LATIN TRADE
Eduardo Costantini
THE OTHER ARGENTINA
Marcos Galperin
THE OTHER
JANUARY / FEBRUARY 2012
ARGENTINA Eduardo Eurnekian
SUCCESSFUL BUSINESS LEADERS DESPITE THE COUNTRY’S SOCIO-POLITICAL NOISE ALSO INSIDE: THE BEST OF TRAVEL • GUIDE TO CHINA • DEALS OF THE YEAR
YOUR BUSINESS SOURCE FOR LATIN AMERICA » WWW.LATINTRADE.COM
JANUARY / FEBRUARY 2012
YEARS OF EXCELLENCE In 2012, Latin Trade celebrates leaders in Latin America.
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YOUR BUSINESS SOURCE FOR LATIN AMERICA
covering regional business trends as well as corporate and government leaders in Latin America and the Caribbean.
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34 42
22 Features
22 Cover: The Other Argentina Successful business leaders despite the country’s socio-political noise. 24
People: Argentina’s Builders
interior of Latin America. I cannot imagine this region with double the population, a developed interior with prosperous cities without the necessary communication.
Eduardo Costantini on Argentina The country has great metrics, but still suffers an image problem.
28
34
People: Argentina’s Builders Eurnekian’s Vision Latin America needs to become connected. We have to look toward the
32
Special Report: Latin American Guide to China
56
A practical guide to doing business in China for Latin American companies.
42
Readers of Latin Trade magazine select the Best of Travel
58 60
Our readers have selected the best hotels, restaurants, airlines, airports and car rental companies in Latin America.
56
2
Industry Report: Latin Trade’s Deals of the Year After analyzing all major deals in Latin America last year, the editorial staff of Latin Trade selected three that stood out:
LATIN TRADE
JANUARY-FEBRUARY 2012
People: Argentina’s Builders Marcos Galperin, CEO of MercadoLibre.
#1 Colombian Giant: Grupo Sura’s $3.7 billion acquisition of ING assets has created one of the top financial service firms in Latin America. #2 Delta-Gol Alliance: Delta scores a Brazilian goal ahead of World Cup. #3 Televisa’s Iusacell Stake: Televisa’s $1.6 billion purchase of a 50 percent stake in Iusacell brings more competition to Mexico’s wireless sector.
We also took a closer look at a deal that didn’t happen, but would have had an enormous impact: 60
The Best Deal that Never Happened: “Pão de Carrefour”: Brazil’s Pão de Açúcar gets rebuked by Casino, its local partner, when it approaches troubled Carrefour for a global merger.
ARGENTINA: ISTOCK; CHINA: RUTH MORRIS; BEST OF TRAVEL: ISTOCK
CONTENTS
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The Scene
Opinion
On the Road
10 Mexico Prepares for China Rush
18 The Contrarian
72 Santiago
Mexico Opens Up Its Market.
John Price, managing director of Americas Market Intelligence, asks if Europe matters anymore.
20 Years of Excellence Latin Trade Turns 20.
Plasma Time Plasma TV sales per capita in 2010 in US dollars.
12 Latin America: Global Champion How Latin America excels globally.
14 Can’t Buy Happiness Whoever said you can’t buy happiness may have some empirical backing.
16 Panama: Star Performer
74 Ask the Concierge 20 The Bottom Line
Chief Concierge Sandra Riveros offers her tips for making the most out of a trip to Santiago.
Alberto Bernal-Léon of Bulltick Capital Markets outlines investor confidence.
40 Korea: Role Model for Latin America Two-way business is growing between Korea and Latin America.
Made In: Mexico 76 Avocados Super Bowl is always when more guacamole is consumed, more than any other day, says Ricardo Vega López, president of the Avocado Producers and Export Packers of Michoacan.
Tech Trends 64 Dell Bets on Latin America Region among star performers for computer maker.
Region’s GDP Champion.
Editor’s Note
LBC Launches in Spanish
6
Bustos Joins Latin Trade Group 4
Firsthand tips for visiting Chile’s capital.
LATIN TRADE
JANUARY-FEBRUARY 2012
Latin America’s Competitive Advantage
IMAGES OF KOREA, CHILE AND AVOCADOS: ISTOCK
CONTENTS
EDITOR’S NOTE
While Latin America in general lags behind the United States in competitiveness, it can actually boast a competitive advantage in certain areas. One such area is airline service and comfort. While some U.S. airlines flying Latin American routes typically offer poor service aboard old and run-down planes, Latin American airlines like Avianca, LAN, TAM and Copa all provide friendly service and modern planes. Those factors place them at the top of the 10th annual Latin Trade Reader Survey of the Best of Travel in Latin America (see page 42). These same four airlines topped the categories for Cabin Comfort/Service and Food & Beverage, with Avianca taking the lead. Avianca, LAN and TAM all offer personalized in-flight-entertainment centers for all passengers, unlike the TV hanging from the roof on U.S. airlines, with its one-size-fits-all programming. Not only do Latin American airlines beat their U.S. counterparts on international flights, but also on local domestic
6
LATIN TRADE JANUARY-FEBRUARY 2012
ones. I remember a short trip between Bogota and Medellin on Avianca where the airline still made time to serve us a meal and a good one at that. Even flying with one of Panama’s small domestic airlines, I was served a basic meal on a 50-minute flight between Panama City and the city of David. These carriers not only offer food on short flights, but friendly service as well. In contrast, I have spent countless trips at lunchtime or dinner time without any food on U.S. carriers (on domestic and even some “short” international flights), leaving me with the option to buy a cookie while surrounded by smelly food others purchased at the airport just before boarding. The service? What service? If anything the crew gives the impression that we, the passengers, are bothering them. “I think the United States lost its sense of service,” Avianca Chairman German Efromovich told Latin Trade last year. “U.S. airlines have “become so crowded, it’s like riding a bus.” As demand for travel to Latin America grows, it’s good to know that the region’s airlines are able to offer a great alternative. And one that readers of Latin Trade appreciate.
Joachim Bamrud Executive Editor jbamrud@latintrade.com
ISTOCK
Latin America’s Competitive Advantage
Are you losing valuable time looking for data and analysis on Latin America and the Caribbean?
EXECUTIVE DIRECTORS ROSEMARY WINTERS MARIA LOURDES GALLO EXECUTIVE EDITOR JOACHIM BAMRUD MANAGING EDITOR ELIDA BUSTOS ART & PRODUCTION DIRECTOR MANNY MELO CONTRIBUTING EDITORS GABRIELA CALDERON (research), MARK LUDWIG CORRESPONDENTS Argentina: Charles Newbery • Brazil: Thierry Ogier (São Paulo), Taylor Barnes (Rio de Janeiro) Chile: Gideon Long • China: Ruth Morris • Colombia: John Otis • France: Ilan Moss • Mexico: David Agren Panama: Sean Mattson • Peru: Lisa K Wing • Spain: Guy Hedgecoe • Venezuela: Jose Orozco CONTRIBUTING PHOTOGRAPHERS Brazil: Paulo Fridman • Chile: Helen Hughes • Costa Rica: Juan Carlos Ulate • USA: Matthew Pace
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TRANSLATION: Alejandra Labanca, Douglas Rojas-Sosa COPY EDITORS: Karen-Janine Cohen, Julio Llerena EVENTS & CONFERENCES EVENTS MARKETING EXECUTIVE Natasha Valle SALES & CIRCULATION SALES REPRESENTATIVES Miami/Pan-regional sales: Silvia Clarke, Senior Account Manager Mercedes Fernandez, Business Development Manager Special Projects Coordinator: Ana Berger Colombia/Panama: María Cristina Restrepo India: Stephen Dioneda CIRCULATION COORDINATOR Claudia Banegas LATIN BUSINESS CHRONICLE Patricia Cabarcos, Enterprise Solutions/Datarisk Director, pcabarcos@latintrade.com Rosemary Begg, Marketing Associate, rbegg@latintrade.com
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CHIEF OPERATING OFFICER JOANNE HARRAS ACCOUNTS MANAGER KATHY POLLYEA, kpollyea@manhattanmedia.com LATIN TRADE GROUP IS A DIVISION OF MIAMI MEDIA, LLC, A SUBSIDIARY OF MANHATTAN MEDIA Executive, Editorial, Circulation and Advertising offices are located at Brickell Bay Office Tower, 1001 Brickell Bay Drive, Suite 2700, Miami, Florida 33131, 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 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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THE SCENE ENE
MEXICO PREPARES FOR CHINA RUSH M
20 YEARS OF EXCELLENCE LEGACY ACY
WHAT THE PRESIDENT SIDENT LEAVES BEHIND
MARCH/APRIL 2010 YOUR BUSINESS INESS S SOURCE SO S SOUR URCE CE FOR R LATIN AMERICA » WWW.LATINTRADE.COM ( ) ECHINT 6 PETROBRAS DISTRIBUIDORA 7 COMISIÓN MISIÓN FEDERAL DE ELECTRICIDAD 8 PEMEX GAS Y PETROQUÍMICA BASICA 9 ODE O BRASIL 12 GRUPO VOTORANTIM 13 TELEFÔNICA BRASIL 14 GRUPO ULTRA S S.A. A 1 RECHT S.A. 10 CODELCO 11 VOLKSWAGEN DO ALSO IN THIS ISSUE: BILLIONAIRE PHILANTHROPY PHILANTHROP Y ENERAL MOTORS MÉXICO 16 MINERA ESCONDIDA NDIDA DA 1 17 7 SHELL BRASIL 18 TE TELEMAR LEMAR PARTICIPAÇÕES 19 1 9 FIAT A AUTOMÓVEIS UT TO 20 NIS P (EMPRESA NACIONAL DEL PETRÓLEO)) 23 ARCELORMITTAL AR BRASIL 24 CARREFOU AN MEXICANA 21 ENAP REFINERÍAS 22 ENAP OMÉRCIO E INDÚSTRIA 25 GRUPO BAL 26 FORD RD MOTOR (MÉXICO) 27 PETROECUADOR PETROECUADO UADOR 28 GRUPO FINANCIERO ANCIERO BBVA-BANCOMER BBVA2 AMARGO CORRÊA 32 COCA-COLA OLA BRASIL 33 BODEGA ODEGA AURRE ASAS BAHIA 30 NESTLÉ BRASIL 31 GRUPO CAMARGO AURRERÁ (NUEVA WAL-MAR S DO BRASIL 36 BUNGE ALIM LIMENTOS 37 CARGI ARGILL AGRI GR 4 VOLKSWAGEN MÉXICO 35 GENERAL MOTORS ALIMENTOS CARGILL AGRICOLA 38 FORD MOTOR (BRAZI 9 ESSO BRASILEIRA DE PETRÓLEO 40 SAM’S CLUB 41 CLARO 42 WALWAL-MART SUPERCENTER AL-MART SUPERC RCENTER ER 43 4 GRUPO MODELO 44 PEMEX PETRO ERTO PASQUALINI-RE REFAP 47 CHEV EVRON N BR BRASI UÍMICA 45 CORREIOS E TELÉGRAFOS 46 ALBERTO PASQUALINI-REFAP CHEVRON BRASIL 48 HEWLETT PACKARD DE MÉXICO 4 ATERPILLAR BRASIL LTDA. 50 CONSTRUTORA A NORBERTO ODE ODEBRECHT EBRECHT 51 1 FRÁVEG F FRÁVEGA VEGA 52 GRUPO SALINAS 53 COMPANHIA BRASIL RA HIPERMERCA CADOS 56 ARC RCELOR LORMITT ITTA AÇOS LONGOS 57 COMPAÑIA LUZ Y FUERZ NA DE ENERGIA 54 UNILEVER BRASIL 55 EXTRA HIPERMERCADOS ARCELORMITTAL 9 USIMINAS IPA ATINGA 60 0 METET-MEX EX PEÑ EL CENTRO 58 ARCELORMITTAL TUBARÃO 59 IPATINGA MET-MEX PEÑOLES 61 OXXO (FEMSA COMERCIO) 62 CEME PART TY O OVER VER R FOR OR PDVS PDVSA? VS 64 FORD ARGENTINA S.A. 65 CELULOSA AR ÉXICO 63 GLOBO COMUNICAÇÃO E PARTICIPAÇÕES X AÇÕES IS THE PARTY UCO VENEZUELA) 67 PEPSICO 68 ANDRADE GUTIERREZ 69 CARGILL 70 U. C (CELCO) 66 MOVISTAR (TELEFÓNICA MÓVILES VILES VENE EZUELA) 6 7 GRUPO GR PO PEPS OMMERCIAL 71 CST-ARCELOR BRASIL 72 HONDA AUTOMÓVEIS BRASIL M ONDA AUTO TOMÓVEIS S DO OB RA ASIL 73 TELEFÓNICA (ARGENTINA) 74 CIA. MINERA DOÑ NÉS ÉS DE COLLAHUASI 75 COTO 76 BELGO SIDERURGIA RURGIA CHILE'S VELASCO VELA ASC CO WOOS INVESTORS 77 PETRÓLEOS DEL PERÚ 78 FURNA ENTRAIS ELÉTRICAS 79 GENERAL ELECTRIC BRASIL VOTORANTIM CIMENTOS 81 GRUPO FINANCIERO HSBC 82 REPSO EN C DO BR RASIL 80 VOT TOR RANTIM C PF ANTAMINA LALA 87 GRUPO BERTIN 88 NESTLÉ CHILE S.A P F PERÚ 83 ALPEK 84 PEQUIVEN 85 MINERA A ANTAM AMINA 86 GRUPO GR RUPO PO INDUSTRIAL INDUS ST NESTLÉ DE MÉXICO 90 MINERA MÉXICO 91 SANMINA-SCI 9N CI H HAS AS THE HE WASH WASHIN WASHINGTON CONSENSUS FAILED? SYSTEMS DE MÉXICO 9 ND E MÉXICO 95 G RU UPO O A J VIER RCI 96 TELEFÓNICA CHILE 97 MINERAL LOS PELAMBRE NDESA BRAZIL 93 ARCOS DORADOS 94 MABE GRUPO VIERCI 8 CENCOSUD CE ENCOSUD SUD ARGENTINA 99 99 ELETRONORTE ELETRONO ORTE 100 A ORTE EROP PUER RTOS OS Y SER RVIC C AEROPUERTOS SERVICIOS AUXILIARES 101 GRUPO IUSA (INDUSTRIAS UN OF F BRAZIL BRAZ AZIL L AND IINTO NTO OA AFRICA F 104 LOUIS DREYFUS COMMODITIES BRASIL S.A AS) 102 AS 10 02 CPFL PAULISTA 103 QUEIROZ GA ALVÃO OUT O GALVÃO COINBRA RA) 105 METLIFE MÉXICO 106 BUNG GE ARGENT TINA 1 07 IBERDROLA BERDROLA M É COINBRA) BUNGE ARGENTINA 107 MÉXICO S.A. DE C.V. 108 GE INTERNATIONAL MÉXICO 10 RUPO FINANCIERO SCOTIABANK INVERLAT 110 NADRO S.A. DE C.V. 111 SIEMENS LTDA. ENERGY SECTOR DOMINATION 112 SAM UNG ELECTRÔNICA AMAZÔNIA 113 ARCELORMITTAL INOX BRASIL 114 ALMACENES COPPEL 115 GRUPO NACIONAL PROVINCIA GNP) 116 ANGLO AMERICAN SUR 117 BRAZIL WANTS IN ON THE BIG OIL CLUB HOME DEPOT MÉXICO 118 TELEFÓNICA (PERÚ) 11 ROCTER & GAMBLE DE MÉXICO 120 ROBERT BOSCH LTDA. 121 CHESF (COMPANHIA HIDRO ELÉTRICA DO SÃO FRANCISCO) 12 AKRO ATACADISTA REPSOL YPF INCHES OUT OF ARGENTINA 123 TENEDORA NEMAK 124 ARTHUR LUNDGREN TECIDOS S.A. 12 OPERSUCAR 126 FLEXTRONICS MANUFACTURING 127 PHILIP MORRIS INTERNATIONAL 128 KRAFT FOODS BRASIL S.A. 129 GRUP ANBORNS 130 VOLVO DO BRASIL 131 GRUPO XIGNUX 132 MASTELLONE HERMANOS 133 GRUPO CONDUMEX 134 VOLKSWAGE RGENTINA 135 MOVISTAR 136 INTEL CHILE'S SONDA SEEKS THE SAFE & SOUND 137 TELEFÓNICA (COLOMBIA) 138 QUATTOR PAR ICIPAÇÕES S.A. 139 NESTLÉ ARGENTINA S.A. 140 MARTINS DISTRIBUIÇÃO 141 EXXONMOBIL DE COLOMBIA 142 MOVISTAR ARGEN INA 143 QUATTOR QUÍMICOS BÁSICOS 144 CONSORCIO AEROMÉXICO 145 GENERAL MOTORS-COLMOTORES 146 SODIMAC 147 ESS ARGENTINA) 148 ALCOAALUMÍNIO 149 ITAIPÚ BINACIONAL 150 PIRELLI PNEUS 151 PHILIPS MEXICANA 152 COMUNICACIONE EXTEL DE MÉXICO S.A. DE C.V. 153 GRUPO ARCOR 154 CTI 155 GRUPO MEXICANA DE AVIACIÓN 156 TOYOTA MOTOR SALES MÉXIC 57 SHELL CAPSA 158 ANCAP 159 AUTORIDAD DEL CANAL DE PANAMÁ 160 DUPONT DO BRASIL S.A. 161 DEACERO 162 RECOPE (RE INADORA COSTARRICENSE DE PETRÓLEO) 163 RHODIA BRASIL 164 BASF S.A. 165 MEGA 166 SIGMA ALIMENTOS 167 RENAULT D RASIL 168 COMPANHIA BRASILEIRA DE ALUMÍNIO (CBA) 169 PSA PEUGEOT CITROËN ARGENTINA 170 HOLCIM APASCO 171 GER AU AÇOMINAS 172 GRUPO TACA 173 SENDAS 174 WHITE MARTINS-PRAXAIR 175 NEXTEL TELECOMUNICAÇÕES 176 CANDELAR 77 MAGAZINE LUIZA S.A. 178 CIGATAM 179 BRIDGESTONE FIRESTONE DE MÉXICO 180 AGROSUPER 181 CAVALLARO HERMANO 82 SANTA ISABEL 183 GRUPO EMPRESARIAL ANGELES S.A. DE C.V. 184 GRUPO COMEX 185 ARCELORMITTAL VEGA 186 GRUP ILLACERO 187 CONSTRUÇÕES E COMER. CAMARGO CORRÊA 188 DOW BRASIL 189 SCHNEIDER ELECTRIC MÉXICO 190 CPFL PIRA ININGA 191 DISCO S.A. 192 NOVARTIS BIOCIÊNCIAS 193 NOKIA MÉXICO 194 ACEITERA GENERAL DEHEZA S.A. 195 COMPREBE 96 CONSTRUTORA ANDRADE GUTIERREZ 197 GRANDES SUPERFICIES DE COLOMBIA - CARREFOUR 198 QUINSA 199 JUMBO 20 LUNORTE - ALUMINA DO NORTE DO BRASIL S/A 201 BAYER 202 COAMO 203 LG 204 BUNGE FERTILIZANTES 205 SEARS ROEBUC 06 SAMARCO MINERAÇÃO 207 BANDEIRANTE ENERGIA 208 TRANSPETRO 209 ALUMÍNIO BRASILEIRO S.A. (ALBRAS) 210 GRUP BRIL 211 AVON 212 DANONE 213 DOW QUÍMICA 214 GRUPO ICE 215 EMPRESA NACIONAL DE MINERIA 216 EPM ENERGIA 217 VITR NVASES 218 WHIRLPOOL MÉXICO 219 GRUPO OMNILIFE 220 RENAULT ARGENTINA 221 ELECTROLUX DO BRASIL 222 ENTEL PC 23 CHEVRON PETROLEUM CO. 224 HONDA MOTORS DE MÉXICO 225 OXY-OCCIDENTIAL PETROLEUM CORP. 226 MERCEDES BEN ARGENTINA) 227 CEMENTOS CRUZ AZUL 228 DOE RUN PERÚ S R L 229 LIQUIGÁS DISTRIBUIDORA 230 NOKIA DO BRASIL 231 GRU O ISA 232 CERVECERÍA CUAUHTÉMOC MOCTEZUMA 233 SOTREQ 234 INFRAERO 235 SOCIEDAD CONTRACTUAL MINERA EL ABR 36 GRUPO SALUDCOOP 237 CAMARGO CORRÊA CIMENTO 238 SIEMENS MÉXICO 239 MOSAIC FERTILIZANTES LTDA. 240 BLACK LACK ECKER DE MÉXICO 241 BASF DE MÉXICO 242 MWM INTL. IND. DE MOTORES DA AMERICA LATINA DO SUL 243 MINERA YANACOCH NACOC CH Y ELECTRO TRO RO 44 TIENDAS OUR ANNUAL LIST OF LATIN AMERICA'S LARGEST COMPANIES 247 HEWLETT PACKARD BRASIL 248 SONY ICOS DE MÉXICO S.A. DE C.V. 249 UNILEVER DE MÉXICO 250 “IMCOPA - IMPORTAÇÃO, EXPORTAÇÃO E INDÚSTRIA DE ÓLEOS LEOS S S.A.” S.A.”” 25 2 NTIM METAIS META AIS 25 IO GRANDE ENERGIA (RGE) 252 MINERA BARRICK MISQUICHILCA S.A. 253 COMPANHIA ULTRAGAZ 254 VOTORANTIM AYER DE MÉXICO 256 PARIS S. A. 257 C V G INDUSTRIA VENEZOLANA DE ALUMINIO CA 258 COMPAÑÍA MINERA ZALDIV ZALDIVAR SCM IVAR RS CM M 25 BARBOSA COMERCIAL LTDA 260 SUPERAMA 261 DANONE 262 ADM ARGENTINA 263 OLÍMPICA S.A. 264 ALIANÇCA NAVEGAÇÃO ANÇCA CA NAV N AVEGAÇ GAÇÃO OGÍSTICAYOUR 265 UNILEVER DE ARGENTINA 266LATIN GRUPOAMERICA COIMEX 267»GRUPO SCHINCARIOL 268 GRUPO JULY/AUGUST ANDREUGUST MAGGI 269 UG T 2009 200 009 9COMPANH BUSINESS SOURCE FOR WWW.LATINTRADE.COM RASILEIRA DE METALURGIA E MINERAÇÃO 270 SUPERMERCADOS INTERNACIONALES H-E-B 271 COSTCO DE MÉXICO 272 MOV
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Latin La atin in n Amer Americ America Ame Boosts Bank Profits
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Y O U R B U S I N E S S S O U R C E F O R L AT I N A M E R I C A » W W W . L AT I N T R A D E . C O M
SABMILLER SABM SABMILL SAB ABMILL AB A MIL ILL BREW BR RE R REW EW EW WS SA BREWS LAT TIN AMERICA AMER AME M R RICA CA CA LATIN AMERICAN STRAT STR RATE RATEG R AT ATEGY TEGY EG G STRATEGY
EL SA SALVADOR'S MAURICIO FUNES AND PANAMA'S RICARDO MARTINELLI VIE TO BE THE P ANA NAMA'S RI FACE OF LATIN AMERICAN POLITICS NEW WF
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DEALS D EALS OF THE YEAR
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LATIN TRADE SYMPOSIUM SPECIAL ISSUE • TOP BANK LA
LATIN TRADE JANUARY-FEBRUARY 2012
ISTOCK
exico’s shoe sector is bracing for a tough 2012 after the country in December implemented long-awaited rules easing imports from China as part of World Trade Organization agreements. Other sectors, like clothing and toys, also expect to be impacted by stronger competition from lower-priced Chinese goods. The winners? Mexican consumers. Meanwhile, the new rules are also anticipated to reduce unfair practices such as incorrect classifications or sending goods through third countries, experts say. The result will be another jump in trade between Mexico and China. During the first half of 2011, two-way trade reached $26.6 billion, an increase of 23 percent from the same period last year, according to Mexico’s ministry of economics. In 2010, total trade between Mexico and China reached $49.8 billion, an increase of 43.5 percent compared to 2009. Of that, imports from China accounted for a whopping 91.6 percent of the total, leaving a Mexican trade deficit with the Asian nation of $41.4 billion ($11.1 billion more than in 2009). Mexico expects to see a 20 percent increase in imports from China in the short run and up to 100 percent in the long run, according to the Inter-American Dialogue’s Latin America Advisor. “Mexican producers…have had 10 years to prepare to face Chinese competition and if they are not ready now, it is unlikely that they ever will be,” Rhys Jenkins, professor of development economics at the University of East Anglia, tells the Latin America Advisor. See also Latin American Guide to China, page 34.
