Enéas Pestana
CEO, Grupo Pao de Açucar
2011
Dynamic CEO of the Year
Luis Carlos Sarmiento Gutiérrez
CEO, Grupo Aval
2010
Dynamic CEO of the Year
Woods Staton
CEO, Arcos Dorados
2010
Pioneering CEO of the Year
Ronald Pantin
CEO, Pacific Rubiales Energy
2009
Pioneering CEO of the Year
Federico Restrepo Posada
CEO, Empresas Públicas de Medellín (EPM)
2009
Social Responsibility CEO of the Year
Lorenzo Mendoza
CEO, Empresas Polar
2011
Emerging CEO of the Year
Martín Migoya
CEO, Globant
2012
Entrepreneurial CEO of the Year
Alejandro Ramírez Magaña
CEO, Cinépolis
2012
Financier of the Year
David Bojanini García
CEO, Grupo Sura
2011
Financier of the Year
Agustín Carstens
Governor, Banco de México
2010
Financier of the Year
Luciano Coutinho
President, Banco Nacional de Desenvolvimento Econômico e Social (Bndes)
2009
Financier of the Year
Enrique García
President & CEO, Corporación Andina de Fomento (CAF)
2008
Financier of the Year
Henrique de Campos Meirelles
Governor, Banco Central de Brasil
2007
Financier of the Year
André Esteves
President, UBS Latin America
2006
Financier of the Year
Luis Peña Kegel
President, Banorte
2005
Financier of the Year
José Ignacio Goirigolzarri
President & Director of Operations, BBVA
2004
Financier of the Year
Roberto Setúbal
CEO, Banco Itaú
2003
Financier of the Year
Eduardo Eraña
President, Visa International, Latin America and the Caribbean
2002
Financier of the Year
Fabio Barbosa
CEO, ABN AMRO Banco Real
2001
Financier of the Year
Emilio Botín
President, Banco Santander
2000
Financier of the Year
Susan Segal
Partner, JPMorgan Partners/Chase Capital Partners
1999
Financier of the Year
Thomas O. Hicks
Partner and Founder, Hicks, Muse, Tate & Furst
1998
Financier of the Year
Roberto Zamora
President, Lafise (Latin America Financial Services)
1998
Financier of the Year
Emilio Botín
President, Banco Santander
1997
Financier of the Year
Henrique de Campos Meirelles
President, Bank of Boston
50
LATIN TRADE NOVEMBER-DECEMBER 2013
BRAVO BUSINESS AWARDS LIST OF PAST WINNERS YEAR
AWARD
NAME
TITLE
1996
Financier of the Year
Enrique Iglesias
President, Banco Interamericano de Desarrollo (BID)
2012
Investor of the Year
Carlos Slim Domit
President of the Board, Telmex, Grupo Carso, Grupo Sanborns & Co-Chairman, América Móvil
2011
Investor of the Year
Alex Behring
Co-Founder & Managing Partner, 3G Capital
2013
Trade Americas Bravo
The Goodyear Tire & Rubber Co.
2010
Technology Leader of the Year
John E. Davies
Vice-President & General Manager, Intel World Ahead Program
2009
Technology Leader of the Year
Laércio Cosentino
CEO, Totvs
2008
Technology Leader of the Year
Marcelo Argüelles
President, Grupo de Empresas Farmacéuticas Sidus
2007
Technology Leader of the Year
Jorge Steffens
CEO, Datasul
2006
Technology Leader of the Year
André Dayan
Founder, Vitrogen
2005
Technology Leader of the Year
Keith Goodwin
Senior Vice-President, Cisco Systems
2004
Technology Leader of the Year
Blanca Treviño
CEO, Softtek
2003
Technology Leader of the Year
Luiz Meisler
Senior Vice-President, Oracle Latin America
2002
Technology Leader of the Year
Michael Dell
CEO, Dell Computer Corp.
2001
Technology Leader of the Year
Luiz Frias
CEO, Universo Online
2000
Technology Leader of the Year
Fernando Espuelas
CEO, Starmedia
2012
Social Sustainability Leader
Douglas Orane, CD JP, Hon. LLD
Non-Executive Chairman, GraceKennedy Ltd.
2011
Humanitarian of the Year
Luanne Zurlo
President & Founder, Worldfund
2010
Humanitarian of the Year
Pilar Nores de García
President, Instituto Trabajo y Familia & First Lady of Perú
2009
Humanitarian of the Year
Rebeca Villalobos
Founder, ASEMBIS
2008
Humanitarian of the Year
Vivian Pellas
Executive Director, Asociación Pro Niños Quemados de Nicaragua
2007
Humanitarian of the Year
Abel Albino
Founder, Cooperadora para la Nutricion del Infante
2006
Humanitarian of the Year
Michel Chancy
Founder, Veterimed
2005
Humanitarian of the Year
Milena Grillo
Founder & CEO, Fundación Paniamor
2004
Humanitarian of the Year
Juan Carlos Blumberg
Founder, Fundación Axel Blumberg
2003
Humanitarian of the Year
Paulo Roberto Teixeira
Director of HIV/Aids Department, World Health Organization
2002
Humanitarian of the Year
Oded Grajew
Founder & President, Instituto Ethos de Empresas e Responsabilidade
2001
Humanitarian of the Year
Juan Hernández
Director, Presidential office for Mexicans abroad
2000
Humanitarian of the Year
Rodrigo Baggio
Founder, Center for Digital Inclusion
1999
Humanitarian of the Year
Baltasar Garzón
Spanish Judge
1998
Humanitarian of the Year
Lázaro de Mello Brandão
President, Bradesco
2013
Innovative Leader of the Year
Germán Efromovich
CEO, Grupo Synergy
2011
Innovative Leader of the Year
Laurence Golborne
Minister of Public Works, Chile
2010
Innovative Leader of the Year
Celso Amorim
Minister of Foreign Affairs, Brazil
2009
Innovative Leader of the Year
Andrés Velasco
Minister of Finance, Chile
2008
Innovative Leader of the Year
Rubén Blades
Minister of Tourism, Panama
2007
Innovative Leader of the Year
María Antonieta de Bonilla
President, Banco Central de Guatemala
2006
Innovative Leader of the Year
Ricaurte Vásquez Morales
Minister of Panamá Canal Affairs
2005
Innovative Leader of the Year
Pedro Pablo Kuczynski
Prime Minister, Perú NOVEMBER-DECEMBER 2013 LATIN TRADE
51
BRAVO BUSINESS AWARDS LIST OF PAST WINNERS YEAR
AWARD
NAME
TITLE
2004
Innovative Leader of the Year
Luiz Fernando Furlan
Minister of Development, Industry and Trade, Brazil
2003
Innovative Leader of the Year
Roberto Lavagna
Minister of Finance, Argentina
2002
Innovative Leader of the Year
Francisco Flores Pérez
President, El Salvador
2001
Innovative Leader of the Year
Valentín Paniagua
Interim President, Perú
2000
Innovative Leader of the Year
Herminio Blanco
Secretary of Commerce, México
1999
Innovative Leader of the Year
Arminio Fraga Neto
President, Banco Central de Brasil
1998
Innovative Leader of the Year
Roberto Monti
President & CEO, YPF
1998
Innovative Leader of the Year
Pedro Malan
Minister of Finance, Brazil
1998
Innovative Leader of the Year
Álvaro Arzú
President, Guatemala
1997
Innovative Leader of the Year
Jaime Lerner
Governor, Paraná
1996
Innovative Leader of the Year
Gonzalo Sánchez de Lozada
President, Bolivia
2010
Environmentalist of the Year
Álvaro Ugalde
President, Instituto Nectandra
2009
Environmentalist of the Year
Douglas Tompkins
President, Fundación Ecología Profunda
2008
Environmentalist of the Year
Richard Hansen
President, Foundation for Anthropological Research and Environmental Studies
2007
Environmentalist of the Year
Julio Cusurichi Palacios
Advisor, Federación Nativa del Río Madre de Dios y Afluentes
2006
Environmentalist of the Year
Albina Ruiz Ríos
Executive Director, Ciudad Saludable
2005
Environmentalist of the Year
María Andrade Hernández
Director General, Pronatura Península de Yucatán
2004
Environmentalist of the Year
Diana Pombo Holguín
Founder, Instituto de Gestión Ambiental
2003
Environmentalist of the Year
Pedro Leitão
Executive Secretary, Fundo Brasileiro para a Biodiversidade
2002
Environmentalist of the Year
Clóvis Ricardo Schrappe Borges
Founder & Executive Director, Sociedade de Pesquisa em Vida Selvagem e Educacao Ambiental
2001
Environmentalist of the Year
Sven Olof Lindblad
Founder, Lindblad Expeditions
2000
Environmentalist of the Year
John Forgach
CEO, Banco Axial, Yale University McKluskey Fellow
1999
Environmentalist of the Year
Homero Aridjis
Founder, Grupo de los Cien
1998
Environmentalist of the Year
Alexander Watson
Director of Latin America, The Nature Conservancy
1998
Environmentalist of the Year
Stephan Schmidheiny
Founder, World Business Council for Sustainable Development
2013
Innovative Social Sustainability Award
Magalie Dresse
President, Caribbean Craft
2013
Distinguised Service in the Hemisphere
Marina Silva
Former Senator, Brazil
2011
Distinguised Service in the Hemisphere
Alberto Alemán Zubieta
Panamá Canal Authority
2010
Distinguised Service in the Hemisphere
Luis Alberto Moreno
President, Banco Interamericano de Desarrollo (BID)
2012
Distinguished Service of the Year
Julio Velarde Flores
Governor, Banco Central de Perú
2013
Lifetime Achievement Award
Maria das Graças Silva Foster
CEO, Petrobras
2012
CEO Lifetime Achievement Award Juan Benavides
CEO, Falabella
2011
Lifetime Acheivement Award
Leonel Fernández
President, Dominican Republic
2010
Lifetime Achievement Award
Álvaro Uribe Vélez
Former President, Colombia
1997
Posthumous Recognition
Ron Brown
U.S. Secretary of Commerce
1996
Posthumous Recognition
José Estenssoro
CEO, YPF
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LATIN TRADE NOVEMBER-DECEMBER 2013
FINANCIAL SECTOR
BRAVO BUSINESS AWARDS 20TH ANNIVERSARY
2004 FINANCIER OF THE YEAR
HOW TO MAKE A MEGA BANK Roberto Setúbal FOUNDER, BANCO ITAÚ
PHOTO: COURTESY OF BANCO ITAÚ
“T
