Latin Trade (English Edition) - Nov/Dec 2012
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20 ANNIVERSARY ISSUE
YOUR BUSINESS SOURCE FOR LATIN AMERICA » WWW.LATINTRADE.COM NOVEMBER/DECEMBER 2012
2011 ENERGY SURVEY
86%of CFOs, Government Policy Makers and Energy Professionals
Agree that energy assessments should be mandatory for companies that use the most energy.
The financial, environmental and reputational benefits of energy efficiency are evident: businesses gain from lower energy bills, lower pollution and CO2 emissions – reducing the risk of suffering penalties from regulators – and better relations with employees, customers and other stakeholders. An energy assessment can spur a business into making positive changes, through optimizing energy use, acquiring new equipment and adopting new habits. Our survey found that 86% of respondents favored mandatory energy assessments for energy hungry industries, showing how seriously they view the need to become more energy efficient and boost productivity.
Energy
Produced by Bloomberg Businessweek Research Services in partnership with ABB. For more Information visit www.abb.com/betterworld
Electric cars: 15 minutes charging, 200 km driving?
Certainly.
Having to wait eight hours to fully recharge an electric car is the main reason for not buying one. But things have changed: With ABB’s direct current (DC) chargers charging time has been slashed to as little as 15 to 30 minutes. No wonder the Estonian govern-ment is relying on ABB to build Europe’s largest electric vehicle fast-charging network. By the end of the year the Estonian main roads will have fast chargers every 50 km. Once accomplished the goal to significantly reduce CO2 emissions by 2020 moves a lot closer. www.abb.com/betterworld
2 LATIN TRADE NOVEMBER-DECEMBER 2012
Profile14 Sebastián Piñera
16 Innovation and Change18 Latin America: 20 Years of Evolution
A New Region22 Luis Alberto Moreno
President Inter-American Development Bank
24 Agustín Carstens Governor Bank of Mexico
26 Enrique García President CAF Banco de Desarrollo de América Latina
28 Susan Segal CEO Council of the Americas
New Enterprises30 Luiz Fernando Furlan Member of the Board BRF Brasil Foods
32 Alessandro Carlucci CEO Natura
The Multilatins Revolution34 Carlos Raúl Yepes President Bancolombia
35 Juan Pablo del Valle Chairman Mexichem
36 Pedro Heilbron CEO Copa Holdings
37 Woods Staton Chairman Arcos Dorados
The New Business Models38 Gerardo Mato CEO HSBC Global Banking for the Americas
40 Frederico Fleury Curado CEO Embraer
42 Germán Efromovich CEO AviancaTaca
A More Productive Region44 Juan N. Cento President FedEx Express
46 Andrew Vesey Executive VP AES Corp.
48 Luiz Meisler Executive VP Oracle Latin America
Features
CONTENTS NOVEMBER/DECEMBER 2012 VOL. 20 No. 6
Editor’s Note6 20 Years of History
The Scene 10 CFO World: Earnings & More
Opinion12 The Contrarian: Searching for El Silicon
Valley of Latin America By John Price
Events 85 Special Event Coverage: BEST OF BRAVO 2012 Highlights from the Latin Trade Symposium and the 18th BRAVO Business Awards gala celebration.
4 LATIN TRADE NOVEMBER-DECEMBER 2012
Cover: 20th Anniversary Issue
WebFind us online at www.latintrade.com
CONTENTS NOVEMBER/DECEMBER 2012 VOL. 20 No. 6
48 James Quigley Executive Vice Chairman Bank of America – Merrill Lynch
50 Jaime Szulc President Latin American Operations Goodyear
52 Leo Rodríguez President Emerson Latin America
A New Frontier: Tourism 54 Kirk Kinsell
President for the Americas IHG
54 Osvaldo Librizzi Co-President for the Americas,Starwood Hotels & Resorts
55 Rob Steigerwald Chief of Operations for Marriott International
Age of Services56 Eduardo Eraña
President for Latin America and the Caribbean, Visa International
57 Manuel Medina-Mora CEO Global Consumer Banking and Executive Chairman of Lat Am and Mexico, Citi
60 Alberto Alemán Zubieta Former CEO Canal de Panamá
62 Hernán Rincón President Latin America Microsoft
63 José Tomás President Latin America and the
Caribbean, Burger King
63 Ferdinand Kurt CEO for the Americas Panalpina
64 Rodolpho Cardenuto President for Latin America and the Caribbean, SAP
66 Stephen Fenwick CEO Americas DHL Express
HR & Demographics 68 Armando Laborde Co-Director for Latin America Ashoka
70 Lucía Herrera President Pantaleón Foundation
Latam Tech to the World72 Claudio Muruzábal CEO Neoris
74 Blanca Treviño CEO Softtek
The Secret Behind the Miracle76 Walter Bayly CEO Banco de Crédito del Perú
77 Ricaurte Vásquez VP Government Affairs and
Public Policy GE
78 Celso Amorim Defense Minister of Brazil
79 Admilson Monteiro Managing Director of International
Business and Affairs Banco do Brasil
80 Pedro Pablo Kuczynski Former Minister of Economy of Peru
A New Concept 82 Alexia Keglevich CEO Assist-Card
83 Juan Benavides Member of the Board
Banco Falabella
6 LATIN TRADE NOVEMBER-DECEMBER 2012
A good magazine will always strive to portray current issues
accurately. Its pages should refl ect the points of
view and events of the region that matter most
to its readers. Th ese are all strong reasons why a
good magazine should keep up with the times.
We believe that Latin Trade, over the last
20 years, has become an eff ective narrator of
the region’s business stories.
It began as US-Latin Trade, a magazine that
focused on new business opportunities that
were opening up for the United States in the
rest of the continent.
Back then, the magazine was written mainly
for US-based multinational companies, cover-
ing every detail as they took their new prod-
ucts, technology and practices south.
US-Latin Trade gradually turned into Latin
Trade, and became the main point of contact
and information for business, social and po-
litical leaders in Latin America. It took note
of the awakening of South American-based
international companies, now known as the
multilatins. And of course the rise of Chile and
Mexico, as well as Brazil, Peru, Panama and
Colombia later.
Along the way it has told stories of suc-
cess and explained those of failure, all of
which have had a profound impact on the
ever-changing region.
Today, Latin Trade is a magazine for
executives working in companies that have
grown far beyond the horizons of their
countries of origin; multinationals and
multilatins that operate in the region as part
of a global strategy. Th ey share the same
concerns, whether they are about human
resources, infrastructure, economic stability
or social issues throughout the region. Th ey
also see the same opportunities arising
as the world’s economic powers shift and
the middle classes in many of the region’s
countries develop and grow.
Latin Trade Group is a business dedicated
to providing information, networking and
intelligence services to companies operating
regionally in Latin America. In addition to
Latin Trade magazine, published as the leading
source of information for Latin America and
the Caribbean, online news and market intel-
ligence Latin Business Chronicle and Latin
Business Traveler, the Group off ers networking
opportunities through a series of events includ-
ing private C-level roundtables and regional
forums of discussion Trade Americas and the
Latin Trade Symposium and BRAVO Busi-
ness Awards.
For our 20th anniversary, we have invited 40
special guests who have witnessed fi rst-hand
EDITOR’S LETTER
Years of History
the great changes that Latin America has seen
in these past two decades.
Each one of them, from their personal
viewpoint and that of their companies will help
us to paint a comprehensive picture of Latin
America’s transformation. And that transfor-
mation, in the coming decade, will create new
markets and new opportunities.
Th e themes that run through this narrative
are innovation and change: new business mod-
els, diff erent ways of spotting opportunities and
new leadership styles.
Th is is are what Latin Trade will emphasize
in this anniversary edition.
We invite you to share with us this col-
lection of business stories and visions of the
future that show the road to development
in the region, as related by 40 people who
helped pave the way.
Santiago Gutiérrez,
Executive Editor
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8 LATIN TRADE NOVEMBER-DECEMBER 2012
CEO
Rosemary Winters
EXECUTIVE DIRECTOR & PUBLISHER
María Lourdes Gallo
EXECUTIVE EDITOR
Santiago Gutiérrez
MANAGING EDITOR
Élida Bustos
ART & PRODUCTION DIRECTOR
Manny Melo
GRAPHIC DESIGNER
Vincent Becchinelli
CONTRIBUTING EDITORS
Gabriela Calderón (research), Mark Ludwig
COLUMNIST
John Price
CORRESPONDENTS Argentina: Charles Newbery, David Haskel • Brazil: Thierry Ogier & Vincent Bevins (São Paulo), Taylor Barnes (Rio de
Janeiro), Tereza Cruvinel (Brasilia) • Chile: Gideon Long • China: Ruth Morris • Colombia: John Otis • Mexico: David Agren, Nancy Ibarra (Monterrey) • Peru: Lisa K. Wing, Ryan Dube • Spain: Sergio Manaut • US: Joseph Mann Jr., Alejandra Labanca (Miami), Mark Chesnut (NY), Ángela María Riaño (Washington), Pablo Calvi, Isabel Piquer,
John T. Sullivan (NY) • Venezuela: Peter WilsonTRANSLATION: Ken Emmond COPY EDITOR: Ruth Morris PROOF EDITOR: Jude Webber
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10 LATIN TRADE NOVEMBER-DECEMBER 2012
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Th e youngest are in Europe and South
America, the biggest earn-
ers are in North America and, once again, the ones left behind are
the women –in terms of the jobs they hold and the pay they receive.
Th ese are some of the results to come out of a survey carried out by
Michael Page among 4,388 managers and fi nancial directors from
around the world, 680 of whom work in Latin America.
Th e Global CFO Barometer 2012 lifts a lid on numbers within the
corporate world –for example, it reveals the fi nancial service companies
pay the highest salaries.
Th e results also show that one out of four CFOs in the fi nancial sector
has an annual income of more than $255,000.
THE SCENE
CFO World
Earnings and more
Compensation (gross annual pay packages, including benefi ts and bonuses, in thousands of US dollars as a % per region)
Low proportion of women CFOs worldwide (percentage of women CFOs, as a % of those surveyed)
Source: Global CFO Barometer 2012, Michael Page
Women CFOs earn less (percentage of women in the income groups in thousands of US$, as a % of those surveyed)
Europe and Latin America have the young-est CFOs (percentage of CFOs younger than 35 years of age, as a % of those surveyed by region)
Pacifi c 18 Asia 17Europe 16North America 15South America 5
Up to $ 80 25%$ 80-119 20%$ 120-154 15%$ 155-189 12%$ 190-254 9%$ 255 or more 6%
Europe 49%South America 43%Asia 31%Pacifi c 30%North America 21%
Up to $ 80 8%$ 80-119 14%$ 120-154 15%$ 155-189 16%$ 190-254 19%$ 255 or more 29%
SOUTH AMERICA
Up to$ 80 1%$ 80-119 7%$ 120-154 15%$ 155-189 12%$ 190-254 16%$ 255 or more 49%
NORTH AMERICA
Up to $ 80 16%$ 80-119 21%$ 120-154 22%$ 155-189 15%$ 190-254 14%$ 255 or more 13%
EUROPE
12 LATIN TRADE NOVEMBER-DECEMBER 2012
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Politicians across the globe
are fond of tout-
ing their nation’s high-tech cluster as the
next Silicon Valley. Few examples around the
world, however, can stack up to the Califor-
nia original. None on that short-list can be
found in Latin America.
Modern Latin America can boast several
fi elds of excellence but innovation is not
one of them. Latin America continues to
perform abysmally by one of the simplest
measures of innovation– patent creation.
Over the last twenty years, neither Brazil nor
Mexico has accumulated more patents than
companies like IBM or Siemens produce in a
single year.
Latin America, home to 6.5 percent of
global GDP, publishes c. 400 patents per year,
or less than 0.2 percent of the world’s total.
More than half of the published patents in
Latin America’s private sector are owned by
foreign multinationals. A high proportion of
homegrown patents are published by univer-
sities and have little or no commercial value.
Taiwan’s Foxconn, the subcontractor of
choice to Apple, HP and Dell, announced
plans for a $12 billion investment in Jun-
diaí, near São Paulo. After much political
glad-handing, a lack of skilled labor obliged
Foxconn to reduce the plant to an assembly
facility, adding marginal value to imported
components, just enough to satisfy the de-
mands of Brazil’s protectionist industrial
policy. If it were not for import tariff s on
assembled products and Brazil’s burgeoning
consumer demand, how much IT invest-
SEARCHING FOR EL SILICON VALLEY OF LATIN AMERICABY JOHN PRICE
ment would the country attract? Too often,
“high-tech” parks in Latin America are thinly
veiled sweat shops. Latin America competes
with Guangdong province, not Silicon
Valley. Even most multinational-funded
R&D spending in Latin America is designed
to comply with juicy tax breaks granted to
greenfi eld investors, not “to tap the scientifi c
talent” of the region.
Th e crux of the matter is the lack of
confi dence in the region’s legal system and
the ability of entrepreneurs (and their inves-
tors) to defend intellectual property rights.
Without adequate legal protection, angel and
venture capital fi nanciers are scared to back
new inventions. Without fi nancial investors,
Latin entrepreneurs have no recourse but
to go to strategic investors for funding– the
same investors who have the political clout
and deep pockets to steal their ideas.
Some argue that Latin America does not
have the distribution and promotional
channels to absorb new technologies
ahead of more mature markets like Europe,
the United States, Japan and Korea. Most
backers of innovation in Latin America
prefer to import proven intellectual property,
negotiate the distribution rights to it across
Latin America and tweak or tropicalize the
product to better fi t the middle income reali-
ties of the region.
With the odds stacked against them, Latin
inventors fi nd their way to the original Sili-
con Valley where their ideas fi nd a welcom-
ing ecology of fi nancial, technical and legal
advisors. Th ey are not alone. In 2011, 76
John Price is the managing
director of Americas Market
Intelligence and a 20-year
veteran of Latin American
competitive intelligence and
strategy consulting.
percent of patents published by the top 10
universities in the United States had at least
one foreign-born author registered.
Innovation in South America is making
headway in two areas of natural competitive-
ness. Access to cheap commodities and en-
ergy gives Latin America a global advantage
in the transformation and fabrication of
secondary goods such as refi ned oil, glass
and metals, as well as extraction machinery.
In these fi elds, Latin inventors produce their
most commercially viable patents.
Capturing the imagination of global mar-
keters is Latin America’s unique mix of mid-
dle-income consumer power, highly urban
and reasonably effi cient distribution networks
and open trade access. An increasing num-
ber of multinationals that provide consumer
goods and services see in Latin America a
laboratory for the creation of tomorrow’s
base-of-the-pyramid products which, once
perfected in Colombia or Brazil, can be rolled
out across Asia and Africa.
In the past, the threat of globalization
was the rallying cry of those who argued for
weaker patent protection. Going forward,
it may be the very motive that strengthens
enforcement.
THE CONTRARIAN
14 LATIN TRADE NOVEMBER-DECEMBER 2012
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The man: Sebastián Piñera Echenique.
Th e job: President of Chile.
It would be hard to fi nd a more in-
teresting post in Latin America than
Piñera’s. He leads a country which not
only has the sixth largest economy in the
region, but also the most competitive. In
addition, Chile is likely to be the fi rst in
Latin America to join the ranks of the
developed nations –the government aims
to eliminate poverty by 2014.
Th e presidency is every Chilean poli-
tician’s dream job but, for 63-year-old
Sebastián Piñera, the achievement is not
at all unusual. Th is native of Santiago is
used to achieving his goals in life.
He could have been a great academic
economist. He was top of his business
engineering class at Chile’s Catholic
University. From there he went on to win
a scholarship from the Fulbright Foun-
dation that took him to Harvard. Th ere
he published a paper about the history of slavery in the United States in
the Journal of Economic History. In just three years he fi nished a PhD
in Economics –a feat in itself – having presented his thesis on education
in Latin America.
President Piñera confessed in an interview that he regrets having
fi nished his formal studies so quickly.
He continued his professional career having been hired by Richard
Musgrave, the economist who at the time was advising several govern-
ments in the region on public spending. He became an adviser himself
to the World Bank, the Inter-American Development Bank and the
United Nations Economic Commission for Latin America, where he
studied poverty in the region, while at the same time lecturing at the
Adolfo Ibáñez and Catholic universities.
But Piñera left economics for business, where he proved to be a great
innovator, overcoming all types of obstacles. With the $50,000 he earned
for working with Musgrave he founded a real estate company. However,
after going broke during the 1982 Mexican crisis, Piñera managed to
launch new construction projects and worked with the fi nancial assess-
ment company Infi nco, where he had been a shareholder since 1978.
As he built up his construction portfolio so, in 1997, he became a
partner in Constructora Aconcagua. In 2008 he took over the assets of
Constructora Fourcade.
During his time in Infi nco, Piñera developed the Bancard credit
card business in Chile, as well as partnering with the Talca and
Concepción banks. With these he held a small percentage of shares,
which gradually grew.
In 1994, Piñera bought a 16 percent
stake in the Lan Chile airline at a time
when the share price was 80 pesos.
Within 15 years, Lan Chile became the
world’s fi fth largest airline in terms of
market share, boosted fi rst by domestic
growth, followed by an international ex-
pansion to Peru, Ecuador and Argentina.
Th e share price reached 12,200 pesos by
December 2011. At that point, Piñera
held 26 percent of the company.
During his business career Piñera
brought Apple to Chile. He also became
a shareholder in Chilevisión and the
Colo-Colo soccer club, a small tribute to
his passion for the world’s favorite game.
After he was elected president, Pi-
ñera decided to sell his Lan and Chi-
levisión shares, as a gesture of trans-
parency. Th at was when he decided to
become a full-time public servant, his
third major career move.
Piñera has already said he has no wish to go back to business, al-
though his personal fortune is reckoned to be close to $2.4 billion. If
personal fortune is a yardstick for success, this number says it all.
And success has continued to follow Piñera in his most recent career.
During his time as a Congressman, from 1990 to 1998, his colleagues
named him the best senator. He became president of the Partido de la
Renovación Nacional from 2001 to 2004, presidential candidate in 2005
and again in 2009, when he won with 51.6 percent votes in his favor
against Eduardo Frei.
As President of Chile, Piñera has continued to deliver. He led the
reconstruction of the country after the 2010 earthquake, one of the most
devastating in Chile’s history. He aimed to conclude the reconstruction
project within three years, and it is already 80 percent complete. Japan
had estimated the project to last 10 years.
Meanwhile, Piñera’s government generated 5.9 percent economic
growth in Chile last year and is heading for close to 4.3 percent in 2012,
a considerable achievement a country that has strong ties to what is a
troubled global economy.
Sebastián Piñera is a fi ghter. Th at much is for sure. He is also decisive,
innovative and impatient. Th is potent mix has helped him to accomplish
the goals he has set himself over the last 40 years. Piñera most certainly
has a vital spark that will surely make him one of the most infl uential
Latin Americans for decades to come.
Santiago Gutiérrez reported from Bogotá
BY SANTIAGO GUTIÉRREZ
PROFILE
The remarkable career of the President of Chile and winner of the BRAVO Leader of the Year Award 2012PIÑERA
SEBASTIÁN
16 LATIN TRADE NOVEMBER-DECEMBER 2012
TWO DECADES that shook Latin AmericaL
atin America is a far diff erent place than it was back in
1992. In historical terms, the region has never been better
in almost every way, nor does it off er so many opportunities
for the achievement of prosperity.
Information to support this claim abounds. A Latin
American newborn child in 1992 had a life expectancy of
up to 69 years, now the projected lifespan would be 74. Th at
same newborn infant would have had an 86 percent chance
of fi nishing primary school; now he or she would be almost
certain to reach that level. If the child were Brazilian, he or
she would only have had a 14 percent chance of owning a
computer and 10 percent of having a mobile phone.
Now, computer ownership has reached more than 50
percent, while mobile-phone penetration is practically 100
percent. In 1992, that same child would have had a 21 percent
possibility of ending up living on the streets, and a 45 per-
cent likelihood of living in poverty. Today, those fi gures have
dropped to 12 and 30 percent, respectively.
Population in the region has grown by 30 percent, and now
stands at 600 million people, while the region’s economy has
grown by more than 50 percent, reaching almost $50 trillion.
Th ese signifi cant changes point to a very relevant trans-
formation –one that was achieved by ordinary people, often
confronting very extraordinary challenges. Some of these
people were from private companies, others from govern-
ments, and all of them made the most of a more connected
and open world.
Innovation and change have been achieved in the way
things are done. Changes in business models, in the percep-
tion of opportunities and in leadership.
Th is special anniversary edition of Latin Trade aims to
highlight this transformation in the words of a select group
of people who have helped shape these changes from their
workplaces.
NOVEMBER-DECEMBER 2012 LATIN TRADE 17
18 LATIN TRADE NOVEMBER-DECEMBER 2012
INNOVATION AND CHANGE
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In 1992, just as Latin Trade was taking its fi rst steps, two historic
events were in the making. Th e fi rst was obvious. Th e signing of
the NAFTA agreement between the United States, Mexico and
Canada was destined to reduce trade barriers and promote business.