PLASMA TIME Plasma TV sales per capita in 2010 in US dollars
Mexico Venezuela Chile Brazil Colombia
4.7 4.7 3.9 3.2 1.2
Source: Euromonitor International
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THE SCENE LATIN AMERICA:
GLOBAL CHAMPION L
WATER RESOURCES Of all the water available, the regions of South America and Asia Pacific have the most.
atin America is shining globally, not only in terms of economic growth, but also in several
other areas, Raul Rivera points out in his book
Nuestra Hora (Pearson). Brazil’s dimensions are comparable to that of the United States, while Argentina’s are equivalent to those of India. Meanwhile, Latin America’s population of 600 million is twice that of the United States and far superior to that of the European Union.
FOREST Land under natural or planted stands of trees. The largest areas of forest in 2000 were found in the Russian Federation, Brazil and Canada.
Rivera also argues that Latin America’s image as a poor underdeveloped area is unfair. “Although “Latin America” and “poverty” are concepts inextricably linked in the mind of many observers, the reality is that we are basically a middle-class area, not so wealthy, nor so poor,” he writes. “Asia and Africa are the poor regions of the world, not ours.” Here we republish some of the charts he refers to in his book. They are developed by Worldmapper.
FRUIT South American territories export twice as much fruit (net) as territories in any other region, except for Western Europe. But as a region, Western Europe is not a net exporter.
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LATIN TRADE JANUARY-FEBRUARY 2012
POVERTY The human poverty index uses indicators that capture nonfinancial elements of poverty, such as life expectancy, adult literacy, water quality and children that are underweight.
BIOCAPACITY Biocapacity measures how biologically productive land is.
BUILDING A BETTER AIRLINE, NOT JUST A BIGGER ONE. With airline mergers constantly in the news, it’s easy to forget that size alone isn’t enough to lead this industry. No one who flies is waiting for a bigger airline; they’re waiting for one that’s committed to making flying better. To that end, we’ve taken a look at every part of the experience - from buying a ticket to getting your bags - and dedicated ourselves to constantly improving it. That’s an ambitious goal, especially at a time when air travel is under pressure from all sides, but the challenges of this industry have always been its fuel. So while we’re proud to offer over 400 weekly flights to more than 45 destinations in Latin America and the Caribbean, we won’t rest until each one of them is as convenient, comfortable, and hassle-free as possible.
DELTA.COM
THE SCENE Whoever said you can’t buy happiness may have some empirical backing.
Bribes:
Best & Worst
A LATIN TRADE ANALYSIS of information from the Happy Planet Index and GDP per capita data from the International Monetary Fund shows that there is no direct connection between happiness and wealth. According to the Happy Planet Index from the UK-based New Economic Foundation, a Latin American country, Costa Rica beat 142 other nations worldwide when it comes to life satisfaction. In fact, Costa Ricans are happier than those in wealthier countries like Ireland and Norway. And even though Costa Rica comes in eighth among Latin American countries when it comes to GDP per capita, it trounces its neighbors in life satisfaction. Meanwhile, being the second-richest country in Latin America has not brought much joy to Chileans, who rank as the third-worst nation in life satisfaction in the region (only Haitians and Peruvians are less happy). Panama takes second place in life satisfaction, even though it ranks in fifth place in GDP per capita. And Mexicans are somewhat happier than their GDP-per-capita numbers should indicate. While Mexico ranks
14
LATIN TRADE JANUARY-FEBRUARY 2012
as the fourth-richest nation in Latin America in GDP-per-capita terms, it ranks as the third-happiest. Interestingly enough, people in Panama and Mexico are also happier than people in much wealthier countries like the Netherlands and Switzerland. Argentina, which has Latin America’s highest GDP per capita, ranks eighth when it comes to life satisfaction. In contrast, Brazilians are happier than their wealth ranking. While Brazil is Latin America’s seventh-richest nation in per capita terms, its people are the fourth-happiest, along with Dominicans. The latter group shows an even larger gap between happiness and wealth. The Dominican Republic ranks in the bottom half of Latin America in GDP-per-capita terms. Both Brazil and the Dominican Republic rank ahead of the United Kingdom in life satisfaction, while Colombia has happier people than Germany. However, in the case of Haiti, wealth may be a factor (although the country also suffers from a range of other problems, including poor progress in reconstruction after the January 2010 earthquake). Haiti is both the least-happy nation in Latin America, and the poorest.
Country
Value Rk
Haiti Bolivia Venezuela Paraguay Argentina Nicaragua Dom. Rep. Ecuador Mexico Colombia Honduras Panama El Salvador Brazil Peru Costa Rica Uruguay Chile
2.6 2.7 2.8 3 3.1 3.2 3.2 3.4 3.6 3.6 3.6 3.7 3.8 4.1 4.3 4.4 5.6 5.9
135 132 131 121 113 109 107 100 91 89 88 81 75 61 59 56 30 21
Source: Global Competitiveness Report 2011-12, Executive Opinion Survey, World Economic Forum
CORRECTION In the September-October issue of Latin Trade we erroneously identified Christophe Maincourt as the President for Cartier Latin America. He is president of Resource Management International. We apologize for the mistake.
ISTOCK
CAN’T BUY HAPPINESS
Executives rank from 1 (worst) to 7 (best) degree of irregular payments and bribes connected with trade, public utilities, tax payments, public contracts and judicial rulings.
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THE SCENE The
PANAMA:
STAR PERFORMER
P
anama’s economy posted Latin America’s highest growth last year and will again outshine its neighbors this year, according to the United Nations Economic Commission for Latin America and the Caribbean (ECLAC). Panama’s economy grew an estimated 10.5 percent last year. That compares with an estimated 4.3 percent for Latin America as a whole. This year, Panama’s GDP will likely expand by 6.5 percent, while the region overall will see its economy grow 3.7 percent. Other growth stars last year included Argentina (up 9 percent), Ecuador (up 8 percent), Peru (up 7 percent) and Chile (up 6.3 percent). The worst performer? El Salvador, which saw its economy expand by 1.3 percent. However, the third-worst result came in Brazil, Latin America’s largest economy. ECLAC estimates it only grew by 2.9 percent, a marked slowdown compared with its 7.5 percent expansion in 2010 (its best in 25 years). See also The Other Argentina, page 22.
Panama Ouperforms Yearly Panamanian and Latin American GDP growth Panama
12%
LatAm
10% 8% 6% 4% 2% 0% -2% -4%
2008
2009
2010
Source: ECLAC
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LATIN TRADE JANUARY-FEBRUARY 2012
2011
2012
Latin Trade Group announces the hire of Elida Bustos as Managing Editor. “We are very excited about hiring someone of Elida’s caliber,” says Joachim Bamrud, executive editor of the Latin Trade Group. Bustos, an Argentine journalist, was team leader at Bloomberg News services, responsible for news content in Spanish, for a decade and for seven years was editor in charge of the Spanish desk of Reuters. She has also worked as a correspondent in Colombia for Reuters and for various media in Argentina.
News, analysis statistics available anytime, anywhere LATIN BUSINESS CHRONICLE, the premium digital publication of the Latin Trade Group, has launched a Spanish version. The new version aims to reach executives in Latin America and Spain that prefer reading key business information in Spanish. The Spanish version of Latin Business Chronicle comes as the publication celebrates its tenth anniversary. Latin Business Chronicle provides market intelligence on business in Latin America through key rankings, indexes and statistics such as the 100 Best Companies, Top 100 Employers and benchmarking indexes on business, infrastructure, taxes, technology, education, security and more.
DIEGO RIVERA | RUFINO TAMAYO | WIFREDO LAM | FERNANDO BOTERO | LEONORA CARRINGTON | GARCIA CORDERO | MARIO CARREÑO | ROBERTO MATTA | ARMANDO VILLEGAS | CARLOS CRUZ DIEZ | WIFREDO LAM | IGNACIO ITURRIA | EDGAR NEGRET| JULIO LE PARC | FRANCISCO TOLEDO | NELSON LEIRNER | CARLOS MERIDA | PABLO TAMAYO | GERALDO DE BARROS | FRANCISCO ZUÑIGA | GARCIA CORDERO | PABLO LEHMAN | MARIA MAGDALENA CAMPOS-PONS | JUAN LECUONA | LEON FERRARI | CUNDO BERMUDEZ | SALUSTIANO | TOMAS SANCHEZ | JOSE BEDIA | LUIS CRUZ AZACETA | GUSTAVO ACOSTA | CAROLINA SARDI | HUGO ZAPATA | CARLOS QUINTANA | HELIO OITICICA | MANUEL MENDIVE | PEDRO RUIZ | ARMANDO MORALES | JESUS RAFAEL SOTO | XUL SOLAR
CELEBRATING OUR TENTH YEAR.
TOP LATIN AMERICAN ART GALLERIES | NEW: FOTOAMÉRICAS INVITED COUNTRY: ARGENTINA | INVITED ARTIST: CARLOS CRUZ-DIEZ
THE LATIN AMERICAN ART FAIR
MARCH 2-5, 2012 MIAMI BEACH CONVENTION CENTER Visit us on arteamericas.com • Follow us on twitter @arteamericasfl • Like us on Facebook @facebook.com/arteamericasmiami
WITH THE SUPPORT OF THE MIAMI-DADE COUNTY DEPARTMENT OF CULTURAL AFFAIRS AND THE CULTURAL AFFAIRS COUNCIL, THE MIAMIDADE COUNTY MAYOR AND BOARD OF COUNTY COMMISSIONERS.
THE CONTRARIAN
Does Europe Matter Anymore? BY JOHN PRICE
How might Latin America fare in such a gloomy environment? Surprisingly well thanks to its own fiscal and monetary discipline and an historic pattern of declining European trade and investment links. MANY LATIN AMERICANS are proud of their European heritage and go to great lengths to sustain their cultural links to the old continent. Fortunately for the region, their economic ties to Europe are far less sentimental. In 2012, the EU-27 countries will buy only 12 percent of Latin America’s exports and will be responsible for less than 15 percent of foreign direct investment entering Latin America. As the European debt crisis pushes the Euro zone into a 2012 recession, Latin America may once again escape relatively unscathed. European governments, even the well run ones, are bleeding with red ink. For example, Germany, held aloft as an example of industry and austerity, is saddled with government debt equal to 83 percent of its GDP. Irish, Italian and Greek public debts all surpass 100 percent of GDP. With still inflated real-estate prices in much of Europe, public debt may be just the tip of the iceberg in a European consumer society that has lived beyond its means ever since the common currency was adopted. In a best case scenario, where debt is gradually paid down in an orderly fashion, Europe faces anemic growth for a decade. In a worst case scenario, the euro collapses and financial flows grind to a halt. How might Latin America fare in such a gloomy environment? Surprisingly well thanks to its own fiscal and monetary discipline and an historic pattern of declining European trade and investment links. Trade between Latin America and its traditional northern partners, the US and
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LATIN TRADE
JANUARY-FEBRUARY 2012
Europe has grown at a small fraction of the pace of intra-regional trade and trade with Asia, most particularly China, as well as emerging South-South trading partners like India, the Gulf states and Africa. In 2012, China will for the first time replace the EU-27 as the 2nd largest trading partner to Latin America. Until recently, European firms held one– third of Latin American FDI stock, having led foreign investment in key sectors such as banking, electricity, telecoms and automotive. But Europe’s share of fresh FDI pouring into Latin America has slowly declined to an estimated 20 percent in 2010. The debt crisis will severely limit the ability of European companies to re-invest in Latin America, let alone deploy new capital to the region. For that reason, some estimate that European FDI to Latin America will barely reach 12 percent of the total or $15 billion in 2012. By contrast, Chinese FDI in 2011 will surpass $20 billion and could reach $30 billion in 2012, double European levels. While trade and investment linkages to Europe may be too weak to hurt Latin America, the more fungible world of capital flows could deliver some unwanted contagion to the region if the European debt crisis further devolves. Some of Latin America’s largest banks come from Spain (Santander, BBV ) and the UK (HSBC). The 2008/9 financial crisis taught us that foreign banks that must de-lever their balance sheets will necessarily stop lending, albeit for a short while. More ominously, Latin America remains
reliant on international debt markets to run its economies. Because Latin American savers keep about half their piggy banks abroad ($3.5 trillion overseas savings), the region is chronically under-banked. Latin American public debt is modest by European standards (36 percent of GDP) but is still too large to be funded domestically by the region’s thin capital markets. If investors are spooked by a collapsed euro, then it will prove more costly than normal for Latin American governments and large companies to raise money internationally. More costly credit will slow Latin America down a bit. In the end, the European debt crisis should not prove more challenging than the US led financial crisis of 2008/9. That time round, Latin America’s currencies and financing flows took a beating for about 6-9 months but the region showed that it could withstand the hit and investors gladly returned. Latin America is economically less reliant on Europe today than at any time since the Spaniards first arrived. For that reason, worst case scenario forecasts for 2012 growth in Latin America are a healthy 2.5 percent.
John Price is the managing director of Americas Market Intelligence and a 20-year veteran of Latin American competitive intelligence and strategy consulting. jprice@ americasmi.com
THE BOTTOM LINE
BY ALBERTO J. BERNAL-LEÓN
IF YOU WERE TO JUDGE the future of Colombia from what you read on Twitter, you would have a gloomy vision of what is to come. Every day, without exception, many of us who try to play an advocacy role on this social network receive striking insults largely for presenting numbers-backed evidence about pragmatic global issues. As many readers know, I am and will be a loyal advocate of the policies implemented by former President Álvaro Uribe Vélez, who pulled Colombia’s economy out of a deep pit and left a country with abundant opportunities to continue down a path of economic progress and social inclusion as an inheritance to his successor, Juan Manuel Santos. I got a recent insult on Twitter from somebody who couldn’t stand my presentation of logical evidence about the rise of the tourism sector since President Uribe took charge of the country. Minibares Ltda. is a family company that has been fighting for years to generate worthy employment in Colombia. Minibares delivers soft drinks, vodkas, beer and crackers to business travelers returning to their hotel rooms after a long day of work, or to families on vacation. The company started more than 20 years ago as a dream of Dr. Carlos José Ruiz, its former president and majority shareholder. The com-
20
LATIN TRADE
JANUARY-FEBRUARY 2012
Minibares Ltda has benefited from Colombia’s economic stability and the increase in tourism pany’s ambition always has been to provide the best possible service to the “wandering tenants” of hotels in Colombia, Panama, Costa Rica, the Dominican Republic and, at one time, Venezuela. The reader can imagine how Minibares’ investment panned out in Venezuela. In the first four years (1999 to 2003), the business was profitable. But when 21st century socialism started to play out in full, the business got tough. Among other things, they couldn’t find stable suppliers or prices, and the business became untenable. Given the adverse circumstances, Minibares pulled out of Venezuela in 2010 at the loss of 10 years of work.
Alberto J. BernalLeón is the director of investigations at Bulltick Capital Markets. You can follow him on Twitter @ AlbertoBernalLe.