here’s no question about it: it was the right decision at all levels,” the founder of Banco Itaú Unibanco, Robeto Setúbal said in his interview with Latin Trade referring to the merger between Banco Itaú and Unibanco. In November 2008, Banco Itaú, the second largest in Latin America at the time, merged with the region’s third-largest, Unibanco, to form Latin America’s second-biggest financial institution with $261 billion in assets at the time. The reported $6 billion transaction was the largest cash M&A ever in Brazil. Despite its tremendous size, the deal was documented and closed in less than a week, without the intervention of the usual army of legal advisors or investment bankers. Setúbal knows the value of counsel, but that time he did not need it. “They are helpful when you need to know your counterpart.” Controlling shareholders of both banks, Roberto Setúbal and Pedro Moreira Salles met almost once a month since mid-2007. They were not rigorously scheduled appointments. Sometimes they would meet more often, but for instance, they skipped their gatherings for three months. In general, they would have two-hour conversations on a late Sunday afternoon at the home of non-executive director of Banco Itau, Israel Fainboim. They would discuss their vision for the banking industry and for their banks. They were both interested in internationalizing their business, and they placed meritocracy at the center of corporate culture. “Nothing was especially difficult. Price was not an issue, because we both wanted to stay in the business. We wanted to get a balanced deal for both sides.” They were not in a real rush. “We wanted to make sure the deal was mature, that everybody was comfortable,” Setúbal said. When the negotiation reached that point, the legal documents to seal the agreement took less than a week to prepare, he added. The story of the mega merger began in 1994 when the Brazilian
financial system went through a major transformation, as the government privatized a block of state-run banks and allowed foreign investment into the sector. New market conditions generated a big incentive to merge. In order to survive, banks had to gain scale, Setúbal said. “Scale was the name of the game in the last 20 years.” Moreira and Setúbal had met in 1988 for the first time, to explore a merger. They did not reach an agreement at that time, Setúbal recalled, and they chose to go in separate expansion paths which profited from the many new opportunities open in the market. Ten years later, they had come to an apparent dead end. “In 2008, there were no more alternatives left. The possibility of growing through mergers and acquisitions was reduced.” They had met two times in the 10 years since they started their expansion and agreed to consider a joint operation in the future. Size was the driver of the new conversations, Setúbal said. When they reached the point where there were not many opportunities to consolidate, they fell back on the mutual trust and the knowledge they had of each other’s business. Seasoned acquirers of family-owned banks, they entered into a new deal as a way to increase their desired size. “We wanted to become more international, and to become a regional leader, we needed a solid local position,” Setúbal remarked. At the close of the third quarter 2013, Itaú Unibanco posted almost $470 billion in assets, a truly fast increase since 2008. The bank has 4,105 branches, nearly 33,000 point of service, 94,280 employees, and an annualized return on average equity of 21 percent. Besides, at more than $71 billion, it is one of the top 20 banks in the world in terms of market capitalization. Those figures are a good testament to the power of vision, and of agile and vigorous execution. They also prove that the Latin American financial sector owes Roberto Setúbal a great deal, as he showed that relevance is a matter of decision.
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BRAVO BUSINESS AWARDS 20TH ANNIVERSARY
FINANCIAL SECTOR 2011 DYNAMIC CEO OF THE YEAR domestic product is considerably smaller), and we saw a possibility of a spectacular return. We didn’t consider the U.S. because the current regulations affect companies based in other countries. Finally, we looked at the Caribbean, but we decided against that area because the countries had low credit ratings. After several years, we finally decided that Central America would be interesting, but only if we acquired a bank that had a presence in all of the countries. In 2010, we discovered that General Electric had decided to sell BAC Credomatic. This would be the start of the expansion.
WHAT WAS THE MAIN WORRY AT THAT TIME? This was the first time we had carried out an international expansion. We also worried about management training and currency risk. All of this was always under control. The results of this experience have been unbeatable.
WHAT ‘S THE NEXT STEP IN INTERNATIONAL GROWTH?
Luis Carlos Sarmiento Gutiérrez CEO, GRUPO AVAL
G
rupo Aval is a successful example of a major trend in Latin America: the international expansion of the banking system. Luis Carlos Sarmiento Gutiérrez, son of the builder and banker Luis Carlos Sarmiento Angulo, has taken the reins of the family business, the largest financial conglomerate in Colombia and one of the most important in Central America. This organization expanded its assets at a rate of 19 percent per year and its revenues by 14 percent per year between 2008 and 2012. Latin Trade spoke with the CEO.
WHEN WAS THE DECISION MADE TO EXPAND GRUPO AVAL INTO CENTRAL AMERICA? The process of internationalization began at the start of the 21st century, although it wasn’t necessarily going to be in Central America. At that time, we did an analysis of which countries could be the most interesting for Grupo Aval in South, Central and North America. We looked at Chile, a very interesting country but one that already had many banks, which suggested to us returns wouldn’t be very high. After that, we looked at Uruguay and Paraguay, which appeared to be very small for that objective. Brazil, on the other hand, was very large. Bolivia, Ecuador and Venezuela seemed to be on a political system contrary to that of Colombia. In the case of Peru, we saw it as being very interesting, but we didn’t find an option that merited expansion to that destination. In Central America, we didn’t find any one country that could be interesting by itself. However, the region as a whole seemed to be attractive because the population is similar to that of Colombia (although the gross
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HOW DO YOU MAKE A DECISION IN THE GROUP? Decisions start off as a recommendation that someone makes and then builds. There comes a point where there is a detailed analysis of the opportunity that has been identified. At the end, they are decisions that are made very quickly, which gives us a competitive advantage over others because the group that makes the decisions within Aval is small. It’s a team delegated by the board of directors and usually the persons delegated are my father and I.
WHO DISCUSSES IT? The decisions are discussed among hundreds of people before they are adopted as a final position.
WHAT IS THE MOST IMPORTANT DECISION THAT HAS BEEN MADE IN THE LATIN AMERICAN FINANCIAL SECTOR IN THE LAST 20 YEARS? It’s the decision that groups from different countries have made to regionalize, to go beyond their own borders and to strengthen themselves.
WHAT DO YOU BELIEVE ARE THE CHARACTERISTICS THAT DIFFERENTIATE THE NEW BUSINESS LEADERS OF LATIN AMERICA LIKE YOURSELF FROM THE PREVIOUS GENERATION OF LEADERS WHO HEADED THE LARGE COMPANIES? It’s the more international vision. Many new leaders now manage companies with a tradition. The previous generation faced the problem of administering new companies, where decisions are of a very different nature.
WHAT DO YOU TAKE FROM THE PREVIOUS GENERATION? From the previous generation, we conserve the experience they bring: their teachings cannot be replaced by academic education.
PHOTO: COURTESY OF GRUPO AVAL
THE INTERNATIONALIZATION OF THE BANKING SYSTEM
We are looking for opportunities to buy in those countries of Central America where we have a presence through BAC, but where our market share is 10 percent or less. That has happened with Banco Reformador in Guatemala and BBVA Panamá in Panama. For now, we just want to consolidate our presence in Central America.
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BRAVO BUSINESS AWARDS 20TH ANNIVERSARY
FINANCIAL SECTOR 2003 FINANCIER OF THE YEAR
Another critical decision in the Latin American region was made when we abandoned our participation in VisaNet Brasil, a company for processing acquisitions which we began in 1995 and developed very successfully, together with three of the country’s banks, with the goal of expanding the acceptance of electronic payments in Brazil. That was how, in the midst of favorable conditions and just at the right moment, we decided to drop our participation, leaving the banks free to create a public company. Thus, in 2009 VisaNet Brasil made its debut in the São Paulo Stock Exchange, entering the market under the name of Cielo.
WHAT WILL BE THE NEXT BIG DECISION THAT VISA MAKES IN THE REGION?