As for the second, no one could imagine how it would transform
the world of business and daily life itself: the fl edgling services of
email and the Internet became available in United States.
Th ree years later there were 16 million users. Today there are 2.4
billion users throughout the planet, 34 percent of the world’s popu-
lation.
In 1992 the fi rst short message service (SMS) was sent from a
computer to a mobile telephone in the United Kingdom. Years later,
this technology would bring the world of fi nance to people in the
most remote corners of the world – for example, by sending prepay-
ments of money using mobile telephones.
Th e Internet provided mass access to information and enhanced
many services. Online banking was born, transforming many
banking services; logistics were improved by the ability to follow
packages in transit in real time; and even more creativity resulted in
an explosion of new uses and services through the “world wide web.”
Today in Latin America, almost 230 million people –almost 40
percent of the region’s total estimated population of 580 million– are
Internet users.
Th e following tables show some of the many economic changes
the region has undergone.
NEW BUSINESS
OF AN EYE
IN THE BLINK
The Internet provided mass access to information and enhanced many services. Online banking was born, logistics were improved by the ability to track packages in transit in real time; and even more creativity resulted in an explosion of new uses and services through the “world wide web.”
NOVEMBER-DECEMBER 2012 LATIN TRADE 19
INNOVATION AND CHANGE
1995 2011
MOBILE CELLULAR SUBSCRIPTIONS
EXPORTS OF GOODS AND SERVICIES AS % OF GDP
NUMBER OF LISTED DOMESTIC COMPANIES
Argentina 1 135Brazil 1 123Chile 1 130Mexico 1 82US 13 106
(N/A 1992-94) 1992 2011
Argentina 7 25Bolivia 20 42Brazil 11 13Chile 30 44Mexico 15 28
1992 2011
Argentina 175 99Brazil 565 366Mexico 195 128Peru 287 202
(per 100 people)(on the domestic stock exchange)
(Net infl ows)MARKET CAP FOREIGN DIRECT INVESTMENT
1992 2011
Argentina $18.6 billion $43.60 billionBrazil $45.3 billion $1.2 trillionMexico $139 billion $408 billionPeru $2.6 billion $79 billion
1992 2011
Argentina $4.43 billion $7.24 billion Brazil $2.06 billion $66.66 billion Mexico $4.39 billion $19.43 billion Peru -$79 million $7.32 billion (2010)
Source: World Development Indicators
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“Over the last 20 years we have learned from so many errors and
so many crises,” said Luis Alberto Moreno, president of the Inter-
American Development Bank, referring to what he believes is the
most important development in Latin America in recent history.
Learning those lessons was painful. Th ey were paid for in blood.
“In 25 years we have had 31 fi nancial crises and in each one of them
poverty in Latin America increased,” he told
Latin Trade in Bogota. But the price paid
did bring about some good results at the end
of the day. Poverty has since been reduced
through enrichment of nations and their
middle classes, and through the success of
some social policies, especially subsidies, that
proved very eff ective. Twenty-fi ve years ago,
45 percent of the population was mired in
poverty. Today that’s been whittled down to 31 percent, he said.
Over the last 20 years the most important social indicators have im-
proved, “not in all countries, but we have advanced,” Moreno said. He
mentioned those that cover basic health care and secondary education.
“Now we have the enormous challenge of producing better professionals,
better adapted to the needs of a changing labor market,” he added.
However, in other areas time was squandered. Manufacturing produc-
tivity, for example, was stronger 20 years ago than it is now, he said. Th e
problem has to do with infl exible labor markets that perpetuate informal
labor, and a lack of effi cient infrastructure. Th e region needs port services,
airports, highways, and energy at competitive prices. “Energy rates are
very high compared with those of India or China,” he said.
The quality of education also must be improved. “It’s hard to
be more productive than China if barely 1 percent of 15-year-
olds in Latin America understand mathematics as well as stu-
dents in Shanghai,” he said.
MORENOHaving learned from the lessons of the past, Latin America will confront the challenges of improving education and infrastructure and building effi cient and sustainable cities
BY SANTIAGO GUTIÉRREZ
31
A NEW REGION
fi nancial crisis in Latin America in 25 years
For Moreno, the next 20 years will be full of interesting trans-
formations. For one, the commodities bonanza, which has created
the curse of imbalances for some countries, can be converted into
an opportunity. Moreno expects that commodity prices will stay
high for the next 15 years, due to the process of urbanization that
will bring 50 percent of the population of China and 70 percent
of the population of India to the cities. Th ese
mega-cities, he believes, will require huge
amounts of materials from the region.
Latin America’s middle class will keep
on growing over the next 20 years. Seventy-
fi ve percent of Latin America’s 500 million
inhabitants will earn more than $10 per day,
he predicts. As well, the number of cities
with 1 million to 2 million people will grow
substantially, and this will force countries to take on the challenge of
making cities that are more effi cient at providing services, and also
more sustainable.
He also expects a considerable increase in the number of Latin
American companies that fi gure among the world’s 500 largest. Th ere
will be Mexican, Brazilian and Chilean companies on the list, he said,
but at the same time Colombian and Peruvian fi rms will also be in the
big leagues.
Lastly, there will be a growing group of medium-sized companies
that venture outside the region, and a good part of the investment
within the region will be done by Latin American companies. Even
now, 25 percent of the investment fl owing into Latin America comes
from multinationals based in the region.
Th ese trends are proof of a promising future for Latin America, and
show that in the end, yesterday’s lessons are being taken to heart.
Santiago Gutiérrez reported from Bogota
LUIS ALBERTO
PRESIDENT INTER-AMERICAN DEVELOPMENT BANK
24 LATIN TRADE NOVEMBER-DECEMBER 2012
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It was almost 20 years ago that Mexico was
looking down the barrel of a peso crisis. Lax
banking, declining dollar reserves and low oil
prices, among other factors, had conspired to
push the economy to the brink, and the peso
came crashing down.
Today, though, there are analysts who point
to Mexico as a model of macroeconomic ma-
nagement. And they credit Agustín Carstens,
Mexico’s central bank governor, as one of the
main contributors to crafting the policies that
will hopefully make calamities like the peso
crisis a thing of the past.
So stark is the turnaround that Carstens
now measures his country’s economy, not
against his southern neighbors, but against
some of the biggest players on the world stage.
“Th e advanced countries have problems with
large defi cits, with debt-to-GDP that’s very
large,” he says. Th ey face “problems in their fi -
nancial systems, of monetary policies that have
had to be oriented to attend to objectives that
are not traditionally those of central banks.”
But in Mexico, “the reality is that we’ve not had
any of these problems.”
Indeed, Mexico is expected to generate eco-
nomic growth approaching 4 percent this year,
while interest rates have remained unchanged at
4.5 percent. Mexico’s debt-to-GDP ratio rests
just north of 30 percent, and the banking sys-
tem, Carstens notes, is well-capitalized, extend-
ing credit. Reserves have reached record levels.
Carstens has held senior positions in the
Central Bank and International Monetary
Fund, and put forward a credible bid last
year for the IMF’s top job. He also served as
Mexico’s fi nance minister in the cabinet of
Felipe Calderón. Since he became Mexico’s
central bank governor in 2010, his country
has emerged as a bright spot in an otherwise
gloomy global scenario. “It’s gratifying that this
recognition is being given to Mexico,” Carstens
says. “Th e reality is that we’ve worked to reach
this place so that... Mexico is one of the most
solid economies, not just among emerging
countries, but the whole of the G-20.”
Mexico wasn’t always such a sexy selection
for emerging markets investors, though. In
2009, the economy contracted nearly 7 percent,
having been hit hard by the world economic
downturn and H1N1 viral outbreak. Carstens,
then the fi nance minister, acted in advance of
the crisis with aggressive hedging of oil sales–
Mexico’s main income source. But Carstens
credits the country’s comeback to having pur-
sued sound fundamentals since the peso plunge
of 1994, with low infl ation, low interest rates
and low debt-to-GDP ratio.
Th at era, the so-called Tequila Crisis, put
Mexico’s back to the wall and forced offi cials
to come up with some sobering solutions, like
strengthening the banking system. “After our
own crises... Mexico made strong, conservative
decisions,” Carstens says. Th e result, he adds,
was a fi scal regime that was even stricter than
systems in place outside of Mexico.
Other risks remain, though, and many
must be resolved in the political realm. One is
achieving structural reforms in labor markets to
incentivize hiring. Another is overhauling the
tax system through fi scal reforms so Mexico
can increase revenues.
“For many decades the main stumbling
blocks were macroeconomic topics, which
we’ve overcome, establishing a trustworthy
platform,” Carstens says. “Now the next step
is how to take advantage of this platform to
be able to generate more growth,” which he
says can reach 6 percent and be encouraged
by healthy banks having optimal conditions in
which to operate.
Carstens, for his part, intends to keep to his
cautious approach. He quotes from Napoleon to
make his point, recalling a phrase the emperor
told his butler: “Go slow because I’m in a hurry.”
“It’s better to go slow, but steady because
you’re in a hurry,” Carstens says. “I think that
applies to the fi nancial system.”
David Agren reported from Mexico City
BY DAVID AGREN
MEXICO’S CENTRAL BANK GOVERNOR
A NEW REGION
CARSTENSAGUSTÍN
26 LATIN TRADE NOVEMBER-DECEMBER 2012
A NEW REGION
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Moody’s Investment Services downgraded
15 of the world’s largest banks, including
Barclay’s and Citigroup, on June 15. Th e same
day, CAF Banco de Desarrollo de América
Latina, received its 16th credit upgrade.
Th e juxtaposition of events isn’t surprising,
said CAF President Enrique García, who has
led the Caracas-based development bank since
1991. “Non-performing loans make up zero
percent of our portfolio,” García told Latin
Trade in an interview from his offi ce. “We have
been very careful in what we do.”
Credit agencies have taken note. Th e bank’s
long-term debt currently carries an A+ invest-
ment grade rating from Standard & Poor’s and
Fitch Ratings, and an A1 investment grade
rating from Moody’s Investment Services.
CAF was a small regional trade bank when
it began operations in 1970. Assets were less
than $1 billion, and it had fi ve sharehold-
ers– the governments of Bolivia, Colombia,
Ecuador, Peru and Venezuela. Today the bank,
formerly known as Corporación Andina de
Fomento, has more than $21 billion in assets.
Th e number of shareholders has now grown to
18 countries, including Brazil, Spain and Por-
tugal, as well as 14 private banks.
Garcia said innovation and sound banking
principles were key to CAF’s growth. “To be
relevant, I knew we had to be more than just a
bank for fi ve countries,” said García, a former
vice president of the Inter-American Develop-
ment Bank (IADB).
To grow its operations, CAF focused on
three key areas: credit expansion, membership,
and funding, all of which were intertwined.
“Th e bank’s original role was in trade fi nance
and we knew we had to broaden that,” García
said. “We saw that there
was a need for develop-
ment fi nance, especially
in infrastructure.”
Focusing on
transportation and
energy projects, CAF
began extending credit
to its sovereign shareholders. Attracted by its
early successes, more countries applied for
membership, which boosted the company’s
capital, allowing it to expand lending.
As of Dec. 31, the bank’s loan portfolio
totaled $15.1 billion. “Th e mix between public
and private sector loans is about 70 percent to
30 percent,” García said.
Th e bank’s success has occurred in spite
of regional credit crises, and the troubles of
individual members, who have weathered
devaluations, foreign exchange controls,
and radical shifts in economic policies since
the bank’s creation. For García, the most
diffi cult challenge came when Venezuela’s
banking system melted down in 1994-1995,
threatening to undermine that country’s
private borrowers and their ability to repay
CAF. “We were meeting non-stop with
members of the Venezuelan government in
a bid to avert a crisis,” said García. “It was a
tiring time but we succeeded.”
Th e bank has also successfully overcome
ideological diff erences among its members,
some of whom embrace neo-liberal economic
systems, while others tend toward a more
active state role in their economies. “We are
very respectful of the diff erent cultures, the
diff erent countries who are our shareholders,”
said García. “Th ey may have diff erent ideas of
the role of the state, but there has never been
an ideological impasse.”
García, who is starting his fi fth fi ve-year
term as president, said the words that will guide
CAF’s future are growth and consolidation.
“Assets of the bank should double in the
next fi ve years to more than $40 billion,” Gar-
cía said. “In 20 years, our assets should be above
$100 billion.”
Th e bank forecasts increased lending
throughout the region. “Our objective has
always been to provide fi nancing for develop-
ment projects that are sustainable, high quality
and spur economic growth,” García said. “We
see that continuing in the next 20 years.”
Peter Wilson reported from Caracas.
BY PETER WILSON
Assets should double in fi ve years to more than $40 billion
GARCÍAPRESIDENT OF CAF
ENRIQUE
28 LATIN TRADE NOVEMBER-DECEMBER 2012
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Susan Segal has been travelling all over Latin America since
1976, fi rst as a banker, then as a venture capitalist, and for the
past nine years as President and CEO of Americas Society and
Council of the Americas, a hemispheric
organization whose members include some
of the most important global companies.
Segal has seen the continent evolve from
a region swamped by the debt crisis of
the 80s and 90s to where it is today– a
dramatic transformation that, despite the
threat of a possible slowdown, “will not
turn back.”
Segal gets excited when she talks about
the changes that have taken place in the region in the last two de-
cades, many of which are still underway. “Twenty years ago countries
such as Chile, Brazil, Mexico, Colombia and Peru were just focused
on the macro-economic reforms. Much of that has changed,” she
said during a recent interview in her New York offi ce. “Th e policy
focus has widened to include challenges like education, social inclu-
sion, and quality employment. Latin America is at a totally diff erent
stage of reforms and regional and global integration, through agree-
ments like NAFTA and the Pacifi c Alliance, have played an impor-
tant role in that process.”
Transformation has also come and it’s being refl ected in the
private sector. As a growing trend, the executive cites how “Latin
American companies are investing all over the region and buying
other companies in the United States, Europe and Asia.” She
points to examples in Brazil and Mexico such as Grupo Bimbo,
Mexichem and Gerdau. She also
speaks enthusiastically about
the growing percentage of Latin
Americans involved in entrepre-
neurial ventures like Argentine
companies Mercado Libre and
Globant, thanks to the develop-
ment of an ecosystem that is
increasingly supporting entre-
preneurship in the region. “I get
inspired when I think that very
soon, some big innovative tech-
nology will come out of Latin
America,” she says.
Still, Segal recognizes that
there are many challenges, and
insuffi cient infrastructure is one
of the largest. “People forget
that what converted the United
States into a real union was the
railroad connecting the Atlantic
with the Pacifi c,” she says. “In
Latin America a huge percentage
of goods travel by road. Talking about social inclusion… if you
can’t connect one side of the country with another and then the
entire continent, it makes it diffi cult to have social inclusion as
well as regional competitiveness. Infra-
structure continues to be a phenomenal
challenge in Latin America in the 21st
century as it was in the past.”
Challenges apart, Susan Segal con-
siders herself an “optimist” and believes
that Latin America is strong enough
to withstand slowdowns in China, the
United States and Europe. “Of course
there are cycles and no country is an
island… in a global economy we are all connected. But I don’t
believe there is a possibility of an implosion like happened in the
80s and 90s. Th e growth of the domestic consumer markets par-
tially shelters some of the countries from outside downturns.”
Segal is a strong advocate of the economic empowerment of
women, from the ones who own microbusinesses to CEOs and
women on boards. “Th is is a huge cultural and practical challenge
for Latin America. But it is critical and makes absolute economic
sense, as women make up 50 per cent of the population, 50 per
cent of the voting power and 70 to 80 per cent of the purchasing
decisions. Growing economies like the Latin Americans can’t be
competitive if they leave half of the work force outside and for
me that is one of the biggest challenges, biggest issues and big-
gest opportunities in the region.”
Isabel Piquer reported from Nueva York
BY ISABEL PIQUER
I get inspired when I think that very soon, some big
innovative technology will come out of Latin America.
A NEW REGION
SEGALSUSAN
PRESIDENT AND CEOAMERICAS SOCIETY AND COUNCIL OF THE AMERICAS
30 LATIN TRADE NOVEMBER-DECEMBER 2012
Luiz Fernando
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Luiz Fernando Furlan doesn’t
believe that innovation only
means applying new technolo-
gies or inventing new processes.
For the former Brazilian minister
of Development, Industry and
Trade, innovation also means a
new way of thinking.
In the case of Brazil, he says,
“innovating was about under-
standing what was possible to
build the future.” With former
President Luis Inácio Lula da
Silva, “there was a very important
change (in thinking) that is called
self-esteem,” Furlan said in an
interview with Latin Trade.
Th is executive isn’t easy to label.
Over the course of his 65 years,
the grandson of the businessman
who founded Sadia, one of the
most important food companies
in the history of Brazil, has been
a military cadet, a chemical en-
gineer, a businessman, a board
member at several multinational
companies and a cabinet minister.
One of his achievements was
guiding Sadia through the worst
crisis in its history, which ended
in a merger with Perdigão, to
create Brasil Foods (BRF) the
nation’s biggest food processing
company. Furlan is currently an
independent member of the com-
pany’s board.
Furlan speaks almost reve-
rently of the achievements of
Lula, even as a corruption
scandal has threatened to stain
Lula’s legacy. Several weeks ago,
Lula’s one-time right-hand-man
José Dirceu was found guilty on
a corruption charge related to a
widespread scheme to buy votes
from legislators to secure their
Kirk Kinsell
support in Congress.
“Th ere was a time when Brazi-
lians felt small when they went
abroad. Today it’s the other way
around; people have recovered
their national pride with Lula
because Lula always treated in-
ternational authorities as equals,”
he said. “Lula always presented
himself as the president of a great
country that was progressing.”
Furlan is proud of his country,
which delivered 40 million people
out of poverty in just ten years,
and which today has the lowest
level of unemployment in its his-
tory. He is especially proud of the
fact that Brazil has “enough re-
serves to pay its public and private
debts, and no longer depends on
the IMF, Washington, London,
or the Pope,” to manage its eco-
nomic policy.
But as a businessman he admits
that Brazil has yet to solve many
problems that aff ect the competi-
tiveness of its companies, such as
a lack of infrastructure, a bloated
bureaucracy, high tax rates, an
inadequate education system and
corruption.
Nevertheless, the former Lula
minister insists that the country’s
sound management in 2008
helped save Sadia, which suff ered
enormous losses due to a series of
bad bets made by the company’s
fi nancial department during the
international market crisis.
“If Brazil hadn’t sustained itself
as it did during the crisis, the
company couldn’t have come out
of it,” says Furlan, who had retired
from Sadia but was called back to
help resolve the crisis.
What also helped Sadia was
what Furlan calls the “common
sense” of its shareholders and their
ability to accept a new idea.
“Th e shareholders understood
what was needed to save the com-
pany,” says Furlan. Facing three
alternatives –to seek investors to
recapitalize the company, to sell
it, or to try for a merger– Sadia’s
shareholders chose the latter, an
option that certainly wasn’t the
easiest.
“Th e last option was the hard-
est, because the (potential partner)
was the competition, Perdigão.
Th e employees hated the com-
petition, and all of a sudden they
had to accept that now we were
all part of the same thing,” said
Furlan. Th e merger created Brasil
Foods (BRF), which last year had
almost 119,000 employees and
net sales of 25.700 million reais
($12.7 billion), and produced
more than half of Brazil’s pro-
cessed food. Ironically, the board
of Sadia had been playing with
the idea of the merger for at least
a decade.
“Th e dream was always to join
with the competition to create a
company with enough muscle to
compete and become a multina-
tional,” says Furlan, who neverthe-
less made it clear that, at the time
of the crisis, the decision appeared
more of a risk than a vision.
“When the bingo game ended,
everyone knew the numbers had
been right. But at the time it was
hard to know for sure what the
best answer was,” he says.
Alejandra Labanca reported
from Miami
BY ALEJANDRA LABANCA
There was a time when Brazilians felt small when they went abroad. Today that is not the case.
NEW ENTERPRISES
Member of the Board
BRASIL FOODS
FURLAN
32 LATIN TRADE NOVEMBER-DECEMBER 2012
Natura brings glamour from the heartbeat of the planet to millions
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The biodiversity of the Amazon region off ers
an unbeatable wealth of aromas, textures
and essences. By the end of the 1990s, the
management team at Natura knew that.
Th ey also knew that no other cosmetics
company in the world could compete with their
know-how in harvesting the Amazon’s bounty.
On top of that, the Brazilian company’s chiefs hatched a sustainable
production plan that would help to improve the quality of life of partici-
pating indigenous communities.
Executives, chemists and technicians set out, all full of enthusiasm.