ISTOCK
Investor Confidence
Not all is dark. Colombia’s history is completely different thanks to the vibrant investment in tourism since former President Álvaro Uribe took control of the country and transformed Colombia from a “failed state” to an honorary member of the CIVETS (acronym for Colombia, Indonesia, Vietnam, Egypt, Turkey and South Africa). Minibares Ltda. went from serving 10 hotels in Colombia at the end of 2002 to 50 today, equivalent to about 6,000 rooms lodging some 1.5 million guests a year. This exponential growth wouldn’t have been possible if the Uribe government hadn’t decided to “bet the house” on providing legal and physical security to hotel entrepreneurs, who expanded the offering of rooms in Colombia by 13,000 units as the traffic of foreign tourists surged from 500,000 in 2002 to 1.5 million in 2010. This growth allowed Minibares to go from providing 10 people with reputable employment (medical insurance, bonuses, transport subsidies, vacations, pensions, unemployment insurance, etc.) to 90 people today. The founding partner of Minibares Ltda., Dr. Carlos José Ruiz, and his son, Carlos Daniel Ruiz, have made it possible for 90 Colombian families to have a better life by “selling water and potato chips,” as Dr. Ruiz puts it humbly. A social hero like Dr. Ruiz couldn’t have existed in the Venezuela of Hugo Chávez. But he does exist in the Colombia of democratic security and investor confidence that President Álvaro Uribe handed over to his successor Juan Manuel Santos.
98 Miami
%
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98%
96%
Cumplimos con las medidas de calidad nacionales.
THE OTHER
ARGENTINA
UNEMPLOYMENT FALLS Yearly Argentine unemployment rate 25% 20% 15% 10% 5% 0%
2001
2002
2005
2009
2011
Source: IMF
FDI: MIXED RESULTS Yearly FDI in Argentina, billions of US dolars $12 $10 $8 $6 $4 $2 $0
2006
2007
2008
2009
2010
Source: ECLAC
STRONG ECONOMIC RECOVERY Yearly Argentina GDP Growth
M
arches, demonstrations in the streets, unexpected or scheduled strikes, negative articles in national newspapers, complaints from the vast majority of the middle class and inflation that currently exceeds 22 percent (which differs by a wide margin from official statistics). This is the first image many see of Argentina. But the macroeconomic figures show a different country. Argentina has grown from an average of 0.6 percent in the 1990s during the conversion of the peso to the dollar to an average of 7.6 percent between 2003 and 2010. Its foreign debt dropped from $105.8 billion, or 163.2 percent of GDP in 2003, to $55 billion or 38.4 percent of GDP in 2009, and international reserves grew during that same period from $10.4 billion to $46.3 billion. With low unemployment, which peaked at 22.4 percent in 2002 and closed at 7.7 percent in 2010 with a projected continued decrease for 2011, Argentina also has the best GDP per capita in Latin America at $15,852 compared to a regional average of $11,236. How can these two realities co-exist? Is the situation in Argentina so bad? Is investment really possible? Three successful private Argentine investors from different economic sectors, who have their own companies and built their fortunes here, introduce Argentina to foreign investors and tell them just what can really be done in this county.
Sources: IMF, Latin Business Chronicle
BUT HIGH INFLATION Yearly Argentine and Latin American Ination Argentina
30%
LatAm
25% 20% 15% 10% 5% 0%
2007
2008
2009
2010
2011
Sources: Ecolatina, IMF, Latin Business Chronicle
JANUARY-FEBRUARY 2012 LATIN TRADE
23
PEOPLE: ARGENTINA’S BUILDERS
EDUARDO COSTANTINI ON ARGENTINA The country has great metrics, but still suffers an image problem. BY ELIDA BUSTOS
BUENOS AIRES – He never stopped building in Argentina, in spite of the harsh ups-and-downs of the country’s politics and economy. For Eduardo Costantini, economist, businessman and an avid collector of Latin American art, building is his element. He builds with designs and textures; harmonious and attractive lines as crucial elements, demonstrated by his functional yet exquisite buildings rising in the city and urban developments in rural areas like Nordelta or Puertos del Lago. It is these “city-towns,” close to the Argentine capital and masterfully integrated into their natural surroundings, that in a few years will house 170,000 residents. “With economic growth, construction is dynamic and has a multiplier effect,” Costantini tells Latin Trade, referring to Argentina’s growth rates, which have been rising since 2003 and hit a peak of 9.2 percent in 2005
24
LATIN TRADE JANUARY-FEBRUARY 2012
and 2010. “Argentina is in a different position than in previous decades. It has a situation of unusual solvency, low debt and solid assets,” unlike what is being experienced in Europe and the United States. “There has never been such a low level of debt,” he says, and adds that a snapshot of the Argentine economy shows a solid level of assets never before seen, which contrasts greatly to 2000, when the country “was trapped by its foreign debt.” From his office at the Museum of Latin American Art – which he himself built and which houses part of his exquisite collection of paintings – the businessman compares the situation that Argentina was in a little more than 10 years ago to its current one, and he believes that abroad there persists a perception of risk about the country that is not based on reality. Similarly, he feels that the low level of foreign invest-
PEOPLE: ARGENTINA’S BUILDERS
A collection’s gem: Frida Kahlo’s 1942 self-portrait
PHOTOS COURTESY OF MALBA - F UNDACIÓN COSTANTINI
Brazilian Tarsila do Amaral’ Abaporu, 1928
Candido Portinari´Festa de São João, 1936
Museo de Arte Latinoamericano’s façade, Buenos Aires
ment is due to “a kind of bad image” that arises from not having finished paying the foreign debt and for having an economic policy that is heterodox, but “not necessarily as bad as foreign investors see it.” Costantini can’t understand how sophisticated institutional investors that buy debt bonds can compare Argentina’s debt to that of countries like Italy, a member of the European Union that has a serious solvency problem, a high unemployment rate and is struggling to make good on its foreign obligations. Argentina “projects a fear that is – in my opinion – unjustified,” he adds. But he believes that it is this perception of risk that makes foreign investors “sometimes choose Colombia, Peru or Brazil, which is the great absorber of direct investment.” Costantini recognizes certain vulnerabilities in the country but does not consider them insurmountable, and thinks that this perception of
risk that foreign investors have can be changed with a few key actions. For example, settling accounts with the Paris Club, to which Argentina owes $9 billion; resolving the situation with bond holders that did not participate in the two invitations from the Argentine government to restructure the debt (the so-called “holdouts”), and, in the macroeconomic area, reducing inflation and continuing to work to strengthen tax accounts. And he adds that Argentina has the luxury of paying its debt without refinancing. Still, investors must work within the country’s current business climate. He cites the increase of “higher than desirable” costs and the lack of medium and long-term financing, both for companies and for families seeking better access to housing. For that, he estimates that correcting
JANUARY-FEBRUARY 2012 LATIN TRADE
25
PEOPLE: ARGENTINA’S BUILDERS
Costantini can’t understand how sophisticated institutional investors that buy debt bonds can compare Argentina’s debt to that of countries like Italy, a member of the European Union that has a serious solvency problem.
ebustos@latintrade.com
BETWEEN TOWERS AND “CITY-TOWNS”
C
onsultatio, the company founded and run by Eduardo Costantini, has projects underway both in the country and abroad. They are few but ambitious: a tower in the Puerto Madero neighborhood of Buenos Aires that will be the country’s largest in terms of office space; a residential tourist complex in Uruguay, another on Miami’s
26
Key Biscayne, and his two “citytowns” of Nordelta and Puertos del Lago, located to the north of Argentina’s capital. With Nordelta, some 30 kilometers (19 miles) outside Buenos Aires, Costantini developed the concept of integrated urban complexes, meaning suburban areas in an rural environment, with all the services of a city, including education, entertain-
LATIN TRADE JANUARY-FEBRUARY 2012
Las Garzas
ment and health care. The scope of the project is overwhelming. It’s developed on 1,600 hectares (3,953 acres) upon which 20 neighborhoods and even a water treatment plant were constructed, and it will be inhabited by 100,000 people when all the owners move in. Construction required the removal of 23 million cubic meters of soil, the installation of 141 kilometers (87 miles) of gas and electrical networks and the construction of 180 hectares (444 acres) worth of artificial lakes, which is what gave Argentina’s first city-town its unique profile. Just setting up the underpinnings of Nordelta required an infrastructure investment of $350 million and today the project is a registered trademark of Consultatio and Costantini. In this city that he erected there are four schools providing education to 3,000 students, one health center, as well as movie theaters, banks, gas stations, supermarkets and even a five star hotel, the Nordelta InterContinental. The builder did not leave out sports either. He built an 18-hole golf course designed by Jack Nicklaus, the essential tennis courts and soccer fields, and a marina with a port for sports activities.
“Making a city is diversity in a bundle. Nordelta is an organism. It is a different habitat, different densities between houses and condominiums,” Costantini explains. “It is a rotund project in its totality, it has a political, community aspect because we are creating community.” Following Nordelta is Puertos del Lago, now in full construction, and future home to 70,000 people. This project is located 44 kilometers (27 miles) outside Buenos Aires, in Escobar, also in the northern zone, and Consultatio has almost 1,400 hectares (3,459 acres) on which to develop a profile similar to the previous one. But Costantini is not stopping there. Following the office towers and homes and city-towns are real estate developments in relaxation areas. In Uruguay, with its beaches that draw the Argentine public, he is building Las Garzas, a 240 hectares(593 acre) residential tourist center, with almost 500 lots to build on and access to the beaches. And in Key Biscayne, at the door to Miami, lies a residential complex with 165 homes, beach access and all the services that could interest a buyer with high purchasing power. – Elida Bustos
PHOTOS COURTESY OF CONSULTATIO
this erroneous perception of risk that the country creates among international investors could produce a flow of foreign investment in the tens of billions of dollars because “there is no dramatic problem with investing in Argentina or for an investor to find quality conditions and the human resources to work here.” The businessman – who also has projects in Uruguay and Miami – believes that Argentina offers several potential growth areas for foreign investment, among them mining, oil production, and agribusiness with its associated biofuel production. He considers the country behind in its mining development and sees a strong future for business in the energy sector. He estimates that there is ample space to provide added value to raw materials that are marketed and exported today. And he has also not left the tourism industry, an attractive, underexploited sector with significant growth potential, out of his analysis. Costantini believes that companies are inexpensive in today’s world and his suggestion to a potential investor landing in Argentina with $200 million or $300 million is to associate with a local group. He or she should also begin by talking with local banks that will screen companies and research specific areas of interest.
Puertos del Lago
PEOPLE: ARGENTINA’S STARS
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LATIN TRADE JANUARY-FEBRUARY 2012
Eduardo Eurnekian
PEOPLE: ARGENTINA’S BUILDERS
EURNEKIAN’S VISION Latin America needs to become connected. We have to look toward the interior of Latin America. I cannot imagine this region with double the population, a developed interior with prosperous cities without the necessary communication. BY ELIDA BUSTOS
PHOTOS COURTESY OF AEROPUERTOS ARGENTINA 2000
H
e believes in an interconnected Latin America –integrated through infrastructure. He also believes that economic and social development will come from that network of engineering and construction. Eduardo Eurnekian began his career working in the family textile business and today he operates airports, has mining and agricultural projects, is the owner of a multimedia corporation and a biodiesel plant. He recently bought a winery and is now immersed in what will be one of the largest infrastructure projects in South America: the Bioceanic Aconcagua Corridor, a tunnel that will traverse the Andes Mountains and open at the Pacific Ocean, 5,100 kilometers (3,168 miles) south of the Panama Canal. “Latin America needs to become connected,” Eurnekian tells Latin Trade from his office in the Palermo neighborhood in Buenos Aires. “We have to look toward the interior of Latin America. I cannot imagine this region with double the population, a developed interior with prosperous cities without the necessary communication,” he says. He emphasizes the need for railroads, roadways, tunnels, connectivity, airports and large-scale infrastructure projects that bore through the hemisphere’s center, stretching from north to south and east to west. Eurnekian stresses the need for large-scale projects that generate business, employment, development and that lead to better living standards. Talk soon turns to the subject of the corridor, a $4.2 billion rail project that will run across the Argentina-Chile border. Bidding on this project begins mid-year. This project was conceived out of the need to transport products from the Southern Cone to the Pacific year-round via a route that would be closer than Panama and less expensive and complicated than the Strait of Magellan route in southern Patagonia. Although there are many passes along the 3,200-mile border between the two countries, the Cristo Redentor in Mendoza, which is generally used to transport cargo, suffers frequent shutdowns during the winter months due to the heavy snowstorms at its 3,200-meters (10,500-feet) altitude. Eurnekian does not know if this project is the culmination of his long career, but it is what enthusiastically consumes him today. He believes that Argentina needs such projects. The businessman emphasizes that there is much construction to be done in the variety of investment opportunities that Argentina offers. “Argentina has an enormous ich-
thyological potential in its marine platforms, agricultural development in the pampas, petroleum centers in the south, marine basins for oil and gas drilling in the north and an array of mineral riches along the border with Chile,” he says. “If we add together the natural beauty in the south, the lakes, mountain ranges, pampas, and all of the northern region, we are talking about investment potential for hotel activities and businesses that is unparalleled anywhere in the world.” He is convinced that investment prospers through the effort, ability and creativity of those who move it forward—beyond the country where it was created. In his opinion, Argentina is not particularly difficult or potentially risky for investment, he says. Rather, it lacks a more global cachet because investors only focus on the recent history in the region. Without mentioning Mexico or Brazil by name, he points out that other countries have had to rely on foreign financial resources to avoid collapse. Yet he establishes an implicit comparison saying that this has not happened in Argentina. Eurnekian further believes that a foreign investor would not have significantly different difficulties investing and working in Argentina than those that may be encountered elsewhere. “It [Argentina] is as complex as any other country. I believe that conditions are the same. I do not think that Argentina is any less friendly than any other country,” he says, adding that in Argentina, there is no ideological clash regarding investments or the foreigners who might bring them. The entrepreneur remains committed to Argentina (as were his parents) though his diverse investment portfolio has brought him to various countries throughout the region as well as to Italy, Morocco and Armenia—the land of his ancestors. In fact, Eurnekian believes Argentina has a comparative advantage when it comes to the ability, suitability and training of the Argentine worker who easily adapts to any activity. At the same time, despite the expanse of the Argentine territory, he believes the country has a strong communications infrastructure, and viable road connections, meaning that an investment in the interior does not mean that you are “stuck in the middle of nowhere”. Eurnekian also dismisses the idea of the additional “Argentine cost” as is often heard in business forums. “Tell me what it costs in the United States, Europe or any other country in the world,” he challenges. “Now, yes, it is cheaper to invest in a politically unstable country such as somewhere in Africa, but that also has its price.”
JANUARY-FEBRUARY 2012 LATIN TRADE
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PEOPLE: ARGENTINA’S BUILDERS
BIOCEANIC ACONCAGUA CORRIDOR There will be only 205 kilometers (127 miles) of railroad tracks, but they will put an end to what was an axiom of South American “real politik” for more than a century: Argentina on the Atlantic and Chile on the Pacific. The Bioceanic Aconcagua Corridor project will bore through the formidable physical barrier—the Andes Mountains—increasing commerce throughout South America. The completion of this tunnel will revitalize commerce in the region with a transportation system capable of shipping more than 70 million tons of products to Asia annually. Currently, 83 percent of Southern Cone commerce that leaves for the Pacific is sent by ship—a very long and costly route. Most of the remainder goes through the Cristo Redentor Pass in Mendoza, Argentina. In the winter months, this route is clogged with long lines of stranded trucks waiting for the snow storms to end. The pass can be closed for up to 60 days in winter due to bad weather. The key to the Bioceanic Aconcagua Corridor is that it is being built 700 meters (2,300 feet) lower than the Cristo Redentor Pass, which guarantees its operation year-round. This project consists of a main 52-kilometer (31 mile) tunnel and 33 secondary tunnels with a total of 20 additional kilometers, 75 bridges and 33 viaducts. The
railroad is electric with wide tracks that will be joined to other preexisting railroad tracks in both countries. For decades both sides of the mountain range have talked about the need for a pass of this type, and now the project is underway. The original design from Tecnicagua—which Eurnekian bought—follows 13 other projects from which the current one emerged. The project will be completed by a consortium made up of Corporación América, the Chilean companies Empresas Navieras S.A and Contrera Hermanos S.A., Japan’s Mitsubishi Corporation and Geodata SpA of Italy. Other companies such as Brazil’s Camargo Correa, will participate to a lesser degree.
Aeropuerto de Carrasco, Uruguay
Eduardo Eurnekian’s investment portfolio is surprisingly diverse. His company, Aeropuertos Argentina 2000, modernized the main terminals in Argentina, and today he manages 35 airports in that country and controls 90 percent of the air passenger traffic. He has also renovated terminals in Lima, Peru, and in Carrasco and Punta del Este in Uruguay. In Ecuador, he revamped Guayaquil airport and built the Ecological Airport in the Galapagos Islands. In November, Brazil granted him the first concession ever given to a private company for renovation of an airport: Natal. With terminals in Sicily and Armenia, he now has 10 foreign airports in
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his portfolio. One of his companies controls 1,600 kilometers (994 miles) of highway in Argentina and another is awaiting approval from Uruguayan authorities to build an ecological park with an investment of $120 million. He is also the owner of a multimedia company in Argentina, Corporación América. Currently, he is preparing to participate in the construction of the Condor Cliff-La Barrancosa hydroelectric dam in Argentina’s far south. Eurnekian has also expanded into a potentially strategic field: biofuels. He has installed his first biodiesel processing plant in the province of Santa Fe, northeast of Buenos Aires. This
LATIN TRADE JANUARY-FEBRUARY 2012
plant produces 240,000 tons of fuel annually and this year will increase production to 1 million tons by processing soybean oil to make the final product. In the agricultural sector he operates more than 100,000 hectares (274,105 acres) in various Argentine provinces with 20 percent of that land irrigated. He bought the Bodega del Fin del Mundo, a winery in the Patagonian province of Neuquén and he also recently incorporated a gourmet restaurant in Buenos Aires, “Experiencia del Fin del Mundo.” Eurnekian also has approximately 20,000 head of Brangus cattle in the northern province of Chaco for the purpose of
producing high-quality export meat. And he is also involved in charities, supporting a range of philanthropic activities in both Latin America and in Armenia. There, Eurnekian owns Converse Bank, which focuses on retail and commercial banking, and also runs that country’s postal service. Eurnekian is convinced that technology must be incorporated in order to improve living conditions. “The current crisis is an indication that the existing technology is worn out; we need innovation,” he says. With that in mind, he is looking into future investments in biotechnology, research and pharmaceutical development.
MARCOS
GALPERIN CEO of MercadoLibre BY CHARLES NEWBERY BUENOS AIRES – Marcos Galperin has done what many from the dot-com bubble couldn’t – he’s survived, and swimmingly. Galperin, 40, co-founded MercadoLibre in 1999 as an MBA student at Stanford University, entering a field teeming with competitors in his native Argentina. There were already four-to five e-commerce websites in each country of Latin America, his expansion target. But as others plowed millions into splashy ads, Galperin, who had come to the fray from trading bonds and oil derivatives, built steadily with a tight team and a view of the long term. He wasn’t in it for the fast buck. This paid off. While competitors crashed or sold out, MercadoLibre emerged from six years of losses as a growing and profitable enterprise. California-based eBay bought 20 percent of the company in 2001, bringing expertise, experience and recognition. MercadoLibre soon acquired operations from its home-turf rival, DeRemate.com, widening its operations across the region. Galperin took the company public in 2007, listing on NASDAQ, where its trading volume now triples that of all stock exchanges in Argentina. Four million vendors hawk wares over its platform, likely to reach five million by 2012. Revenue shot up fourfold to $217 million in 2010 from 2006, pushing profits to $52 million from $1.1 million over the same period. Pleased? Yes, but Galperin is not satisfied. The chief executive is building bigger by creating what he calls an ecosystem of e-commerce platforms and services. This drive has been his signature from the beginning. “When I see challenges, I see opportunities,” he says. He got his start in the 1995-2000 dot-com boom, when wads of money were flowing to Internet ventures. He and two partners set up an online auction website, persuading friends to list 1,000 used items. It was a hard sell. “People told us, ‘This will never work,’ ” because consumers won’t buy what they cannot touch from vendors they cannot see, he remembers.