Eduardo Eraña PRESIDENT, LATIN AMERICA AND THE CARIBBEAN, VISA
E
duardo Eraña, president of Visa for Latin America and the Caribbean since 2002, is responsible for a market of 420 million cards, 21 percent of all cards that this company has issued throughout the world. Mexican, golfer, tennis player and family man, he has more than 40 years of experience in the finance business, and so he has an intimate knowledge of all the ins and outs of the payment markets in the region. His biggest challenges are to convince people to adopt electronic payment systems, and to facilitate the incorporation of the millions of people in the region who are outside of the banking system into modern payment systems. Eraña shared his strategy with Latin Trade.
WHAT HAVE BEEN THE TWO MOST IMPORTANT DECISIONS YOU HAVE MADE IN THE LAST TWO DECADES AT VISA LATIN AMERICA? For more than 50 years, Visa has been a protagonist, and also a witness to many changes in the electronic payments industry. However, one of the most decisive moments for the company took place in 2008, when Visa went public, after having achieved the best public offering in the history of the United States. Without doubt, this marked a milestone in the history of Visa, which enabled us to grow and evolve to what it is today: a leading technology payments company that helps to drive the global economy, while at the same time connecting consumers, businesses, banks and governments in more than 200 countries and territories around the world.
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WHAT POLITICAL MEASURE HAS BEEN THE BIGGEST HELP IN DEVELOPING THE ELECTRONIC PAYMENT SYSTEMS IN THE LAST TWO DECADES? Granting proper incentives to consumers to use electronic payments instead of cash. Argentina and Mexico are interesting examples. In Argentina, consumers who use their debit cards receive a refund of five percentage points of the value-added tax – that is, they end up paying at a rate of 16 percent instead of 21 percent. This has helped Argentina to have one of the highest rates of penetration of Visa cards in private consumption. In the case of Mexico, gasoline stations formerly didn’t accept cards, but this changed completely when the authorities established that the deduction for the value-added tax for consumption of fuel could only be realized through an electronic payment. Now, practically all of the gas stations in Mexico accept card payments. In Uruguay, the government is also working on a package of very innovative measures, including a refund of the value-added tax, to encourage more use of the debit card.
WHAT MEASURES STILL NEED TO BE TAKEN THAT WOULD MOST EFFECTIVELY HELP TO DEVELOP ITS USE IN THE REGION? There are millions of people who still have no access to the convenience, reliability and security that electronic payments or the inclusion into the formal financial system offer. That’s why Visa will continue focusing on innovative methods of payment that enable individuals from various segments to be part of the current and new methods of payment and receiving payments. Worldwide, there are 2.5 billion people who are not participating in the banking system. With a number like that, it’s important to keep on focusing our efforts on making it easier for more people to use electronic payments, independent of their level of access to financial services.
PHOTO: COURTESY OF VISA
CASHLESS PAYMENTS
The big challenge, but also the most significant force that steers our industry, continues to be migration from the use of cash and checks to electronic payments. Industry trends show the advances that are being made toward the convergence of electronic payments and mobile devices, the consolidation of electronic commerce, the expansion of acceptance of payments, and the importance of expanding their benefits to whoever doesn’t have access to financial services. Mobile payments, as well as on-line commerce, will introduce new opportunities to overcome the historic challenges and to offer financial services to the 2.5 billion consumers throughout the world who do not have a formal banking relationship.
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FINANCIAL SECTOR 2012 FINANCIER OF THE YEAR
to get a feel for the price in a very competitive acquisition process. In fact, the synergies were more encouraging for an investment like this, generating returns interesting for the future.
IT WAS CLEAR, THEN, THAT YOU WERE DETERMINED TO BETTER THE OFFERS OF YOUR COMPETITORS? It was a purchase that fit perfectly into our expansion plans, not only in terms of geographical location, but also in relation to the strategic sector this business represents. We wanted to make a competitive proposal and the previous analyses enabled us to present an interesting economic offer together with an attractive transition and consolidation plan. We were aggressive, but at the same time we measured the risks very carefully, and that’s why we were able to get this done.
David Bojanini García CEO, GRUPO SURA
T
o make a long story short, David Bojanini García and a team of 18 people have transformed Grupo Sura – a small, almost unknown, investment group from Medellín, Colombia – into the largest pension fund administrator in Latin America, with 25 million customers and more than $100 billion of assets under its management. The group arrived at that level in 2011 with the purchase of ING’s Latin American pension business for $3.7 billion. Currently, the office of Bojanini García is one of the best observation posts to follow the movements of pension savings, which started to grow in the region in the 1980s with the reforms in Chile, and in the 1990s with the reforms of seven other countries, including Colombia, Argentina, Uruguay and Mexico. The assets under management in the pension funds, which are worth almost 70 percent of the GDP in Chile, and between 10 and 20 percent of GDP in the other large Latin American economies, are one of the most powerful tools for accelerating development. Latin Trade spoke with the CEO about his approach.
THE BIGGEST DECISION THAT GRUPO SURA HAS MADE IN ITS ENTIRE HISTORY WAS THE PURCHASE OF ING IN THE REGION. WHAT WAS THE MOST IMPORTANT FACTOR THAT YOU TOOK INTO ACCOUNT TO SET THE OFFER PRICE FOR THE PURCHASE? In the analysis of these assets, we took into account many factors to be able to make a proposal sufficiently competitive to be a winner. We used different valuation models in addition to imputing a value for the synergies that would result from a business like this, which is what enabled us
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From the point of view of obligatory pensions, the individual savings system ensures the peace of mind for people of retirement age. Governments have the additional task of making reforms that increase the coverage. In some countries, and with different characteristics, there are some tax incentives to generate higher voluntary savings, and that’s why we at Grupo Sura are working to encourage the development of the market in this sense, through complementary alternatives of savings and investment, in all of the countries in which we have a presence. This is especially true in Colombia, a country with an important tax incentive that stimulates savings.
WHAT POLICY MEASURES ARE NEEDED IN LATIN AMERICA TO SPEED UP THE GROWTH IN HOME SAVINGS? This process is evolving in the way in which homes can satisfy their basic needs. In these countries, we will be observing significant growth in savings, given the formalization of labor, the lowering of unemployment rates and the growth of gross domestic product per capita. As was mentioned in a recent World Bank study, the number of middle class people in Latin America has risen from 100 to 150 million in the decade of the 2000s. But a key factor for stimulating voluntary savings is definitely the tax process, directed not only at ordinary people but also at entrepreneurs. This type of savings helps people put together a complement of pension for their retirement, with plans at the personal and entrepreneurial level. It’s also interesting to see that these savings work together to be a leverage to the development our countries.
HOW DO YOU MAKE DECISIONS? DO YOU RELY ON YOUR INSTINCT? ON THE NUMBERS? ON SOMETHING ELSE? To make decisions, the most important thing is to have complete and timely information, as well as keeping calm. Intuition helps, provided that it’s backed up by experience and can support an objective and wellinformed vision about the issue that is being analyzed.
PHOTO: COURTESY OF GRUPO SURA
A TRANSFORMATION IN SAVINGS
IN ADDITION TO CREATING THE PRIVATE PENSION FUNDS, WHAT IS THE MOST SUCCESSFUL POLICY MEASURE THAT HAS BEEN IMPLEMENTED IN THE REGION TO MAKE HOME SAVINGS GROW?
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FINANCIAL SECTOR 2009 FINANCIER OF THE YEAR
By sheer determination, he was able to make headway with some strong measures. He raised the price of fuels the day after he took office as minister, and convinced the president and the rest of the team who didn’t share his ideology of the need for the adjustments. “The results quickly re-established macroeconomic equilibrium and enabled us to reopen relations with international organizations,” he recalled.
EXPANSION:
ANOTHER FINANCIAL CASE
Enrique García CEO, CAF, LATIN AMERICAN DEVELOPMENT BANK
“T
he CAF couldn’t remain as an institution of five Andean countries. It needed regional expansion. It wasn’t easy to convince the partner countries that opening it up to the others was something positive for the region and for them.” But Enrique García, president of the Latin American Development Bank since 1991, made it happen. The bank now has 18 shareholder nations and $26.8 billion in assets, which compares nicely with the $10.4 billion it had in 2006. In addition, it has been able to maintain the character of a regional institution and to keep majority control with the region’s countries. The easy way would have been to give up control to the countries of the first world, which would have enabled it to make investment grade quickly. “Luckily, it was the right decision. We achieved investment grade in 1993 and since then, we have had 14 upgrades in our credit rating, until we reached AA-,” he explained. In personal terms, the decision to take control of what at the time was the Corporación Andina de Fomento (CAF) had the risks that confront anyone who leads a small organization. But García already had a history of taking on complex challenges, like leaving a comfortable position at the Inter-American Development Bank to accept the post of minister of the economic team of Bolivia at the end of the 1980s. “It was a left-right coalition government, and I wasn’t a member of any of the coalition parties. The situation in the country was so delicate that it required drastic measures,” he said.