Th eir aim was to get to know the native cultures and traditions, but
the road to knowledge was at times a rocky one. “It was a very diffi cult
learning process,” Natura’s chief executive, Alessandro Carlucci, tells
Latin Trade.
To begin with, people work hard in the Amazon. But modern capital-
ism –its demands in terms of commitment and its rewards in terms of
money– was alien to the villagers. Natura had to teach new values and
learn traditional ones.Th e Natura teams had to fi nd the villages, interest
the residents in the project, determine which ingredients each one could
produce, and then educate people to achieve continuity and commitment
to production. Th en came the tasks of verifying in the laboratory that
the harvested plants really had the properties the indigenous communi-
BY ÉLIDA BUSTOS
NEW ENTERPRISES
ties had claimed, obtaining a constant fl ow of raw materials to maintain
industrial production, adjusting logistics to conditions dictated by nature,
and working with authorities on the new regulations.
“We had to develop a new internal corporate culture,” says Carlucci.
He recounts how they had to reorganize their procedures starting with
the most basic of all: changing their way of thinking to solve the unique
problems that arose each day. “Before, everything was easy. We’d call up a
supplier and tell him, ‘I want a ton of such and such,’ and he would send it
the next day. With a community in the middle of the jungle you can’t call
anyone because there are no telephones. And if there’s a downpour and the
rivers are in spate, you can’t get there at all.” You need to develop a diff erent
kind of supply chain and accept that it simply isn’t stable, he adds.
Innovation was matched with tenacity, and at last the project began to
show results. Dozens of families from remote villages joined the produc-
tion chain, improving their quality of life, while Natura created the unique
products known as the Ekos line, on sale throughout Latin America and
France. Th e Ekos line of creams, essential oils, deodorants, soaps and
shampoos “bring the aromas of the Amazon, along with the tradition of
the communities and the respect that comes from the sustainability of the
way the products are made,” explains Carlucci.
Th e successful outcome of the Amazon project has given Natura a
competitive edge. “No other company in the cosmetics world has the
credibility and know-how to obtain ingredients from the Amazon’s
biodiversity in a sustainable way,” claims Carlucci. Sales in France
constitute a real challenge because France is the mecca of cosmetics
and “we come from a region that doesn’t have much of a name in the
cosmetics business.”
Before the Amazon adventure, Natura was no upstart. Th roughout its
history, the company’s growth was always tied to being one step ahead of
the competition in innovation. During the 1970s it was a pioneer in using
a direct sales network, and in the 1980s in promoting refi llable containers.
In the 1990s it discovered the Amazon.
Nowadays Natura is a multilatin with
2011 revenues reported at 5.591 billion
reais (US$2.751 billion) and profi ts in the
neighborhood of 830 million reais (US$408
million). Th e workforce consists of 1.4 million
beauty consultants who serve 100 million
customers in every corner of Brazil, as well as a
full-time staff of 6,800.
Natura is a remarkable company in many ways, not least in the training
of its salesforce. Every three weeks the company organizes get-togethers
attended by 450,000 to 500,000 beauty consultants. New products
are presented and the information about them passed along. Some
100 million Brazilian customers get the message from the formidable
salesforce. But that’s not all. Far from resting on its laurels, Natura’s
management continues to push on. Carlucci notes that Latin America
has 600 million inhabitants, a potential market half as big as China’s. It’s
not enough for Natura to increase sales in Brazil – where the brand has 60
percent penetration – it has to expand in the rest of Latin America.
Within its home territory as well, increasing sales means launch-
ing between 250 and 300 new products per year and cutting delivery
times to the bone. Th e logistical challenge is formidable in a country
as huge as Brazil.
Élida Bustos reported from Buenos Aires
100 million customers and 1.4 million beauty consultants only in Brazil.
CARLUCCIAlessandro
CEO, NATURA
34 LATIN TRADE NOVEMBER-DECEMBER 2012
A tale from recent fi nancial history. How the fi nancial sector has aided regional development. Bancolombia’s new strategy for creating a more humane bank.
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Banking has undergone a very important
transformation over the last twenty years,
mainly in connection with the way banks relate
to their customers, says the president of Banco-
lombia, Carlos Raúl Yepes.
Bancolombia is Colombia’s biggest bank
and came in at No. 19 in Latin Trade’s regional
ranking. Yepes, meanwhile, is surprisingly
young for a post typically held by executives of
50 years or older. But he knows recent banking
history backwards and he has no doubt as to
the transformations his sector has undergone.
At the beginning of the 90s, he says, banks
off ered basic services and tried to build a tran-
sactional banking operation. At about that
time, telephone and digital channels were in-
troduced to complement the work of branches.
Later, the emphasis shifted to full-service
banking, or fi nancial supermarkets.
Th e use of technologies like Customer Rela-
tionship Management programs (CRMs)
made it possible to personalize fi nancial off er-
ings and hone in on the needs of each custom-
er, making the bank more relational, he said.
During the last few years the banks’ business
model has focused on making access to the
bank easier.
“We were looking for what was convenient
for the customers anytime and any place,” he
said. He characterized this period as more
relational still, because customers’ experience
improved substantially, thanks to increased use
of mobile, digital and telephone channels, in
BY SANTIAGO GUTIÉRREZ
PRESIDENT BANCOLOMBIA
THE MULTILATINS REVOLUTION
supermarkets and in non-bank outlets.
Yepes indicated that advances in banking
have also served nations, because they
promoted improvements in other key areas.
In the 80s, with the introduction of
electronic banking, many telecommunications
problems were also solved, such as
incompatibilities between hardware and
software, as well as legal vacuums. In the
90s, online banking helped highlight and
solve other problems related to personnel
qualifi cations, as well as security issues tied
up in legal loopholes. Finally, starting in
2000, the so-called Generation C (connected
consumers) arrived on the scene. Th eir arrival
coincided with the adoption of new models
for interacting with customers that rendered
obsolete earlier, non-digital means.
Now Bancolombia is preparing for what
Yepes calls the consumer era. “Now custom-
ers have more ways to compare, comment and
recommend products or a company; social
media and communications media make this
easier,” he says. “Customers are changing their
habits and they are very demanding. Th ey want
things to be immediate, easy, and intuitive,” he
adds. Th at’s why he’s looking to technology to
transform the customer experience by provid-
ing services whenever, however and wherever
they’re needed.
To date Bancolombia has operated like the
region’s other banks, riding the same trends, and
following more or less the same path as other
institutions. But in this new hyper-connected
environment, with less distance between
the client, the producer and the product,
Bancolombia has found a way to diff erentiate
itself. “We want to be the best example of a
more humane bank,” said its president. Th is
explains, for example, its company slogan:
‘We add soul.’ Its internal campaigns are also
designed to cultivate more respect, closeness,
warmth and inclusion in labor relations.
Th is direction would appear to signal a
new direction from the usual path followed by
banks—a model more concerned with off ering
a broad and effi cient portfolio of services. Time
will tell if Yepes’ bet pays off . For now, Banco-
lombia, with its strategy of organic growth and
acquisitions, will take its idea of humanizing
banking to more people in Latin America.
Th ose who know the region understand the
power of this proposal.
Santiago Gutiérrez reported from Bogotá
GROWTH 1995-2011
Assets 53 timesProfi ts 27 timesShare Price 8 timesADR Price 4 times
YEPESCARLOS RAÚL
NOVEMBER-DECEMBER 2012 LATIN TRADE 35
Growth has sometimes gone against the grain. But the bets have paid off.
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Innovation for Mexichem emerged a decade ago from a mine in the
central state of San Luis Potosí, where the Mexican chemical concern
had the world’s largest reserves of fl uorite. Th e fl uorite’s quality was high,
but it had some impurities. “We said, ‘If we fi nd a way to remove the
impurities, we’re going to see a great growth opportunity,” Mexichem
chairman Juan Pablo del Valle recalls.
A team of engineers went to work to solve “a question that seemed
impossible because big chemical companies in the United States couldn’t
do it.” But Mexichem engineers did fi nd a solution, and their innovation
cut Mexichem’s costs by 90 percent, “detonated” growth and transformed
the company. “We were a company in fl uorite that used to sell rocks,” del
Valle says. But “upon defi ning a strategy of vertical integration and sy-
nergies, we began to compete with our customer and... become a supplier
of value-added products.”
Th at was the fi rst step to becoming the sucessful multilatin Mexichem
is today. Over the past decade, the company consolidated its position in
the chemical industry in Latin America and emerged as a global player.
Sometimes, it’s gone against the grain, such as its 2007 purchase of
Colombian PVC pipe-maker Amanco. At the time, few Latin American
companies were buying other companies in the region, and in eff ect,
Mexichem paid a premium for growth potential in an emerging market.
But Mexichem’s bet paid off , and it has not been drawn into a bad deal,
or allowed its balance sheet to be blemished.
Th e company has found ways to carve out profi ts from it core pro-
ducts of vinyl chloride and fl uorine by lowering costs and adding value.
Outlining a corporate vision and staying the course has helped too. “We
have two (lines of business) that are easy to understand,” del Valle says.
“We don’t move from these businesses.”
Investors have understood the approach, or at least the company’s
record of stellar results: Mexichem’s stock price has surged 400 percent
over the past fi ve years. A September bond off ering raised $1.15 billion
and was 16 times oversubscribed. “It’s recognition of the company’s track
record, of which we’re very proud,” del Valle says.
Growth has characterized Mexichem since Antonio del Valle, Juan
Pablo’s father, became the controlling shareholder in 2002. More re-
cently, Mexichem purchased Dutch pipe-maker Wavin. Europe may be
considered an unattractive market by many, but del Valle sees potential,
especially in countries like Poland, the Czech Republic and Turkey. Like
the bond off ering, the purchase speaks to Mexichem’s stature. “Wavin
was our technology supplier,” del Valle says. “Th e opportunity to buy the
leading pipe-maker in Europe… when we bought Amanco, this was
unthinkable.”
Mexichem also recently signed a memorandum of understanding
with Occidental Chemical Corp. to build a “cracker”– a distiller for pro-
ducing ethylene. “Th ose that are doing big business right now are those
who own the crackers,” del Valle says. “It’s going to supply 50 percent of
our need for resin,” along with providing “spectacular savings” over the
long-term.
Savings in Mexichem come from its vertical integration model and
“adding value,” to its raw materials– fl uorspar and salt. Mexichem wasn’t
always so single-minded, though. Th e company, previously known as
Camesa, made steel cables for the construction sector and had a chemi-
cal component. Th e cable part of the company was sold to pursue the
chemical business, which del Valle says had better growth potential.
Its purchase of Amanco was another example of pursuing better
growth potential. Mexichem paid $600 million for Amanco, more than
double what it would have paid for a U.S. competitor that it was also in-
terested in buying. Th e U.S. company served the more established North
American market, so buying Amanco was somewhat counter-intuitive.
But it turned out to be a well calculated bet for Mexichem on long-term
growth in Latin America. “We saw the possibility to grow in Latin
America justifi ed paying double the price,” del Valle said.
Th anks to the purchase, and to the company’s decision to turn down
an innovative path, Mexichem now is growing in markets outside Latin
America too.
David Agren reported from Mexico City
BY DAVID AGREN
THE MULTILATINS REVOLUTION
DEL VALLEJUAN PABLO
CHAIRMAN, MEXICHEM
36 LATIN TRADE NOVEMBER-DECEMBER 2012
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From quiet beginnings as a small domestic air carrier, Panama’s Copa
Airlines has rocketed. Now it plays in the big leagues, and has be-
come one of the fastest growing airlines in
Latin America, adding new planes and ca-
pacity, tacking more and more destinations
onto its map, and steadily attracting more
passengers.
For Pedro Heilbron, 54, CEO of Copa
Holdings and Copa Airlines, it has been
about building the foundations to deliver.
“What we see today has happened over the last 20 years,” said
Heilbron, of the airline’s strong and sustained growth. “Th is year and last
marked 20-plus years of capacity growth... We adopted world-class stan-
dards and service and a small airline became world class.”
Heilbron pointed to several factors that helped lift Copa: innovation,
new technology, a well trained and committed workforce, and robust
economic growth in Panama, Copa’s home base. Other parts of Latin
America also surged economically, creating greater demand for better
connectivity and direct fl ights among the 29 countries Copa serves.
Copa, which celebrates its 65th anniversary this year, responded by
purchasing new planes and expanding its network.
“We were ahead of the curve,” said the businessman. “We connected
the dots for intra-Latin America travel.” Before Copa developed the
Hub of the Americas, travelers had to take multi-stop fl ights, he noted.
A trip from Panama to South America often meant a stopover in Mi-
ami. Meanwhile, there were no good alternatives to fl ying, like rail and
road transportation. And as trade and investment expanded, there was
new demand for air connectivity.
Th is year alone Copa, with an enviable on-time performance of over
90 percent, added fl ights to Las Vegas (USA), Recife (Brazil), Liberia
(Costa Rica), Willemstad (Curaçao) and Iquitos (Peru), and now fl ies
to 64 cities, including North America, Central America, South America
and the Caribbean. Copa has also increased the frequency of departures
from its Panama hub. Th e payoff is in the numbers. Last year the airline’s
parent company, Copa Holdings posted net income of $310.4 million,
representing 17 percent of its $1.83 billion in operating revenues.
Profi ts in 2011 increased by more than 22 percent over the previous
year. In the fi rst half of 2012 Copa Holdings, which is traded on the
New York Stock Exchange, logged net income of $127.9 million on
operating revenues of more than $1 billion.
In 1998, Copa agreed to a strategic alliance with Continental, at the
time a leading international airline based in the United States. “We
adopted their service standards, their frequent fl yer program, shared
fl ights and offi ces, co-branded our presidential clubs and adopted their
livery under Copa’s name,” Heilbron said.
Th en in 2005, Copa acquired Aero Republica in Colombia.
Implementing the new standards and operating Copa’s expanded
system required investment in recruiting and training, as well as high
quality employees at all levels. Today, it has over 8,000 employees, with
about 6,500 based in Panama.
Technology also plays a critical
role in the success of Copa. Th e
airline currently operates a fl eet
of 83 planes, including the most
modern Boeing 737s (700s and
800s) and Embraer 190s, and
is acquiring 11 more latest-
generation 737s in 2013 and 2014. Th e company invests $250 million to
$300 million a year, mostly in new planes. It has one of the most modern
fl eets in the world.
Th ese modern, fuel-effi cient planes mean Copa has lower maintenance
and fuel costs and can use satellite approaches to airports. Copa was also
a pioneer in off ering its clients Web-based check-in and is the fi rst Latin
American airline to off er passengers check-in via their mobile devices.
Looking forward, Heilbron said airlines need to make the airport
experience easier for passengers. “After 9/11, traveling by air –which used
to be a romantic experience– became a hassle. I think technology will
change that by making it easier to pass through security,” he said.
And after the Panama Canal expansion is completed, Heilbron ex-
pects Panama to increase its capacity as a major logistics center, which
means new business opportunities for Copa.
Copa carried 8.7 million passengers in 2011, up from 8 million in
2010. It’s forecasting 10.3 million this year.
Joseph A. Mann, Jr. reported from Miami
BY JOSEPH A. MANN, JR.
THE MULTILATINS REVOLUTION
8.7 million passengers to 64 destinations
HEILBRONPEDRO
CEO, COPA HOLDINGS
We were ahead of the curve. We connected the dots forintra-Latin American travel.
NOVEMBER-DECEMBER 2012 LATIN TRADE 37
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Is it possible to innovate within the standardized parameters of a fran-
chise? Arcos Dorados, the biggest McDonald’s restaurant operator in
Latin America and the world’s biggest franchisee of the brand, off ers
plenty of examples of just this.
Among its innovations, it opened a kosher restaurant in Buenos Aires,
installed dessert centers in most of its Latin American locations, adapted
McCoff ee to local tastes (using real crockery, rather than paper) and of-
fered young people with Down’s syndrome a chance to work in the res-
taurants. Now it’s set on becoming a more eco-friendly company.
“Th e McDonald’s system has three fundamental rules on which
everything it does is built: off er good food, hire good people and be good
neighbors,” says Woods Staton, chairman and CEO of Arcos Dorados,
from his offi ce near Buenos Aires. Within these rules, you can innovate
and still maintain the franchise parameters.
“We can serve kosher food or dulce de leche desserts here, arepas in
Venezuela, chicken with hogao in Colombia, Mexican meals in Mexico.
But we have to keep the main menu, the Big Mac, the Quarter-Pounder.
So long as we are faithful to this, we can also have some local content,”
he says.
On the topic of being a good neighbor, he says, “If a neighborhood
wants kosher food... I can off er it without abandoning the essence of
McDonald’s.” To this end, Arcos Dorados executives went to Israel, saw
how the restaurants were operated there, spoke with a rabbi in Argen-
tina, and soon afterward opened the doors of Latin America’s fi rst kosher
McDonald’s restaurant in the Abasto district of Buenos Aires. It was a
complete success.
Something similar happened when the company incorporated young
people with Down’s syndrome into the powerful machinery that is Arcos
Dorados’ 90,000-strong regional workforce. At fi rst there was reluctance,
BY ÉLIDA BUSTOS
Staton admits, but the end result was positive for everyone– for the
youths who now had a chance to work, and for their colleagues who
had the chance to learn from them. And so this program that began in
Argentina more than 20 years ago was repeated in Chile and Brazil. Th e
next step will be to expand it into Mexico and Colombia.
With all these innovations that Staton has been introducing in
the restaurants since he joined McDonald’s in the 1980s– fi rst as an
employee and then as a partner– the business has fl ourished in Latin
America, especially over the last two decades.
McDonald’s was launched cautiously in the 1970s in Brazil, Puerto
Rico and several Central American countries, but it began to grow
steadily after 1986, under Staton’s stewardship, with three new locations
in Argentina. “Th ey sent me here to be the regional director of Chile,
Argentina and Uruguay,” he tells Latin Trade. And, he adds, he started
literally from scratch: “looking for land, suppliers and people.”
From then on, the chain grew and restaurants multiplied, despite the
region’s volatility. In 2007, McDonald’s decided to sell its businesses in
Latin America. Th ere was an international bidding process and Arcos
Dorados, a company formed by the region’s operations managers, won.
Th us the new company, headed by Staton, took charge of the chain in 19
Latin American countries and became the world’s largest franchisee of
the American brand.
Th e numbers for this multilatin company (with American roots) are
awesome: it serves 4.3 million customers per day in 1,840 restaurants all
over Latin America, with 2011 revenues of more than $3.65 billion.
Another interesting aspect of the work plan is that most of Arcos Do-
rados’ employees are under 25 years of age. “Every restaurant sells almost
$3 million a year and they are managed by people who are 22 or 23 years
old, with 60 or 70 people reporting to them,” says Staton. Insisting that
meritocracy rules at Arcos Dorados, he adds, “We have people who man-
age country operations who started out as cashiers.”
Staton says Arcos Dorados is always innovating in new areas. It may
be looking for healthier food, incorporating new products, or introducing
changes in daily operations to become more environmentally friendly.
As for the green initiatives, Arcos Dorados already has three inter-
nationally certifi ed ecological buildings in Latin America, uses energy-
effi cient lighting and recovers condensed water from air conditioners to
water the grounds. Now the company is looking to convert used oil from
its kitchens into fuel for its fl eet of vehicles in Argentina and Brazil.
“Being good neighbors means recycling, reusing and reducing con-
sumption of certain things,” says Staton.
Th e businessman believes that encouraging creativity and innova-
tion among personnel means allowing people to have a level of freedom
while doing their job. And they have it, even within the parameters of a
franchise.
Elida Bustos reported from Buenos Aires
THE MULTILATINS REVOLUTION
4.3 million customers per day
in 1,840 restaurants
STATON
CHAIRMAN AND CEO OF ARCOS DORADOS
WOODS
38 LATIN TRADE NOVEMBER-DECEMBER 2012
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It’s no wonder Gerardo Mato is enthusiastic about emerging econ-
omies. As CEO of HSBC’s Global Banking for the Americas– a
region that comprises all of Latin America and Canada– he believes
that over the next twenty years a crucial part of HSBC’s business
will be associated with these new global growth centers.
Developing effi cient mechanisms at the local or international level
to fi nance corporations, and even at times to help governments get
fi nancing, is one of the tasks that has occupied Mato since he began
leading this area of HSBC a little more than two years ago. “Th e
only way to develop the corporate sector is through low-interest
loans and medium- to long-term fi nancing,” said this United States-
based Argentine, who in the past has also worked with Merrill
Lynch. “Th is can be done locally with some limitations,” he said,
“but if it’s a question of fi nancing large corporations as Brazil did,
corporations with global penetration, outside fi nancing is needed.”
Th e results don’t lie: between 2010 and 2011 before-tax profi t of
HSBC Global Banking for the region grew by almost 30 percent,
from $1.8 billion to $2.3 billion. Th e growth is even more dramatic
if you consider that in 2009 the sector generated barely $1.1 billion,
less than half of the 2011 result.