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But his bet paid off and MercadoLibre became synonymous with e-commerce as it gained traction in Latin America with the advance of broadband and falling computer and connection prices. Galperin kept a lid on ad spending and introduced a listing fee, drawing fears of a bust. Instead, the fee – there’s a free option, as well – perked up confidence by reducing concerns of credit card abuse and online fraud. MercadoLibre, which makes money through ads, fees and service commissions, has come to be viewed as a reliable corporate sales platform. Firms now account for 80 percent of transactions, with 80 percent of the movement involving new goods and 95 percent at fixed prices. That’s a big change from the first years, when it was 100 percent individuals hawking old bikes and toys, auction-style. Small companies have found they can compete over the site against big retailers no matter what their location, something Galperin likes to call the democratization of commerce. There’s room for growth, too. E-commerce accounts for 3 percent of retail sales in Latin America compared with 10 percent in the United States. The spread of cell phones and tablet computers is boosting the share, he says. There are hurdles. Deliveries, for one, can be costly, unreliable and sluggish, and this slows e-commerce. Galperin would love to replicate what happens in Japan, where a fish can be ordered for delivery at a buyer-determined hour – and on ice. The longer distances in Latin America make this tougher, but it is his ambition, he says. A second hurdle is to combine purchases and payments. Many transactions are completed offline, sometimes days later when a seller, at times physically, delivers a product for cash. This can be costly and cumbersome for sellers, especially when processing hundreds of deals a day, he says. To help, he’s introduced an online payments service now available for any retailer website. MercadoShops, launched in 2010, allows retailers to create their own e-commerce sites, with more than 30,000 already up. Another service lets companies place text ads on MercadoLibre to drive traffic to their own sites. This is part of Galperin’s vision of an e-commerce ecosystem, with each service working off the other. To expand business, MercadoLibre spent 18 months rewriting its technology so its services run better on smartphones and tablets, with one million people already doing business over Androids, Blackberrys and iPhones, he says. A next step is to open the platform for developers to make software applications that help users perform different tasks such as linking MercadoLibre deals with inventory management or mailing systems. The advances are the result of Galperin’s zeal for research and innovation. He spends a good chunk of his time combing the industry for trends and new technologies, helping him to chart his next steps. He promotes this among his 1,600-person staff, half of whom work out of five floors of airy offices in Buenos Aires. The floor plan is open; everybody sits at similar desks. Employees can approach Galperin when they want. “You have to be constantly adapting yourself, generating changes or adapting yourself to the changes to maintain your leadership,” he says. He spreads this belief by example. “I could be a great orator,” he confides. “But if I don’t do what I say, then it won’t work,” he adds, pointing to a sign in an office conference room. “Well done,” he reads out loud, “is better than well said.”
PHOTOS COURTESY OF MERCADOLIBRE
PEOPLE: ARGENTINA’S STARS
SPECIAL REPORT
LATIN AMERICAN
GUIDE TO CHINA A practical guide to doing business in China for Latin American companies. BY RUTH MORRIS
SHANGHAI -- A Bolivian executive lands at a Chinese airport and politely kisses the cheek of an assistant sent to greet him, as she recoils in astonishment. A Dominican businessman buys a container of red beans in China, but when the shipment arrives it’s half full of pebbles. A Peruvian
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chef steps onto the streets of Shanghai, surveys the black sedans, the gray sky, the rusty bicycles, and asks himself: “Do these people really want to eat ceviche?” It hasn’t always been smooth sailing for Latin Americans doing business in China. From hulking multinationals down to
adventure-driven entrepreneurs, the journey has been fraught with regulatory headaches, marketing missteps and copy-cat competitors, not to mention a yawning cultural divide. But despite the challenges, many Latin American companies are forging ahead,
PHOTOS RUTH MORRIS
SPECIAL REPORT
Edgar Puch, Eduardo Vargas and Marusia in YuYuan garden.
moving beyond the tried and true commodities trade, and seeking out Chinese buyers for value-added products like Brazilian shoes and Mexican tequila. Others are launching trading companies, communications ventures, tourism services and Latinthemed restaurants, all with a common goal:
to stake a claim in the world’s fastest growing major economy. “I’m quite amazed at how many people are coming and taking the chance to start something up here. And in Latin America, I don’t think they’re seeing this,” says Edgar Puch, director of the procurement and trad-
ing company Pryme Group, in Shanghai. While many large Latin American companies have struggled to find a toehold in China, Puch says a growing army of Latin American entrepreneurs is scrambling up the learning curve; they are getting their hands dirty, and immersing themselves in China’s business culture. “Small companies are doing an important job here, opening our eyes, accumulating knowledge, and I expect more and more to come,” he says. “And they must come.” A glance at the numbers explains why: With a staggering 1.3 billion inhabitants, China has posted economic growth rates of around 10 percent for three decades. What’s more, trade between Latin America and China is on fire-- shooting up 51.2 percent in 2010, to $178.6 billion. In other words, China’s trade with Latin America is growing at nearly twice the level of US trade with the region. “The Chinese market is truly becoming an attractive market,” says Efrén Calvo Adame, president of the Mexico-China Chamber of Commerce. In the context of Europe’s debt crisis and the United States’ limping recovery, he added, “China is healthy, emergent, and sustainable over the long-term. What other market offers that?” Yet by most accounts, Latin America has arrived late to the game, and several of Latin America’s large multinationals have had a bumpy ride in China so far. Experts point to the case of Brazilian airplane maker Embraer, which stood by for months with an inactive factory in China while it waited on government authorizations. “China is not for a first-timer in Asia. You don’t enter the Chinese market in a gung-ho spirit,” says Mario Ignacio Artaza, Chilean consul-general in Hong Kong. “The first rule of success is investing in a plane ticket, in a hotel stay, in a cab, and seeing for yourself.” THINK NICHE, THINK RICH Puch, who is Bolivian, came to China as an executive for a Chilean company in 2005. He struck out on his own two years later, selling his car and sinking all his savings into Pryme Group. The company has grown swiftly ever since and recently added a research and analysis division.
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SPECIAL REPORT: CHINA Puch says his most important piece of advice for Latin American clients is to find a niche in China, preferably one that taps into the country’s luxury spending spree. China’s millionaire households surged 31 percent last year, a recent Boston Consulting Group survey showed; the group expects China’s middle-class and affluent consumers to double in number over the next decade, to more than 400 million. “China has more millionaires than any country outside Japan and the United States,” Puch says, “and Chinese society has become aspirational.” He pointed to a Chilean client that sells avocado oil as a company poised to take advantage of the trend. Food safety looms large in China, and cooking oil has been a major offender. In September, the official Xinhua news agency reported a police crackdown on a gang that sold thousands of tons of illegally recycled cooking oil, much of it collected from drains behind restaurants. As a result, China’s wealthier consumers are willing to pay a premium for imported food products that conform to stricter safety standards. Puch’s advice to the avocado oil client: “You have a very good product for this market, but you have to sell it like a delicacy, not to the supermarkets.” Consuelo Valdez, CFO of LaREDChina. com networking website, says China’s urban spending habits caught her off guard when she arrived earlier this year. “You have an image of China as rice and pirated DVDs, but when you come you see women with Louis Vuitton shopping bags and Chanel shopping bags... big bags,” she says. “Plus you see construction everywhere, infrastructure everywhere. I’ve been very impressed by the buying power, and by the pace of change.” Before venturing into the Middle Kingdom, Puch advises clients to take stock of China’s value-added and import taxes. China has thrown open its doors to commodities like Argentine soy, to feed its livestock, and Brazilian iron ore, to feed its construction boom. But China slaps import duties on everything from wood to wine to food products, sometimes as high as 35 or 40 percent.
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China has more millionaires than any country outside Japan and the United States, and Chinese society has become aspirational. Edgar Puch, director of the procurement and trading company Pryme Group, Shanghai.
SECOND-TIER CITIES When Peruvian Eduardo Vargas arrived in Shanghai in 2002 as an executive chef for a Hong Kong-based restaurant, his first impression was of a dreary city with the black sedans of party officials swooshing by. “There was no western food that was particularly good. There weren’t choices. We were new,” he says. A year later he opened his own cafe. Skip forward more than a dozen openings-an Italian bistro, a deli-- and Vargas has become a culinary fixture in the city, listed by CNNGo as one of Shanghai’s “20 people to watch,” alongside former NBA star Yao Ming. Vargas’s latest venture, Chicha, features ceviche, anticuchos and pisco sours in a lounge bathed in deep yellow and orange hues, and swaying to samba. Across the street, in Fuxing Park, elderly Chinese play mahjong and practice tai chi. But now Vargas is looking beyond Shanghai, at China’s so-called second-and third-tier cities. Shanghai, Beijing and Guangzhou are China’s major business hubs, seen as the country’s early winners. But China has at least 15 cities with populations above five million people--Uruguay has a population of about 3.3 million. They’re all simmering with ambition, throwing up malls, fitness clubs and even opera houses. “There are cities in China that look like Shanghai 10 years ago, when I arrived,” says Vargas, referring to cities like Suzhou, Tianjin, Chongqing, Hangzhou and
Chengdu. He added, “A city that used to have only Kentucky Fried Chicken and McDonald’s,” in the way of foreign restaurants, “now has an Italian restaurant... It could be a money-making machine.” Artaza, the Chilean consul-general, is encouraging companies from his own country to tread the same path. Chile was the first South American country to recognize the mainland Chinese government in 1970, and Artaza says China has “almost a firstkiss remembrance” of those early diplomatic ties. China and Chile signed a Free Trade Agreement in2006. “And we should be the first ones to plant a kiss in these second-third-and fourth-tier cities,” Artaza says. “Within these cities there is an efficient market for distributing our goods to a population that’s eager to enter a growing globalization process.” CUSTOMIZE, OR NOT As for the manual on customizing Latin American products to Chinese tastes, it hasn’t been written yet. Mexican food giant Grupo Bimbo became one of the first to test the waters after entering China in 2006.Taking note of the Chinese penchant for savory foods, the company cut back on sugar and introduced breads with layers of meat and red bean paste. According to the China Daily, “rolling style bread”, or juanqu, with beef floss, is the company’s best selling product in the Middle Kingdom. Experts say packaging is also key. Red
SPECIAL REPORT: CHINA
For companies manufacturing in China, experts also advise keeping vital components and trade secrets out of the equation, to avoid copying. signifies good luck, for example. Gold, wealth and happiness. Puch recommends packaging food products in small quantities, since the Chinese tend to shop often and buy small amounts. During China’s Mid-Autumn Festival, he notes, friends and fa-mily exchange moon cakes filled with lotus seed paste. The cakes are small and, by western standards, bland. But they arrive in large, elaborate boxes, sporting thick ribbons and painted fabric. At the same time, experts say, Chinese consumers often seek out imported products precisely because they are not Chinese. A bottle of French wine bestows more status than, say, a bottle of China’s own Great Wall Wine. No need to mess with a good thing. “I don’t believe in ‘Chinacizing’ things. It doesn’t work,” says Vargas of the western cuisine that’s built his reputation. Ex-pats flock to his upscale eateries, but Chinese diners, he says, “are my bread and butter.” SETTING UP SHOP For those who decide to set up shop in China, Steve Dickinson, co-author of China Law Blog, has some bad news and some good news. The bad news: a steady stream of Latin American business clients have come through his door over the years, seeking help after being cheated by Chinese partners. “It’s just one after the other, after the other,” says Dickinson, who works almost exclusively with foreign companies setting up operations in China. The good news: he insists most of their problems can be avoided.
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In particular, he counsels new businesses not to form joint-ventures with Chinese partners unless they have to. China requires joint-ventures in some key sectors, but the structure has been famously problematic in cases where intellectual property “leaks” to Chinese partners, who then turn around and compete against their foreign partners with a home-court advantage. In most cases, Dickinson says, a Wholly Foreign owned Enterprise, known as a WFOE, will do the trick. An increasingly popular investment vehicle in mainland China, WFOEs are limited-liability corporations belonging to foreign nationals, set up with foreign funds. Common-sense precautions also apply, like rigorous vetting of suppliers. Dickinson cited one client who bought a container of red beans in China to ship to the Dominican Republic: He took delivery of a container that was half full of pebbles. Another bought frozen shrimp, but received a container full of ice blocks. Dickinson says many have let their judgement be fogged by a delusional concept of “the Chinese price.” “The fundamental thing is, if the price is too good to be true, it’s too good to be true,” he says. “Steel is steel. It costs a certain amount.” For companies manufacturing in China, experts also advise keeping vital components and trade secrets out of the equation, to avoid copying. A company manufacturing a household electronic device, for example, might produce the housing for its product in China. But if the machine relies on a computer chip with special embedded
codes, the company can insert the chip as part of a separate assembly...elsewhere. On the bright side, says Luis Alberto Guahuna, a Colombian apparel entrepreneur, “China has something that’s extremely important: Things get done.” Guahuna and his partners started Hong Kong-based Prolinks in 2007, “as a hobby, really.” But orders quickly piled up. Somewhere around the time he took an order for $200,000 of brassieres, Guahuna says, “We realized the business is not small anymore.” Prolinks is currently working with designers to develop its own line of electrical appliances to sell in Latin America. Guahuna says anchoring the company in Hong Kong had offered easy access to mainland China’s vast manufacturing sector, and simplified accounting. He also noted labor costs have risen in China, where inflation hit a three-year peak of 6.5 percent in July, and where the government’s one-child policy has gradually reduced the labor pool. Bangladesh might offer cheaper manufacturing, Guahuna says, “But in China the quality is a lot better now. The infrastructure is in place and there is efficiency.” RESOLVING DISPUTES From fake iPhones to copy-cat designer bags, China’s reputation for intellectual property infringement can cause night sweats for foreign investors. But experts say there are ways to minimize risk, or at least maximize profits early on. “China has a good trademark system, but you have to use it,” says Dickinson.
SPECIAL REPORT: CHINA
Contacts laredchina.com He advises clients to register not just their trademark, but “all the paraphernalia, the colors, the little fluffy animal that represents your brand.” If a big operator infringes on a trademark, “you can shut them down,” Dickinson says. A mom-and-pops operation, selling fake coffee mugs from a push cart, might have to be tolerated as a nuisance. Companies introducing new technology in China have a harder time. “It can be a losing battle,” says Stan Abrams, a prominent intellectual property lawyer and law professor in Beijing. “Eventually someone else, legally or illegally, will adopt your technology and start doing the same thing, and the competition will catch up to you very quickly.” With the right advance, “You can probably jump in and do very well,” Abrams added. “But I always tell my clients, ‘As soon as you’re in China, the clock starts ticking.’” The World Bank’s 2011 “Doing Business” report gave China low marks as a place to start a business, but China ranked 15 out of 183 countries in the category of enforcing contracts. “There is this sense, this sensation, that there are no clear rules in China, but there are,” says Calvo, of the Mexican Chamber of Commerce in China. “That’s how they are able to grow.” THE CULTURE GAP According to Marusia Musacchio, the Mexican co-founder of Zhao Cards, such misconceptions reflect a gaping cultural divide. She says most Latin American universities have yet to incorporate Chinese studies into their curriculum. And she remembers the reaction of one of her favorite professors when she announced she would be focusing her studies on Sino-Latinamerican relations. “I really love her, but I remember she said, ‘Marusia, why do you want to be so eccentric?’” Musacchio went on to earn a masters degree, not in Mexico, but at Harvard University. She started her tourism guide company, Zhao Cards, with a friend after being bom-
barded by out-of-town visitors. At the time, China had very few signs in English, so she gave them her cell phone number in case they ran into trouble. Overwhelmed by their calls, she started making small flashcards for them. “I need a coke,” read one, in Chinese characters. “They got kind of sophisticated, like, ‘Go to this specific restaurant and order this really great dish,’” she laughs, or, “’I need a massage, but more for my lower back.’” Today the company sells rings of detachable cards to help English speakers navigate Shanghai, Beijing and Hong Kong. There’s a Spanish version on the way. The company also has an audio-enabled iPhone app that made Apple’s “New and Noteworthy” list. Now, users can literally ask for that coke in Mandarin. But if Zhao Cards are meant to shrink the culture gap on the tourist grid, the business world may require a whole new map. Executives are told to present business cards with both hands. During toasts, they learn, it is respectful to keep the rim of your glass below the rim of your host’s glass. Karaoke sessions may be part of sealing a deal, as may late-night drinking games fueled by rice liquor. “It’s not a cliché, the personal relationship matters a lot,” says Musacchio. “With the distributors you have to go sit down and have a cup of tea and socialize.” Abrams says companies shouldn’t be spooked. “There is a whole industry (in China) about training people for cultural issues. I think that’s all a bit overblown,” he says. “There are some things that are useful to know, but in the end, if you have something people want, and if you’re friendly, it doesn’t really matter.” And the way things are going, says Artaza, of Chile, Latin America’s business class has no choice but to place more chips in China. “My competitive advantage as a Latino professional is my English,” he says. “But my daughter can write, speak and read in Mandarin, and she’s 12 years old. That’s her comparative advantage, for life.” editorial@latintrade.com
laredchina.com Contains many business forums (in Spanish) where Latin Americans exchange tips on suppliers, vendors and licensing in China.
www.thebeijingaxis.com The Beijing Axis is a China-focused international advisory firm operating in four principal areas: Commodities, Capital, Procurement and Strategy. (Website in English)
www.investhk.gov.hk InvestHK is a division of the Commerce and Economic Development Bureau of the Hong Kong SAR Government. It supports overseas businesses setting up and expanding in Hong Kong, providing free advice and customized services. The website has a Spanish-language section.
Other Information www.chinalawblog.com In English, this is an excellent blog about business law in China, geared towards international companies. It’s co-authored by Steve Dickinson, who is a source for our story. www.chinahearsay.com Also in English, written by another source, Stan Abrams, this blog offers deep insight into international business news in China, plus economic commentary.
www.china-files.com With many stories in Spanish, this site contains general news but also runs Latin America-specific stories.
www.hola-china.net A Spanish-language magazine geared towards Latin Americans living in China.
ProMexico promexico@promexico.gob.mx http://www.promexico.gob.mx
ProChile info@prochile.cl http://rc.prochile.gob.cl/
ProExport (Colombia) informacion@proexport.com.co http://www.proexport.com.co/
JANUARY-FEBRUARY 2012 LATIN TRADE
39
KOREA:
ROLE MODEL FOR LATIN AMERICA
Two-way business is growing between Korea and Latin America. BY JOACHIM BAMRUD SEOUL – While China is getting the lion’s share of attention these days, another Asian nation is also boosting its business with Latin America: South Korea. Throughout Latin America, Korean companies like Samsung, Hyundai, LG and SK are expanding. At the same time, Koreans are increasingly playing the role of middleman in importing Chinese cars to Latin America. “A lot of Koreans are importing Chinese cars to Latin America,” says Jae-Sung Kwak, Associate Dean of the Graduate School of Pan-Pacific International Studies at Kyung Hee University. Business is expected to grow further as a result of a new free trade agreement with Peru (which took effect in August) and FTAs with Mexico and Colombia are currently being negotiated. These come on the heels of a 2004 trade deal with Chile. The Korea-Chile FTA led to a quadrupling of trade to $7.2 billion in 2010. “Now, Chilean wine and grapes [have] become regular features at the Korean dinner table. And made-in-Korea cars are easily seen on the streets of Chile,” Korea’ s Vice Minister of Strategy and Finance Je-Yoon Shin told the Korea-LAC Business Forum held in Seoul in October. The event, the second one of its kind since 2007, was organized by the IDB and the Ministry of Strategy and Finance of Korea, in close collaboration with the Korea Export and Import Bank (KEXIM), the Korea
Trade-Investment Promotion Agency (KOTRA) and the Federation of Korean Industries (FKI). Chilean wine now has a 25 percent market share in Korea compared with 6 percent in 2003 before the FTA, according to Cristian López, Corporate Export Director for Asia, for Chilean wine producer Concha y Toro, who adds that Koreans are now drinking more wine than before. “The Korea-Chile FTA changed drinking cultures,” adds ByungSoo Ahn, president of the Import Research Institute of the Korea Importers Association. And wine and grapes aren’t the only beneficiary of the FTA with Chile. “No one would have predicted the success of Chilean pork in Korean markets,” says Kwak. Korea’s trade with Latin America grew by 29 percent in 2010 to a record $43.8 billion. Korean exports to Latin America jumped 30 percent to $29.7 billion, while imports from Latin America increased 27 percent to $14.1 billion, according to the Korea International Trade Association. Korea’s top exports include automobiles, electronics, home appliances and petroleum products. About half of its exports went to Mexico and Brazil, where it operates factories making cars, electronics and other goods. Its purchases from the Latin American region included metals, agricultural products, fish and other basics.