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That attitude made it easier to take on the CAF, and that’s how he became a permanent observer of Latin America. “We’ve been through a very deep economic, financial and social change. Twenty years ago Latin America was a very vulnerable region, with countries just emerging from severe adjustments. Today we see a region that has ridden out the crisis of 2008 and the current ones. It hasn’t been part of the problem, but part of the solution during this time of crisis of the central economies,” he said. The big lessons the region learned in the 1980s are being put into practice on other countries of the world – for example, in external debt management, unemployment and fiscal adjustments, he said. “Today we have good macroeconomic management. It has enabled us to reduce poverty. It’s a very different region.” He thinks that now the region’s main challenge is to make the structural changes that will enable it to develop a growth model that’s less dependent on commodities. It must be based, he said, on dynamic sectors that generate added value, and that will invest more and better, and on strengthening institutions and taking measures that make growth compatible with conservation of the environment. “It’s a big challenge. Sometimes the success of the last few years in economic stabilization, growth and poverty reduction makes us complacent. That’s the fundamental risk.” The cycle of favorable commodity prices is ending, and so García is proposing to double infrastructure investment, improve education so that it can meet 21st century’s needs, strengthen institutions, and adjust the region’s economies to a much more open world. He thinks that up until now the region hasn’t been taking enough advantage of the bonanza to make microeconomic reforms to bring about higher productivity, “in order to be able to grow faster, with a more inclusive model,” he said. But it also appears to him that there’s one other bit of unfinished business: “The most serious of all is the inequality. Latin America is the world’s most unequal region,” he said emphatically. That’s how Enrique García, the Bolivian who in 20 years was able to transform a small Andean financial entity into a bank that will finance Latin America’s future development, views the region.
PHOTO: COURTESY OF CAF
CAF now has 18 shareholder nations and $26.8 billion in assets, which compares nicely with the $10.4 billion it had in 2006.
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BRAVO BUSINESS AWARDS 20TH ANNIVERSARY XXX
FINANCIAL SECTOR 2006 FINANCIER OF THE YEAR very sharp X-ray and have a more precise view of the customers to understand their needs and their behavior. On the other, there have been advances that make the payment system more efficient. “The check is being used less and less, and I like that,” he said. But in addition, the connection of payments to cellular telephones or through automatic tellers has meant that the
bank branches are losing relevance. With those transformations, the future of banking in the region would appear, as if it was seen from the office of Luis Peña, in a building close to the Monument of Independence in Mexico City: with a few clouds (and there always are some), but mostly clear and, why not say it? Sunny.
CHANGES AT THE BANK Luis Peña Kegel PRESIDENT, HSBC MÉXICO
PHOTO: COURTESY OF HSBC MÉXICO
T
he most important decision of the last 20 years in Latin America in the opinion of Luis Peña Kegel, president of HSBC Mexico, was the merger of the Brazilian Banks Itaú and Unibanco. He also thinks the purchase of Bancomer by BBVA in 2000 and of Banamex by Citi in 2001 are in that category too, he said in an interview with Latin Trade. The two latter transactions are a good example of the trend toward internationalization of the Latin American financial system. The effect was very profound and especially in Mexico, where most of the banks are in foreign hands. Another very important element during that time was the design of financial policy to rescue savers during the crisis. “In 1994-95 they managed to defend the savers without letting the financial sector sink into bankruptcy,” he said. They rescued every one of the investors even though the banks’ shareholders at that time lost all of their capital. That strategy of intervention was learned and perfected in the rest of the region after the first Mexican problems. Over the last 25 years, Latin American had 31 financial crises. One aspect, that in Luis Peña’s opinion has also changed drastically during the past two decades, has been risk management. Today, the difficulties associated with credit operations and the administration of liquidity are much better understood, and there are specialized areas in the banks. It’s substantially more sophisticated than it was at the beginning of the nineties. Lastly, another great transformation in the banking system is on the customer side. On one hand, CRM programs enable financial entities to take a
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TIMELINE
20
Y E A RS OF POLITICS AND ECONOMICS IN LATIN AMERICA
United States, Canada and Mexico sign the North American Free Trade Agreement (NAFTA).
30% Wage difference between professionals, formal and informal workers
P RES IDENCY
Rafael Caldera Venezuela
Brazil, Argentina, Paraguay & Uruguay create the common market of the Southern Cone (Mercosur).
Peru joins APEC.
PRESIDENCY
Álvaro Arzú Guatemala
P RES I D EN CY
Andrés Pastrana Colombia PRESIDENCY
Ricardo Lagos Chile
Fabián Alarcón Ecuador
Chile joins APEC.
Janet Jagan Guyana
1994
Venezuela & Cuba launched the Alba. Latin America shows its higher economic growth since 1980, due to commodity exports towards China.
P RES IDENCY
Boniface Alexandre Haití United States and Chile sign a Free Trade Agreement.
2004 64
1995
Perú is the country with the largest expenditures in science and technology in relation to its GDP: 1.16%, followed by Brazil with 1.12%.
1996
2005
LATIN TRADE NOVEMBER-DECEMBER 2013
1998
PRESIDENCY
Argentina is paralyzed by protests against the export taxes. Michelle Bachelet Chile
Minimum wage in Brazil rises by 50%.
United States approves the Central America Free Trade Agreement with Guatemala, Costa Rica, Nicaragua, Honduras and Dominican Republic.
1997
Felipe Calderón México Evo Morales Bolivia Rafael Correa Ecuador
2006
United States and Peru sign a Free Trade Agreement.
PRESIDENCY
Bruce Golding Jamaica Cristina Fernández Argentina
2007
Latin America’s population is 569 million, of which 38% are located in Brazil and 22% in Mexico.
Exports increased (23% of the GDP)
2008
BRAVO BUSINESS AWARDS 20TH ANNIVERSARY
TIMELINE
Politics shaped the region. The move of countries toward democracy; the disappearance of military dictatorships; the interest in free trade, economic stability and equity in the distribution of income; and economic liberalization were some of the elements that facilitated inclusive growth in Latin America. This is a list of some of these changes.
89.7% of people ages 15 and above are literate.
Ten years without a military coup d'état in Latin America
The Gini Index reduced to 1% for 9 countries of the region.
513 million Latin American population PRESI DENCY
Hugo Chávez Venezuela
PRESIDENCY
Ricardo Lagos Chile
Jean-Betrand Aristide Haití
Valentín Paniagua Perú
Alejandro Toledo Perú
Gustavo Noboa Ecuador
1999
2000 96.8 out of 100 people have a mobile device.
PRESI DENCY
Bolivia approves a new constitution. Dilma Rousseff Brazil
2001
Laura Chinchilla Costa Rica
Mauricio Funes El Salvador
2009
Kamia PersadBissessar Trinidad
Álvaro Uribe Colombia Gonzalo Sánchez de Lozada Bolivia
2002
Luiz Inácio Lula da Silva Brazil Carlos Mesa Bolivia
2003 Argentina has the highest monthly minimum wage: US$609, followed by Chile with US$411 and Uruguay with US$405.
Panama has an average growth of 9% per year from 2006 to 2011, the fastest in the Americas.
Poverty levels drop to 29.4%. 24.5% of the parliament and government positions are held by women.
Sebastián Piñera Chile
PRESIDENCY
P RES I D EN CY
PRESIDENCY
PRESIDENCY
1% Growth rate of the number of persons per household over the next 20 years in Colombia, Ecuador, Bolivia, Peru and Mexico
Brazil is the sixth largest economy in the world.
Price of construction per square foot: Rio de Janeiro US$227, Buenos Aires US$213 & Bogota US$159 P RES I D EN CY
Horacio Cartes Paraguay
PRESIDENCY
Juan Manuel Santos Colombia
Ollanta Humala Perú
2010
2011
Nicolás Maduro Venezuela
2012
2013
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TRADE 2000 INNOVATIVE LEADER OF THE YEAR
Herminio Blanco FORMER CHIEF TRADE NEGOTIATOR, MEXICO
O
n one wall of Herminio Blanco’s office in San José Insurgentes in Mexico City, there’s an enlarged copy of the front page of the Washington Post from November 18, 1993. The daily newspaper headlines that edition with the news that the United States Congress has approved the North American Free Trade Agreement. This was an enormous personal triumph for the Mexican economist, but it also marked an important milestone for Latin America. Like other leaders interviewed for this edition, Blanco thinks the opening of international trade was the most important decision made by the countries of the region over the past 20 years. “I have no doubt it’s a trend that has turned us into a more stable region,” he said. “For Mexico, it has been very important.” The North American Free Trade Agreement (Nafta) was a pioneering pact that, as Blanco said, showed the way for others in the hemisphere. “If you look at a graph of preferential agreements, you will find that the number of them explodes after Nafta,” he said. “It woke up almost all the regions of the world, mainly Latin America and Asia. It showed them the importance of negotiating with them. We opened ourselves to the United States,
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tally or in part, especially transportation services, telecommunications and energy, became an obstacle to a larger success, said Blanco. He thinks Mexico would have grown more rapidly, and would have employed more low-income people, if it had opened the economy more right from the start. For proof, he said, look no farther than the huge development in Mexico’s north. “My life was this. I was working day and night, because I had one of the greatest responsibilities with this historic initiative of the country,” he recalled. He believes that his appointment as negotiator was opposed by several important politicians. They argued against his lack of experience negotiating trade agree-
The North American Free Trade Agreement (Nafta) was a pioneering pact that, as Blanco said, showed the way for others in the hemisphere. ments. But in reality, very few people in the world had negotiating experience for the ‘new generation’ of trade agreements. In the end, his personality and academic training enabled him to complete the task. He closed pacts with 10 Latin American countries, Europe, and Israel, and launched the negotiations with Japan. His work in trade negotiations continued after he served as secretary of trade and industry for Mexico. He helped Central American nations achieve trade pacts among themselves and with the United States, and did consulting work with governments and all kinds of entities. Then, in 2013, he was a candidate for director general of the World Trade Organization. In the opinion of many, it’s just a question of time for him to make it. At the end of the day, the architect of Nafta has years to reap what he has sown.