“HSBC’s business of global banking, corporate banking and in-
vestment banking was very limited in 2002,” Mato explains. “We
began to focus our eff orts on developing key relationships, which
helped us develop these areas, starting with focusing more on the
debt issue. But our approach is to build lasting relationships. When
you build long-term relationships, business follows naturally.”
Innovation was key to many of the businesses Mato is referring
to, especially as relates to consolidating the “south-to-south” axis–
that is, the commercial and fi nancial relationships between Asia and
Latin America.
“We opened the Asian market using perpetual bonds,” he says.
“We reopened the pound sterling market, and recently we were
fi rst with a “dim sum” bond for América Móvil, which became the
fi rst renminbi bond in the history of the region.” Th rough HSBC,
América Móvil became the fi rst company ever to issue debt in the
local currency of the China market.
“We have also done 30-year europeso bonds for Televisa and
América Móvil– that is, transactions in pesos purchased by for-
eign investors. We specialize in fi nding whatever is going to be the
most effi cient denomination in terms of costs for the company, and
that’s how we diff erentiate ourselves.” Mato adds that the presence
of HSBC at both the global and regional level in Asia and Latin
America has been central for consolidating this trend.
At the same time, management has paid careful attention to the
China-Brazil corridor, which, thanks to the enormous demand for
infrastructure in China, grew by more than 30 percent in 2011.
Trade between China and Brazil totaled $77 billion last year, and
among the 6,250 Brazilian companies whose trade with their
Chinese counterparts required fi nancing, more than half turned to
HSBC.
As for the region’s stars of the future, Brazil is the runaway leader.
“In Brazil, many companies have started construction projects for
the Olympics and for the World Cup, and the raw materials and
fi nancing are all internal,” says Mato. “Th ey want fi nancing in reais
with payment in reais, and obviously the banks that have the ability
to do local bonds or local fi nancing have an advantage over banking
institutions that don’t have a local presence.”
Th is hinge role between developed economies and developing
ones will be the key to success for the next few years. “It’s crucial to
maintain this double role that enables us to develop not only our
local presence– which is very strong in places like Brazil, Argentina,
and Mexico where we can off er fi nancing in reais, Mexican pesos or
Argentine pesos—but also the international presence, which enables
us to help export companies to fi nance in dollars or any other inter-
national currency whenever they need it.”
Pablo Calvi reported from Nueva York
BY PABLO CALVI
A NEW BUSINESS MODEL
CEO HSBC’s Global Banking for the Americas
When you build long-term relationships, business follows naturally
MATOGerardo
40 LATIN TRADE NOVEMBER-DECEMBER 2012
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Frederico Fleury Curado is a high-fl ying
executive with simple manners and, as the
thinking (and talking) head of the world’s third
largest aircraft manufacturer, he makes it plain
that innovation is part of Embraer’s DNA.
For one, the company has had to diversify
its range of products to adapt to market forces,
while maintaining its focus on regional aircraft.
It has also been experimenting with biofuels,
as pressure intensifi es around the world to fi nd
alternatives to fossil fuels.
Curado joined the São José dos Campos-
based company in 1984 as an engineer and has
been at the helm of the prominent Brazilian
multinational company since 2007. Th at put
him in the driver’s seat during the prolonged
fi nancial crisis, which he admits has taken a
toll. Embraer has had to reinvent itself, invest
again in the defense industry and diversify into
executive jets.
From his offi ce in São Paulo, Curado says
2008 “was a big blow. We felt the impact in
2009 in terms of delivery and since then we
have not yet recovered.” Th e company’s deli-
very fell by 20 percent that year. In the second
quarter of 2012, Embraer’s profi ts dropped by
25 percent (year on year), to 114 million reais
($56.2 million). Over 90 percent of Embraer’s
sales come from exports (9.85 billion reais last
year, $4.86 billion).
But a relaxed Curado says Embraer is doing
alright. “We have never been afraid of invest-
ing. We have consolidated a respectable posi-
tion in the marketplace. We have more than 65
customers in over 40 countries. Margins are not
great, but we are running a stable business…
It’s been rewarding.”
Th e history of Embraer, born as the
state-owned Empresa Brasileira de
Aeronáutica, combines scientifi c innova-
tion and entrepreneurship.
“In Brazil we had a long-term project
that dates back from WWII, which was to
generate knowledge in aerospace, technology
and science, rather than trying to acquire
technology. In the 1950s, the Brazilian
government launched an engineering school,
and also established a research center for
aerospace sciences. So the country went from
books and academic knowledge and science
to industrial capability. Embraer only exists
because there is a very solid foundation of
knowledge: thousands of engineers, graduates
over a period of 60 years. It’s something very
unique in Brazil. It’s a model that worked:
technology associated with the Brazilian spirit
of entrepreneurship.”
Th e company almost went bust in the 1990s,
then took off after its privatization in 1995.
Segmentation was part of the new commercial
vision. “Embraer had the strategic view to go
for market segments where we can diff eren-
tiate ourselves, where we have opportunities for
tailor-made products.”
Curado says the company saw an opportu-
nity a few years ago in regional e-jets– a range
of Embraer jets that are bigger than executive
jets but smaller than regular regional jets, with
between 70 and 120 seats. “So we came into
that segment and made it fl ourish,” he says.
But then the global crisis hit. In order to
compensate for the slump in civil aviation mar-
kets, Embraer has invested in reconnaissance
and military aircraft.
“We have been in the defense market from
Day 1, but it became a very small part of the
business until a few years ago. We are trying to
reinvent that business with very encouraging
results. Th is year it will reach $1 billion in re-
venues for the fi rst time,” says Curado.
Looking forward, Curado believes the use of
bio kerosene could be a way for the industry to
show its concern for the environment.
“Th e technology to transform oil from plants
into kerosene is there. But the scale and the
cost just don’t work at the moment,” he says. “It
works perfectly. Is it commercially viable? I don’t
have the answer to that, but it’s not something
short term. It’s more like 10 years or more.”
Th ierry Ogier reported from São Paulo
CURADOBY THIERRY OGIER
Embraer’s CEO explains the strategy
behind the company’s success
NEW BUSINESS MODEL
FREDERICO FLEURY
42 LATIN TRADE NOVEMBER-DECEMBER 2012
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Twenty years ago, in 1992, Germán
Efromovich and his brother José were just
beginning to set forth the structure of Grupo
Synergy. Th ey had started up with the produc-
tion of hydrocarbons and they had already con-
solidated their off -shore construction, medical
services and inspection businesses. But they
had not yet waded into the aviation business
with AviancaTaca-- today one of the biggest
airlines on the continent.
Skip forward two decades and Efromovich
has transformed a mid-sized family business
into a vast conglomerate with interests in areas
like agriculture, petroleum and mines, aviation,
tourism and services. It’s a sign of the times,
where local companies blossom into multila-
tins... and global players.
There are plenty of tools available that
make life easier for today’s businessman,
but the method of identifying opportuni-
ties hasn’t changed during those twenty
years. Even though rotary dial telephones
and faxes have been replaced by telecon-
ferences and the internet, Efromovich
says he still makes decisions the way he
did when he became a partner of the
super-successful Pacific Rubiales, or when
he decided to create a hotel chain.
Efromovich only does what “smells right,”
he says, touching his nose with his index fi n-
ger for emphasis. Th is formula, which would
be looked upon with suspicion by almost any
business school graduate, has nonetheless
yielded extraordinary results.
He notes however that during this time the
region has changed radically. “Th e political
stability generated an economic stability and
growth never seen before,” he says.
At the same time, other conditions favorable
to growth have been established, he says. Le-
gislation has permitted the opening of markets
and the arrival of foreign investment. Monetary
and fi scal discipline has lowered the threat of
hyperinfl ation and fl exible exchange rates have
eliminated currency black markets.
Th e new danger, he says, is that the markets
move on speculation. “Some people want to
sell smoke, businesses with no base.” He thinks
tracking the tangible value of projects is a basic
element for returning sanity to investment,
while speculation has the capacity to turn the
region’s business environment into a big casino.
He thinks that in the next twenty years the
region’s new businesses will be closely linked to
infrastructure, given that all countries have to
invest heavily to catch up in this area.
Meanwhile, he predicts that airlines will
consolidate into large groups, and that there
will be less space for small ones. He thinks that
airlines that prioritize market participation over
effi ciency will disappear. “Th is has already ha-
ppened to the state airlines. Th is formula leads
to bankruptcy,” he said.
Efromovich was born in Bolivia, and is
citizen of Brazil and Colombia. He thinks of
himself as an innovative entrepreneur who
“evaluates risk diff erently from all other mor-
tals, who defi nes opportunities diff erently from
all other mortals.” In any case he has built his
business empire by accepting bets that others
wouldn’t take.
He sees opportunities beyond the ups and
downs of economic cycles and short term
obstacles, makes decisions quickly and thinks
beyond his borders.
In this, he resembles other successful Latin
American businessmen.
Th at’s why his vision of the region and
its development is so interesting. Because
surely it’s Efromovich and people like him
who will mold the region’s reality in the next
twenty years.
Santiago Gutiérrez reported from Bogotá
As Latin America adopts a new way of doing business, glance the future through the eyes of an entrepreneur with a Midas touch.
BY SANTIAGO GUTIÉRREZ
THE NEW BUSINESS MODEL
Airlines that will prioritize market participation over
effi ciency will disappear.
EFROMOVICHGERMÁN
CEO, AviancaTaca
we CONGRATULATE LATIN TRADE MAGAZINEfor THEir 20th anNiversary
THANK YOUFOR
20YEARSOF INSPIRATIONPROVIDING USEVERYTHING WE NEEDEDKNOWTO
ABOUT BUSINESSIN LATIN AMERICA
44 LATIN TRADE NOVEMBER-DECEMBER 2012
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For FedEx, innovation and technology
have been key elements in building the
company’s fast-growing operations in Latin
America and the Caribbean into a service
network that links regional customers large
and small to business opportunities in the
global marketplace.
“I’ve been in Latin America for over 20
years and I’ve seen us go from a company
that introduced time-sensitive parcel service
to one that has become a pillar for economic
growth in the region,” said Juan N. Cento, the
Miami-based regional president for FedEx
Express in Latin America and the Caribbean.
“We have evolved into a solution-specifi c
company to meet growing customer needs,”
added Cento, who joined FedEx in 1989 when
the company took over the Flying Tigers Line
and added a large international network to
its system. “Not only have we built a physical
and technological infrastructure in the region,
but now we have become a company that can
build ‘me’ a solution,” meeting and anticipating
a wide range of services needed by new and
existing businesses and provid-
ing each client with the specifi c
services they require.
FedEx began operating
in Latin America and the
Caribbean in 1989 and today
has about 17,000 employees in
the region serving 50 countries
and territories. It off ers
express, air and ocean freight,
with options for standard or
expedited delivery, as well as
logistics and trade consulting.
Th e company has an air fl eet
of 40 planes in the region and
some 1,900 trucks. In terms of
technology, FedEx uses one of
the world’s largest computer and
telecommunications networks
for real-time package tracking
of each shipment. Aside from
the hand-held computers used by FedEx
employees, Cento said the company introduced
mobile tracking access to customers in Latin
America about two years ago, so clients can
follow their shipments from anywhere on their
mobile devices, and in their local language.
Cento pointed to other innovations in
Latin America and the Caribbean. Beyond
time-sensitive parcel service, FedEx deve-
loped the Global Trade Manager program, an
online tool that permits small- and mid-sized
businesses in the region to reach unfamiliar
and complex foreign markets.
“I’m a small company in Argentina that
makes pens. I know how to ship my pens
from Buenos Aires to Rosario, but I don’t
know how to reach the German market,”
Cento said. “We have the expertise at
FedEx.” Using Global Trade Manager,
the customer can learn about documenta-
tion and regulations for shipping from
Argentina to Germany, as well as ship-
ping options, costs and other details. Th is
way, they can fully prepare for the export
operation before sending the merchandise.
Innovation also extends to management
and human resources, Cento noted. “We used
to import expertise into the Latin American
market,” he said. “Over the years, we stopped
bringing in executives from the U.S. and
invested in our own people to develop a pool
of executive talent from the region. Today, all
key executives in our markets are local staff .”
As part of FedEx’s commitment to innova-
tion, Cento and his team spend considerable
time watching for new business developments
in the region and working to meet emerging
needs of new and existing businesses.
In Mexico, Cento and his team also pro-
vided new services for the growing aerospace
industry in Querétaro. As Brazilian and Ca-
nadian aerospace companies began planning
new manufacturing operations in Querétaro,
FedEx met with company offi cials to antici-
pate their needs and off er solutions as they
move raw materials and parts to facilities
making passenger planes.
Cento also saw an opportunity to move
fresh cut fl owers from Colombian producers
to FedEx’s U.S. hub in Memphis, where they
could quickly be dispatched to customers in
Los Angeles and other parts of the country.
Th is initiative provided FedEx with new
business and off ered Colombian fl ower pro-
ducers an alternative to moving their fl owers
through Miami, the main entry point for
most cut fl owers from Latin America. Since
the fl owers reach dealers quickly, they don’t
have to be stored in Memphis (as they are in
Miami), thus increasing shelf-life.
Joseph A. Mann, Jr. reported from Miami
BY JOSEPH A. MANN, JR.
regional President for FedEx Express Latin America and the Caribbean
A MORE PRODUCTIVE REGION
We stopped bringing in executives from the U.S. and invested in local talent.
Juan N.
CENTO,
46 LATIN TRADE NOVEMBER-DECEMBER 2012
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If energy equals mass times the speed of light squared, at AES Cor-
poration the energy business is multiplied by the speed of innovation
squared.
According to executive vice president Andrew Vesey, “innovation is to
trust people. If you ask me what I prefer, I prefer small everyday innova-
tions of our people.” And that, for Vesey, is where the power of innova-
tion lies.
Examples abound in the company’s two decades of operation in Latin
America— among them the award-winning Angamos project in Chile,
the fi rst hybrid coal plant in the world that uses a bank of batteries. Th e
system eliminates the need for reserves and increases total plant produc-
tion, and came about as the solution to a gas supply shortage from Ar-
gentina in 2008. For this project, AES Gener received the international
EEI Annual Edison Award, the highest honor in the electricity industry.
Another example is AES Nejapa in El Salvador, a 6 MW plant that
can serve up to 12,000 families. Th e plant generates electricity from
methane gas collected at the country’s largest landfi ll. It’s a fi rst genera-
tion project of AES in El Salvador, and the fi rst of its kind in Central
America.
In Brazil, AES Eletropaulo distributes electricity to more than 6 mi-
llion customers in 24 municipalities in the metropolitan region of São
Paulo. Because the plant provides electricity to low-income communities,
where reliable service and aff ordable energy are critical to improving
security and social development, the company established a program to
transform consumers into clients– working to improve power supply and
also disseminating knowledge on the safe and effi cient use of electricity.
Since 2004, this program has benefi ted nearly 2 million people in over
1,100 communities.
Vesey says innovations like solar panels and wind turbines are crucial,
but he also sees innovation in daily operations: from formalizing service
in Brazilian favelas, to increasing consumer awareness of the importance
of paying energy bills to obtain a reliable and safe service, to working
with Panamanian authorities on environmental solutions for the pro-
posed construction of a hydroelectric plant.
Vesey also says one of his main endeavors is to get a team of 27,000
employees to live a culture of innovation in day-to-day operations.
“First, try to make each person feel proud of the results of the com-
pany, feel that their work contributes to achievements,” he says, outlining
his strategy. “Second, it is vital to listen to the opinion of each person
who works in the company, customers, and stakeholders. And third, pro-
mote performance excellence in all operational processes.”
Th ese three pillars of innovation have enabled the company to enter
Latin American markets and overcome what Vesey sees as the most
important change of the energy industry in the last two decades in the
region: the privatization of the sector.
“We entered the Latin American market with the fi rst wave of priva-
tizations, starting in Argentina. It was our second investment outside the
United States. And for us it was our fi rst investment in a non-English
speaking country. Today the most common spoken fi rst language in
our company is not English. It says a lot about our investment in Latin
America,” says Vesey.
After two decades of learning about Latin American markets, politics,
economies, governments and communities, Vesey believes that the main
innovation in Latin America over the next 20 years will be to achieve
regional integration in the electrical energy sector. In other words, inte-
gration would be the multiplier to transform rich natural resources into
energy for the region.
Ángela María Riaño reported from Arlington, Virginia, US
BY ÁNGELA MARÍA RIAÑO
A MORE PRODUCTIVE REGION
Innovations every day from providing services in favelas to major hydro plants.
VESEYANDREW
EXECUTIVE VP AES CORP
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have exposure or a single global policy. Learn more at www.AIG.com
48 LATIN TRADE NOVEMBER-DECEMBER 2012
Successful international banking is a craft that re-
quires not only a gift for math and credit analysis, but also an understanding of cultural nuances and business habits. James Quigley, executive vice chairman at Bank of America – Merrill Lynch, brings these diverse talents to his role.
Quigley joined Merrill Lynch in December 1982. He started within the New York Syndicate Group where he received his fi rst opportunity to work on Latin American credit– the fi rst global bond issuance for the Republic of Argentina.
Twenty years ago, Merrill Lynch was a typical securities dealing house. Bank of America on the other hand, provided a host of bank-ing services ranging from trade fi nance to foreign exchange trading, as well as structured lending to sovereign and corporate debt trad-ing. On January 1, 2009, Bank of America and Merrill Lynch merged to become Bank of America – Merrill Lynch (BAML).
Quigley oversaw the transition in Latin America. “The cultural cross-currents (in) Latin America dictated that our strategy should not be a country-centric one, but a well diversifi ed one across ge-ographies, industries, asset classes and market capitalizations,” Quigley told Latin Trade.
Looking forward, BAML is on target to grow the lending and se-curities underwriting aspect of its business model. In 2011, the Debt Capital Markets Group (DCM) underwrote 47 transactions totaling $10.4 billion, capturing 13 percent of all Latin American transac-tions. Aggregate BoFA credit exposure to Latin America was ap-proximately $13.9 billion as of June 30 this year .
BAML has also garnered awards recognizing its cash manage-ment services and its Latin American Research division. These strengths provide the platform for BAML to grow region-wide. Vibrant markets throughout Latin America and the Caribbean are being evaluated, with Colombia, Panama, Costa Rica and Trinidad identifi ed as countries that might provide future opportunities. John T. Sullivan reported from New York.
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Trying to summarize a recipe strategy for success in an industry which by its very nature constantly revolutionizes the way we do things is no easy
task.”You have to have a clear, complete strategy at any given time that revolves
around the task at hand and engages with the tools available today,” says Luiz Meisler, executive vice president at Oracle Latin America, the computer tech-nology company, from his São Paulo headquarters. ”You adapt this as needed to the era you are in and the space you occupy.”
Meisler, now at the head of one of Latin America’s most important com-panies in a competitive growth sector, seems to have benefi tted quite well from this approach. After 12 years at the company, he oversees relationships with clients throughout Latin America, as well as innovating new methods for project management.
More broadly, he is involved in the industry’s current shift toward cloud-based computing, which he says should yield huge results in terms of data security and computing effi ciency, and sooner than many realize.
“Now all of these various technologies and devices, such as smartphones, computers, data centers, the cloud, etc., all are separate,” he says. ”In ten years, everything will be integrated. In most cases there have not even been standards across platforms and systems. We have to sell solutions now that maximize potential at all times.”
Meisler is also keenly aware that we rely more and more on technologies that we understand less and less. ”It’s fundamental to our work to understand that there is much more technology being made available than people know about or know how to use,” he says.
One project quite a few people know is a recent collaboration between Oracle and the Discovery Channel for the Spanish-language show, ’2111,’ in which the company uses its expertise to draw a picture of the world a century from now. Meisler makes one more prediction: as technology revolutionizes, he says, ”technology will be more and more transparent.”
Vincent Bevins reported from São Paulo
BY VINCENT BEVINS
BY JOHN T. SULLIVAN
A MORE PRODUCTIVE REGION
MEISLERLUIZ
EXECUTIVE VPORACLE LATIN AMERICA
QUIGLEYJAMES
EXECUTIVE VICE CHAIRMAN,BANK OF AMERICA – MERRILL LYNCH
50 LATIN TRADE NOVEMBER-DECEMBER 2012
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Roads that are poorly constructed or badly repaired --no roads at all
in some cases– extreme topography and temperature ranges, a huge
extension of terrain for off -road driving… it all makes Latin America a
diffi cult region. And not only for logistics, but for tires too.
“Th e conditions on our highways are very diff erent from those of Eu-
rope and the United States,” Jaime Szulc, president of Goodyear Latin
America, tells Latin Trade.
And thinking of the region Goodyear has met these very special
challenges by designing some special products. Tires using AquaMax
technology include a composite that improves adhesion and improves
maneuverability whether roads are wet or dry.