Korea’s apparel company SAE-A is betting on SEOUL -- Korea-based SAEA is one of the leading apparel manufacturing companies in the world, with exports to the United States and Europe exceeding more than $1.1 billion. Its major clients include Walmart, Target, Kohl’s, and Gap in the United States, and H&M, Zara, Mango, Adidas and Tesco in Europe. And it is counting on Latin America to keep it competitive. Most of its manufacturing plants are located in two countries in the region – Guatemala and Nicaragua – as well as in Indonesia and Vietnam. It is now also expanding into another country in the Ameri40
cas: Haiti. SAE-A currently has five sewing factories and one printing facility in Guatemala, with more than 5,000 employees producing more than five million garments a month, valued at $240 million a year. “When textile quota limitations still existed, we selected Guatemala as our first country for investment because of several factors [such as] relatively low-cost labor, reasonably high productivity, good government support and an adequate infrastructure as well as its close proximity to the U.S.” O.Y. Hwang, SAE-A’s Vice Chairman, told the Korea-LAC Business
LATIN TRADE JANUARY JANUARY-FEBRUARY FEBRUARY 2012
Forum here. “Guatemala is still important to our overall sourcing strategy but rising wages are adversely affecting its competitive advantage…. In 1998, when we opened our first factory there, the monthly average wage was less than $250 but now it has more than doubled.” The duty-free benefit from CAFTA (the free trade agreement between Central America and the United States) is not enough to offset rising costs when compared to Southeast Asian countries, he points out. SAE-A’s second-largest Latin American investment is in Nicaragua, where it began operations in 2004. It currently
has five factories there with more than 6,000 workers producing four million garments a month valued at $150 million a year. “The duty free program which has helped Nicaragua to nurture a growing textile industry is unfortunately set to expire in 2014,” complains Hwang. “Hopefully, those responsible with the authority to extend this agreement will take this matter under careful review and will come to the conclusion, as we recommend, that Nicaragua needs an extension.” SAE-A’s next big project is in Haiti, where it is building
KOREAN ADVANTAGES Both Koreans and Latin Americans say the two are closer culturally than are China and Latin America. “Koreans and people from Latin America are very similar emotionally,” Korea’s Minister of Strategy and Finance Bahk Jaewan said in a statement prepared for the Korea-LAC summit. “We both are very passionate, candid and open-minded.” Koreans also have a better reputation than their Chinese counterparts when it comes to delivering goods as agreed, several Latin American trade officials say. However, Latin American companies that want to successfully enter the Korean market should follow these two key tips, advises Kwak. First, bring your top-of-the-line products. “Only the best products will survive,” he says. Second, get a well-placed, local partner. THE KOREAN MODEL “The Koreans are a role model for us,” Peruvian foreign trade and tourism minister Jose Luis Silva told the Korea-LAC Business Forum. Korea’s economy in per capita terms in the 1960s was lower than that of Colombia and Argentina, points out Inter-American Development Bank president Luis Alberto Moreno. “Fifty years later, it’s higher.” The lessons for Latin America include Korea’s emphasis on education and developing global companies, Moreno tells Latin Trade. “When kids have exams, the airport is closed for two-to-three hours so kids don’t get distracted,” he says.
Meanwhile, Korea has also led the way in terms of providing highquality and extensive infrastructure, Moreno says. “Korea is willing to share with LAC countries the lessons that we learned from our economic development,” Bahk said. “Korea is ready to help LAC countries if there is an area, such as IT and infrastructure where we’re ahead.” CHALLENGES However, all is not completely rosy. One of the consistent complaints from Korean companies operating in Latin America is the region’s inefficient infrastructure, says Won-Ho Kim, the dean of the Graduate School of International and Area Studies at Hankuk University of Foreign Studies. “Korean companies [invest and do business in Latin America] despite a lack of efficient infrastructure,” he says. “That means that with efficient infrastructure in Latin America…Korean investment would be higher.” Another reason for concern is growing protectionism in countries like Brazil. Its recent 30 percent tax hike on cars with imported content is facing harsh criticism from a leading Korean auto industry official. “That was a setback and I believe it goes against the provisions of the WTO [World Trade Organization],” Huh Wan, executive managing director of the Korea Automobile Manufacturer’s Association, told the Korea-LAC Business Forum. “I hope the Brazilian government will reconsider. Many people are paying attention to this.” –With additional data from Latin Business Chronicle.
Latin America to keep it competitive globally. an $85 million manufacturing complex in an industrial park located in the northern part of the country, near Cap Haitien, that will create more than 20,000 jobs and double the existing Haitian garment industry. It will be one of the world’s largest vertical fabric mills and apparel manufacturing complexes, according to Hwang. It is expected to open by mid-year when the first phase of construction is scheduled to finish. Given the difficult postdisaster environment, many consider Haiti high-risk, Hwang acknowledges. “However we have identi-
fied numerous opportunities and advantages that actually make Haiti attractive for investment.” They include Haiti’s proximity to the United States (which gives the advantage of shorter delivery time), an abundant and motivated labor force and duty-free shipping to the United States of Haitianmade apparel. The SAE-A investment is part of a $300 million project in partnership with the IDB and the U.S. and Haitian Governments. The United States is building a power plant and employee housing near the park that will be
made available to workers through low interest loans. It is also upgrading the local port and other infrastructure. Meanwhile, the IDB is funding creation of the industrial park itself, including providing financing for equipment and machinery. SAE-A isn’t only bringing business and new jobs, but also know-how. It is training group of Haitians to run the new plant. “Haiti’s existing garment manufacturing industry is relatively small so the availability of experienced factory supervisors is very limited,” Hwang says. “We could bring in all Korean or other foreign talent but we
believe in the localization of management.” Meanwhile, SAE-A is working on plans to build a school for local children living near the factory who currently don’t have access to a quality education. It also plans to offer adult education classes at the school in the evenings, open to any workers wishing to pursue their education after work. “With our investments in garment and fabric manufacturing in Guatemala and Nicaragua and Haiti, we hope to maximize the development of business and economic prosperity in the region,” Hwang says. –editorial@latintrade.com
JANUARY-FEBRUARY JANUARY Y F FEB BRUARY 2012 LA LATIN ATIN TRADE TR R RADE
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Readers of Latin Trade magazine select the Best of Travel
On the next eight pages we present the results of the tenth annual LATIN TRADE Best of Travel reader survey. Our readers have selected the best hotels, restaurants, airlines, airports and car rental companies in Latin America.
42
LATIN TRADE JANUARY-FEBRUARY 2012
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LATIN AMERICA’S
BEST AND WORST AIRPORTS
S
antiago continues to be the most popular airport in Latin America among Latin Trade readers. It received the top spot in comfort/ambience and shops/amenities. The airport received 10.3 million passengers in 2010, according to Airports Council International. Panama City is right behind, though, thanks to getting most votes in customs/baggage, ease of connection and location/access.
Thanks largely to efforts by Panamanian airline Copa, the airport is becoming a major hub for traffic in Latin America. Last year the airport handled 5 million passengers. That compares with only 1.3 million tourist arrivals that year, clearly showing how the airport is being used as a hub. Mexico City, Latin America’s
Best overall 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 44
SANTIAGO, CHILE (SCL) PANAMA CITY (PTY) MEXICO CITY (MEX) LIMA (LIM) SAN JOSE, CR (SJO) MONTERREY, MX (MTY) SÃO PAULO (CONGONHAS: CGH) RIO DE JANEIRO (SANTOS DUMONT: SDU) GUATEMALA CITY (GUA) SAN SALVADOR (SAL) BRASILIA (BSB) GUADALAJARA, MX (GDL) MONTEVIDEO (MVD) SANTO DOMINGO, DR (SDQ) BUENOS AIRES (EZE) MEDELLIN (MDE) GUAYAQUIL, EC (GYE) QUITO, EC (UIO) RIO DE JANEIRO (GALEÃO-ANTONIO CARLOS JOBIM INTERNACIONAL: GIG) SAN PEDRO SULA (SAP) CALI, COL. (CLO) BOGOTA (BOG) MANAGUA (MGA) TEGUCIGALPA (TGU) SÃO PAULO (GUARULHOS:GRU) CARACAS (CCS) LATIN TRADE JANUARY-FEBRUARY 2012
second-largest passenger airport, moved up to third place (from 4th in our previous reader survey). It received more votes than Santiago in customs/baggage and ease of connection. The airport received 24.1 million passengers in 2010, ranking it second in passenger traffic in Latin America, according to Latin Business Chronicle.
Lima improved dramatically compared with our previous reader survey, jumping from 10th to fourth place. It received the top score in comfort/ambience and second-highest score in ease of connection. Long gone are the days when the airport was considered one of the worst in Latin America. What about Guarulhos in Sao Paulo, last year’s worst-ranked airport? This year, it actually managed to improve its score slightly (from 2.2 to 2.3) while Caracas saw a decline (from 2.3 to 2.1), leading the latter to have the dubious honor of being ranked as Latin America’s worst airport for business travelers. –editorial@latintrade.com
Comfort/ Ambience
Customs/ Baggage
Ease of Connection
Shops/ Amenities
Location/ Access
Overall
5 4.3 4.8 4.9 4.1 4 3.7 3.9
4.8 5 4.9 4.7 4.6 4.5 4.4 4.3
4.7 5 4.8 4.9 4.6 4.3 4.2 3.9
4.9 4.6 4.7 4.8 4.5 4.4 4.3 4.2
4.9 5 4.1 4 3.9 3.7 3.8 3.6
4.9 4.8 4.7 4.6 4.3 4.1 4 3.9
3.8 3.4 3.1 3.6 3.3 2.9 2.8 3.2 3.5 3 2.2
3.9 4 4.1 3.8 3.7 3.3 3.4 3.5 3.6 3.2 4.2
3.8 4.1 4 3.7 3.3 3.6 2.9 3.5 3.1 3.2 2.3
4.1 4 3.9 3.8 3.7 3.6 3 3.5 3.4 3.3 2.4
3.3 3.1 2.9 3 3.4 3.5 4.3 2.8 2.2 2.3 3.2
3.8 3.7 3.6 3.5 3.4 3.3 3.2 3.3 3.1 3 2.9
2.3 2.6 2 2.5 2.7 2.1 2.4
3 3.1 2.3 2.9 2.2 2.1 2
3.3 2.8 2.2 2.5 2.1 3 2
2.9 2.8 2.7 2.6 2.5 2.1 2
2.5 2.6 4.2 2.4 2.7 2.1 2
2.8 2.7 2.6 2.5 2.4 2.3 2.1
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BEST OF TRAVEL: READERS’ CHOICE
W
ISTOCK
BEST
CAR RENTAL COMPANIES
hen it comes to renting cars in Latin America, Dollar/ Thrifty again ranks tops. For the second year in a row, surveyed travelers gave Dollar/Thrifty the highest score among major car rental companies in the region, with Hertz ranking second and Avis third. Dollar/Thrifty beat out all competitors on rates and service – two factors key for business travelers. It narrowly lost to Avis in the speed of check-in and check-out of cars. And it lagged behind Hertz in vehicle options. But overall, its offerings earned a winning 4.7 score, the same as last year. Competition for Latin America’s car rental title was stiffer than in 2010, however. Hertz kept its second- place score at 4.6 this year, but other companies jumped in their rankings. Avis rose to 4.5 from 4; Budget jumped to 4.4 from 1.3; Alamo scored 4.2, up from 2; Enterprise earned 4.1, up from 1.9; and Brazil-based Localiza trailed with 3.7, which was still up sharply from less than 1 last year, the survey showed. The rental companies are benefiting from solid economic growth, a rising middle class and increased tourism in Latin America, but many international travelers still don’t rent vehicles in Latin America. Concerns about crime are a key reason. A GPS device can help an out-of-towner find a route, but it can’t distinguish whether that route goes through a dangerous area that locals would avoid, travelers say. Should an accident or other problems occur, some visitors worry about corrupt police officers or the security risks while waiting alone for roadside assistance.
COMPANY
RATES
REL.
4.8 4.3 4.6 4.5 3.9 4 3.7
4.6 4.8 4.7 4.5 4.3 4.2 3.5
DOLLAR/THRIFTY HERTZ AVIS BUDGET ALAMO ENTERPRISE LOCALIZA
To keep safe, some multinational executives say they prefer to be driven by colleagues they visit abroad – or the colleague’s driver. Sharing time in the car also gives them more opportunity to talk. Other travelers like to hire a driver with his or her own car, so they can avoid the stress of navigating unfamiliar roads and learning a new driving culture. Hiring a driver tends to be economical in Latin America because of lower labor costs compared to the United States or Europe. Then there’s the issue of price-deterring rentals. Rates can be high compared to other world regions. Raphael Almeida, a Brazilian working in Germany, was stunned to find companies he consulted at Santos Dumont Airport in Rio de Janeiro asked roughly double the rental rate he pays in Europe. And that was for an average car compared to a Mercedes in Germany, Almeida says. He rented nothing. Still, Evelio Medina of Miami says he learned the hard way that it’s worth paying more for a well-known company if you rent. In the Dominican Republic, he once opted for a cheap rental from some unknown local joint and ended up with a flat tire, with no spare in the trunk and no jack either. He now tends to use Dollar/Thrifty, Budget or other major companies to make sure he can count on their support systems in case of problems. Says Medina, who heads up the Brickell Chamber of Commerce in Miami, “I look for the companies that have online reservations and pick-up at the airport.”
SERVICE 4.9 4.7 4.8 4.6 4.5 4.2 3.9
IN/OUT 4.7 4.6 4.8 4.5 4.4 4.3 3.9
OPTIONS 4.3 4.8 4 3.9 3.7 3.8 3.5
OVERALL 4.70 4.60 4.50 4.40 4.2 4.10 3.7
NOTE: Speed In/Out refers to time needed for check-in and check-out. Final score based on number of votes for options ranging from excellent to poor, then weighted to reflect overall choice.
46
LATIN TRADE JANUARY-FEBRUARY 2012
BEST OF TRAVEL: READERS’ CHOICE
AVIANCA BEST ON SERVICE AND FOOD Avianca goes after business travelers by offering quality on-board amenities ISTOCK
BY JOSEPH A. MANN, JR.
B
attling for international business passengers in a fiercely competitive market, Avianca says that one of the ways it seeks to differentiate itself from other airlines is by offering superior on-board service at competitive prices. As the Bogota-based company works to position itself as the leading airline in Latin America, company executives point to the fact that Avianca provides business travelers attractive on-board entertainment and work options on most of its Airbus fleet, comfortable seating and a wide variety of beverage, snack and meal alternatives, depending on the length of each trip. Business travelers participating in Latin Trade’s annual survey Best of Business Travel Latin America agree. Avianca received the most votes in the categories of Cabin Comfort & Service and Food & Beverage. In both cases it beat Chile’s LAN and Brazil’s TAM. Currently, Avianca has 61 aircraft in its fleet: 7 Airbus A330-200; 24 Airbus A320-200; 10 Airbus A319-100; 10 Airbus A318-100 and 10 Fokker Turbo Prop 50. AIRLINE
1 2 3 4 5 6 7 8 9 10
LAN AVIANCA/TACA TAM AIRLINES COPA AIRLINES AMERICAN AIRLINES CONTINENTAL AIRLINES DELTA AIR LINES AEROMEXICO AIR FRANCE BRITISH AIRWAYS
48
Avianca received the most votes in the categories of Cabin Comfort & Service and Food & Beverage. In both cases it beat Chile´s LAN and Brazil´s TAM. On flights originating in Colombia, Avianca makes both hot and cold meals more appealing by using freshly prepared domestic fruits, vegetables and other local ingredients. Passengers on international and domestic flights also receive a welcome beverage and a package of mixed nuts. Since on-board service is such an important selling point, the airline says that it carefully oversees caterers and regularly performs meal checks on random flights to ensure food
Best in Food & Beverage AIRLINE 1 2 3 4 5 6 7 8 9 10
SCORE
AVIANCA/TACA LAN TAM AIRLINES COPA AEROMEXICO CONTINENTAL AIRLINES DELTA AIR LINES AIR FRANCE AMERICAN AIRLINES BRITISH AIRWAYS
4.8 4.7 4.5 4.3 3.9 3.5 3.4 3.3 3.2 3
quality, freshness and presentation. Menus operate on three different monthly cycles and are completely revamped each year. As is the case in other airlines, Avianca offers the most modern amenities in its newest airplanes. For example, the airline has individual video screens on its A319, A320 and A330 aircraft and shared screens on the A318s. Business passengers on the newer Airbus planes (A319 to A330) have access to Avianca’s “Sky Office,” providing tools for businessmen and women to work effectively while flying. Sky Office allows passengers to display work from office files on their screens, insert USB flash drives,
BUSINESS
CABIN
FOOD
FF
TICKET
AIRPORT
ON-TIME
OVERALL
4.9 4.5 5 3.7 4.6 4 3.8 3.3 3.6 3.9
4.8 4.9 4.7 4.2 3 4 3.7 3.8 3.2 3.6
4.7 4.8 4.5 4.3 3.2 3.5 3.4 3.9 3.3 3
4.2 3.9 3.8 4.4 4.3 4 3.7 3.3 3.5 3.2
4.4 3.9 4.2 4.1 4.3 4 3.5 3.3 3.4 3.2
4.3 4.2 3.9 4.1 4.4 4.2 3.6 3.2 3.3 3.1
4.3 4 3.8 3.9 4.2 4.1 3.4 3.7 3.5 3.3
4.5 4.3 4.2 4.1 4 3.9 3.6 3.5 3.4 3.3
LATIN TRADE JANUARY-FEBRUARY 2012
BEST OF TRAVEL: READERS’ CHOICE
Best in Cabin Comfort & Service AIRLINE
ISTOCK
1 2 3 4 5 6 7 8 9 10
AVIANCA/TACA LAN TAM AIRLINES COPA AIRLINES CONTINENTAL AIRLINES AEROMEXICO DELTA AIR LINES BRITISH AIRWAYS AIR FRANCE AMERICAN AIRLINES
SCORE 4.9 4.8 4.7 4.2 4 3.8 3.7 3.6 3.2 3
use and recharge iPods, as well as follow the flight’s progress on a map, view live connections to other Avianca flights and operate/recharge other electronic devices. The Airline Passenger Experience Association (APEX) says Avianca offers the best on-board entertainment system in South America because of the wide range of movies, TV series, shorts and video games available, as well as other amenities, including music, on-board reading material and video entertainment for children. Avianca has two classes of service: executive (business) and tourist (coach), as well as a Superior Business category on its A330 aircraft, which offers roomier seating, more space and other amenities. With service to 21 destinations within Colombia and 23 international cities, the airline has an average of 380 direct flights daily.