PHOTO: COURTESY OF SOLUCIONES ESTRATEGICAS S.C.
THE ARCHITECT OF NAFTA
and so overcame the fears of opening up that everyone had.” Mercosur was strengthened with the Ouro Preto Treaty in 1994, in large part due to the success of Nafta, Blanco believes. The Nafta talks weren’t easy. In particular, energy issues were very sensitive. The opening of the Mexican energy industry to private investment and security of supply to the U.S. were two issues that complicated the negotiations, he said. Between the United States and Canada, there had been a clause that obligated Canada to reduce its energy exports to the United States only by the same amount that internal consumption decreased. “They were very hard decisions,” he added. Each country made a list of “nonnegotiables.” “We Mexicans had five ‘no’s,” he said. The opening up of energy and corn imports were two of them. These issues in particular were chosen because they made it easier for Nafta to be accepted in Mexico. “(We estimated) that they were needed so that the parties and the country could accept the start of negotiations,” Blanco explained. “Corn was one of the fundamental negotiating issues. Keeping it closed helped to open things up for the others.” At the time, many groups thought that opening corn to competition was wrong because it was the poorest Mexicans who produced it. The negotiators were able to show that local production was insufficient to cover internal consumption, and that therefore an opening could help poor consumers by having access to a larger supply. “That’s why we chose a system of reducing protection gradually over 15 years.” The success of the negotiations was impressive, but the sectors excluded to-
TRADE
BRAVO BUSINESS AWARDS 20TH ANNIVERSARY
2001 LEADER OF THE YEAR
“LATIN AMERICA IS A REGION DIVIDED IN TWO” José María Aznar FORMER PRIME MINISTER OF SPAIN
BY SERGIO MANAUT
H
e left the Moncloa Palace a decade ago, but each time he speaks, Spain stops and listens. José María Anzar, the man who changed the face of the Spanish right wing, today is one of the most sought-after personages by his nation’s press. From his office at Faes, the Partido Popular’s think tank, he analyzes with Latin Trade the Latin American reality, his other great passion.
PHOTO: COURTESY OF GENTILEZA FAES
WHAT WERE THE DECISIONS THAT CONSOLIDATED GROWTH IN LATIN AMERICA? One of the most important issues is that of political stability together with macroeconomic stability. Economic stability in the most important countries paved the way to a process of economic development that created new opportunities. That is an absolutely fundamental factor. The combination of political and economic stability is decisive. In the second place, growth in other regions of the world created a demand for raw materials. Third, stability deepened confidence and reinforced risk-taking, as is the case with the Spanish investments. There, other growing and influential realities occurred, such as the presence of China. The fourth point is the importance the Pacific has for many Latin American countries. Latin America is a region divided in two. There are the countries of the ALBA, and there are the countries that are much more advanced, much more prosperous. That has generated an increase and a surge of a new middle class that is going to be more demanding and that will contribute to the process of changes and reforms that the societies need.
IS SPAIN LOSING ITS LEADERSHIP IN THE REGION? I see a certain discontinuity, and I would like to see a Spain that is politically more active in Latin America. That’s precisely what I am working on at this time, on all the issues that signify the redefinition of Atlantic politics, because there are many people who think the future resides in the Pacific
Basin. The Pacific Basin is very important, but the Atlantic Basin is the most important in the world from the standpoint of natural resources. The redefining of policy in the Atlantic Basin is based on four pillars: the North American, Latin American, African and European pillars. The nations that created the Pacific Alliance in Latin America are Atlantic nations, not geographically, but politically. Colombia, Mexico, Peru, Chile are Atlantic in their structures, in their vision of things, in their democratic values, in their values of an open economy. We are talking about a world of values as well as an economic world.
DO YOU SEE SOME SIMILARITY BETWEEN THE DEVELOPMENT OF THE MULTILATINAS AND THOSE WHICH AT THE TIME TOOK THE SPANISH COMPANIES INTO INTERNATIONALIZATION? The large Spanish companies became multinationals when they were privatized, and the process of modernization of the Spanish economy produced their expansion. One of the essential elements that has changed over these 20 years is the Hispanic factor in the United States, which not only has economic significance, but fundamentally has a cultural and political significance. Many Spaniards complain that the multilatinas don’t invest in Spain as the Spanish companies did in the Americas. People also say that they aren’t using Spain as a bridge for the rest of Europe. The second part of your question is more political than economic. Much depends, too, on the internal health of a country. Spain has suffered a very deep crisis from which we are only starting to recover and it’s obvious that they have to notice. But it’s a question of decisions. The Spanish companies started in Latin America and then went to the United States. The Latin Americans could start in the United States and then go there. Sergio Manaut reported from Madrid.
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TRADE
ONE VOICE FOR THE SOUTH Celso Amorim MINISTER OF DEFENSE FOR BRAZIL
C
elso Amorim is ready for the interview precisely at the agreedupon time. There’s no waiting at all, though waiting is something that tends to happen with government people in Latin America. The former foreign minister, who today is Brazil’s defense minister, opened with a cordial conversation that almost immediately revealed his personality as a wise master of high-level world diplomacy. He began by stating that the Ouro Preto meeting in 1994 was one of the region’s most important decisions of the last 20 years in Latin America. “It provided the institutional backbone for Mercosur, which had been created three years earlier,” he said. The agreements that resulted from that meeting established, for the first time, the concrete basis for strong integration of the group of nations that comprise the south of the continent. That same year, negotiations opened for the free trade agreement of the Americas, or Ftaa. Unlike Mercosur, he said, it was an unbalanced initiative that favored Canada and the United States, especially in the technology sector. “We weren’t against having an agreement, but Brazil signed a declaration that later enabled us to seek a more balanced accord.” There was a repeat of that situation at the meeting of the World Trade Organization (WTO) in Cancun in 2003. “Brazil insisted
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on structuring a pact that would take seriously the interests of the developing countries on agriculture issues. We didn’t want to sign an agreement that had already been cooked up between the European Union and the United States,” he said. “In a nutshell, we didn’t want an agreement that was openly unfavorable for Brazil and Latin America.” Amorim was thoroughly familiar with the rules of this game. He had signed the Marrakesh agreement under which the WTO was established in 1994. “There was very strong pressure for us to accept an unjust agreement. At the same time, there was a perception that we were slowing down the negotiations. But if we had signed, we would have had to wait another 20 years before our interests were taken into consideration.” Up until that time, the developing countries usually did little more than to try to force a minor change in the texts that were negotiated among the largest economies, he said. “In contrast, in Cancun, we led a movement that created problems because it proposed a different path. It wasn’t negative or destructive. In a positive way, we created the framework in which the WTO now operates,” he said. The United States was very critical of the Brazilian position at the beginning, Celso Amorim recalled. However, it soon changed its attitude. “Three or four months after Cancun, I was in Buenos Aires when I received a call from Robert Zoellick (the United States trade representative). He told me that it seemed important to him to reopen the negotiations and he invited Brazil, India and other countries.” The discussion ended up becoming a sort of G20 within the WTO, where the voice of the developing countries began to be heard. “It was the first time that Latin America had played a crucial role in international institutions and debates. And they took our views into account,” he said. That kind of cooperation sustains and encourages democracies. “It helps create the multipolar world we have been working toward.” He believes that a world configured in that way also benefits the first world countries, in that the broad consensus enables decisions to be accepted more easily. That’s why, he said, Brazil is interested in strengthening the multilateral system. “We helped with the creation and the ongoing reform of the WTO, which is part of the architecture of world peace, like the United Nations.” Today, there is no doubt that this country is taken seriously in trade talks. The election of Roberto Azevêdo as secretary general of the WTO is a good demonstration of that. For those who follow developments in the negotiations of trade agreements, a good part of the reason why they have achieved this novel world balance has the stamp of one of the continent’s sharpest diplomats, the redoubtable Celso Amorim.