FuelMax tires, which are new to Latin America, save fuel as a result
of their low-rolling resistance. Goodyear reckons that what one of these
tires saves in a lifetime amounts to the equivalent in fuel of what it costs
to buy a full set of tires.
Szulc explains that Goodyear has a history of innovation. It has always
been on the lookout for the latest material or product, and the Latin
American subsidiary sticks to that tradition. Latin America was, in fact,
the fi rst region of the multinational to set up an innovation department.
Th at achievement, together with others in terms of management and
resource handling, won the Utah State University’s prestigious Shingo
prize for operational excellence. “We’re the only Goodyear plant in the
world that won it,” Szulc says proudly.
Technological innovations are also developed for use within produc-
tion plants and company processes. Goodyear plants in Brazil have not
dumped any residues into the natural environment for the last seven
years. In addition, 100 percent of the water used in production processes
is recycled.
Th e spirit of innovation is not limited to the laboratory, adds Szulc.
It has reached the management process, creating “solutions that are
diff erent business models”.
Szulc is still surprised by how much has changed in the region –in-
cluding fabulous levels of growth in gross domestic product– when he
returned a couple of years ago after working for several years in Europe.
Th ose last 15 years of change also include radical changes in the way of
doing business in the tire sector, he adds.
“With the latest cars came a new degree of complexity,” he says. “It
used to be that each market was straightforward. With a limited produc-
tion range you could satisfy all your consumers’ needs”. Not any longer.
Szulc reckons that the number of cars in Latin America has grown
over the past seven or eight years, and will grow by just as much in the
next fi ve years. On top of that, the increase in the variety of cars has
directly aff ected tire factories, not necessarily because of the need to in-
crease production volumes, but also because the factories have to invest
more in order to keep pace with the number of product lines that are
needed.
A specifi c example is the surge in the number of compact cars over the
last fi ve years. Diversity means having to increase stocks, which in
turn means having to invest more money on diff erent tire models.
With a wider range of cars, and consequently a wider range of tires,
the market can no longer be a monolith. “Goodyear’s strategy is to be the
leader in target market segments. Th e company can’t make all the tires
people want. It has to choose”, says Szulc.
To make things in the business even more complicated, “the amount
of information to which people have access has grown exponentially”
and that aff ects the way that people buy the product. Customers are
much more demanding nowadays. Th e Internet allows them to compare
quality, characteristics, durability and price.
“Consumers have become more demanding, the market has become
more complex, there are more people who scrutinize the cost per kilo-
meter, and who will think not only about the tire itself but in its mainte-
nance”.
Szulc predicts that “performance labeling” is the next step in innova-
tion. Performance labeling, which reveals such key characteristics of
the tire as fuel saving, noise and braking ability, is already being tried in
Europe. As is the case with other new concepts, it won’t be long until it
arrives in Latin America.
Élida Bustos reported from Buenos Aires
BY ÉLIDA BUSTOS
A MORE PRODUCTIVE REGION
Maintaining a grip on tough terrain and even tougher markets.
SZULCJAIME
PRESIDENT OF GOODYEAR LATIN AMERICA
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52 LATIN TRADE NOVEMBER-DECEMBER 2012
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Think of them as your nervous system. Th e
bones, fl esh, inner organs, muscles and skin
would be of little use without a driving force to
organize, optimize, synchronize and monitor
each and every movement and function.
At Emerson, a $24 billion-revenue company
based in St. Louis, MO, they think in terms of
“solutions.” And every solution is innovative,
custom-made and one-of-a-kind.
Let’s say Mexico’s Pemex, Venezuela’s
PDVSA, Brazil’s Petrobras or Argentina’s
YPF want to boost output at a plant, beef up
safety standards, improve quality, or perhaps
come up with some new product, such as
high-viscosity lube oil. Or maybe they suspect
that the pressure drop in that gas duct means
there is a leak somewhere in the system. Lower
temperatures in storage-vats would also be
desirable, not to mention faster conveyor belts
or better ventilation and illumination and
communications systems, they say. Or, more
likely still, any combination of the above.
In comes Emerson and presto! Th ey’ll
design a “solution,” bring in the parts, the
software, the equipment (which can be either
custom-made by themselves or off -the-self ),
the technicians and engineers. And they will
install and run the operation.
Oh, you wanted it fully automated? Th ey
can do that too: they’ll put in place not just the
nervous system but the e-brains on top of it.
Hmm, sounds a bit Jetsons-ish. Is corporate
Latin America ready for this space-age ap-
proach to production?
“Is it?” says Leo Rodríguez, president of
Emerson Latin America. “I’ve been with
Emerson for 37 years and in the past 20 years a
lot of things have happened. What I’ve seen is
a huge transformation.”
Th e big oil companies are a good example,
Rodríguez told Latin Trade. “Th ese companies
used to be very regional. Now they’ve become
truly multinational and very powerful on a
global scale.”
Playing in the major leagues has led them
not only to expand their domestic operations
but also to become more demanding as well.
Yes, they still want their state-of-the-art solu-
tions. But they want them now, and they want
them here, in their own language, delivered
and run by locals, and with as much domestic
content as possible.
So gone are the days when “solutions” would
be brought in from outside. “You can’t export
these things from the United States or Canada
or Europe anymore,” Rodríguez stressed. “Our
customers, as a result of being global, now
expect us to have very strong operations on a
local scale.” And that includes all areas, from
design to engineering to manufacturing.
Emerson now has more than 30,000 em-
ployees throughout Latin America, with a local
presence in every single country in the region.
In Mexico alone they have 39 fully-owned
plants with 17,000 employees. Other opera-
tions with a strong headcount include Brazil,
Venezuela, Colombia, Chile and Costa Rica.
“As our customers become very global,
we become a global solution provider
from Latin America,” Rodríguez says.
Th is in turn has prompted the com-
pany to get in close touch with Latin
American universities. “To build up
these facilities and solutions at the local
level, you have to go out and fi nd the engineer-
ing power. You have to work with those who
develop the talent.”
Another complementary element Rodríguez
sees in the advent of major Latin corporations
is the rapid growth of the middle class.
Other business areas where Emerson has a
strong presence include mining – where it pro-
vides industrial solutions to Barrick Gold for
example, which has major operations in Chile,
Peru and Argentina— pharmaceuticals, car
making, and the food and beverages industry.
So next time you have a beer or a burrito or
fi ll up the gas tank, chances are Emerson has
been busy behind the scenes making the drink
colder, the fuel more effi cient, and the snack
tastier.
David Haskel reported from Buenos Aires
BY DAVID HASKEL
A MORE PRODUCTIVE REGION
Custom-made and home-grown solutions for any problem.
RODRÍGUEZLEO
PRESIDENT OF EMERSON LATIN AMERICA
54 LATIN TRADE NOVEMBER-DECEMBER 2012
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IHG Group, the parent of InterContinental
Hotels and other famous brands in Latin
America, is moving aggressively to meet bur-
geoning demand in the region, especially in
mid-scale hotels for underserved cities, said
industry is developing in Latin America.
Whereas hotels were often owned by high
net-worth individuals in the past, and were
located in a single country or market, today
institutional investors own properties dotted
across the map.
“Th ey are sophisticated investors who hire
professional managers,” Kinsell said.
Another shift has come with ownership
trends. Kinsell notes that just ten years ago, the
IHG group owned more than 600 hotels. To-
day, it owns nine or ten properties worldwide,
focusing instead on managing and franchising
hotels. Th e group’s business partners own the
properties.
Looking to the future, IHG will be intro-
ducing hotels catering to healthy lifestyles, with
de-stressing sleep environments and in-room
“brain spas” to stimulate the intellect.
Joseph A. Mann, Jr. reported from Miami
Big international luxury hotels
were relatively scarce in Latin
America a decade ago. Th ere were
at best a few in the main cities,
and the service there wasn’t on a
par with that of grand hotels in
the great capitals of the world.
Today, thanks to the region’s huge
economic growth, which is at-
tracting business peo-
ple and investors from
all over the world, as
well as policies that
have generated greater
purchasing power at
home, Starwood, one
of the leading chains
in the luxury hotel
industry, is launching
an expansion.
“From the stand-
point of our industry,
we continue to lead
in the upper, upscale
segment, with in-
novations from the point of view
of (the growing presence in the
region of more of ) our brands,”
Osvaldo Librizzi, co-president for
the Americas of Starwood Hotels
& Resorts, told Latin Trade.
“Th is enables us to position
ourselves in various cities with
distinctive hotels that are very dif-
ferentiated, and each one responds
to a diff erent lifestyle.”
Starwood, owner of the brand
Sheraton, currently manages a
portfolio of several brands that it
refi nes to capture specifi c niches.
Th e company now has 71 proper-
ties in operation in Latin America
and 16 more planned or under
construction, under eight diff erent
brands.
St. Regis is the most exclusive
of the Starwood brands. Th e
company aspires to position it as a
hotel “for connoisseurs who want
to experience the best expressions
of luxury.” Next in line is Th e
Luxury Collection (“unique ho-
tels that off er exceptional service
for an elite clientele”), then W
(“hotels with an iconic design and
a vanguard style that open their
doors to exclusive and extraordi-
nary experiences”), and Westin
(“providing innovative programs
and distinctive services that trans-
form all aspects of the stay into a
revitalizing experience”).
Starwood sees a segment of
luxury travelers in Latin America
that’s wide enough to fi ll all these
slots.
“Th e Latin American econo-
mies are solid and have proved
that they were better prepared to
withstand a crisis. Th is is a com-
petitive advantage,” says Librizzi,
who has been with the company
for more than 30 years.
Starwood is preparing the
2013 launch of an app that will
allow guests to book hotels from
their smartphones in Spanish and
Portuguese— an option already
available in English.
“We think mobile technology
will transform the hotel busi-
ness.”
Alejandra Labanca reported from
Miami
BY JOSEPH A. MANN, JR.
BY ALEJANDRA LABANCA
OSVALDO LIBRIZZI
A NEW FRONTIER: TOURISM
Kirk Kinsell, president of
IHG for the Americas.
“Hotels in the past were
full-service, luxury proper-
ties located in a central
city,” said Kinsell, who has
worked for IHG for 16
years and took over the Americas presidency in
2011. “Today we are building more select– or
limited– service hotels located in big cities and
other parts of these countries.”
In other words, IHG continues to expand its
portfolio of large, full-service hotels and spas in
major cities. But it’s making a big push to add
service hotels like the Holiday Inn and Stay-
bridge Suites brands in provincial cities with
strong growth potential.
Kinsell attributed the uptick in demand
in part to a growing middle class that is ac-
quiring the means to travel more often. De-
mand is especially strong in Brazil, Colom-
bia, Chile and Peru. He also said the com-
pany was training new employees to off er
the best hospitality experience, and working
with new private sector investors under
management and franchise agreements. Th is
model speaks to a major shift in how the
The focus now for IHG is on managing and franchising. Business partners own the properties.
Kirk KINSELLPresident IHG
CO-PRESIDENT FOR THE AMERICAS OF STARWOOD HOTELS & RESORTS
NOVEMBER-DECEMBER 2012 LATIN TRADE 55
Marriott, the American hotel chain, is betting that the greater social mobility of Latin Americans
will be a blessing for its sector. It’s preparing for the rush with a plan to build new hotels and to adopt new techno-logy that will enable guests to make hotel reservations from a simple mobile phone.
“When people leave poverty behind they do two things: fi rst they buy a mobile phone, and second they travel,” Rob Steigerwald, chief of operations for the southern region of the Americas for Marriott International, told Latin Trade.
To take advantage of this expected growth, Mar-PH
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BY ALEJANDRA LABANCA
riott plans to open 71 new hotels in Latin America and the Caribbean over the next few years– part of a plan to double the number of properties the company has in the region. Last November the company also launched a Spanish-language app that enables people to make reservations at any of its hotels from a Smartphone.
“We chose to launch our second app in the world in Spanish because we found that it’s the second most popular language for making reservations, after English,” Steigerwald said.
The region’s current expansion strategy is con-sistent with the Marriott culture. According to the executive, Marriott has sought to grow continuously ever since it was founded. “When I started out (at the company) in 1981 we had 60 hotels throughout the world. Now we have 3,800,” he said. “Now, looking at the long term, we think Latin America offers us a world of opportunities.”
The Latin American country in which it’s expand-ing most aggressively is Mexico, where it now has
22 hotels, with plans to open 30 more in the next three years. Since the 1980s Marriott has followed an aggressive strategy to broaden its market by launching new brands (Courtyard Marriott, Resi-dence Inn, Autograph Collection) and by acquiring others (Ritz-Carlton).
The brand on which Marriott is placing its big-gest bet in Mexico is Fairfi eld Inn, a middle-class hotel chain designed to take advantage of Latin Americans’ new social mobility. To expand in Mexico and in Brazil, the company’s second larg-est growth market, it decided not to replicate the brands already operating in other parts of the world, but rather to adapt to local tastes.
“Our strategy is to go ’glocal’,” said Steigerwald. “For the Fairfi eld group we spent a lot of time studying local travelers in Mexico and Brazil and developed our models based on local needs. For ex-ample, our Fairfi elds in the United States don’t have restaurants, but they will have in Brazil,” he said.
Alejandra Labanca reported from Miami
A NEW FRONTIER:TOURISM
STEIGERWALDROB CHIEF OF OPERATIONS
MARRIOTT INTERNATIONAL
56 LATIN TRADE NOVEMBER-DECEMBER 2012
EDUARDO ERAÑA President of Visa International for Latin America and the Caribbean
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“Remember those manual machines we used to use for processing
credit cards?” asked Miami-based Eduardo Eraña, president of
Visa International for Latin America and the Caribbean, when asked
about how things had changed for Visa in Latin America over the last
few decades. “Today, we swipe our cards electronically and it takes about
three seconds to obtain approval,” he said.
Eraña, who has more than 40 years of experience in Latin American
banking and credit cards and 28 years with Visa, has seen the payments
industry evolve from one where Visa and its client fi nancial institutions
had to send magnetic tapes with information on transactions back and
forth across the region, to one where credit and debit transactions are
transmitted at the speed of light. “Th e driving force behind this has
clearly been people and the level of globalization that we’ve reached,” he
noted. “But what really has allowed these changes to occur is technology.”
Today, the payments industry continues to evolve, driven by the Inter-
net and mobile technology, as well as the shift from paper money to elec-
tronic payments for many of our banking needs. Over the years Visa has
expanded its products to include credit, debit and prepaid cards as well as
mobile transactions for
individuals, companies
and governments.
Businesses and
governments use Visa
prepaid or debit cards
to pay bonuses and meal plans to employees and to make payments to
people who lack bank accounts. Visa also off ers express payments (no
signature for amounts less the $25) at gas stations, fast food outlets and
for taxis, and is rapidly expanding its reach in mobile payments.
Th is “technology explosion” has also created new expectations among
consumers, the Visa executive said. “Consumers now expect to use their
mobile devices to carry out fi nancial transactions anytime and anywhere
for almost everything,” Eraña said.
By constantly investing in new technology, an expanding network
and innovative products, Visa aims to satisfy this burgeoning demand
not only for traditional credit and debit transactions, but also for mobile
products that reach tens of millions of unbanked and underbanked indi-
viduals in Latin America.
In Mexico, for example, the government’s largest social program,
Oportunidades, uses Visa prepaid cards or debit cards to make payments
directly to poor families.
Th e government-owned bank Bansefi deposits funds for 4.5 million
families into Visa debit card or prepaid card accounts every two months.
Th ese transfers, to be used for purchasing food and other necessities,
mean that money is readily available to families. And it does away with
the need to stand in line at bank branches or government offi ces to ob-
tain payments.
More than 800,000 people in the Dominican Republic also receive
government subsidies through a Visa card, which can be used to pay for
food, fuel and medicine.
Visa is also moving ahead with its “electronic wallet” , which will allow
holders of Visa and other major cards to make electronic payments on
their mobile devices. Th e company is testing this service in the United
States, and eventually plans to extend it to Brazil and Mexico. To support
this service, Visa launched a new online site called V.me
Visa has been operating in Latin America for over 40 years. Th e
company today works with some 557 fi nancial institutions and has more
than 3.7 million merchant customers in Latin America and the Carib-
bean. Th ere are over 341 million Visa cards in Latin America, of a world-
wide total of more than 1.8 billion, and the region accounts for total
transactions– in payments and cash– of more than $682 billion.
Joseph A. Mann, Jr. reported from Miami
BY JOSEPH A. MANN, JR.
THE AGE OF SERVICES
341 millionVisa cards in the region
“Consumers now expect to carry out fi nancial transactions anytime and anywhere”
NOVEMBER-DECEMBER 2012 LATIN TRADE 57
CEO Global Consumer Banking and Executive Chairman of Latin America and Mexico, Citi
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Carrying a Banamex-branded credit card
could be considered cool in the Mexican
capital. Here, Banamex card holders can cut
in line for concert tickets and are even off ered
the opportunity to purchase seats for shows by
performers like U2 and Madonna two days in
advance of anyone else.
“We try to lead the entertainment dimen-
sion,” Citi’s CEO of global consumer banking
and executive chairman of Latin America
and Mexico, Manuel Medina-Mora, tells
Latin Trade. “It is access– access to something
special, to privileges, and that is the way you
position your credit card business.”
Th is approach is an example of the innova-
tion in consumer banking that Medina-Mora
has overseen in his native Mexico for years.
Th is third-generation banker originally led
Banamex, which was purchased by Citi in
2001, growing the venerable Mexican bank
by concentrating on customer service and
relationships.
It’s also an approach he is attempting to
extend throughout Citi, which has operations
in more than 100 countries, and is coming
back to a core philosophy: “Banking is not
about transactions, it’s about relationships,”
he says. “In Banamex we have always had a
philosophy ... that banking has to be about
relationships with our clients, that banking is
client-centered.”
Many banks had abandoned this attitude
until the fi nancial crisis forced them to redis-
cover old ways of doing business.
Medina-Mora cites two other trends in
banking: digitalization and globalization,
which he says Citi is also embracing. Bana-
mex, for example, launched a digital transfer
platform with cellular giant Telcel and Inbursa
(both owned by Carlos Slim) to allow any-
one with a mobile phone to access banking
services. “It is probably much clearer in the
consumer dimension,” Medina-Mora says of
digitalization. “But even in the corporate elec-
tronic banking, online banking has changed
the way we do things… in trading, in capital
markets, in the way transactions are executed,
in cash management, trade fi nance and sup-
ply-chain fi nance.”
Globalization also has brought about
change in the banking sector– a trend
Medina-Mora anticipates will accelerate in
coming years. “More and more, globalization
is becoming part of the daily life of mid-size
companies because they are part of the supply
chain to global companies and Latin Ameri-
can champions,” he says.
Medina-Mora sees Citi as well-situated to
succeed in an increasingly globalized world,
in part because of its global reach. Th at reach
includes 23 Latin American and Caribbean
countries, a number unrivaled in the region.
“We are the only truly global bank present in
the region,” he says.
Citi executives recognize the region’s im-
portance for the company, he says. Citi reaped
7 percent of its profi ts from Latin America in
2002. Th at’s surged to 21 percent in 2011. In
consumer banking, the number of clients has
increased from 18 million in 2002 to nearly
30 million today, without “any signifi cant ac-
quisitions” , Medina-Mora says.
Naturally, Medina-Mora is bullish on
the region, and on specifi c countries within
it. His bank forecasts growth for the region
of between 4 percent and 5 percent over the
coming decade, “if nothing extreme happens.”
He expresses some short-term concerns
about the state of Brazil’s economy, “which
are natural given the very rapid growth over
a multi-year period,” but remains optimistic
over the medium term. Mexico, he says, “now
represents one of the few countries in the
world with the best combination of growth
and not a signifi cant economic risk in front
of it: low infl ation, not an over-expansion of
credit lending.”
“Our future lies more and more in the
emerging markets, especially the Asia-Pacifi c
region and Latin America,” Medina-Mora
says. “Th ose are our two priorities.”
David Agren reported from Mexico D.F.
BY DAVID AGREN
Even in the corporate electronic
banking, online banking has
changed the way we do things.
THE AGE OF SERVICES
MEDINA-MORAManuel
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60 LATIN TRADE NOVEMBER-DECEMBER 2012
THE AGE OF SERVICES
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BY ÉLIDA BUSTOS
Alberto Alemán Zubieta is an engineer, a very feisty one. And very
political too, despite his claims to the contrary. Alemán twice headed
the Panama Canal Authority; his two terms lasted for a total of 17 years,
and in both of them he confronted major challenges.
Th e US withdrawal in 1999 from the administration of the Canal
meant that Panama recovered its sovereignty of the waterway. But the
country needed the Panama Canal Authority to generate earnings too.
Its non-profi t status had to be dead and buried.
Th e fi rst task was to transform the Authority’s management from a
statist mentality to one of a company without fear of competition. Th e
next was to solve the problem that two studies of the time had posed: by
2012, the Canal was going to reach full capacity.