Here’s what Avianca says passengers can expect: SEATS: Avianca’s Airbus330 has the best seat “pitch” – or distance between seats – at 65 inches for executive class. On A318, A319 and A320 aircraft the pitch is 38 inches in executive class. Seats can recline to 170 degrees. Avianca’s ergonomically-designed seats are covered in cloth and have a compartment for shoes. Each seat has a power plug and a massage option.The pitch for all economy seating is 32 inches. BEVERAGES AND SNACKS: For flights originating in Colombia before 10 a.m., Avianca cabin crews serve orange juice, water and coffee or tea. (Passengers receive a free 70-gram packet of Colombia’s
La Sierra coffee at flight’s end.) Beverages on later flights include champagne, coconut lemonade, juices and other refreshments. A mixture of nuts is served before takeoff. Aside from non-alcoholic beverages, Avianca’s international flights offer beer, Black Label, 8-year-old rum, vodka, gin, two varieties of red wine and two white, as well as sherry, Baileys, cognac, Cointreau and Kahlua. MEALS: On a typical flight from Bogota to Miami, Avianca offers different menus blending international-style cooking with typical Colombian fare. A breakfast in executive class, for example, would be a cheese omelette with sautéed mushrooms and a Colombian arepa (a type of bread made from corn flour). Avianca also offers platters of tropical fruit from Colombia and servings of natural juices. For lunch/dinner in executive class, a passenger might be served ravioli filled
with squash, while lunch/dinner in economy class would be chicken in a countrystyle sauce (salsa campesina) accompanied by cooked vegetables and barley. Business travelers receive an appetizer, a choice of three different main dishes, two types of hot bread with butter or marmalade, fruit and cheese plus dessert. On long distance flights, passengers receive dinner and breakfast, or a snack with a variety of desserts. Passengers on special diets related to medical conditions or religious beliefs can order their meals before the flight. INFLIGHT ENTERTAINMENT: As part of the entertainment features mentioned earlier, Avianca offers daily reports from CNN in Spanish on world and business events, RCN Noticias, soap operas, sports, business features and other programming. editorial@latintrade.com
JANUARY-FEBRUARY 2012 LATIN TRADE
49
BEST OF TRAVEL: READERS’ CHOICE
20 CITIES BEST ININ LATIN AMERICA BY CITY IN ALPHABETICAL ORDER OF EACH CITY
BOGOTA
GUATEMALA CITY
GUAYAQUIL
RK
HOTEL
RK
HOTEL
RK
HOTEL
1 2 3 4 5
JW Marriott Hotel Bogotá Sheraton Bogotá Embassy Suites Bogotá - Rosales Crowne Plaza Tequendama Bogotá Hotel Casa Medina
1
Real InterContinental Guatemala Westin Camino Real Crowne Plaza Guatemala Holiday Inn Guatemala Radisson Hotel & Suites
1 2 3
Sheraton Guayaquil Hilton Colón Guayaquil Hampton Inn by Hilton Guayaquil - Downtown Courtyard Guayaquil Hotel Oro Verde Guayaquil
2 3 4 5
BUENOS AIRES RK
HOTEL
1 2 3
Hilton Buenos Aires InterContinental Buenos Aires InterContinental Nordelta Tigre-Buenos Aires Hotel, Residences & Spa Four Seasons Buenos Aires Park Tower, Buenos Aires
4 5
CARACAS RK
HOTEL
1
Tamanaco InterContinental Caracas Embassy Suites by Hilton Caracas JW Marriott Hotel Caracas Gran Meliá Caracas Renaissance Caracas La Castellana Hotel
2 3 4 5
50
LATIN TRADE JANUARY-FEBRUARY 2012
Hilton Buenos Aires
4 5
HILTON BUENOS AIRES COURTESY OF HILTON WORLDWIDE; ISTOCK
HOTELS
STAY PICKY.
With more than 42 hotels across Latin America, great changes have been made so you can feel more comfortable than ever. From our lobby to our refreshed rooms and amenities. We believe you’re at your best when you can truly be yourself. At Holiday Inn, you always can.
STAY YOU.™ For reservations, call the hotel nearest you or visit holidayinn.com © 2012 InterContinental Hotels Group. All rights reserved Most hotels are independently owned and/or operated.
holidayinn.com
Real InterContinental Metro centro Managua
LIMA RK
HOTEL
1
Westin Lima Hotel and Convention Center JW Marriott Hotel Lima Sheraton Lima Hotel & Convention Center Swissôtel Lima Doubletree El Pardo by Hilton Lima
2 3 4 5
MANAGUA RK
HOTEL
1
Real InterContinental Metro centro Managua Hilton Princess Managua Crowne Plaza Managua Holiday Inn Managua Barceló Managua
2 3 4 5
InterContinental Miramar Panama
St. Regis Mexico City
MEDELLIN
MONTEVIDEO
RK
HOTEL
RK
HOTEL
1 2 3 4 5
InterContinental Medellín Four Points by Sheraton Medellín Holiday Inn Express Medellín Medellín Royal Hotel Belfort Medellín Hotel
1 2
Sheraton Montevideo Hotel Four Points by Sheraton Montevideo Holiday Inn Montevideo Radisson Montevideo Victoria Plaza Hotel Belmont House
MEXICO CITY
5
RK
HOTEL
PANAMA CITY
1 2 3 4
Four Seasons Mexico City St. Regis Mexico City Hotel W Hotel Mexico City Presidente InterContinental Mexico City JW Marriott Hotel Mexico City Hilton Mexico City Reforma Crowne Plaza Hotel de México Embassy Suites by Hilton Reforma Hilton Mexico City Aeropuerto Internacional Mexico City Marriott Reforma
5 6 7 8 9 10
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LATIN TRADE JANUARY-FEBRUARY 2012
3 4
RK
HOTEL
1
InterContinental Miramar Panamá Le Meridien Panama City Panama City Marriott Trump Ocean Club International Hotel & Tower Panama Bristol Panama
2 3 4
5
REAL INTERCONTINENTAL METRO CENTRO MANAGUA AND INTERCONTINENTAL MIRAMAR PANAMA COURTESY OF IHG; ST. REGIS MEXICO CITY COURTESY OF STARWOOD HOTELS
BEST OF TRAVEL: READERS’ CHOICE
REAL INTERCONTINENTAL SAN SALVADOR COURTESY OF IHG; W HOTEL MEXICO CITY COURTESY OF STARWOOD HOTELS; HILTON SAO PAULO MORUMBI COURTESY OF HILTON WORLDWIDE
BEST OF TRAVEL: READERS’ CHOICE Real InterContinental San Salvador
Hilton Sao Paulo Morumbi
QUITO RK
HOTEL
1 2 3 4 5
JW Marriott Hotel Quito Hilton ColÓn Quito Sheraton Quito Holiday Inn Express Quito Swissôtel Quito
RIO DE JANEIRO
SAN JOSE
SANTO DOMINGO
RK
RK
RK
HOTEL
1
Hotel V Centenario InterContinental Santo Domingo Renaissance Jaragua Hotel and Casino Hilton Santo Domingo Holiday Inn Santo Domingo Meliá Santo Domingo
1 2 3 4 5 6 7 8 9 10
HOTEL JW Marriott Hotel Rio de Janeiro Copacabana Palace Sheraton Rio Hotel & Resort Sheraton Barra Hotel & Suites Fasano Hotel Sofitel Rio de Janeiro Copacabana Caesar Park Rio de Janeiro Ipanema Hotel Santa Teresa Mercure Rio de Janeiro Botafogo Promenade Palladium
1 2 3 4 5
HOTEL Costa Rica Marriott Hotel InterContinental Hotel San José Doubletree Cariari by Hilton San José Crowne Plaza Corobici San José Costa Rica Holiday Inn Aurola San José
3 4 5
SAN SALVADOR RK 1 2 3 4 5
HOTEL Hilton Princess San Salvador Real InterContinental San Salvador Sheraton Presidente San Salvador Crowne Plaza San Salvador Hotel Terraza
SAN PEDRO SULA RK
HOTEL
1 2 3 4
Hilton Princess San Pedro Sula InterContinental San Pedro Sula Crowne Plaza San Pedro Sula Hotel Boutique San Juan (San Pedro Sula)
SANTIAGO
W Hotel Mexico City
2
RK
HOTEL
1 2 3 4 5
W Santiago Ritz-Carlton Santiago San CristÓbal Tower InterContinental Santiago Grand Hyatt Santiago
SAO PAULO RK
HOTEL
1 2 3 4 5 6 7 8 9 10
Hilton São Paulo Morumbi InterContinental São Paulo Sheraton São Paulo Hotel Grand Hyatt São Paulo Staybridge Suites São Paulo Holiday Inn Parque Anhembi Hotel Emiliano Fasano Hotel Sofitel São Paulo Renaissance São Paulo Hotel
TEGUCIGALPA RK
HOTEL
1
Hotel Real InterContinental Tegucigalpa Crowne Plaza Tegucigalpa Tegucigalpa Marriott Hotel Hotel Portal del Angel (Tegucigalpa) Humaya Inn (Tegucigalpa)
2 3 4 5
JANUARY-FEBRUARY 2012 LATIN TRADE
53
BEST OF TRAVEL: READERS’ CHOICE
MONTEVIDEO
BEST RESTAURANTS
FOR 11 CITIES IN LATIN AMERICA BY CITY IN ALPHABETICAL ORDER
1 2 3 4 5
El Viejo y El Mar Fellini Risotto Baretto La Perdiz El FogÓn Terracota
PANAMA CITY 1 2 3 4 5
La Casa del Marisco Manolo Caracol FusiÓn (at the Radisson) Monsoon (at the Sheraton) Las BÓvedas
RIO DE JANEIRO 1 2 3 4 5 6 7 8 9 10
Fasano al Mar Sushi Leblon Hotel Cipriani Restaurant Terral at the Sheraton Barra Hotel Aprazível Carême Mirador Le Pré-Catalan Gourmet Praia Carlota
SAN JOSE 1 2 3 4 5
MEDELLIN
1 2 3 4 5
1 2 3 4 5
Andrés Carne de Res Harry Sasson La Brasserie La Cigale Casa San Isidro
La Provincia Hatoviejo Palmas El Cielo Il Forno Café le Gris
BUENOS AIRES
MEXICO CITY
1 2 3 4 5
1 2 3 4 5 6 7 8 9 10
Cabaña Las Lilas La Estancia Piegari Ristorante El Aljibe at the Sheraton Café des Arts
LIMA 1 2 3 4 5 54
Astrid y Gastón Restaurant Huaca Pucllana Cebichería La Mar Pescados Capitales Costanera 700 LATIN TRADE JANUARY-FEBRUARY 2012
Astrid y GastÓn Hacienda de los Morales Au Pied de Cochon Restaurante San Angel Inn Puerto Madero El Cardenal Solea at the W Contramar Dulce Patria Azul Condesa
SANTIAGO 1 2 3 4 5
Astrid y Gastón El Cid La Mar Baco Vino y Bistro Puerto Fuy
SÃO PAULO 1 2 3 4 5 6 7 8 9 10
Fogo de Chão Restaurante Figueira Rubaiyat Canvas Bar Restaurant Fasano Skye Restaurante at the Hotel Unique Barbacoa Itaim Bar des Arts D.O.M. Antiquarius Gero
ISTOCK
BOGOTA
Grano de Oro Le Monastère L’Olivo Restaurante Machu Picchu Bella Italia
THE 18TH LATIN TRADE SYMPOSIUM &
BRAVO BUSINESS AWARDS
NOMINATIONS
OPEN
www.bravo.latintrade.com
RECOGNIZING EXCELLENCE AND ACHIEVEMENT IN THE AMERICAS
Nominate outstanding political leaders, CEOs, bankers and financial leaders, humanitarian leaders and environmentalists. Past award categories have included: • LIFETIME ACHIEVEMENT • LEADER OF THE YEAR • INNOVATIVE LEADER OF THE YEAR • FINANCIER OF THE YEAR • DISTINGUISHED SERVICE IN THE HEMISPHERE • CEO OF THE YEAR
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• PIONEERING CEO OF THE YEAR • SOCIAL RESPONSIBILITY CEO OF THE YEAR • INTERNATIONAL CEO OF THE YEAR • TECHNOLOGY LEADER OF THE YEAR • EMERGING CEO OF THE YEAR • ENVIRONMENTAL LEADER OF THE YEAR • HUMANITARIAN OF THE YEAR
The deadline for nominations is March 15, 2012 LATIN TRADE SYMPOSIUM IN PARTNERSHIP WITH:
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INDUSTRY REPORT
LATIN AMERICA’S
total mergers and acquisitions were $157 billion last year, a 26.5 percent decline from 2010, according to Thomson Reuters. The top deal was the $7.7 billion initial public offering (IPO) of Mexico-based Minera Frisco, a company owned by Mexican mogul Carlos Slim. Other major deals of the year included the $6.5 billion merger of América Móvil with Telmex (both controlled by Slim) and Brasil Telecom’s $5.8 billion acquisition of the remaining shares of Tele Norte Leste SA. After analyzing all major deals in Latin America last year, the editorial staff of Latin Trade selected three that stood out: • Colombia-based Grupo Sura’s $3.8 billion acquisition of ING’s insurance and pension assets in Latin America. • Mexico-based Grupo Televisa’s $2 billion acquisition of half of Mexican wireless operator Iusacell. • US-based Delta Airlines Inc.’s $100 million minority stake in Brazilian airline GOL. We also took a closer look at a deal that didn’t happen, but would have had an enormous impact: Grupo Pão de Açúcar’s proposed merger with the Brazilian assets of France-based retailer Carrefour.
GIANT
COLOMBIAN
Grupo Sura’s $3.7 billion acquisition of ING assets has created one of the top financial service firms in Latin America. David Bojanni, President of Grupo Sura
BY ANASTASIA MOLONEY
BOGOTA-- It has been a stellar year for Colombia’s Grupo de Inversiones Suramericana (Grupo Sura). With the acquisition of most of Dutch group ING’s Latin American insurance and pension portfolio in July, the Colombian investment group has positioned itself as one of the leading providers of financial services in the region. Getting there has been a rollercoaster ride, says Andres Bernal, Grupo Sura’s vice-president of investment. “It’s the largest acquisition of a foreign company ever done by a Colombian company. We’ve broken records. It’s been a roller coaster. We are very proud, excited and tired. It’s been a long journey,” Bernal says. That journey started in January 2011 when ING was looking to shed assets to comply with the terms of its government bailout following the 2008 financial crisis.
Few could have anticipated that this would become a surprise opportunity for Grupo Sura, a relatively little-known investment group with a team of 18 people based in Colombia’s second city, Medellin. When ING hired Goldman Sachs as their main advisor, the investment bank compiled a list of possible buyers for the Latin America arm of ING’s insurance business. Grupo Sura didn’t even feature on the original list. But David Bojanni, president of Grupo Sura, had a different game plan. He relayed a message to ING expressing the company’s interest in buying part of the Dutch giant. In just several months, Grupo Sura beat off big names in the insurance and pension industry to win the deal. “We’ve heard that there were 15 bidders behind ING in the non-binding process, and five of those, including Grupo Sura, were chosen to take part in a binding process,
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LATIN TRADE JANUARY-FEBRUARY 2012
including Prudential, Principal, Metlife and a joint-venture company that included interest from Mexico, Peru, Colombia and Chile,” says Bernal. It was just a small difference that finally clinched the deal. “We paid almost $3.7 billion for ING. We won by a tiny difference, by less than one percent of what the runner-up offered, which was $3.67 billion,” Bernal says. The deal includes ING’s assets in Chile, Colombia, Mexico, Peru and Uruguay, excluding ING’s 36 percent stake in leading Brazilian insurer Sul America SA, which will be sold off separately. Analysts say the deal is a fair price in a region where positive economic growth is projected, giving Grupo Sura access to Latin America’s key markets via the second-or thirdbiggest pensions and insurance groups. “It’s a reasonable price considering they
INDUSTRY IN NDUSTRY R REPORT: EPO ORT:
(Grupo Sura) are buying control, a whole package of five countries at the same time, where the brand is already well-positioned and well-known. It’s a strategic expansion that allows Grupo Sura very positive growth,” says Jairo Agudelo, a senior analyst at Celfin Capital, a Chilean brokerage with offices in Medellin. “Latin America is a region where economies are stable. The IMF predicts a growth rate of about 5 percent for the next five years,” Agudelo added. For Grupo Sura, buying ING was a ‘very good fit,’ says Bernal, complementing its existing portfolio where it holds significant stakes in companies in other countries throughout the Americas. “Of the seven countries we want to expand in Latin America and Central America, ING already had profitable companies in five of those countries, so it was a very good fit for us. The acquisition allows us continued growth and expansion in the Latin American market,” Bernal says. The deal, the largest ever cross-border acquisition within Latin America, also allows Grupo Sura to expand its customer base. “With this acquisition we will have 25 million clients in the region and assets under management of over US$120 billion. So we are becoming the largest pension provider and one of the top in insurance in Latin America, which is part of our long-term plan and strategy,” Bernal says. In recent months, Grupo Sura, a parent company of Colombia’s largest bank, Bancolombia, has been on an expansion drive, picking up US cement companies through subsidiary Cementos Argos and El Salvadorean insurer, Aseguradora Suiza Salvadoreña. The historic deal was four months in the
making. Advisors based in South America, the US and Europe, including 20 lawyers from law firm Shearman & Sterling, shuttled to and from New York city, where most of the predeal negotiations took place. “A lot of people were involved in the negotiations, 300 people were involved in this process. Local lawyers in five countries, investment bankers, UBS bank and Bancolombia and information technology, accounts and tax specialists,” says co-negotiator Bernal. “It was an acquisition that has companies in five different countries and also different types of companies, pension funds, and insurance, so it’s a complicated structure,” Bernal explains. On a typical spring-like day in late July, the swank, glass headquarters of Bancolombia in Medellin became the backdrop for the groundbreaking deal. In a fleeting visit to Colombia, Jan Hommen, ING’s CEO, flew in from Amsterdam via Panama to Medellin to seal the deal. He arrived late on the Friday at the start of a weekend-long marathon push to get the deal signed. “The chairman of ING flew to Medellin to get to know us and to know the people who are buying the company. We stayed all day Saturday and Sunday at the Bancolombia headquarters where we did the final presentations and negotiations,” Bernal says. A Colombian lunch of ajiaco soup, plantain and fruit juices, and one glass of white wine, provided a brief respite as Grupo Sura’s two main negotiators, Bernal and Bojanni, and ING’s core team of five negotiators, finalized the nitty-gritty details. “When we agreed on the price, when then had to agree on the transaction and preparations. There was an all-day conference call on the Sunday with lawyers in Medellin,
Amsterdam and New York,” Bernal explains. “The negotiations were complicated. We had to prove, and guarantee, that we had the resources to go ahead with the acquisition,” he says. It was a race against time. ING wanted the deal to be signed before the markets opened at 7am Amsterdam time on the Monday morning and have the press release ready, Bernal says. The contract, containing over 100 pages, was simultaneously signed in New York, Amsterdam and Medellin, just minutes before the European markets opened. “Sunday 25th of July was a very special day for us. We signed just before midnight Medellin time on that day after a very tough week. We scanned the signatures,” Bernal says. Shortly afterwards, Colombia’s president, Juan Manuel Santos, phoned the Colombian negotiators congratulating them on the acquisition he described as, “big news not only in economic terms but in geopolitical ones too.” With the ink barely dry on the contract, Grupo Sura then turned their focus on the final step of the transaction - raising the $3.7 billion. Grupo Sura has brought in mino-rity partners including the International Finance Corp (IFC), the investment arm of the World Bank, and other co-investors to cover up to 25 percent of the total ING asset purchase. The deal needed regulatory approvals from the respective authorities in Chile, Mexico, Peru, Uruguay and Colombia. Grupo Sura used credit, the sale of $2.1 billion worth of preferred stock, and its own funds to finance the purchase. “The local offering of sale shares in Colombia has raised $1.82 billion,” says Bernal. editorial@latintrade.com
DELTA-GOL ALLIANCE
Richard Anderson (L), CEO of Delta Airlines, and Constantino de Oliveira Jr., president of Gol
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LATIN TRADE JANUARY-FEBRUARY 2012
SÃO PAULO -- They looked like two grown-ups playing with small toys. Richard Anderson, CEO of Delta Airlines, was handling a model of a Delta-branded airplane to Constantino Oliveira, his counterpart at Gol
Linhas Aéreas Inteligentes, who was simultaneously presenting his new partner with a Gol model. The scene was carefully stage-managed last December in a São Paulo Sheraton hotel room, as Delta agreed to take a small yet
NEWSCOM
Delta scores a Brazilian goal ahead of World Cup
: DEALS THE YEAR DEAL LS OF OF T HE Y EAR
promising 2.9 percent stake in Brazil’s second largest airline. A $100 million cash injection will also boost Gol’s finances, after it registered losses of 516.5 million reais (equivalent to $300 million) in the third quarter of 2011, when the Brazilian economy was flat, registering 0 percent growth. Still, medium and long-term growth perspectives look promising to Delta, which has set its sights on the growing (and traveling) Brazilian middle class ahead of the 2014 World Cup. “In 2014, Brazil will be the fourth largest market for airlines in the world,” says Anderson. The company reckons that more than 150 million Brazilians will have enough money in their pockets to become airline customers by 2020, almost a 20 percent increase compared to the current population that travels by plane.