PHOTO: COURTESY OF THE BRAZILIAN MINISTRY OF DEFENSE
2010 INNOVATIVE LEADER OF THE YEAR
BRAVO BUSINESS AWARDS 20TH ANNIVERSARY
CHART
THE SIGNS OF CHANGE Here are some figures, which help to understand the magnitude of the transformation of Latin America in the last 20 years. POPULATION WITH INCOME OF LESS THAN
LIFE EXPECTANCY (Years)
$1/ DAY
69.4 2013 73.9 1993
11.4% 1993
$2/ DAY
5.5%
21.7%
10.4%
2013
1993
2013
Percentage of total population
INFANT MORTALITY RATE Per 1,000 born alive
42.0 16.0 1993
UNEMPLOYMENT RATE Unemployed as percentage of working age population
2013
8.3% 2013 6.4% 1993
GDP PER CAPITA
ILLITERACY RATE
$ per inhabitant
Percentage of total population
1993
14.1% 2013 12.1% 1993
2013
INCOME CONCENTRATION - GINI 6.0
.51 .49
4.0
Sources: The World Bank, Eclac
2.0 0.0
1993
4,165
2013
5,856
INFLATION RATE
FOREIGN DEBT
Annual change, percentage
Percentage GDP
10.2%
34.4%
1993
1993
3.9%
24.5%
2013
2013
CURRENT ACCOUNT BALANCE
SHARE OF THE WORLD’S GDP
Percentage GDP
Percentage
-3.0
1993
-2.4 -3.0
1993
9.3%
2013
8.6%
2013 -2.0
-1.0
0.0
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BRAVO BUSINESS AWARDS 20TH ANNIVERSARY
SOCIAL MULTILATINAS 2006 ENVIRONMENTALIST OF THE YEAR
A SOCIAL MULTILATINA Albina Ruiz Ríos FOUNDER AND PRESIDENT, CIUDAD SALUDABLE
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lbina Ruiz Ríos is another Latin American woman who escaped the millstone of precariousness to become a central personality in regional history. She nurtured one of the first environmental companies to develop a broad international presence. Raised in a rural home in Moyobamba in northern Peru, she worked in the country with her nine brothers and sisters. She was always at the head of the class at her school. Later, as an engineering student in Lima, she began studying optimal systems for garbage disposal, and organized small but profitable recycling businesses. As she moved forward in the design of these initiatives, she completed a master’s degree in ecology and environmental management, and later a Ph.D. in chemical engineering in Spain. In 2001, when she returned to Lima, she founded Ciudad Saludable, a consulting firm for recycling businesses. She didn’t want it to run a typical NGO that would depend on donors. Her dream was to not depend on donations, “but rather on the money that we could generate,” said Ruiz Ríos in her interview with Latin Trade. That’s why she decided to resist offers from potential donors who wanted to participate in her project. The second crucial decision for the organization was to go outside the country of origin. In 2005, it made its first international foray, to Maturín in Venezuela. “At that point we decided to expand.” The next year, Ciudad Saludable started to be recognized for its work. It received a prize in Dubai for its practices in improving the environment, the Global Development Network Award, and the BRAVO prize as environmentalist of the year. The list of awards has continued to grow right up to the
present. “(The prizes) enabled us to have a bigger audience,” she said. Today, it has operations in the Dominican Republic, Chile, Bolivia, Ecuador, Brazil, India, Haiti and Mexico. They are starting up in Colombia and have a proposal to start an operation in Egypt. “We have to cross borders,” she said, in reference to her successful internationalization. The strategy for managing the international expansion of her ideas is clear. They don’t establish a new Ciudad Saludable in every country; rather, they look for local teams and transfer their practices to them. That’s the way they have done things in every region from Guatemala to India. “The local factors are the ones that ensure sustainability. They are the ones that make things work, they are the ones who understand the reality,” she argues. Although it may be hard to believe, in many times and places there have been people opposed to recycling. That’s why, to be successful, Ciudad Saludable has allied itself with companies and with important sectors of the society to open the spaces it needs. “Everything depends on political will,” she said. In addition, it empowers local officials and above all, it cultivates the theme of ethics. Pairing up with recycling companies, Ruiz Ríos and her team have developed a distance education program that specializes on the complete management of residues, with the Catholic University of Peru. There are already six versions of the program, and they have trained 300 professionals from Brazil, Venezuela, Chile, Ecuador and Peru, she said. Next on her agenda: to make this program even more international by working with universities in the United States or Europe. In addition to that is the work of creating a recycling reference center for the world in Peru, which she calls a “social innovation center.” “Very soon, we will have the business plan for this initiative. We already have the support. Now we are choosing a top-level team of economists.” For Ruiz Ríos, this project won’t be hard. At the end of the day, and from these heights, almost nothing should be difficult for this woman who has discovered the most profound secrets of social alchemy.
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PHOTO: COURTESY OF CIUDAD SALUDABLE
She exported her strategy to countries like Chile, Bolivia, Ecuador, and Brazil.
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BRAVO BUSINESS AWARDS 20TH ANNIVERSARY
SOCIAL MULTILATINAS 2008 ENVIRONMENTALIST OF THE YEAR
“If a country can’t feed its people, it has no future.”
Richard Hansen PRESIDENT, FOUNDATION FOR ANTHROPOLOGICAL RESEARCH AND ENVIRONMENTAL STUDIES
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rchaeology provides a window on an issue of singular importance in the development of societies. One of the elements it offers is the recognition that, in spite of the changes, we are all still humans “subject to the same values, vices and virtues, and that we are in the same situation,” explained Richard Hansen, president of the Foundation for Anthropological Research and Environmental Studies. In the midst of the upswing in the cycle like the one in which Latin America lives, where there is euphoria, it doesn’t hurt to have someone remembering that there are things that, more or less, remain unchanged. Archaeology also enables us to understand why societies prosper, and why they disappear. Hansen, an expert in Maya culture and the discoverer of one of the most important archaeological sites of this civilization, in the Guatemalan basin El Mirador in Petén, gives us a vision of this crucial theme. The cultures that endure, he said, live in territories where there are usable natural resources. Secondly, they have a strong and viable agricultural system. “If a nation can’t feed its people, it has no future,” he said. He illustrates the problem with an example: “If one had to be out looking for grasshoppers to eat, he certainly wouldn’t be working comfortably in an office.” These cultures also have a robust infrastructure to move food and basic resources within their country. “The Mayas had a complicated network of highways that made it possible that when the crops of corn, beans or materials failed in one area, they could be brought in from others.” In the United States, the transcontinental railway, and later the highway system, have served the same purpose. In addition, a society that lasts needs what Hansen calls organic solidarity, a sense of common belonging that unites the societies. “The Mayas designed a unique religious ideology, and that united them,” he said. In the United States, he thinks that this thread of
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openly wants to destroy it. Societies must also be faithful to the principles that have made them great, he said. Curiously, with this way of seeing things, diversity is not an element that helps the survival of cultures. “There has to be a common identity, a solidarity that unites them. If it shatters, the societies break down.” He thinks diversity is an issue that seems very nice, but is a trap. Finally, there is another crucial message: protection of the environment. “Illness, war or economic difficulties allow societies to recover. But if the environment is damaged, there is no turning back,” he said. The Mayas burned limestone and green wood in great quantities. “They did it because they could,” he said, to show that they were dealing with a basically unnecessary process. This practice resulted in the deforestation of the region, and the mess that resulted from burning permanently damaged the agricultural system. “They couldn’t go back. They couldn’t feed their population and for that reason, they had to abandon their land,” Hansen said. He thinks incentives should be created to protect the environment. One way is to develop the concept of wilderness that does not exist in Latin America, to look for economic justifications to conserve intact areas of jungle or mountains. For example, to show off these places, making roads for tourists, or for example, promoting medical research on the uses of biodiversity. This type of activity facilitates conservation and helps to finance it. “Good ideas without financing remain as dreams; nothing is converted into reality,” he said. Lastly, he thinks that for societies to endure, they need visionary leaders who are able to rise above the corruption, or the short presidential periods, who do things that have an impact that last for decades, or for perhaps what pleases archaeologists the most, for many centuries. Looking at contemporary societies in the distant mirror of history might help us to understand the road we have to follow.