“Th ey handed me over a company that had a death sentence hanging
over it,” Alemán told Latin Trade shortly before retiring as Administra-
tor of the Panama Canal.
“How was it going to compete? Th e world wasn’t prepared to wait for
me.” Th e post-Panamax ships were about to be built. Something had to
be done. Th at “something” was going to be costly and it had to be big, but
fi rst the Authority’s fi nances had to be put in order.
During the 85 years in which it administered the canal, the United
States never aimed to earn profi ts. Instead the objective was strategic
control of the waterway. Washington had no interest in making money;
all that was required was self-suffi ciency. “It was a break-even operation,”
said Alemán. Now it had to be transformed into “a company with profi ts
-- which amounts to a 180-degree turn.”
Th is meant transformation of the management objectives. “Th e
new mandate for the canal was to be effi cient. We had to bring
about a cultural change in the authority, both from within and out-
side the organization.”
Th e reorganization began with the management structure the Ameri-
cans had used. It provided “a very sound foundation in legal and structu-
ral terms, as well as procedures and regulations”.
As the fi rst step in the change, the Authority had to learn how to
manage its resources. It was accustomed to “redundancy –have two, three
or four, just in case someone or something was needed.” Th at could no
longer go on.
At the same time, Alemán was well aware that one of the battles he
faced was his staff ’s fear of change. Th e overwhelming mentality was
that “if things are doing fi ne, why change? Don’t rock the boat! What I
said was ‘Th e opposite is true. We really need to ‘rock the boat’ so as to
make things get better.”
Of course, the unions got wind of his plans, and they feared that the
drive for effi ciency would mean fi rings on a mass scale.
Alemán had no fear of the unions, and he never closed his offi ce door
to them. Instead, he made the unions take part in the changes, while he
personally got to know the situation fi rst hand in the various areas of the
operation. “I personally negotiated all the practices that were included
in the collective agreement,” he said. “Th e leader in the negotiations was
me, and that was something that the prevailing mentality didn’t unders-
tand. ‘How come the CEO is negotiating the collective agreement?’ It
ALEMÁN ZUBIETA Alberto
The Panama Canal’s construction was an epic that pitted the human spirit against nature. More recently, the problems haven’t been fl ies but internal resistance to change and the need to face competition.
NOVEMBER-DECEMBER 2012 LATIN TRADE 61
THE AGE OF SERVICES
was a message to make sure that people knew that what was coming was
a change for real. I was involved. I knew what was going on and they
couldn’t spin me a yarn. I went to the manual workers, the ones who have
to operate the Canal, and with the guys in dredging so I could fi nd out
about that line of business –and it’s a very complicated one.”
While these very fundamental issues were handled, information te-
chnology had to be updated. Th e authority used a DOS-based system.
“Th at was awful. Th e systems weren’t integrated,” said Alemán.
At the same time, managers had to keep up-to-the-minute on what
was going on in the Canal. “How can it be that I’m supposed to be run-
ning the Canal when I don’t know which ship is just around the bend?”
Th at was how control by satellite was introduced.
Not that everything had to be bought. A lot of the ad hoc solutions
came from the experience of the staff .
And there was another thing. Alemán was working on several fronts:
management, legal, technological and fi nancial. Now he had to “unders-
tand the business”.
He got in touch with the Canal’s 40 leading clients to ask them what
they thought about the service. “Th at marked a fundamental change:
the CEO of one company was talking with another. Th at was a very big
deal,” said Alemán. Not once in the 85 years of administration by the US
did anyone speak with a client.
Th e underlying aim behind the eff orts to understand the business was
the need to tackle tariff s, as part of the authority’s mandate to make pro-
fi ts. Alemán reckoned that the key was not to increase the rates but to set
up a new scheme of diff erentiated tariff s.
“Th e previous way was to charge all the ships the same. Th ere was no
segmentation, no understanding of the needs of the business. First come,
fi rst served, and that was all.”
Alemán thought otherwise. “What’s our business about? Is it about
the passage of ships or the passage of the cargo that they carry?” Meeting
up with the clients was a tough experience, but it created more effi ciency
and it led to a range of prices based on the type of ship, the type of cargo,
containers in vessels with above-deck capacity, and so on.
Th e revolution in the Panama Canal Authority led Alemán to a se-
cond term as Administrator. He had previously served two years during
the change from US to Panamanian administration. During those years,
the bureaucratic mentality was buried. A year before the transition en-
ded, the authority had a surplus of $41 million. Last year, 11 years later,
the fi gure came to $1.2 billion.
Meanwhile, expansion is prolonging the Canal’s life expectancy. And
investment of $5.25 billion is mainly being provided from the authority’s
own resources.
Nobody yet knows which ship will be the fi rst to open the
expanded Canal within a couple of years, but Alberto Alemán
Zubieta, who dedicated 17 years of his life to the Canal Authority,
deserves to be on the deck..
Élida Bustos reported from Panama City
62 LATIN TRADE NOVEMBER-DECEMBER 2012
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“Th e market has exploded in Latin America,” said Hernán Rincón,
president Microsoft Latin America, describing the speed with
which sales are growing in the region. He told Latin Trade that of the
thirteen regions into which the company divides the world, his is the
one with the highest growth rate, expanding by rates of 3 percent to 6
percent over the past 10 years.
It hasn’t always been like this, says Rincón, who has seen the trans-
formation of the technology market from the special vantage point of
his Fort Lauderdale offi ce.
Adoption of computer technology over the last two decades has
come in waves (see box). Financial fi rms were the fi rst to invest in
systems and communications, with ATMs and with the installation
of new systems for processing and administering information. Gov-
ernments and state-run companies followed. At that time, most of
Latin America’s oil companies and public service operations were in
state hands.
Privately-owned Latin American companies started to compete on
the world stage after 2000. Th ey had to become more effi cient to be
successful against India and China, Rincón said. “It was (compara-
tively) easy to compete against the Europeans.” To do this they lowered
costs by boosting productivity, which they achieved through investing
in software, communications and manufacturing technologies.
Some sectors, such as mining, made fast progress. Chile’s Codelco
and some Peruvian mining companies have drilling and extraction
technologies, as well as IT systems, that are on a par with the best in
the world, he says.
Other areas, like agriculture, education and healthcare, have lagged
behind. With healthcare there is some investment in medical equip-
ment, “but in the administration of patients, hospitals and medicines it
has yet to be made,” he said. “Healthcare ranks back where banks were
20 years ago,” he says.
He expects the next big step for the region to involve wide use of
cloud computing. With the cloud, users can always be connected and
have access to as much information and computer capacity as they re-
quire. “Th e cloud breaks forever the barrier that capital investment used
to impose,” he said. “Now a family doesn’t need to spend much money,
nor does a company have to install a computer center. All that’s needed
is a communications device. Th e rest is in the cloud.”
Other future transformations in the region will involve applications
that help governments to provide better service to their citizens– in
education and health. “All governments understand that that is the
next frontier,” he says.
As a result, Latin America will continue to be one of the most in-
teresting target markets for those off ering such products. Today, for
example, 45 million personal computers are sold in the region per year,
a number that makes it the third biggest market in the world after
China and the United States. For Microsoft, software sales in Latin
America have grown between 2.5 and three times faster than the total
market during the last seven years, he says.
“We’re very optimistic about Latin America,” Rincón says. “In 20
years, Brazil and Mexico will be two of the fi ve biggest economies in
the world and they will be more sophisticated,” he says. “Th ey will ap-
ply technology in everything they do.”
Th e way it looks now, the trend seems unstoppable.
Santiago Gutiérrez reported from Miami
BY SANTIAGO GUTIÉRREZ
THE AGE OF SERVICES
The fi rst major Latin American investors in technology were big companies and governments. Over the past 10 years, there has been another wave of investment from medium-sized and small businesses– those with fewer than 250 employees. Today their demand is growing twice as fast as that of large companies. The third wave, which has come over the last fi ve years, is driven by consumers. They buy everything from smartphones to tablets and computers. In 2011 and 2012, their demand was double that of mid-size and small companies. This year, it is growing 34 percent faster than last year.
THE THREE WAVES
Latin America is the region with the world’s highest growth rate in demand for technology.
RINCÓNHernán
President of Microsoft Latin America
NOVEMBER-DECEMBER 2012 LATIN TRADE 63
F ifty years ago the Panalpina Group, one of
the leading global providers of supply chain solutions and logistics services, started developing its Latin American network with its first operations in Colombia and Venezuela, said Ferdinand Kurt, the regional CEO of Panalpina for the Americas.
“We pro-vide end-to-end solutions to a variety of industries, including oil and gas, health-care and high-tech through-out Latin America,” said Swiss-born Kurt, who has over 30 years of experience in the international freight forwarding and logistics sec-tors.
Kurt, who previously was president and CEO of Kue-hne + Nagel for South and Central America, sees good growth opportunities in markets such as Colombia, Brazil, Peru and Mexico, and particularly in the upstream supply chain for oil and gas. “We have a long history in
Latin America and offer our customers specialized ex-pertise, know-how and solu-tions,” said Kurt.
Panalpina, for example, has state-of-the-art cold-chain services for the healthcare sector’s delicate
air cargo ship-ments that can be monitored for temperature con-trol. And recently began offering air
freight customers faster turn-around times with a twice weekly flight from Hong Kong to Brazil. To meet new demand for air freight, the Switzerland-based company this year added two new Boe-ing 747-8 cargo planes to its international network. These advanced aircraft will form part of Panalpina’s “own con-trolled network,” which has been designed to offer solu-tions for different industries that are not available from commercial carriers. Joseph A. Mann, Jr. reported
from Miami
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Social networks have transformed the way Burger King relates to its cus-
tomers, especially in Latin America. José Tomás, president of Burger King
for Latin America and the Caribbean, told Latin Trade the fast food chain’s promo-tional campaigns through social media are more successful in Latin America than in other regions. He attributes this to enormous growth in the number of people with smartphones, and the fact that the company’s franchisees are open to strategies that can be implemented using new technologies.
The company’s latest social network campaign tar-geted customers in Brazil using Facebook.
After hitting the one-million mark for people who registered as Burger King “fans” on the site, the chain gave away a Whopper (Burger King’s fl agship sandwich) to every person who had signed up. The fast food restau-rant’s page became the second most visited Facebook page in the country.
Technology has also changed the way the company, which was acquired by the investment fund 3G Capital in 2010, interacts with its franchisees in different countries throughout the region.
“In the last fi ve years, our region has adopted a new way of thinking about how we communicate,” Tomás said of Burger King operations in Latin America.
New communications technologies (webinars, vid-eoconferences, Skype) have enabled the good ideas to fl ow more freely, the executive said. “If there is a good campaign in Argentina, no doubt someone will go there, will see how it works, and will bring it back to another country.”
Interconnectivity has also contributed to lowering costs for the franchisees, said Tomás. He cited as an example a company initiative to make architectural plans for regional Burger King restaurants available on its internal web page, so that whoever wants to open a new restaurant doesn’t need to hire an architect to make a new design and a new fl oor plan.
Thanks in part to these advances, and to Latin Ameri-ca’s explosive economic growth, Burger King’s progress has been spectacular in the last two years. In 2011 the company opened more restaurants in the region than in any other year (more than 80), and this year it expects to open another 175.
“The economy has helped us a lot,” said Tomás.
Alejandra Labanca reported from Miami
BY JOSEPH A. MANN, JR.
AGE OF SERVICES
State-of-the-Art in the
COLD-CHAIN
KURTFerdinand
CEO of Panalpina for the Americas
WHOPPING RESULTSfrom social media
64 LATIN TRADE NOVEMBER-DECEMBER 2012
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“What has changed in our industry in recent decades? Every-
thing!” exclaimed Miami-based Rodolpho Cardenuto, an elec-
tronics engineer and president of business software giant SAP for Latin
America and the Caribbean.
“We were still programming with mainframes and using languages
like COBOL. Th e IT user then had to be an IT expert,” said Cardenuto,
a Brazilian whose region includes over 12,200 clients and 3,000 emplo-
yees in 12 countries.
As technology advanced, every aspect of the business changed, noted
Cardenuto, whose company has been working in Latin America for
18 years. Information –previously stored on magnetic tapes, and before
that punch cards-– had to be collected and processed overnight. Today,
companies can process large volumes of data, access huge data bases and
retrieve and analyze information in real time.
If a customer two decades ago had a problem, SAP had to dispatch a
technician to solve it. “Today, we can use new technology to manage cus-
tomers from a distance,” said Cardenuto, who took over as head of Latin
America and the Caribbean in 2008 following 25 years of experience in
technology sectors, including 17 years at HP.
At the outset, SAP did not work with business partners in Latin
America. Now, the company has over 450 partners in the region and
they represent an important share of total sales.
“Th e way we work today would not have been possible 20 years ago.
IT has developed from something used by a few, to something accessible
to many, thanks to the Internet and now to something available to every-
one via mobility.”
Changes at SAP Latin America in recent years have been equally
dramatic. Th e company, which is part of German-based SAP AG, an
international leader in enterprise software, today principally works in fi ve
market categories: cloud computing, mobility, business analytics, data
base and applications.
“When I arrived at SAP in July of 2008, 95 percent of revenues
came from classic ERP (Enterprise Resource Planning) and about
5 percent from analytics,” Cardenuto said. “Now about two-thirds
of our revenues are derived from innovation and new applications
while one-third comes from ERP. Everything has changed. Th e
market has changed, we’ve changed. We’ve acquired companies and
invested consistently in innovation.”
Th is year, SAP has logged double digit growth while Latin
America is outperforming the rest of the world in software sales. For
example, SAP Latin America reported 23 percent growth in rev-
enues for software and services in the second quarter of 2012, while
revenues from software sales to SMEs (small and medium-sized
enterprises) in the region increased by 44 percent.
SAP has grown and prospered in the IT world as a result of its
constant innovation, acquisitions and investments in R&D.
Th e technology, innovation and experience gained from these
acquisitions enhance SAP’s software and services in Latin America
and the rest of the world.
Cardenuto stressed that R&D is of prime importance for SAP in
Latin America, in order to provide localized solutions and support
customers throughout the Americas. In 2009, SAP invested about 15
million euros in a new R&D center in the Centro de Tecnología de
Unisinos in São Leopoldo, Brazil (SAP Labs Latin America) and this
year announced an additional investment to expand the facility. SAP is
adding a new, LEED-certifi ed building to the R&D center with a ca-
pacity for an additional 500 employees.
Innovation has been a driving force in SAP since it was founded in
Germany in 1972 by fi ve engineers who had worked for IBM. SAP–
which means Systems, Applications and Products in Data Processing–
focused on business software and became the world’s largest supplier of
specialized enterprise software to both large and small companies.
In Latin America, SAP moved to advance its ability to serve the
expanding mobility market by teaming up with Colombia’s UNE-
EPM Telecommunications. Th e carrier can now off er its corporate
customers a cloud-based mobility platform to access business appli-
cations and systems. SAP previously partnered with Chile’s Entel to
provide mobile services.
Joseph A. Mann, Jr. reported from Miami
BY JOSEPH A. MANN, JR.SAP has logged double-digit growth while Latin America is outperforming the rest ofthe world in software sales.
THE AGE OF SERVICES
CARDENUTORODOLPHO
President SAP Latin America and the Caribbean
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66 LATIN TRADE NOVEMBER-DECEMBER 2012
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DHL was started by innovators and grew by
using innovation to respond to customer
demand all over the world, said Stephen Fen-
wick, CEO of DHL Express Americas.
“Conceptually, DHL was a garage start-up.
We started out with a few people sitting on
planes fl ying documents from San Francisco
(California) to Hawaii,” said Fenwick, who has
worked with DHL for three decades and now
runs a division that includes the United States,
Canada, Latin America and the Caribbean,
employing about 15,000 people in 57 countries
and territories.
DHL began in 1969 when three men,
Adrian Dalsey, Larry Hillblom and Robert
Lynn (whose last names provided the initials
for DHL), established an air express business
by personally delivering shipping documents by
air. Th e documents arrived at customs offi ces
before the freight, which allowed cargos to
pass through customs more quickly and helped
improve the fl ow of international trade.
“For years, our people carried documents
on planes,” said Fenwick, an Australian who
previously worked for DHL in Singapore as
senior vice president of network operations for
Asia Pacifi c, Eastern Europe, the Middle East
and Africa. “Sometimes our people would take
up a whole plane, and the airlines didn’t like us
at the beginning.
“Th at’s how we started-- through innova-
tion. Off ering a service that didn’t exist,” he
added. “And we’ve grown over the years by
using innovation to respond to customer de-
mand.” DHL today is the courier service with
the greatest international reach, serving more
than 220 countries and territories worldwide.
As its business expanded, DHL realized the
value of computer technology and word pro-
cessing. Th e company was a pioneer in using
word processors, Fenwick noted, a step that
sped up the handling of enormous volumes of
paperwork previously done either with type-
writers or manually.
As the company grew, it acquired its own
planes and added more routes. Today it ope-
rates its own worldwide fl eet of cargo jets and
partners with regional airlines in order to ex-
tend its reach.
In Latin America, DHL expanded its
network far beyond capital cities, following
international and domestic trade patterns and
setting up service in provincial centers. Th e
company built a regional hub in Panama and
has quality control centers in Brazil, Mexico
and Brazil.
“Ten years ago the trend in Latin America
was all North-South business,” Fenwick said.
Trade patterns have changed and today the
fl ow moves both directions along the North-
South axis as well as East and West. “As
smaller companies get into the import/export
business all over Latin America, this trend will
continue.”
Other important developments in the
region that will impact DHL are near-shoring
(moving manufacturing from China to Latin
America as costs rise in Asia); increased
online shopping among the growing middle
classes in Mexico, Brazil and other countries;
the growth of Latin multinationals and their
use of Panama as a distribution point; and a
continued expansion of trade.
To improve performance and customer ser-
vice in the Americas, all employees are required
to take a training program that explains each
aspect of the express business– customs, docu-
mentation, customer service, operations and
fi nance. Everyone, “from airport workers to the
CEO participates in this program,” Fenwick
said.
During Fenwick’s time at DHL, the com-
pany has used technology to shift from using
paper bills of lading to worldwide electronic
tracking.
Now, Fenwick pointed out, DHL is raising
the use of barcodes and tracking systems to a
new level. “Th e customer– using a computer
or mobile device– receives up-to-the-minute
reports on where his shipment is and when it
arrives.”
DHL Express is a division of Deutsche
Post DHL which is based in Bonn, Germany,
and has about 275,000 employees across the
globe. Other divisions are DHL Global For-
warding, Freight; Supply Chain and DHL
Global Mail.
Joseph A. Mann, Jr. reported from Miami
BY JOSEPH A. MANN, JR.
THE AGE OF SERVICES
FENWICKStephen
CEO DHL Express Americas
68 LATIN TRADE NOVEMBER-DECEMBER 2012
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Social entrepreneurship has seen a surge
over the past decade with the rise of social
networking websites like Facebook that allow
people to reach wider audiences and fi nd more
funding sources.
Armando Laborde understands this well.
Th e 47-year-old has been running the Central
America and Mexico operations of Ashoka
since 2006 and is also co-director for Latin
America.
Founded in 1980 by American social entre-
preneur Bill Drayton, Ashoka identifi es and
invests in social entrepreneurs in 70 countries.
It has grown into a global nonprofi t organiza-
tion with 3,000 social entrepreneurs as fellows;
the third-largest concentration of fellows is in
Mexico, after India and Brazil.
Th e mission of the Arlington, Virginia-
based nonprofi t is to support entrepreneurs
working to tackle problems in a way that pro-
duces social benefi ts, either through fi nancial
support, professional backing, or access to a
global network of people and organizations
that can help.
Of the fellows, 200 are in Costa Rica, El
Salvador, Guatemala, Mexico and Nicaragua.
Programs range from promoting volunteerism
and civic engagement, to training school chil-
dren to use computers, to reducing greenhouse
gas emissions.
Alito Alessi, for example, is using a dance
program in Mexico to help people on the
fringes of society gain self-confi dence and fi nd
jobs, or develop their own social projects.
Nicaragua’s Flavio Bianchini helps equip
communities and grassroots
organizations to measure the
harmful consequences of mining
and other resource extraction
eff orts— data that can be used
to bring lawsuits in cases of en-
vironmental degradation.
El Salvador’s Julio Cesar Canizales, who lost
his sight just before turning 24, helps the blind
to develop job skills while pressing for legal
changes to provide more social and economic
opportunities for them.
American-born artist and papermaker Mark
Callaghan is helping the Maya population of
Yucatán, Mexico, to develop a community-
based papermaking project as a micro enter-
prise.
“Th e fellows look at things diff erently,”
Laborde said. Asked if they can make a dent
in the wide array of social problems the world
faces, he says, they can help, but only so much.
“We need a lot more (of them),” Laborde
confi des.