Delta and Gol will fly to 400 destinations in more than 70 countries. Delta and Gol will fly to 400 destinations in more than 70 countries. This is not the first time that Delta is making a strategic move in the fast growing Latin American market, as it already agreed to pay $65 million for a 3.5 percent stake in AeroMéxico last August. But as far as Gol is concerned, the deal was largely a defensive move to prepare for stiffer competition after the merger between the LatinAmerica based lines LAN and TAM. “We will have a stronger balance sheet and reduce our leverage,” says Oliveira, who saw his company’s debt rise to 2.6 billion reais (some $1.5 billion) by last September. The Brazilian company, which was launched as a low-cost airline 10 years ago, will also enjoy a capital increase of $160 million, and Delta’s chairman Ed Bastian will join Gol’s board of directors. “This commercial agreement is oriented toward generating benefits for both companies in both the commercial and operational areas,” says Fitch Ratings, the rating agency. In addition, some U.S. institutional inves-
tors that are shareholders of Delta, such as Wellington Management Company and Fidelity Investments, also bought a combined stake of more than 10 percent of Gol’s preferred shares on the market in October, according to Bloomberg. The move also reflects a wider trend in the airline industry, according to Andrew Janszky, head of Latin America for Milbank, a law firm that advised Delta on this deal.
“There is a sense that business as usual is no longer working. It’s a fundamental realization on the part of Delta that the Gol network is important to get closer to, and a realization by Gol that it is a good thing to be close to an airline with the global scope [that Delta has],” he says. “[But] I do not think this is the first step in a bigger acquisition.” – Thierry Ogier
JANUARY-FEBRUARY 2012 LATIN TRADE
59
INDUSTRY IN NDUSTRY R REPORT: EPO ORT:
TELEVISA’S IUSACELL STAKE Televisa’s $1.6 billion purchase of a 50 percent stake in Iusacell brings more competition to Mexico’s wireless sector. MEXICO CITY – When Televisa announced plans to acquire a 50 percent stake in wireless operator Iusacell, it shook up Mexico’s business circles. It also represented a realignment led by the two titans of the broadcasting sector, which is expected to bring stronger competition to the wireless sector. The sector is, of course, dominated by Carlos Slim’s América Móvil, which operates under the Telcel brand and holds a 70 percent market share. Telefónica’s Movistar brand holds approximately 20 percent, while Nextel and Iusacell split the rest. “This isn’t what you’d call true competition,” says Ernesto Piedras, director of The Competitive Intelligence Unit, a research and consulting firm, in Mexico City. Interestingly enough, it pairs two companies that otherwise are fierce rivals. Televisa’s main broadcast rival is TV Azteca, owned by
Grupo Salinas, which also owned all of Iusacell. Televisa is the world’s largest Spanish-language media company, with holdings in broadcast (including Mexico’s largest TV company), TV production (including world-famous soap operas), direct-to-home satellite services, cable TV and telecommunication services, magazine publishing (including flagship Vanidades) and distribution, radio production and broadcasting, professional sports and live entertainment, and feature-film and video game production and distribution. “Companies like Televisa and TV Azteca, they think, ‘I’m good at producing content, but I want to hold some control over the distribution,’ ” says Nymia Almeida, senior analyst with Moody’s in Mexico City. “Mobile is the future. That’s another channel of distribution that they want to hold control of.”
The deal, which is pending approval by Mexico’s competition commission, allows Televisa to expand on its current “Triple Play” offerings of cable, Internet and fixed-line telephony by adding a cellular option and creating “Quadruple play” packages, the companies say. This comes at a time when Mexican regulators have denied giving Telmex permission enter the pay TV market and sell similar packages. (Iusacell already has a “Quadruple Play,” package; Televisa controls cable companies Cablevisión and Cablemás and phone company Bestel.) Analysts say Televisa is financially robust enough to make the investment without difficulties. For Iusacell, the deal appears to be enormously beneficial for a company often lacking strong finances and customer growth. Indeed, Iusacell has gone into bankruptcy twice over the past five years.
Markets originally disapproved of the deal with Televisa, with shares falling roughly 10 percent. Some analysts found positives, however. Piedras mentions the time factor as being the main plus. “The price they’re paying is for time-to-market,” Piedras says. “If they’d started a new business, it would have taken at least two years to get going. With Iusacell, they hit the ground running.” Iusacell’s growth has been unspectacular in recent years and it holds only 4 percent of the market. On the bright side, Piedras says Iusacell has a nationwide network – both CDMA and GSM – and scores well in call and data performances. Additionally, Iusacell has many high-value customers, who spend an average of 197 pesos ($14.25) per month – more than the 155 ($11.21) pesos per month spent on average by Telcel customers. --David Agren
THE BEST DEAL
THAT NEVER HAPPENED: Brazil’s Pão de Açúcar gets rebuked by Casino, its local partner, when it approaches troubled Carrefour for a global merger. BY THIERRY OGIER
SAO PAULO -- To Abilio Diniz, the sky is the limit, or so it seemed. Diniz, the son of a Portuguese immigrant who launched a small grocery store in São Paulo after the Second
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LATIN TRADE JANUARY-FEBRUARY 2012
The founder of Brazilian chain of supermarkets Pão de Açúcar, Abilio Diniz, poses for a picture during a press conference in São Paulo, Brazil on April 7, 2011. The administrative council of French group Carrefour approved the merger with Pão de Açúcar on July 4, 2011.
World War, indeed became Latin America’s largest retailer a half century later. Then, within just six months, his group doubled in size thanks to two key 2009
acquisitions in the non-food market (Ponto Frio and Casas Bahia). But at almost 75, the still-ambitious Diniz, chairman of Pão de Açúcar (listed in São Paulo and New York
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INDUSTRY IN NDUSTRY R REPORT: EPO ORT:
as Companhia Brasileira de Distribuição, or CBD), was aiming even higher: He wanted to play a role in the global marketplace. In Brazil he had friends in high places who, he thought, could grease the wheels of a megamerger with Carrefour, the world’s second largest, but troubled, retailing chain. A detailed plan was unveiled in late June after weeks of speculation. With the support of the Brazilian development bank (BNDES), which would finance most of a 2 billion euro equity swap transaction, and the BTG Pactual investment bank, Brazil’s top retailer intended to merge with Carrefour. The Brazilian government’s initial reaction was positive. The BNDES gave a preliminary go ahead to proceed, although it did not release any funds at that stage. Still, ministers supported the move. Fernando Pimentel, minister of industry and foreign trade, said the deal had “a strategic importance for Brazil.” He sounded convinced by Diniz’
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LATIN TRADE JANUARY-FEBRUARY 2012
nationalist argument, and saw a wide opportunity for exporting Brazilian food products. “This would open a very important gate to put Brazilian products in foreign markets. We will have for the first time Brazilian processed products abroad in a large international retailing chain,” he said. Meanwhile, the presidential civil chief of staff, Gleisi Hoffmann, maintained that no public money would be involved since the transaction would be carried out by BNDESpar, the equity arm of the BNDES. Diniz spoke on the main evening news program on Globo television that night and characterized the merger as in everybody’s best interest. Finally, the grand scheme that he had been mulling for months with his close advisers, Percio de Souza from the Estater financial boutique, and Claudio Galeazzi, a partner at BTG Pactual and a former Pão de Açúcar CEO, was up and running. His Novo Pão de Açúcar would get even bigger in Brazil, where
he would have the opportunity to sort out Carrefour’s troubled subsidiary, and he would also get a stake in the Paris-based company. Indeed, Carrefour was up for grabs. Some of its key shareholders, the Arnault Group and Blue Colony, wanted out in order to recoup some of their losses, and the Brazilian subsidiary itself had been involved in a 550 million euro accounting fraud. It was a golden opportunity. The thinking was, if they did not do it, Walmart would. It all seemed to be coming together. But that was before Groupe Casino weighed in. If the Diniz deal went ahead, Groupe Casino, which first acquired a stake in CBD 12 years ago and was due to take over in June 2012 in line with a shareholders’ agreement, would see its share in the business diluted. What’s more, French hypermarket firm Casino also happened to be Carrefour’s arch rival in France, Casino’s top market, and its boss, Jean Charles Naouri was dead
: DEALS THE YEAR DEAL LS OF OF T HE Y EAR
set against the deal from the start. He had already called for arbitration before the International Chamber of Commerce against Diniz’ moves, and started buying CBD’s shares on the stock market to increase its position in the company, going from 33.7 percent to 37 percent in June. (He later continued buying and by December, 2011, owned 48 percent of the company’s equity.) But to Diniz, it all seemed like a minor inconvenience. The former racing champ is the kind of businessman who does not take a “non” for an answer and he thought he would be able to twist Naouri’s arm. But Naouri, a former cabinet chief to the late French president François Mitterrand, is not one for turning. He accused Diniz of shifting the goalpost with the ball still in play. After Diniz and his financial advisers unveiled their plan in late June, he spoke bluntly of “expropriation.” In an exchange of emails with Diniz he said there was no point in meeting him after such “dissimulation.” He felt cheated. In the
late 1990s he had helped rescue the indebted Diniz business, which suffered greatly from the devaluation of the real. Later, Naouri flew to Rio de Janeiro to meet with Luciano Coutinho, the president of the BNDES. Calmly, almost methodically, he insisted on the need for Brazil to respect contracts. “He was very careful in signing the [2006 shareholders’] agreement, and there is no way that there could have been a loophole in the contract” that could allow Diniz to engage in a business negotiation without telling his main business partner, says a source who has worked in the past with both men. Eventually the Brazilian government backed down and the deal collapsed, but Diniz still thinks that he was misunderstood. On several occasions, he tried to raise the issue again with Naouri, to no avail. In spite of this, Diniz has continued to defend the plan in public. “Was it a great plan?” he asked before a managers’ audience during an Endeavor Institute event in São Paulo
last November. “It was sensational. Could it still be? Maybe it can. And I believe in it because it is a project with a beginning, a middle and an end.” He insisted that his biggest mistake was to have involved the BNDES, and that BTG Pactual could have mustered enough resources from the financial market to eventually go ahead with the merger. Naouri was not amused. As soon as these comments were made public, Casino sent a letter to Diniz to seek clarification. At the end of the day, the legendary Diniz may well have gone a step too far. The irony is that after the failed merger between Pão de Açúcar and Carrefour, Diniz and Naouri will still have to work together for some time. Indeed, Casino may be able to run the business by next June, but the contract also says that Diniz may remain as chairman of the board. The cold war is not over yet. In fact, it may just be starting. editorial@latintrade.com
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The economies of Latin America are healthier. –Peter Wiegandt, Dell Latin America president
Dell Bets on Latin America Region among star performers for computer maker. hanks to Latin America outgrowing the world average both in economic terms and in PC sales, companies like U.S.-based Dell have reason to be optimistic about their revenues in the region this year. “The economies of Latin America are healthier, with a few exceptions,” says Peter Wiegandt, the company’s Latin America president. “That wasn’t the case 20 years ago.” Latin America’s GDP is expected to grow by 3.7 percent this year, estimates the United Nations Economic Commission for Latin America and the Caribbean (ECLAC). That compares with an estimated 2.1 percent in the United States, according to Credit Suisse. Meanwhile, the sales of PCs continue to grow. This year, total PC sales are expected to reach 39.8 mil-
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lion units, an increase of 5.3 percent, according to estimates from market researcher IDC. While desktop sales will barely grow (0.3 percent to 15.6 million units), notebook PC sales will likely increase 8.7 percent to 24.2 million units. Brazil is Dell’s top Latin American market, followed by Mexico, Argentina, Colombia, Chile and Peru as well as Central America. “Brazil has grown most [in relative terms], but the country with most [percentage] growth is Peru,” Wiegandt says. And Brazil still offers potential for further growth, he adds. The country’s economy, Latin America’s largest and the sixth-largest in the world, is expected to grow 3.5 percent this year, according to estimates by ECLAC. Wiegandt is optimistic that demand will continue to
JANUARY-FEBRUARY 2012
increase despite the uncertainty over Europe’s economy and its impact on Latin America. “Latin America has to catch up and the govern-
ments have realized that technology is an enabler, a facilitator [that can improve] education, health [and] public services.” While he declined to break down revenue figures by country, the company did release growth numbers for the third quarter of 2011. They showed that Latin America revenue increased 4.9 percent, which compares with flat growth worldwide. Dell ranks second in Latin America after HP, according to IDC. The uncertainty surrounding HP, the world’s top PC vendor, has had a positive impact on Dell, he acknowledges. “We have been talking to clients we didn’t talk to before,” Wiegandt says. HP last year said it was considering selling or closing its PC unit before reversing itself after it replaced its CEO. —Joachim Bamrud
PICTURE THIS Camera sales per capita in 2010 in US dollars
Chile Argentina Brazil Venezuela Mexico
10.2 8.4 6.8 6.7 2.6
Source: Euromonitor International
PHOTO: COURTESY OF DELL
TECH TRENDS
CREATING AN ENVIRONMENT FOR
BUSINESS OPPORTUNITIES IN THE HEMISPHERE MIAMI JUNE 11-13, 2012 InterContinental Hotel Miami AN AFFILIATE OF THE LATIN TRADE GROUP
www.tradeamericas.com
The Latin Trade Group presents
Trade Americas in partnership with
The first business focused conference and expo designed for North American Small and Medium sized businesses positioned for growth. Trade Americas will convene: • Small to Medium sized North American business leaders • Latin American Trade and Investment Promotion agencies • Leading Corporations and Service Providers Each with a commitment to business expansion and job creation in Latin America! Participate in Trade Americas and: • Learn how to successfully expand your business in Latin America • Hear from Latin American countries on the opportunities their countries provide and their primary business sectors positioned for growth • Experience best practices in expanding your business, delivered by government and corporate leaders • Network with other North America SME’s • Participate in business matchmaking with Latin American Trade and Investment Promotion Agencies and Suppliers
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To learn how to successfully grow your business in Latin America, and for further details on Trade Americas please contact rwinters@latintrade.com
LATIN TRADE SPECIAL SUPPLEMENT
LOGISTICS 2012: A Special Intermodal South America Report
KEY TRENDS, CHALLENGES AND SOLUTIONS
F
rom managing complex supply chains to addressing transportation and warehousing risks, Latin American companies face a broad array of logistics challenges. However, forward-thinking businesses are partnering with their service providers to reduce overall costs and gain a competitive advantage in their markets. “Companies with complex logistics challenges should work long-term with their transport providers to optimize the processes and cut costs out of the entire logistic chain,” says Poul Hestbaek, senior vice president, commercial for Hamburg Sud, Caribbean and Latin America West Coast. “We are seeing a shift away from annual contract negotiations towards a broader, longer-term approach.”
“In 2012, new emerging geographies, technology’s constant evolution and a stronger emphasis on greener methods will enhance the list of supply chain variables to be managed.” Alexandre Cecolim | Managing Director, Logistics, FedEx Express Latin America and Caribbean Division Ferdinand Kurt, CEO of Kuehne + Nagel S.A. - South & Central America, says effective supply chain management should be part of a company’s high-level strategy.“Logistics should not be an isolated department trying to find immediate solutions without a clear medium and long term vision,” he says. This spring, logistics providers from around the world will be showcasing their latest services and solutions at Intermodal South America, April 10-12 in Sao Paulo, Brazil. A leading hemispheric conference, the event puts a spotlight on the key issues facing the logistics sector, such as the need for more efficient transportation infrastructure in Latin America. “In 2012, new emerging geographies, technology’s constant evolution and a stronger emphasis on greener methods will enhance the list of supply chain variables to be managed,” says Alexandre Cecolim, managing
director, logistics, FedEx Express Latin America and Caribbean Division. Kurt adds that the acceleration of global supply chains will continue, pressing logistics providers to find new ways to reduce costs and add value. “This is of particular importance in emerging markets like Latin America where infrastructural and bureaucratic hurdles still hamper the efficient and predictable flow of goods,” he says. “Professionals will need to spend more time with logistics planning to better organize their inventories and avoid potential disruptions to the supply chain.” ADDRESSING SUPPLY CHAIN COMPLEXITY As global manufacturing has shifted to developing regions like Latin America and Asia supply chains have become longer and far more complex. “Multiple sourcing of parts for manufacturing has also dictated a much more advanced approach to the logistic challenges,” says Hestbaek. “Also, consumer demand for the newest products adds pressure for the quick and smooth dispatch of those cargos.” Despite recession concerns in Europe, Hestbaek expects a 4 to 6 percent increase in global container volume in 2012. “For Latin America we expect an average transport volume growth of 6 to 8 percent,” he adds. While the freight cost environment remains volatile, Hestbaek says longer-term partnerships can smooth out those factors, enabling greater cost predictability.
“For Latin America we expect an average transport volume growth of 6 to 8 percent.” Poul Hestbaek | Senior Vice President, Commercial for Hamburg Sud, Caribbean and Latin America West Coast
LATIN TRADE SPECIAL SUPPLEMENT
For companies seeking to reduce transportation costs and accelerate shipments, Cecolim recommends a full evaluation of the current supply chain using a cross-disciplinary approach that focuses on the customer experience. “Other strategies and tactics include consistent and systematic reviews for technology upgrades and utilization of network modeling tools for proper facilities location planning,” he says. “You should also build a team with reliable local knowledge in key markets to meet regulatory compliance requirements and minimize controllable risks.”
“About 60 percent of cargo transport claims can be avoided through an effective risk management plan. Loss prevention and loss control procedures are essential aspects of supply chain management.” Xavier Pazmiño | Regional Vice President for marine insurance, ACE Latin America MANAGING SUPPLY CHAIN RISKS For Latin American companies, one of the biggest logistics challenges is managing supply chain risks.“About 60 percent of cargo transport claims can be avoided through an effective risk management plan,” says Xavier Pazmiño, regional vice president for marine insurance,ACE Latin America. “Loss prevention and loss control procedures are essential aspects of supply chain management.” Pazmiño says managing risks begins with the appropriate selection of service providers, including ocean, air and inland carriers, warehouses, freight forwards and cargo agents. “Look for providers who meet international quality standards,” he says. With inland cargos, satellite, radio and wireless tracking devices can help minimize the risk of theft, although armed custody may be necessary in some areas. “To prevent physical damage to cargo, be sure to review the type of transport packaging and the handling techniques,” Pazmiño adds. “You may also want to conduct inspections when storage is required during the transit.”