PHOTO: SAUL MARTINEZ/EPA/NEWSCOM
A DISTANT MIRROR
unity is embedded in the Judeo-Christian values. If this is required to subsist, the past shows us that there are other requirements for societies to thrive. One, said Hansen, is a strong army for a society to defend itself from whoever sees the success of a nation and wants to benefit from it without having the strength to build it, or anyone who
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SPECIAL ADVERTISING FEATURE
IHG’s CORPORATE SOCIAL RESPONSIBILITY
The InterContinental Buenos Aires, Argentina - Green Globe Certified
As one of the leading hotel companies in the world with a broad portfolio of brands, IHG has an unrivalled opportunity to bring about positive change in the environment and community both at a local and global level. Each one of their hotels in Latin America and Caribbean is a central part of its community by creating jobs and stimulating economic opportunity, managing their environmental impact in a responsible way, and providing shelter in times of need. Behaving in a responsible way helps IHG make a positive long-term contribution not only to the communities in which it operates in, but also empowers its brands, its people, and creates value for all of its shareholders and stakeholders. IHG’s initiatives are concentrated on two areas– the environment and the local community. There are a number of ways in which IHG behaves responsibly; however, its three flagship initiatives are IHG Green Engage, the IHG Academy and the IHG Shelter in a Storm Programme. IHG Green Engage is a system which enables the company to manage the environmental impact of hotels, without compromising the guest experience. It is an online environmental tool, designed to help hotels in IHG’s system to review industry standards, share the best practices, and manage, track and report their energy, water and waste consumption. IHG is the only global hotel company to build such a comprehensive environmental management system with and for its hotels. It is also the only hotel company with a streamlined path to LEED volume certification for existing buildings, confirming their place as an industry leader in sustainability. During the first semester of 2013, there were more than 864 green solutions completed for Green Engage in Latin America and the Caribbean. For example, Brazil hotels underwent an energy efficiency audit, which resulted in cost savings for the hotels and LEED certification in most cases. Additionally, hotels in the Americas continue to strive for environmental sustainability and support carbon reductions. For example, the InterContinental Buenos Aires received the Green Globe Certification, the first IHG certified hotel in Argentina and the Americas. This global award provides independent verification of the hotel’s sustainable practices,
SPECIAL ADVERTISING FEATURE
all of which have been implemented as part of IHG’s Green Engage program. In line with the IHG brand promise, the InterContinental Buenos Aires has demonstrated outstanding corporate responsibility for years. IHG’s second flagship initiative is IHG Academy-- a unique collaboration between IHG hotels and local schools in each community to benefit students who will potentially be part of their country’s tourism workforce. The program works with local schools, colleges and community organizations and provides skills development and employment opportunities at the hotels to help motivated students to develop job training skills in hopes of being more marketable in today’s competitive hotel industry. Through this program, IHG has been able to build skills and raise aspirations across hundreds of communities and will further develop the program wherever their hotels are located. In the last year, IHG opened nine IHG Academy Programs in Latin America and the Caribbean as a result of numerous IHG-branded hotels in the region partnering with education entities such as the Youth Career Initiative (YCI) of São Paulo, the Panama International School, CAMP, Casa do Moinho, FMU, Centro Universitário das Faculdades Metropolitanas Unidas (Sao Paulo), Senac University, Universidad del Este and MBTI Training institute. IHG’s third flagship initiative is Shelter in a Storm Programme. This program provides IHG hotels globally with guidance on when and how to best respond when disasters occur, ensuring a quick and effective response to crises affecting IHG branded hotels anywhere around the world, their employees and the local community. People naturally seek shelter during a storm at hotels and a key role of IHG hotels in society is to give shelter to those in need within the communities they operate. This program includes the IHG Shelter Fund, built up by fundraising activities in the IHG hotels and corporate offices throughout the year. As a result of these activities, the hotels are able to respond as soon as disaster strikes within their community, providing immediate assistance, including shelter, food and water, medical supplies and other necessities to employees, guests and the local community around our hotels and offices. In April, torrential rains flooded the area of La Plata and Buenos Aires, Argentina leaving thousands of people without electricity and in need of vital supplies. With 50 people perished from the floods and over 3, 000 forced to leave their homes, Argentina government declared a three day national day of mourning for the victims.
Holiday Inn, Escazu, Costa Rica
IHG Shelter in a Storm Program assessed the damages and with the help of its partner, CARE, a leading humanitarian organization fighting global poverty, was able to agree on which community organization was the best to support in order to maximize relief efforts by working alongside the Argentine Red Cross. Although there were no damages to any IHG hotels in Buenos Aires, a number of employees unfortunately suffered damages to their homes and lost vital food and supplies. In order to support local hotel employees who were impacted by the floods, IHG allocated funds to support the replenishment of food and additional resources. At the heart of IHG culture is a commitment to act responsibly in everything they do, and delivering a more responsible business is a priority they continued to make significant progress in 2013 and will continue throughout 2014. If you would like to donate and join IHG in making a difference, simply visit www.ihgshelterinastorm.com or www.ihgrewardsclub.com/donate for IHG ® Rewards Club members.
THE LATIN TRADE SYMPOSIUM The 2013 Latin Trade Symposium, the premiere forum in the Western Hemisphere, brought together more than 500 elite members of the business and government communities of the Americas to debate key issues facing the re-
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gion. It was held at the Four Seasons Hotel Miami on October 25, 2013. This year’s discussion centered on the topic: “Public-Private Partnerships for Economic and Social Development.” The state should be a regulator but should allow all players to act. “We need more responsive, effective and flexible government,” said Germán Efromovich, the 2013 BRAVO Innovative CEO of the Year, and head of the Synergy Group. States should act to promote greater participation of individuals, ensure legal security, stimulate production of goods, and offer an effective system of public information. As for the private sector, companies must be more sensitive to public needs, foster socially responsible management, promote innovation and entrepreneurship, and assume greater commitment to the public, he said. The president of Guatemala, Otto Pérez
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Molina, who was recognized by Latin Trade with the 2013 BRAVO Leader of the Year Award, said that over the next ten years, his country will need more than $27 billion in investment, and the government plans to work with private investors to identify and develop oil, hydroelectric and infrastructure projects.
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1. Jaime Szulc, President, Latin America, The Goodyear Tire & Rubber Company; Craig S. Smith, President for the Caribbean & Latin America, Marriott International; Richard Burns, Chairman, Latin Trade Group 2. Santiago Fernández Valbuena, Chairman and CEO, Telefónica Latin America; Barry Ridgway, Vice President, Microsoft Latin America 3. Marta Elvira, Associate Dean for Research and Professor of Strategic Management and Managing People in Organizations, IESE Business School; Bruno di Leo, Senior Vice President, Sales and Distribution, IBM; Rudolf Lang, Managing Director, Chopard Marketing Services 4. CEO Roundtable 5. Juan Pablo Cuevas, Managing Director, Head of GTS, Latin America and the Caribbean, Bank of America Merrill Lynch; Jorge Becerra, Senior Partner and Managing Director, The Boston Consulting Group; David Bojanini García, CEO, Grupo Sura 6. Lorena García Durán, Director, South Florida, Ashoka 7. Óscar Rojas, President, Latin America, Brightstar Corporation 8. Jordi Botifoll, President, Latin America, Cisco 9. Rudolf Lang, Managing Director, Chopard Marketing Services
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“Think global, think people, think partnerships.” These themes appeared as the key elements to foster corporate success in Latin America. Symposium panelists identified drivers of corporate success and sustained growth. Álvaro Fernández Garza, CEO of the Mexican conglomerate Alfa, suggests that companies expanding beyond their national borders should not try to impose their way of doing things on the companies they acquire. They should
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also create flexible teams, willing to move overseas. Local managers should actively participate in the design of corporate strategy, advises David Bojanini, CEO of Colombia’s Grupo Sura. Companies should renew management from below, not from above, said Ignacio Antoñanzas, CEO of Enersis. On sustainability, Vidal Garza Cantú of the FEMSA Foundation, stressed
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the need for public-private collaboration to confront Latin America’s problems. “Everything that government or business does should produce public value,” he said. Felipe Bosch Gutiérrez, a board member in Central America’s Corporación Multi Inversiones, offers an example: his team meets with Guatemala’s President every week to discuss three specific projects, in housing, microcredits and infrastructure.
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10. Lunch Panel - Latin America’s New Strategic Alliances 11. H.E. Arturo Sarukhan, Former Ambassador of Mexico to the US, Chairman of Global Solutions, A Podesta Company; Alejandro Werner, Director, Western Hemisphere Department, IMF; David Rothkopf, CEO and Editor, Foreign Policy Magazine 12. Ignacio Antoñanzas, CEO, Enersis (International CEO of the Year) 13. Felipe Bosch Gutiérrez, Board Member, Corporación Multi Inversiones 14. Salvador Paiz, Vice President, FUNDESA; Vidal Garza Cantú, Director, FEMSA Foundation 15. David Bojanini García, CEO, Grupo Sura; Jorge Becerra, Senior Partner and Managing Director, The Boston Consulting Group 16 Recaredo Romero, Regional Managing Director for Latin America and the Caribbean, Kroll 17. José Antonio Ríos, CEO & Chairman, Celistics
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On strategic trade alliances, the formation of trade blocs could
est trading partners, China and the U.S. Alejandro Werner, Director of
strengthen economic integration and political relations in the global
the Western Hemisphere Department, IMF, highlighted the need for
economy. The Pacific Alliance countries, for instance, have tried to
trade diversification, to allow countries to strengthen their economies
gain a strategic geopolitical and economic advantage with its two larg-
and insulate themselves from downturns in partnering regions.
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1. LOGISTICS PANEL: Ferdinand Kurt, CEO Americas Region, Panalpina; Ricardo Sánchez, Senior Economic Affairs Officer, United Nations Economic Commission for Latin America and the Caribbean; Daniel Jiménez, Vice President, Corporate Segment, Telefónica Latin America; Francisco X. Santeiro, Managing Director, Customs and Regulatory Affairs, FedEx Express Latin America and Caribbean Division 2. Rosario Londoño, Senior Social Innovation and Development Effectiveness Specialist, Inter-American Development Bank 3. Germán Efromovich, Chairman and CEO, Synergy Group (Innovative CEO of the Year); Lyana Latorre Sabogal, Director, South America, Ronald McDonald House Charities 4. Ignacio Antoñanzas, CEO, Enersis (International CEO of the Year) 5. Aldemir Dadalt, Founder, Prisma Engenharia SA; Deborah Dadalt, Spa do Vinho 6. Federico Bove, CEO, Datarisk 7. Patricia Roquebert, Regional Marketing Manager, Copa Airlines; Fernando Fondevila, Regional Sales Manager, Copa Airlines 8. Anabel Pérez, President & CEO, Novopayment 9. Marie T. Oates, Director of US Communications, Institutional Development and Alumni, IESE Business School; Silvia Clarke, Senior Account Manager, Latin Trade Group
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Trade and investment propel economic growth in Latin America,
power is expanding in Latin America, but that major hydroelectric
but poor infrastructure still holds the region back. That was the
projects are not moving ahead. Latin America will need to double
main conclusion of the session “Latin America’s Global Integra-
its existing electric generating capacity in 10-15 years to meet de-
tion and Connectivity,” one of the three concurrent sessions of the
mand, said Jorge Rosenblut of Endesa Chile. On the third session,
Symposium. Seaports and airports may be the best functioning in-
“A New Era of Foundations: Proactive Change,” it was clear that
frastructure in the region, but they’re still a challenge. Infrastruc-
foundations have to improve their operations to become efficient
ture investment currently comprises one percent of the region’s
tools for social improvement. Good intentions are not enough.