Laborde was director of community fi nance
at Mexican micro-lender FinComún, followed
by a stint implementing sustainable, fair-trade
coff ee production in Mexico. He then ran Pro-
Mujer México, a nonprofi t helping women pull
themselves out of poverty through fi nancial
literacy, low-cost healthcare and microloans.
Looking back, Laborde said his experience
has taught him that there is “a continual need
for... innovation so that you can fi nd new ways
to make more (of an) impact.” As an example,
he cites bringing companies together to help
fi nance small coff ee cooperatives that otherwise
might go bankrupt.
After joining Ashoka, Laborde set out to
rustle up local partners to fi nance an expan-
sion drive. His division now gets 100 percent
of its fi nancing from within Latin America,
compared with 5 percent before he took the
job. Donors include Mexico City-based Com-
partamos Banco, the largest microfi nance bank
in Latin America, Brazilian cosmetics maker
Natura, Danone, UBS, Santander, Walmart
and Google.
Another task, he said, was to identify pro-
grams that can help Ashoka reach more people.
“We want to reach hundreds of thousands”
of people, who could potentially become social
entrepreneurs, he said. Ashoka also is pairing
executives with social entrepreneurs on social
causes. Th e aim, Laborde said, is to transform
business leaders into “people of change” so that
corporate responsibility becomes a core value of
their businesses.
Charles Newbery reported from Buenos Aires
BY CHARLES NEWBERY
HUMAN RESOURCES & DEMOGRAPHICS
LABORDEARMANDO
DIRECTOR OF ASHOKA CENTRAL AMERICA AND MEXICO
The fellows look at things differently
70 LATIN TRADE NOVEMBER-DECEMBER 2012
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Students at the Wilfrido Campos Poveda
school, in Choluteca, Honduras, used to
have no option but to have their lessons out-
doors. It wasn’t until this year that they could
study in classrooms with roofs, thanks to the
work of the Pantaleón Foundation.
Th e Foundation is one of the best examples
of a corporate initiative aimed at changing social
action, both for their employees and the com-
munities near where their production is based.
Created in Guatemala in 1993, the Founda-
tion was created by Grupo
Pantaleón, one of Latin
America’s largest producers
of sugarcane, sugar and its
derivatives. Th e company
decided to make a contribution to the Founda-
tion’s programs based on the production of its
sugar mills, the president of the Foundation,
Lucía Herrera, told Latin Trade.
Th e organization has launched a three-
pronged course of action –in education, health
and environment. Th e results have made major
contributions in these areas to Guatemala, Ni-
caragua and Honduras over the last 20 years.
One of the most interesting projects is the
provision of literacy skills and primary educa-
tion for cane-cutters who have been with the
company for at least six months during the
sugarcane harvest. Th e cane-cutters attend
school within the sugar refi nery and are free
to continue their studies within their com-
munities. Several of those who have fi nished
the program have been promoted; others go
on to study further, said Lucía Herrera. Th e
Foundation has also established scholarship
and student credit programs for those who
fi nish primary education and wish to continue
their studies. Some who have taken part in the
primary education program are now studying
in universities, Herrera added. According to
experts in the fi eld, this is something of a miracle
in Latin America, where many people fi nd
education to be a major roadblock against their
hopes to achieve social and fi nancial stability.
Another interesting project is the vocational
studies program. In Nicaragua, the Pantaleón
Educational Center off ers vocational high
school courses to employees’ children and
people who live near the company’s production
plants. Th ey can take courses in car mechanics,
machine operation, welding, turning machines
or, in the case of women, become sugar spe-
cialists. Th is training is obviously good for the
company, although it has also proven benefi cial
for other sugar refi neries and industries in the
region. “We have raised the academic standard
of staff in this area”, said Lucía Herrera.
Th e Foundation is constantly developing its
programs. Having improved the basic educa-
tion of its employees, this year it launched a
series of programs aimed at children under six
years of age. Over the years, the importance of
education for this age group has been widely
recognized throughout the region. As a result,
educational programs for young children have
been launched. Th is year, a daycare center ser-
vice was opened for employees’ children who
are aged under six, and will then be given the
opportunity to study at the organization’s own
primary school.
Th e Foundation’s work has been interna-
tionally recognized, as has Grupo
Pantaleón’s initiative in launching
it. In 2007, the group was named
Best Corporate Citizen by the
Organization of American States
for its “Visionary Schools” education project,
which promotes values such as democracy and
tolerance.
In 2008, Guatemala’s Corporate Social
Responsibility Action Center conducted a
survey among 68 companies. Pantaleón was
consistently among the top fi ve in seven areas
of social responsibility: governability, staff , en-
vironment, providers, marketing, communities
and public policies.
Th e Foundation has worked extensively
across the three countries where it operates,
and has already begun to export its model to
others that have seen the results. Th e work of
Lucía Herrera is an example of how corporate
action can help shape a continent.
Santiago Gutiérrez reported from Bogotá
BY SANTIAGO GUTIÉRREZ
HUMAN RESOURCES AND DEMOGRAPHICS
Cane-cutters smash roadblocks to social mobility through education.
HERRERALUCÍA
PRESIDENT OF PANTALEÓN FOUNDATION
72 LATIN TRADE NOVEMBER-DECEMBER 2012
“ This is the only industry where supply is always in high demand because of talent.
PH
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OR
IS
At Neoris, innovation means adopting an
uncommon approach to IT consulting:
working alongside clients in and outside their
companies. Neoris’ strategy, according to com-
pany CEO Claudio Muruzábal, is to combine
two elements – the practical and the visionary.
“Th is is not just a nice marketing state-
ment,” said Muruzábal, who has led Neoris
since 2004. “Th e visionary always focuses on
new ideas, technology and diff erent ways of
doing things. And we are practical. We’re a
lean company, easy to do business with. We
have a lot of visibility, we engage with our
clients, get close to them and make decisions
with them,” he said
Th e approach may have been the key to
success for this young company that in little
more than 10 years evolved from being the
IT branch of Mexican cement giant Cemex
to one of the fastest growing business and IT
consulting companies in the world.
In 2000, the company separated from
CEMEX, still its majority shareholder, and
began working on its own. Th e company did
consulting work in Mexico, then found clients
in other countries in Latin America, as well as
the United States, Europe, the Middle East,
Africa and India.
“We grew mostly by word of mouth,”
Muruzábal said of the Miami-based business,
which boasts more than 3,500 employees and
20 offi ces worldwide. “Industry notices com-
panies that can get the work done.”
Neoris is the largest IT consulting and sys-
tems integration company in Mexico and the
second largest in Latin America, according to
IDC (International Data Corp.), the world-
wide IT and telecommunications market
intelligence fi rm. According to Neoris’ global
report for 2012, practical visionaries develop
“the art of being functional, grounded, reliable
and realistic, yet possessing the foresight, drive
and innovation to constantly convert aspira-
tions into realities. At Neoris,” it continues,
“we partner with our clients.”
Another innovation was to embrace “near-
sourcing” as an alternative to help centers
based half-way around the globe. Muruzábal’s
strategy involved establishing centers for IT
services and software development in Argen-
tina, Mexico, Hungary and Spain. Th ese cen-
ters off ered alternative solutions to clients that
found disadvantages with outsourcing fi rms in
India and the Philippines.
Neoris also partners with a wide range of
technology companies to provide the best
options for its clients. In Brazil, Neoris
partnered with SAP, the German software
company, to assist Usiminas, a major Brazil-
ian steel producer, to develop and implement
a system of monitoring and controlling all
aspects of a steel mill. Neoris worked closely
with the steel producer to understand how its
complex plant worked and what the company
wanted to achieve, while SAP developed
software suited to the client.Looking ahead.
Muruzabal said that attracting talent is one of
the biggest challenges for his company. “Th is
is the only industry where supply is always
behind demand because of talent,” he said.
“It’s what keeps you awake at night.”
But, he added, Neoris is “blessed” with
access to engineers and people with business
and language skills throughout Latin America
and the Caribbean.
Joseph A. Mann, Jr. reported from Miami
BY JOSEPH A. MANN, JR.
LATIN AMERICAN TECHNOLOGY TO THE WORLD
MURUZÁBALClaudio
CEO, Neoris
74 LATIN TRADE NOVEMBER-DECEMBER 2012
at the computers of that time. Today you have an iPad or a Smartphone.
All the potential you have in these little devices was unimaginable before.”
Not to mention online banking, a sector in which Softtek has played
an active role.
How does Blanca Treviño imagine technology in 20 years’ time? “I
just expect it will be something that I can’t even imagine today.” Touché.
What she can imagine is the future of the company she has directed
now for more than 25 years: “I expect that Softtek will continue to be an
important player in all of the industries it’s in, and will still be delivering
value to the companies in these industries no matter what the techno-
logy of the day might be.” She emphasizes that Softtek is a global player
hungry for challenges.
So speaks the Monterrey native who led Softtek as it became Latin
America’s leading IT company. In a telling detail, at each company anni-
versary, she invites its collaborators to celebrate the coming year and not
the one just ended.
What’s important is what comes next.
Today Treviño is one of Latin America’s most celebrated business-
women, but she never forgets the journey that positioned the company in
the North American marketplace.
“It was all an adventure, that a Latin American company could be-
come a player in this sector,” she recalls. “Th ere were companies that
asked: ‘Will you use technology?’ Th ey didn’t ask if you’d develop it, they
asked if you’d use it.”
Th en came her Near Shore success, a system that revolutionized
outsourcing services by off ering them from countries close to the target
market.
What challenges a company so successful and thriving, then? “Mak-
ing sure we have the best talent: attracting it, keeping it, and developing
it.” Th e Softtek CEO has bet on linking up with universities, working
with them to structure study plans that closely replicate the real world of
industry, while also opening the company’s doors to senior students with
the aim of “enamoring” them with the
sector and, of course, the company.
“Just as we have a value proposal for
the customer, we have a value proposal
for this human capital, so that they’ll
say: ‘I want to be in Softtek,’” she says.
Treviño says each night she notes
to herself: “Be aware of the risk. Your
whole team is going home, as if it were your machinery. What are you
going to do so they’ll want to be with you tomorrow morning?” Th e
company has 10 percent annual staff turnover, while at the same time it
must grow by 20 percent.
Even as she cultivates and attracts this human capital, Treviño could
also be thinking about the inorganic growth that comes with acquisi-
tions, as a means of expanding into new markets and industry sectors.
Finding the economic resources is not the problem, but rather fi nding
the right opportunity and choosing assertively, especially since she oper-
ates in an industry that changes so quickly.
Th ere’s no doubt that Blanca Treviño already has some acquisition
prospects in her sights.
Nancy Ibarra reported from Monterrey, Mexico PH
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FT
TE
K
The woman has crisscrossed borders throughout the world with a
technology company that boasts a worldwide staff of 7,000. But
at the same time she modestly states
that sharing the company was Softtek’s
highest-yielding innovation.
Th e algorithm is simple for CEO
Blanca Treviño, the much-admired na-
tive of Monterrey, Mexico: “When we
started the company we decided to share
it. We were never open to receiving
investment funds or selling it, only bringing in and nourishing talent. We
said: join us and the company is partly yours. You too are building your
dream.”
Th at’s how Softtek, an information technology (IT) service provider,
built a team of talented engineers who have helped the company to con-
quer markets that it hadn’t dreamed of when it was founded 30 years ago.
“I think if we were to talk about an innovation model that enables us
to be where we are as an organization, we undoubtedly would have to
talk about our culture, our organizational structure and stock participa-
tion,” Treviño says.
She doesn’t hide her enthusiasm for being part of an industry that she
sees as fascinating and challenging. Talking about how the sector and the
company she directs have evolved over the last 20 years, she says, “Just look
BY NANCY IBARRA
LATIN AMERICAN TECHNOLOGY TO THE WORLD
“There were companies that asked, ‘will you use
technology?’ they didn’t ask if you’d develop it.”
TREVIÑOBLANCA
CEOSOFTTEK
For further details on sponsorship opportunities or registration, please contact Mary Arda, Director of Special Projects at [email protected]
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76 LATIN TRADE NOVEMBER-DECEMBER 2012
As Peru’s economy began to open up, the banking sector was trans-
formed. State-run banks were privatized and foreign fi nancial institu-
tions set up shop. Competition heated up.
Banco de Crédito’s fi rst move was to bring in a new set of managers,
many of whom had international banking experience. “We began
transforming the bank to be more competitive,” said Bayly, one of the
new managers at the time. “What had made us successful in the past was
clearly not what was going to make us successful in the future.”
One of Bayly’s early positions at Banco de Crédito was to run the
bank’s offi ces outside of Lima, a challenging task in Peru, since commu-
nication between vastly diverse regions could be patchy.
To stay on top of local developments, Bayly formed relationships with
community leaders who provided on-the-ground insight. “I formed
important relationships with maybe 20 or 30 important business men in
their own cities or regions and that is something that has remained over
many years,” he said.
After years of focusing on wholesale banking, Banco de Crédito’s new
managers refocused the fi rm’s activities on retail banking, betting that
continued economic growth would increase demand for consumer credit.
Th at decision marked a major shift in Banco de Crédito. In the early
1990s, about 10 percent to 20 percent of the bank’s business came from
retail banking, while today it accounts for more than 50 percent.
Although the bank was initially focused on high-end retail business,
for the last several years it has worked to increase the number of clients
from low-income areas that have traditionally lacked access to banking
services. Th is is part of a broader eff ort in the sector over the last few
years to increase banking participation in Peru, which has one of the
lowest participation rates in Latin America.
Within this framework, one of Banco de Crédito’s most impor-
tant innovations during the past 20 years has been to introduce
‘agencies’ in Peru— stripped down banking stations at mom-and-
pop shops, pharmacies and other small stores. Th e agencies off er
fewer services than branches, but they are less expensive to operate.
“Th ey are used extensively and it is a relatively inexpensive way to
increase our coverage and to reach places where branches or even an
ATM is not profi table,” Bayly says.
Bayly says technology will play a key role in growing service in
remote and isolated Andean towns and jungle communities. “We
are extremely focused on how technology can help us widen our
reach,” he says. For example, mobile banking is expected to take off
in the next few years in Peru.
Ryan Dube reported from Lima PH
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P
Peru was in a tough spot 20 years ago. A violent insurgency by leftist
rebels was threatening to topple the government, while the economy
was coming out of a long stretch of hyperinfl ation that had wiped out
the savings of local residents. Today, much has changed in the Andean
country. It’s been one of Latin America’s fastest growing economies in
recent years, helping millions of people escape poverty.
Walter Bayly, the CEO of Banco de Crédito del Perú, the largest
bank in the country, credits the return of political stability and govern-
ment reforms in the 1990s for the turnaround. After living abroad for 13
years, Bayly returned to Peru in 1993, a year after the capture of Abimael
Guzmán, the leader of the Shining Path insurgency.
“One of the key elements that triggered my decision to return was the
fact that terrorism was starting to come under control,” Bayly says. “It
was a country after war. Th e country as a whole, I would say, had practi-
cally collapsed,” Bayly adds, remembering his fi rst impressions of Peru
after his return. “It was still a moment in time in which many of us Peru-
vians questioned whether Peru was viable.”
New retail focus features mom-and-pop shops.
BY RYAN DUBE
THE SECRET BEHIND THE MIRACLE
LLONAWALTER BAYLY
CEO Banco de Crédito del Perú
NOVEMBER-DECEMBER 2012 LATIN TRADE 77
technology in lighting, energy, health, jet engines, trains, manu-
facturing, nanotechnology and other areas.
In Latin America, Vásquez said, GE is developing new
technologies for jet engines, the oil and natural gas industry,
environmental improvements, as well as energy production from
biomass and other sources, to name a few. The company today
has about 20,000 employees in the region.
“We have a technology center in Querétaro (Mexico) that is
working on new technology for jet engines,” Vásquez said. This
part of Mexico has become an important aerospace manufactur-
ing site, with companies such as Embraer, Bombardier, Hawker
Beechcraft, Gulfstream Aerospace, Textron and Honeywell also
operating there.
GE also is investing $100 million in a new research center
in Rio de Janeiro. The multi-disciplinary facility, which will
employ several hundred specialists when fully operational, is
developing new technologies in biofuels, systems integration,
process control and decision-making solutions for the oil and
gas, aviation, transportation and electric energy industries.
“A major goal will be to support Petrobras,” Vásquez said,
“but the new technologies developed will be used throughout
the region and worldwide.”
GE invests about 5 percent of its revenues in R&D globally,
Vásquez noted, with a focus on environmentally sound products
under the concept of “ecomagination.”
“Research is becoming very collaborative. By the time we
have a product that goes to market– for example a stethoscope
with a camera and a screen– it has been developed with col-
laboration from all over the world.” And emerging countries are
increasingly playing a role in this process.
Joseph A. Mann, Jr. reported from Miami
GEhas been operating in Latin America for 115 years, hav-
ing disembarked in the region 19 years after opening its
doors in the United States, under the banner of Edison Electric
Light Co.
One sign of GE’s major innovative impact on the region is
visible even today at the Panama Canal, said Ricaurte (Catín)
Vásquez, vice president of government affairs and public policy
for GE Latin America.
GE designed and built the massive electro-mechanical control
system that has opened and closed the Panama Canal locks since
the canal was inaugurated in 1914.
Even though the control system has been upgraded over the
years, Vásquez noted, “You can still see the original GE logo in
the canal control room.”
GE, which has about 36,000 “technologists” in its global
workforce, has been a world leader in developing innovative
From Panama to Petrobras
PH
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BY JOSEPH A. MANN, JR.
THE SECRET BEHIND THE MIRACLE
VÁSQUEZRicaurte
VP of government affairs and public policy for GE Latin America
In Latin America, GE is developing new technologies for jet engines, the oil and natural gas industry, environmental improvements and energy production from biomass.
78 LATIN TRADE NOVEMBER-DECEMBER 2012
PH
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OF
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BR
AZ
ILCelso Amorim, the current Brazilian
defense minister who served as foreign
minister during the eight years of the Luiz
Inácio Lula da Silva government, brought
innovative policies to each of the areas under
his management. Now, his challenge is to
bring in a national and regional security pol-
icy that’s consistent with the ideal of South
American integration. Amorim, who won the
Bravo Award in 2010 in the category of “In-
novative Leader of the Year,” spoke to Latin
Trade about the challenges that lie ahead.
Latin Trade was launched 20 years ago. How
do you see the regional political panorama of
that time when you look back today?
Twenty years ago the trend toward democ-
racy was just getting underway. Local econo-
mies were facing monetary instability, and the
rich were feeling vulnerable. Mercosur was
taking its fi rst steps and was being looked
upon with skepticism. It has faced its prob-
lems and freed itself from the threat of the
Free Trade Area of the Americas (FTAA),
and now has just gained an important new
partner: Venezuela.
Why do you think the much-criticized incorpo-
ration of Venezuela into Mercosur is important?
In addition to providing opportunities for
trade, the arrival of this new partner reduces
asymmetries. Before, there were two large
economies, Brazil and Argentina, and two
small ones, Paraguay and Uruguay. Now there
is a middleweight in the balance, and this will
bring more equilibrium to the bloc, strength-
ening continental integration.
What were your work guidelines when you
were foreign minister?
Th e priority was to strengthen Mercosur,
and eff orts towards achieving integration;
south-south relations, including Africa; and
the search for new markets and partners in
the international arena, with a view toward a
more benign multi-polarity. Within the re-
gional plan, we achieved extraordinary results
that benefi tted all countries, culminating with
the creation of the Union of South American
Nations (Unasur). I think this success came
about mainly as a result of the maturing of
an idea: that integration must focus on South
America and not on Latin America.
Th is hasn’t aff ected the concept of Latin
American unity?
We limited the process to the geography
of what was possible, and this was imposed
by reality. Th is doesn’t mean relations with
Central America and the Caribbean no
longer were important. Th ey still are, but we
must recognize that the economies of the
Caribbean and Mexico are subject to a huge
infl uence from the North, which of course is
also natural, beyond barriers of a physical or
cultural nature.
Was breaking off the FTAA negotiations with
the United States a good decision?
Without a doubt. I was sharply criticized
at the time, but now the critics can see that it
was the right decision. If we had signed the
agreement, it would have inhibited economic
growth and we would not have obtained such
positive results in the integration process. (NB:
Over the last few years local economies have
taken off and intra-regional trade has grown
by 62 percent. Brazilian trade with its neigh-
bors has quadrupled. Trade between the region
and the rest of the world has doubled, with the
trade surplus growing from $73 billion to $110
billion between 2010 and 2011–an increase of
50.6 percent.)
Mercosur has spent 20 years putting itself
together and it still has problems. Doesn’t
continental integration require a much longer
time to mature?
Mercosur, with all its strengths and weak-
BY TEREZA CRUVINEL
THE SECRET BEHIND THE MIRACLE
AMORIMCELSO
Defense Minister of Brazil
NOVEMBER-DECEMBER 2012 LATIN TRADE 79
“We’re following
the leader wher-
ever he may go.” This
seems to be the dictum
of Banco do Brasil’s
foreign operations.