In addition to crime and piracy, shippers also need to consider the impact of severe weather conditions on global supply chains.“We are seeing more weather-related losses in recent years,” Pazmiño says. Various types of import and export insurance policies can also reduce shipping risks by covering physical damage, loss of cargo or other hazards. “We recommend that the cargo owner have broad insurance coverage from the point of origin to final destination,” Pazmiño says. Because ownership of international cargo can change while in transit – depending on terms of the contract – Pazmiño says it’s a good practice for the logistics provider to have a comprehensive policy that covers both the buyer’s and seller’s interests. He adds, “It’s also important for providers who consolidate or warehouse smaller shipments to provide insurance as part of their service.” INTEGRATING SUPPLY CHAINS Integrating supply chains is a key step for Latin American companies seeking to lower costs, reduce transit times and improve customer service.“Logistics service providers who can offer true “end-to-end” solutions can help their customers optimize their supply chains,” Kurt says. But for that to happen, companies and providers need to share a common understanding about those logistics services. “The terminology ‘integrated’ is brand new in the marketplace, creating gaps between sellers and buyers of those services,” he says. “That can lead to philosophical discussions internally and externally with less than desirable results for customers and service providers alike.” Cecolim points out that supply chains can vary significantly between different industries, and “integration” may mean different things for different companies. However, there are several common challenges, including building a technology and physical infrastructure, synchronizing supply with demand and measuring performance globally, as close to real-time as possible. Ultimately, though, supply chain management comes down to people, according to Cecolim. “Proper management of human assets has the potential to be a source of sustainable competitive advantage for high-performance organizations,” he says. “We have seen hundreds of examples in which companies have successfully managed their people to create not only revenue, profit and growth, but also unique products and services in challenging environments. That sets the path for long-term success.”
LT CFO EVENTS MEXICO CITY
MEXICO
and the world economy was the focus of the Mexico City LT CFO Event. exico will experience less economic growth in 2012 due to market uncertainties in Europe and the rest of the world, but not slide into negative territory. Gabriel Casillas, vice president and chief economist with J.P. Morgan in Mexico City, offered the forecast during a discussion on the Mexican economic and political situation at the Latin Trade CFO forum held Nov. 17, 2011. “Everyone will be hit by this, has been hit by this and Mexico is no exception,” Casillas said. Casillas forecasts 2012 GDP growth of 2.5 percent – compared with 4.5 percent GDP growth in Mexico for 2011 – which he called, “not bad,” given that Mexico has had GDP growth of less than 2 percent between 2000 and 2010, comprehensive economic and structural reforms are still pending and the world economy is slumping. Despite the economic turbulence of recent years – and labor troubles in three of its most important mines – mining and transportation conglomerate Grupo México grew impressively over that time, growing revenues from $5.9 billion in 2008 to $8 billion last year. And even with a tough lending market, Grupo México’s CFO Daniel Muñiz
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Quintanilla managed to obtain a $1.5 billion syndicated loan in December 2009 in order to close a nearly $4 billion deal to bring ASARCO out of bankruptcy. The deal was part of Grupo México’s strategy of finding merger and acquisition targets with “low multiples” and building “world-class assets.” Muñiz was awarded the CFO of the Year – Dynamic Growth – Mexico and spoke on navigating the commodities boom. He acknowledged that helping guide Grupo México through 2008 wasn’t easy, but credited a disciplined approach for achieving stellar results in difficult times. “We have a lot of volatility in copper,” he remarked. To overcome that, “you have to build and diversify,” he added, along with having a strong, conservative balance sheet and “being very aggressive in cost cutting.” Being aggressive with costs was a common theme at the CFO forum. Knowing your business was another. Muñiz, a lawyer by training, got to know Grupo México’s business by living in Cananea, home to an important copper operation (now known as Buenavista) in Sonora state – and the source of billion-dollar losses during a strike related to the legal problems of the fugitive leader of the country’s mining union. Another CFO advising his counterparts
to know their businesses intimately is Luis Olloquí Aguirre of Cinépolis, the fourth largest cinema company in the world. Cinépolis now operates 2,673 screens in 11 countries, including India. Despite the disparate geography and local differences, Cinépolis encourages its managers in the disparate countries to communicate directly with each other – even if that means avoiding the corporate office in Morelia. Knowing your business also means avoiding things you don’t fully understand, such as derivatives. “We focus on our core business,” Olloquí said. “Selling popcorn and soft drinks; that’s where the money is,” he added, somewhat laughingly. Cinépolis’ business can be complex, especially dealing with so many different currencies; the growing company had $900 million in revenues, Olloquí said, “the same as last year… because of cu-rrency exchange.” This makes for challenges in banking. Olloquí said a bank with a branch network is important for paying employees and that having fewer banks is preferable. But, he no-ted, “it gets inefficient” with multiple banks. He also added, “Global banks don’t exist.” Like Grupo México’s Muñiz, Olloquí and Cinépolis promote aggressive cost cutting.
LT CFO EVENTS MEXICO CITY “When you track lunches, travel … it builds a culture,” he said. One solution for tracking spending is the use of corporate cards, something still not entirely embraced in Latin America. Eduardo Viniegra, Manager of Commercial Products with Visa Mexico, says cards allow CFO’s to know how employees travel and spend, but also know what you’re spending
with suppliers. Walmart Latin America CFO ChristianPhilippe Schrader knows all about a culture of cutting and tracking costs: company executives forego travel frills, work from normalsize cubicles and empty their own waste paper baskets. The same discipline is brought to the company’s stores. One method for evaluating a firm’s per-
Michael Schwandt, Corporate Banker, J. P. Morgan; Mauricio Braverman, Director de Productos, Visa; Daniel Muñiz Quintanilla, CFO, Grupo México; Eduardo Vélez, Director of Finance, SAP México y Centroamérica; Mark Ludwig, LT CFO Contributing Editor, Latin Trade Group.
Eduardo Viniegra, Business Leader, Commercial Products Mexico, Visa.
Luis F. Olloquí Aguirre, Director of Finance & Treasury, Cinépolis; Aldo Chiquini, VP Treasury Services, J. P. Morgan.
formance and communicating its strategy to employees is through the development of Key Performance Indicators. The benefits, said Eduardo Vélez, Director of Finance at SAP México y Centroamérica, include having a vision of the organization, along with better consensus and ability to make quick decisions in “real time.” —David Agren
Gabriel Casillas, Vice President and Chief Mexico Economist, J.P. Morgan.
Latin Trade CFO Roundtable.
Karina Franco, CFO, Dell.
Philippe Schrader, VP, CFO & Strategy, Walmart Latin America.
Eduardo Palacios, TSS Mexico Country Head, J. P. Morgan.
Enrique Breton, Treasurer, Poly Rafia SA de CV; Juan Pablo Sánchez Kanter, Finance VP and Finance Director, San Luis Rassini.
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LT CFO EVENTS MIAMI
MIAMI LT CFO EVENT
atin America is expected to see real GDP growth of 3.9 percent this year after an estimated 4.6 percent in 2011, Kathryn Rooney Vera, Senior Macroeconomic Strategist and Partner, Bulltick Capital Markets, told participants in the LT CFO Forum in Miami on December 2, 2011. Consumer prices in the region are projected to rise 6.6 percent in 2012 after an estimated 7.3 percent last year. The worst case scenario – a collapse of the euro – would lead to a recession in Latin America. But a less dramatic, “basic case” European scenario would not mean much for Latin America. The region is resilient, Vera said, and there is not a 1-to-1 relationship with international trade because internal markets have grown. Christian-Philippe Schrader, Vice President, CFO and Strategy, Walmart Latin America, received the LT CFO of the Year Award and spoke about multinational dynamic growth and expansion. Companies today must find ways to give consumers what they’re looking for, Schrader said, since consumers have become much more price conscious, cha-nnels are shifting from informal to formal and new opportunities exist in expanding e-commerce.
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Critical decisions include choosing which market segments you want to reach, developing a “people plan” to find and retain the best talent, making sure you offer the best product at the lowest possible price and working closely with suppliers to keep down costs and pass savings along to customers. In a theme repeated throughout the forum, Schrader pointed out that CFOs at multinationals have to deal effectively with the “eternal struggle” – balancing demands of headquarters vs. individual countries. The key to successfully managing this, he stressed, is converting the CFO’s job from bookkeeper/controller into that of a trusted business partner in the organization. Joe Andris, Treasurer/Finance Manager, Latin America, Caterpillar Americas Services Co., and Patricia Cabarcos, Managing Director-North America, Datarisk, took on the task of talking about improving forecasting and budgeting processes. Andris provided tips on annual budget forecasting, typically an onerous process. Caterpillar starts from the bottom up at the district level and applies top-down feedback from headquarters. Try to be as accurate as you can, he suggested, avoiding underestimates and back-and-forth with HQ. Credibility is important and building a reputa-
tion for accuracy helps achieve this. With credibility, you can successfully argue your point of view if HQ tells you to cut expenses without any good reason. Avoid prolonged give-and-take on budget by starting early and working accurately. Inflation, exchange controls and price controls complicate the budget process, but these are challenges we have to deal with. Cabarcos summarized two cases where improvements in data collection gene-rated benefits. In one case study involving fertilizer sales, the client, Monsanto, had distribution partners that included some very small businesses with small staffs, which made sound data collection difficult. The company wanted to increase sales but also wanted to identify high-risk custo-mers. By helping distributors upgrade internal monitoring procedures, data co-llection and evaluation improved. The issue of multi-country financial management was discussed by Carlos Cubias, Vice President Finance & Accounting, Latin America Strategy, UPS. Maintaining a strategic balance between local business plans, the regional five-year strategy and the corporate top-down goals and M&A oversight is a constant challenge for units of multinational companies, Cubias noted.
ALEX GORT PRODUCTIONS
KEY TOPICS: Economic review, CFO Award, improving forecasting and multi-country financial management.
LT CFO EVENTS MIAMI CFOs must try not to make the fiveyear plan a “paper job,” Cubias said. Since managers don’t last five years, CFOs have to watch the economic climate and adjust. Typically, companies lean on cash cows to support revenue streams but UPS also looks at places with good margins and promotes them, even if they are relatively small. And since HQ constantly pressures
managers to keep up with big competitors like DHL and FedEx, opportunities for organic growth vs. local acquisition have to be carefully evaluated. Ramon Arcona, Vice President, J.P Morgan Treasury & Security Services, pointed to some trends in multi-country financial management. Payables, for example, were moving from cash/check
Joachim Bamrud, Executive Editor, Latin Trade Group; RamóN Ancona, Vice President, Sales Manager, J.P. Morgan Treasury & Securities Services, J.P. Morgan; Philippe Schrader, VP, CFO & Strategy, Latin America, Walmart Latinoamérica; Kathryn Rooney Vera, Senior Macroeconomic Strategist & Partner, Bulltick Capital Markets; Diego Rodríguez, Head Commercial Solutions LAC, Visa; Rosemary Winters, Executive Director, Latin Trade Group.
ALEX GORT PRODUCTIONS
Patricia Cabarcos, Managing Director- North America, Datarisk Global.
Mark Ludwig, LT CFO Contributing Editor, Latin Trade Group.
—Joseph A. Mann, Jr
Joe Andris, Treasurer/Finance Manager - Latin American Division, Caterpillar Americas Services Co..
LT CFO roundtable at the Four Seasons Hotel Miami.
Alejandro Ubeira, VP Corporate Accounting & Reporting-Region Americas-Deutshe Post World Net, DHL; Daniel Lopardo, Finance Director, Campbell Soup Company.
to electronic while in receivables, most of his bank’s customers are trying to make the process more efficient with electronic invoicing and Web-based information for customers. There is more focus on shared services in accounting, cash management and other functions, he noted.
Eduardo Carneiro, Director, Latin America Finance, Burger King.
Carlos Cubias, VP Finance & Accounting, Latin America Strategy, United Parcel Service.
Juan Carlos Barreto, CFO, Latin America, Brightstar Corp.; Patrick Luthy, Finance Director Latin America, Medtronic Latin America; Luis Brito, CFO, Turbana Corporation.
Seher Samilgil, Manager, Finance and Business Support, InterContinental Hotels Group.
Eduardo Gras, Global Corporate Bank Mexico, J.P. Morgan.
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ON THE ROAD
SANTIAGO, CHILE
Santiago: Firsthand tips for visiting Chile’s capital Insights and advice from Daniel Picciotto, president of Colombia-based PDC Vinos y Licores Ltda., and José Luis Portela, general manager of the Chilean subsidiary of Spain’s Telepizza.
José Luis Portela: I’m currently based in Santiago but I travel a lot and I really appreciate Santiago’s marvelous climate, especially the summer with its long, sunny but not overpoweringly hot days and pleasantly cooler nights. It also has a privileged location, just an hour by car from both the beach and several ski centers. The main shopping malls and the Alonso de Córdova neighborhood are excellent for shopping, with a variety of top-quality brands and products.
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the rather aggressive way people sometimes drive. L.T. What are your preferred hotels when on business? Picciotto: I’m a big fan of the Sheraton Four Points. It’s well located, has great service and the price is unbeatable (Disclosure: Picciotto belongs to a group that is part owner of this hotel). The Sheraton Towers has a great swimming pool and so does the Hyatt. Portela: One of the hotels I can recommend is the W. It’s set apart by its location, decoration and atmosphere. I’d also recommend the Hyatt with its great facilities and attentive service.
L.T. What do you like least? Picciotto: Santiago’s air is very polluted, especially in winter. Traffic can sometimes be a problem but this is true of many capitals around the world.
L.T. What restaurants do you recommend? Picciotto: For fancy dining I like to go to El Europeo, which has a classical French menu. Da Carla is a classical Italian restaurant with great food and atmosphere. I also like Ichiban for sushi, Cuerovaca for steak and Miraolas for seafood. If you want to venture downtown, Ostras Azócar for oysters is a must and, for typical Chilean food, Doña Tina. The best place for pizza and a fun place to go is Tiramisú but it’s a good idea to reserve ahead of time.
Portela: The smog in winter. I also dislike
Portela: For Peruvian food, which is very
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popular in Santiago, I like La Mar and Cocoa. For fish, there’s Miraolas and, for meat, Ox and Santabrasa and, for Italian food, Da Carla. La Boquería de Barcelona, a new Spanish restaurant, has been very successful. L.T. What practical advice would you give to someone who is visiting Santiago for the first time on business? Picciotto: Choose your hotel’s location carefully because of traffic and because there is a lot to do apart from business, like visiting a winery or driving to Valparaíso. Santiago is very informal and most businessmen have done away with jackets and ties but it’s always a good idea to find out how the people you are meeting will be dressed before you travel. Santiago tends to be very quiet at night if you don’t know where to go so I always schedule both my days and nights ahead of time. Portela: Santiago is a comfortable city for work and to visit. I’d recommend trying to set aside some time to visit the surrounding area - the vineyards of the Casablanca Valley, the Cajón del Maipo in the Andes and Zapallar, an elegant beach resort where the Chiringuito restaurant is a great place for lunch. —Ruth Bradley
ISTOCK
L.T. What do you like most about traveling to Santiago? Daniel Picciotto: As a frequent traveler, I appreciate the efficiency of the city’s airport and the fact that it’s easy and fast to get from there to downtown and the hotels. The roads and highways are fantastic which also means you can visit places outside Santiago. I love the weather. In winter, you can ski on weekends and then drive to the oceanside in the late afternoon. And, of course, if you are a wine lover, Chile is a place you want to visit.
ON THE ROAD
SANTIAGO, CHILE
The opening of the W Santiago in 2009 marked the hotel chain’s debut in South America and Chile’s capital remains its only location in the region. The hotel, in the heart of the fashionable El Golf district, caters mostly to businesspeople and is a particularly popular choice with younger executives. Along with two restaurants Japanese and French - it offers a terrace with a spectacular view over the city as well as the lively Whiskey Blue night club. Chief Concierge Sandra Riveros offers her tips for making the most out of a trip to Santiago.
What restaurant would you recommend for a professional lunch or dinner? Our first recommendation, of course, is the hotel’s own restaurants but, other than that, we mostly recommend restaurants on Avenida Nueva Costanera and, particularly, Tierra Noble. If guests want to be able to talk quietly, we call the manager there and they provide a very good service in that respect. Others we recommend on Nueva Costanera are Ox for meat and Puerto Fuy. I know there are a lot of restaurants on our street, Isidora Goyenechea, but they get very busy, especially at lunchtime, and we explain that to guests. I have 24 hours in Santiago. What itinerary would you recommend? We offer guests a city tour with a private driver, but quite often they want to explore on their own. In that case, we suggest they use the subway - which is very safe - and get off at the Pedro de Valdivia station to visit the Providencia district and then get
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Santiago, Chile
back on and go to the Baquedano station to visit the Bellavista area and walk through the park by the river into the downtown area and La Moneda presidential palace and, perhaps, the Central Market. Can you suggest one or two places to shop? If guests want to buy Chilean craftwork, we suggest the Pueblito de los Dominicos which isn’t far from here and has shops selling a wide range of typical products. The other option is Avenida Alonso de Córdova which is where the main international brands have their shops. What are the must-buys? Chilean wine - many guests come with the idea of getting to know Chilean wine and buying some - and, perhaps, lapis lazuli.
We suggest that women don’t wear too much jewelry. It’s not that we tell them that Santiago is a place where they’re going to get mugged but just to be careful with jewelry and not be too conspicuous. It’s embarrassing as a Chilean but I have to say we also warn guests about the risk of being overcharged by taxis they flag down in the street. I have many meetings in the city. What is the best way to get around? Use a hotel car and driver; that’s what the vast majority of our guests do. What is the appropriate amount to tip a taxi or other driver and in restaurants? It’s not usual to tip taxis you take in the street but, for a driver who’s taken you on an excursion, around 10 percent is normal and the same in a restaurant.
What safety measures do you recommend? —Ruth Bradley
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MEXICO CITY -- Super Bowl Sunday can mean food and fun as much as football – and the food part often means guacamole. Super Bowl fans in 2010 wolfed down more than 50 million pounds of avocados used to make the creamy sauce. Over the past 15 years, the Super Bowl staple has been made increasingly with avocados imported from Mexico – specifically, the western state of Michoacan. “Super Bowl is always when more guacamole is consumed, more than any other day,” says Ricardo Vega López, president of the Avocado Producers and Export Packers of Michoacán. The first of Mexico’s prime picking seasons comes in January, just prior to the big game. But meeting the Super Bowl demand is only part of the Mexican avocado industry’s success. Mexico’s growers and packers have exported ever more boxes of the iconic fruit – which is native to Mexico – feeding a seemingly insatiable appetite in the United States and beyond. Avocado exports totaled $528.7 million over the first half of 2010, according to ProMéxico, the Mexican government agency that tracks trade data. Exports reached 410,000 tons during the 2010-2011 season, or one-third of the total harvest. The industry itself has invested in marketing campaigns and successfully positioned avocados as commonly consumed fruit in the United States – not just something for Latinos. “Consumption fortunately hasn’t just come in the Latino segment of the market but in other ethnic markets,” Vega says. Consumers were much less effusive about avocados in past decades, however. Just getting avocados into the United States
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– the main export destination for Mexican avocados – was a challenge, too, as the United States officially banned imports due to concerns of fruit flies inadvertently impacting U.S. growers. Those restrictions were partially lifted in 1997 and fully removed a decade later. The result was an increase in consumption – to which the Mexican avocado imports contributed – allowing Mexico to capture a 56 percent market share. Per capita yearly consumption, meanwhile, reached 4.11 pounds in 2009, according to the U.S. Department of Agriculture, rising from just 1.73 pounds in 1997. Latinos in the United States, especially those migrating from Michoacan, drove early demand. The fruit – known for its leathery skin and creamy innards – “was part of their daily diets,” but wasn’t available year round due to the import restrictions, Vega says. Mexico’s growers and packers have made attempts at sending their products to markets beyond the United States, which accounts for 88 percent of Mexican avocado exports. Japan is now the industry’s second-biggest market, while Canada ranks third. Some markets have proven pleasant surprises – such as Central America: Costa Rica and Honduras are the fourth and fifth biggest importers respectively of Mexican avocados. “Central American countries have always consumed avocados,” Vega explains, adding, “We wouldn’t have thought they would become important customers with a high level of consumption.” —David Agren
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