GDP, but it needs to double to keep up with the region’s demands,
Woods Staton of Arcos Dorados said that foundations have to
said Eclac’s Ricardo Sánchez. On the second session, “Energy and
be disciplined and very focused. Strong alliances, and above all
the Path Forward,” there was a consensus that demand for electric
impact assessment, are crucial to this improvement.
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1. Antonio Cassio, Chairman & CEO, Zurich Latin America 2. Jorge Rosenblut, Chairman, Endesa-Chile; Ricaurte Vásquez Morales, Executive Director, Latin America Gas Vertical, GE 3. H.E. Otto Pérez Molina, President of Guatemala (Leader of the Year) 4. Christiaan Gischler, Senior Energy Specialist, Inter-American Development Bank 5. Susan Segal, President & CEO, Americas Society/Council of the Americas 6. Angélica Ocampo, Executive Director, Worldfund 7. Latin America Global Integration and Connectivity Session 8. Ferdinand Kurt, CEO Americas Region, Panalpina 9. José Luis Sanchez, President LA North, SAS
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THE 19TH ANNUAL BRAVO BUSINESS AWARDS More than 400 business, government and non-profit leaders from around
the Year Award from his brother — a surprise to both Efromovich and the
the Americas gathered at the Four Seasons Hotel Miami on October 25,
audience. Goodyear Latin America CEO Jaime Szulc accepted the Trade
2013, for Latin Trade Group’s 19th annual BRAVO Business Awards Gala.
Americas BRAVO Award for the The Goodyear Tire & Rubber Company
The distinguished guests and honorees mingled during a cocktail hour, and
— the first time the BRAVO Awards have honored a company for leader-
then enjoyed a seated dinner during the awards ceremony.
ship, rather than an individual.
Latin Trade Group honored nine leaders from all sectors in the region, in-
Petrobras CEO María das Graças Silva Foster was honored with a Life-
cluding Leader of the Year Otto Pérez Molina, president of Guatemala.
time Achievement Award; Alfa CEO Álvaro Fernández Garza received the
The audience enjoyed stirring personal speeches sprinkled with humorous
BRAVO CEO of the Year Award; Enersis CEO Ignacio Antoñanzas was
anecdotes from each of the honorees. Special tributes rounded out the eve-
honored as International CEO of the Year; Grupo Pão de Açúcar CEO
ning, including a message specially recorded by Donna Karan and former
Enéas Pestana was presented with the Dynamic CEO of the Year Award;
United States President Bill Clinton for Caribbean Craft President Magalie
and Marina Silva, director of the Institute of Democracy and Sustainability
Dresse. Dresse received the Innovative Social Sustainability Award. Ger-
and a former Brazilian senator, was honored by Latin Trade Group for her
mán Efromovich, CEO of Synergy Group, received the Innovative CEO of
Distinguished Service in the Hemisphere.
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1. Richard Burns, Chairman Latin Trade Group; Magalie Dresse, President, Caribbean Craft (Innovative Social Sustainability Award) 2. Jaime Szulc, President, Latin America, The Goodyear Tire & Rubber Company 3. Ignacio Antoñanzas, CEO of Enersis (International CEO of the Year) 4. Claudio Fontes Nunes,President, Petrobras America, Inc. 5. Álvaro Fernández Garza, CEO, Alfa (CEO of the Year) 6. Marina Silva, Former Senator of Brazil, President of the Marina Silva Institute and Director of the Institute of Democracy and Sustainability (Distinguished Service in the Hemisphere Award); H.E. Otto Pérez Molina, President of Guatemala (Leader of the Year) 84
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7. Germán Efromovich, Chairman and CEO, Synergy Group (Innovative CEO of the Year); José Efromovich, Synergy Group, Brazil 8. Jaime Szulc, President, Latin America, The Goodyear Tire & Rubber Company 9. H.E. Otto Pérez Molina, President of Guatemala (Leader of the Year) 10. The 2013 BRAVO Award Winners 11. Enéas Pestana, CEO, Grupo Pão de Açúcar (Dynamic CEO of the Year) 12. Gerardo Mato, President, Global Banking & Capital Financing, Americas, HSBC; H.E. Otto Pérez Molina, President of Guatemala (Leader of the Year), and First Lady of Guatemala, Mrs. Rosa Leal de Pérez NOVEMBER-DECEMBER 2013 LATIN TRADE
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1. Teresa Guimarães; Carlos Guimarães, President, Latin American Investment Group 2. Nilda M. De Boyrie, Vice President - Branch Manager, Latin America, Charles Schwab & Co., Emile De Boyrie; Lisa Hunt, Executive Vice President, International Services and Special Business Development,Charles Schwab & Co., Inc 3. Sonia Dulá, Vice Chairman for Latin America, Bank of America Merrill Lynch, Global Corporate and Investment Banking Division; Álvaro Fernández Garza, CEO, Alfa (CEO of the Year) 4. Drew Westervelt, Programs and Special Projects Manager, Latin Trade Group; Victoria Kenny, Programs and Content Advisor, Latin Trade Group; Yndira Marin, Programs and Content Manager, Latin Trade Group; Mark Keller, Deputy Editor, Latin Trade Group 5. Volker Heiden, Vice President, Finance Caribbean & Latin America, Marriott International; Fabiana Farias Jenkins, Vice President, Marketing & eCommerce, Marriott International; Alex Fiz, Vice President Sales & Marketing, Marriott International 6. María Cristina Restrepo, Regional Director, Latin Trade Group; David Bojanini García, CEO, Grupo Sura; Paula Jaramillo 7. Ramiro Crespo, CEO/President, Analytica; H.E. Otto Peréz Molina, President of Guatemala (Leader of the Year); Eduardo Checa, CEO, Analytica 8. Adriana Aristizábal; Anuar Barake, President Latin America, Emerson Industrial Automation; Lorene Rodríguez; Leonardo Rodríguez, President Latin America, Emerson; Ana Paula Murray; Vernon Murray, Vice President Latin America, Emerson Micro Motion & Rosemount Flow 9. Scarlett Álvarez, Vice President, Chief Stakeholder Officer, The AES Corporation 10. Juan Pablo Cuevas, Managing Director, Head of GTS, Latin America and the Caribbean, Bank of America Merrill Lynch, Pilar Cuevas; Claudia de Fernandez; Álvaro Fernández Garza, CEO, Alfa (CEO of the Year) 11. Evelyn De la Torre; Sergio de la Torre, Minister of Economy, Guatemala.
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1. Anchit Sood, Centre Director, Sao Paulo Overseas Centre, International Enterprise Singapore; José Antonio Ríos, CEO and Chairman, Celistics; Francisco Rios Zanotti, Centre Director, Mexico City Overseas Centre, International Enterprise Singapore; Natalie Choo, Group Director, Americas Group, International Enterprise Singapore; Antonio Belfort, COO, Celistics; 2. Woods Staton, Chairman and CEO, Arcos Dorados; Jorge Becerra, Senior Partner and Managing Director, The Boston Consulting Group 3. Enéas Pestana, CEO, Pão de Açúcar (Dynamic CEO of the Year); Chris Copeland, Vice President, Marketing and Innovation, Diageo Latin America and Caribbean 4. Poul Hestbaek, Senior Vice President, Caribbean and Latin America West Coast, Hamburg Süd and Tine Hestbaek 5. Julio Ligorria, Ambassador of Guatemala to the US 6. Maria Lourdes Gallo, Executive Director & Publisher, Latin Trade Group 7. Roberto Lara, President, Cervecería Centroamericana; Guillermo Castillo, Director, Cervecería Centroamericana; Dunia Miranda, Trade Commisioner, General Consulate of Guatemala 8. Katia Bouazza, Head of Debt Capital Markets, HSBC; Gerardo Mato, President, Global Banking & Capital Financing, Americas, HSBC; Mercedes Fernandez, Business Development Director, Latin Trade Group; Alexei Remizov, Managing Director, Capital Financing Brazil, HSBC 9. Martin Alvarez, Regional President, G4S Latin America; Fiona Walters, Chief Corporate Development Officer, G4S Americas; Eric Ospina, G 4S Latin America 10. Michel Chancy, Secretary of State for Live Stock, Ministry of Agriculture, Haiti. Naike Chancy
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LATIN TRADE NOVEMBER-DECEMBER 2013
ALL PHOTOS: PABLO BLAZQUEZ
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Arcos Dorados began with a promise, renewed every day. Serve quality food, and offer an extraordinary experience. Today, we are nearly 100,000 people, serving clients in 20 countries in Latin America and the Caribbean. The future? We see opportunity, growth, and serving great food to great customers.
Woods Staton Dynamic CEO of the Year, 2010