Asked why the
largest bank in Latin
America and one of the
oldest in the world has
chosen to launch its
apparently haphazard
expansion in next-door
Argentina, managing
director of International
Business and Affairs
Admilson Monteiro
does not hesitate: “We
haven’t. Our customers
have. We were naturally
following them.”
Argentina is not only
South America’s second
largest economy after
Brazil, it is also Brazil’s
partner in the Merco-
sur trading bloc. In this
case, the leaders were
400 Brazilian companies
that have set up shop in
Argentina.
This same principle
also has led BB,
founded in 1808, to
target other regional
nations like Chile,
Colombia and Peru.
“Our international
strategy commitment is
based on three drivers:
the existence of Brazil-
ian communities living
abroad, the growing
presence of Brazilian
companies in other
countries, and Brazil’s
foreign trade fl ows,”
Monteiro explains. “We
aim to be recognized
as the worldwide,
fi rst-choice bank for
Brazilians and South
Americans.”
These guidelines have
led the state-run bank to
launch operations in 24
countries and counting.
An open-minded ap-
proach helps it target
the right niches in each
country:
• In Colombia, a
fl ourishing capital
market means BB
is now considering
establishing a new unit
or maybe acquiring a
local bank to tackle
this business arena.
• In South America’s
rising star Chile, the
focus is on a thriving
private pension
funds system that is
luring foreign asset
managers from
around the world.
• In fast-growing
Peru, opportunities
abound, from a strong
infl ow of investments
generating all sorts
of ventures, to a
robust export drive,
to remittances from
Peruvians working
in Japan. Seven BB
branches in the Land
of the Rising Sun mean
Peruvian workers
never have to go far
to send their money
home to their families.
Back to Argentina, in
2010 BB acquired Banco
Patagonia, Argentina’s
eighth largest bank,
with more than 180
branches, 500 ATMs,
and 800,000 retail and
wholesale clients, half
of them in the public
sector.
Market orientation,
open-mindedness,
fl exible and innovative
expansion strategies…
not a bad repertoire
for a public institu-
tion established in the
early 19th century by
Portuguese colonial
authorities.
David Haskel reported from Buenos Aires
FIRSTCHOICE BANK
The state-run bank has
launched operations in 24 countries
and counting.
nesses, is set up as a customs union. Unasur isn’t a
customs union. It’s based on free trade agreements.
Th us, the process of integration moves at two
diff erent speeds. We will have Mercosur in front,
with a more advanced integration, and we will
have Unasur going forward at a slower pace. But
in the medium term, I expect the two processes
will converge.
You are a diplomat, and now a leader in the military
sector. How do you reconcile a strong defense policy
with a push for regional integration?
We are strengthening our national defense
policy in close coordination with the integration
project. In reality, we are encouraging a regional
defense policy with the support of Unasur’s South
American Council.
How is this integration being built?
We are trying, initially, to encourage the
region-wide emergence of a strong industrial
base in this (military) sector, which would allow
purchases and exchanges among neighboring
countries. Today this industrial sector is very
fragile in the region, even in Brazil and Argen-
tina, where it is most advanced, though we are
starting to cooperate.
For example?
Brazil has sold Super Tucano military aircraft
to Ecuador and has bought some big military
boats from Colombia for patrolling the coast
and the large rivers. Argentina provides parts
for the new Embraer cargo aircraft. Peru is
interested in military aircraft and can provide
ships for the Brazilian Navy. Th is has barely
started, but it was in this way, building inte-
grated solutions, that we made other advances
in the region.
How do you think the international crisis will aff ect
the region?
I’m an optimist. It might seem everyone is
saying the same thing, but I see this crisis as
an opportunity for new advances, especially for
increasing regional trade, within the scope of
Mercosur and all of South America. I’m not
talking about returning to import substitution
or closing the economy… We must not, nor can
we, isolate ourselves in South America. But we
must protect each other. Th e sea is not for fi sh
that swim off on their own.”
Tereza Cruvinel reported from Brasilia
BY DAVID HASKEL
THE SECRET BEHIND THE MIRACLE
for Brazilians and South Americans around the world
80 LATIN TRADE NOVEMBER-DECEMBER 2012
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Renowned Peruvian economist Pedro Pablo Kuczynski likes to keep
things simple.
Th is approach, which is even applied to his name –he is known sim-
ply as PPK– and his generally laid back attitude, have helped carry him
through fi fty-plus working years wearing numerous hats.
A prominent international economist and pioneering emerging mar-
kets investor, his achievements also include presidential candidate, avid
fl autist and piano player, and philanthropist.
“I have always followed the same general principles: One, try to learn
something from whatever you’re doing. You’ve got to move on and move
up, you can’t stay stuck. Two, be very simple and practical. And three,
work with a small team. Don’t empire-build and do enormous schemes
that don’t work,” says PPK, 74, in his distinctive unhurried speech.
He brought his small-team philosophy to his 10-year stint at First
Boston Corporation (today Credit Suisse) in New York City, beginning
in 1982. “When I was on Wall Street, I had a little team of maybe 10
people, which was considered tiny by Wall Street standards, but I’d say
we produced some pretty important results,” says PPK. “I opened up
emerging markets (at the bank). I started out in South East Asia when
very few people were going there. We worked hard on China, Taiwan,
(Former Economy Minister of Peru)
Korea, and Spain, which hadn’t really been discovered until then.”
His lengthy CV also lists top jobs in private equity, mining and hedge
fund management. However, PPK’s involvement in Peru’s political scene
–where he is known as “El Gringo” because of his U.S. citizenship– is
what has garnered him most attention in recent years.
He ran for president in Peru’s 2011 elections, arriving late to the race
but quickly gaining ground. Despite an enthusiastic, well-strategized
campaign –his campaign mascot was “PPKuy” in reference to the “cuy,”
an Andean guinea pig native to Peru– he came in third place, losing to
current President Ollanta Humala. (During the fi rst electoral round
PPK captured 19 percent of the vote to Ollanta’s 32 percent and Keiko
Fujimori’s 24 percent. He did not advance to the run-off .)
It was by no means his fi rst run at public service. In 1967, PPK began
working for Peru’s Central Bank. He returned to Peru 13 years later
to serve as Minister of Energy and Mines under President Fernando
Belaunde, and then served as Minister of Economy and Finance and
as Prime Minister during President Alejando Toledo’s administration
(2001-2006).
“Because Peru is not such a big country, we were able to actually pro-
duce results, particularly from 2001 to 2006. We stabilized the economy,
reduced debt, privatized, opened up trade, reached an agreement with
U.S. on free trade, and so on. All of this resulted in the fastest growing
economy in Latin America, along with Panama, and probably also the
healthiest,” he notes.
Although PPK does not consider himself an innovator or even a poli-
tician, most business and political leaders in Peru concur that he has been
a driving force behind opening markets, bringing sound management
to his country’s budget and fi scal accounts, and developing Peru’s oil, gas
and electricity sectors.
And while PPK says, “I am not in the legacy business,” he’s clearly
proud of founding the Agua Limpia non-governmental organization
in 2007. Th e NGO has helped provide about 350,000 people with
clean water.
“Peru has 10 million people –and Lima 1.5 million people– without
water in their houses. In (the jungle town of) Iquitos, where I lived as a
kid, there are many, many people without water even though it’s on the
edge of the world’s biggest river. So access to clean water is an issue I feel
very strongly about,” says PPK, whose German-born father, a prominent
tropical disease specialist, arrived in Peru in 1936 to set up public health
services in the jungle region.
Lisa K. Wing reported from Lima
BY LISA K WING Enrique Garcia
THE SECRET BEHIND THE MIRACLE
We stabilized the economy, reduced debt, privatized and opened up trade. All of this resulted in Peru being the fastest growing economy in Latin America.
KUCZYNSKIPedro Pablo
Doing business in multiple countries is a challenging task. Understanding and meeting local regulations, maintaining company policies, and having control and
visibility over company spend are vital to effective business management. Corporate fi nance managers need to under-stand card usage and acceptance, travel patterns and vendor charges in order to identify potential issues and fi nd solutions.
At the same time, multinational companies need to provide their employees with a widely accepted corporate card that is both convenient and secure when traveling or conducting business. It’s a time-saving tool for employees, and a vital source of information for the company. After all, being able to capture that card data effi ciently is crucial to automating payment processes, maintaining spend visibility and enforcing company policies.
With the Visa Multinational Program, corporate fi nance managers can turn their corporate and purchasing card programs into powerful information management tools to reduce purchasing costs, monitor corporate expense compliance, provide consolidated data, and improve global spending analysis.
In addition to that invaluable global perspective, multinationals need to be able to localize their card programs for tax, compliance and reporting purposes. Visa’s Multinational Programoffers the best of both worlds – a globally accepted corporate card that consolidates data from different countries, different banks and currencies with the fl exibility to meet the require-ments of local subsidiaries and affi liates. The integration is done seamlessly thanks to our open-payment network business model that enables Visa and our multinational partner Banks to deliver measurable value through our commitment to service excellence, technological advancement, and payment innovation making our multinational program the right choice for multi-country commercial solutions.
Visa’s Leading-Edge Financial ToolsTo achieve these cost-reducing and productivity-enhancing global and local benefi ts, Visa’s Multinational Program incorporates state-of-the-art fi nancial tools:
l Visa IntelliLink Spend Management – a versatile informa-tion management tool that provides complete reporting and full-featured expense management integrated into a single, scalable platform.
l Perform Source – a suite of proprietary quantitative and qualitative analysis tools that includes sophisticated data an-alytics and benchmarking best practices diagnostics capable of identifying the strengths and opportunities in your commer-cial card program.
Meeting Multinationals’ Evolving NeedsWith its versatile multinational commercial card program, Visa has created the infrastructure, standards, and technology so-lutions that allow international companies to meet their evolv-ing global and local business needs. To take advantage of this value-added program, contact your Visa fi nancial partner.
But these benefi ts are only the beginning. After implementing Visa’s Multinational Program, additional tools are available to ensure that the program is performing at its peak. Through ongoing quantitative and qualitative analysis – and custom-ization of these key tools as necessary – Visa can deliver fi nancial benefi ts that continue to add value to multination-al card programs, enhance spending visibility and simplify payment processes.
Diego Rodríguez is Head of Commercial Solutions for Visa Inc. Latin America Caribbean
SPECIAL ADVERTISING FEATURE
BY DIEGO RODRÍGUEZ
Visa’s Multinational Program:Providing Versatile and Powerful Global Payment and information Solutions.Your international business deserves a globally recognized and respected fi nancial partner that can help you conduct business anywhere in the world with greater ease, control and effi ciency.
a, and improve global spending analysis.
at invaluable global perspective, multination
A sample report from PerformSource
iPad version
82 LATIN TRADE NOVEMBER-DECEMBER 2012
Samoa, Be-
nin, the
Comoros, the
Maldives, the
Kiribati archi-
pelago, Tajikistan
… places that are
very distant to
Latin America.
But all of them
are covered by
the Assist-Card
travel care com-
pany, a multilatin of European origin that grew in Argentina’s
Pampas.
Th e company recently celebrated its 40th birthday and Alexia
Keglevich, chief executive and the founder’s daughter, explained
that in those days “there was no concept of travel care in Latin
America”. Nor were there Latin American travelers who ventured
into exotic destinations. Well-off Latin Americans traveled to
Europe and the United States; few even traveled to the rest of
Latin America.
Although founded in Geneva, the company moved within
months to Buenos Aires and grew within the region while gener-
ating 65 percent of its revenues in the Argentine market. Expan-
sion was steadily. Th en two crises in quick succession shook up
the company’s structure in 2001.
Th e September 11 attack on New York’s Twin Towers
paralyzed the international travel business. “All of a sudden,
everything was up in the air,” said Keglevich. “Th e company was
stopped in its tracks. Th e world was paralyzed.” It took three
months for business to stage the beginnings of a return.
Just when the company was getting back on track, Argentina’s
economy collapsed and Assist-Card had to open its mind and
get ready to look for more business in the region and the rest of
the world. “Th ere was a watershed. Assist-Card had to change its
mentality,” she added.
Just as these two crises hit, the Internet made its debut in the
world of business. And it turned out to be an extraordinary tool
to contribute for Assist-Card’s makeover.
Th e Internet changed all of the company’s operations. It also
turned the key to a door that opened up to exponential growth.
“Technology was what changed Assist-Card,” said Keglevich.
Now, the company has seven million clients of which 40 percent
are corporate. It provides assistance in more than 100 countries.
Élida Bustos reported from Buenos Aires
A NEW CONCEPT FOR LATIN AMERICA
Clients come to us.... for their contract
logistics and transportation
needs.
We deliver to them…
world class services and value added solutions…
with the people, processes and technology…
to make it all
happen.
PH
OT
OS
: C
OU
RT
ES
Y O
F A
SS
IST
-CA
RDBY ÉLIDA BUSTOS
ALEXIA KEGLEVICH CEO of ASSIST-CARD
NOVEMBER-DECEMBER 2012 LATIN TRADE 83
Meet some of the thousands
of contract logistics and
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To fi nd out more about which
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visit go2uti.com/videos.
Not a weak link in the chain
Exceeding their expectations…
time and
time again. Because what’s important to them… Is important
to us.
A NEW CONCEPT FOR LATIN AMERICA P
HO
TO
S:
CO
UR
TE
SY
OF
FA
LA
BE
LL
A
The essence of retail business– supplying customers with a wide mix of products, good
prices and good service– has not changed, said Juan Benavides, Member of the Board of Banco Falabella, the fi nancial arm of large regional de-partment store Falabella.
“What is different is the rate of change,” added
BY JOSEPH A. MANN, JR.
BENAVIDESMember of the Board of Banco Falabella
Benavides, who oversaw the group’s rapid expan-sion over the last several years. “What used to happen in a year in retail now can happen in weeks or days. Fashion used to change on a seasonal basis, but today it changes every 15 days.”
Benavides, a Chilean former CEO of Falabella department store, noted that the ability of consumers to fi nd and compare products online, and see reviews of what they are planning to buy, represents “a gigantic change.”
Whereas stores purchase products and put them on display on their shelves, today’s customer can also buy directly online, whether they’re interested in national products or even imported items. At Falabella, only about 5 percent of customers buy online, but this is changing rapidly and could reach 10 to 15 percent in coming years. Falabella and Sodimac home improvement centers have operations in Chile, Argentina, Peru and Colombia. To keep up, company executives and store managers “have to be very aware of changes in consumer taste and demand,” Benavides said. Falabella buys from Latin America as well as from China and India,
where it has offi ces that identify and purchase new products. “By the time a product hits the stores, it’s already history,” he added. Productivity is still very low in our countries, Benavides noted, and to
compete effectively, the company must invest in training and in fi nding the right people.
Benavides is an excellent example of how an executive uses innovation to grow and strengthen his company and compete effectively in a demand-ing sector.
With extensive experience in banking and fi -nance, Benavides started his career at Falabella as head of its credit card, CMR Chile. Originally, the card could be used only in Falabella stores, but Benavides extended its reach so that cardholders could use it at other outlets, thus generating spec-tacular growth in the group’s credit business. He also was in charge of setting up the group’s retail bank, Banco Falabella, plus new businesses in travel and insurance. “Innovation is part of what we do every day,” the CEO said.
Joseph A. Mann, Jr. Reported from Miami
“Fashion used to change on a seasonal basis, but today it changes every 15 days”
Juan
NOVEMBER-DECEMBER 2012 LATIN TRADE 85
As in previous years, Latin Trade Group hosted a private welcome reception for the BRAVO Business Award honorees, past winners
and special guests. Th e event was held at the Intercontinental Hotel in Miami.
PH
OT
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CT
ION
S
LATIN TRADE SYMPOSIUM & THE 18 TH ANNUAL BRAVO BUSINESS AWARDS
1. Alia Orane, daughter of Douglas Orane, Douglas Orane, Non-Executive Chairman, GraceKennedy Ltd., Zahra Orane, daughter of Douglas Orane; 2. Andrés Otero, Market Leader Latin America, Kroll Advisory Solutions,;Robert Brenner, Senior Managing Director and Practice Leader, Kroll Advisory Solutions; Recaredo Romero, Colombia Country Manager, Kroll Advisor Solutions; 3. Juan Benavides, CEO, Falabella, María Angélica Jaramillo, Guest of Juan Benavides; Julio Velarde, Governor, Central Bank of Peru; 4. Pamela Cordova, Copa Airlines, Sales Manager; Patricia Roquebert, Copa Airlines Marketing Regional manager; Daniel Verón, Managing Director, Advertising International; María Cristina Restrepo, Sales Representative Colombia and Panama, Latin Trade Group; 5. Mario Pinasco, Executive President, Crowne Plaza Lima; Margot Pinasco, Executive Director, Crowne Plaza Lima, Clay Sawyer, Director of Marketing Latin America & Caribbean, InterContinental Hotels Group; 6. Andrés Gluski, President and CEO, The AES Corporation, Scarlett Álvarez, Vice President Chief Stakeholder, The AES Corporation; Nelson Ortiz, President, Galisteo Investments; Guillermo Zuloaga, President, Globovisión.
Every year Latin Trade Group gathers the Latin American and Caribbean most influential business and government leaders during the Latin Trade Symposium, a one day forum of discussion focusing on Building the New Latin America preceding the annual BRAVO Business Awards. The signature event has recognized excellence and leadership in government, business and social contributions in the region during the past 18 years.
Welcome reception
and theTHE
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86 LATIN TRADE NOVEMBER-DECEMBER 2012
Latin Trade Symposium
Th e annual Latin Trade Symposium begins with the private CEO
Roundtable that brings together the presidents of some of the most
important Latin American companies. Th e Symposium has become
the venue par excellence through which to view regional problems
and opportunities through the eyes of business and government
leaders. Th is year the Roundtable discussed the avenues that can lead
to the achievement of fully sustainable enterprises.
Th e 2012 Latin Trade Symposium posed challenging issues for
discussion on Building of the New Latin America. A fi rst plenary panel
addressed the question of how to become a winning multilatina in a new
commercial landscape and in a highly competitive environment.
A second panel identifi ed ways to leverage the impact of global power
shifts on Latin American growth. Th ey underlined the changes required
in leadership and the acquisition of corporate knowledge in order to profi t
from the new trends. In a mid-day keynote address Felipe Larraín, Chile’s
Finance Minister, described the road that his country has followed in
recent years to reach the goal of becoming Latin America’s fi rst developed
nation. Th e conference program was fi nalized with a lunch session that
explored the future of governance in the region. Th e speakers discussed
how the new political landscape and new political forces are changing the
ways of doing business.
1. Attendees at the Latin Trade Symposium. 2. Luanne Zurlo, President and Founder, Worldfund; Jordi Soley Climent, Director General, Expresso Bibliográfi co; 3. Jorge Becerra, Senior Partner and Managing Director, The Boston Consulting Group; 4. Damian Chan, International Director for the Americas, Singapore Economic Development Board; 5. Poul Hestbaek, Senior Vice President Caribbean and Latin America, Hamburg Sud; Mariela García, Hamburg Sud; Carlos José Fabri, Country Manager Caribbean and Latin America West Coast, Hamburg Sud; 6. Susan Segal, President and CEO, Americas Society/Council of the Americas; 7. Andrew Vesey, COO, The AES Corporation; 8. Richard Burns, Chairman, Latin Trade Group; Felipe Larraín, Minister of Finance, Chile; Jorge Rosenblut, President, Endesa Chile; Juan Benavides, CEO, Falabella; Juan Luis Nilo, Consul General of Chile.
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NOVEMBER-DECEMBER 2012 LATIN TRADE 87
9. Fred Hochberg, Chairman and President, Ex-Im Bank; 10. Juan Pablo del Valle, Chairman of the Board, Mexichem SAB; 11. Enrique García, President and CEO, CAF - Banco de Desarrollo de América Latina; 12. Jerónimo Correa Braun, Senior Vice President, HSBC Private Bank; Jorge Escobar, Senior Vice President, HSBC Private Bank; 13. Felipe Larraín, Minister of Finance, Chile; 14. David Rothkopf, President and CEO, Garten Rothkopf; 15. Federico Restrepo Posada, EPM, Autopistas para la Prosperidad de Colombia; 16. Hans Hickler, CEO Asia Pacifi c, Agility; Lorena García-Durán, Director South Florida, Ashoka; 17. Rosemary Winters, Executive Director, Latin Trade Group; José Tomás, President LATAM & Caribbean, Burger King; 18. Rob Steigerwald, COO Americas Southern Region, Marriott International; 19. José Luis Sánchez Castro, President Latin America North, SAS Institute; 20. Andrés Gluski, President and CEO, The AES Corporation; Gilberto Rivera, Vice President, Area Sales - Latin America Freight Forwarding, UTI; Nilda M. De Boyrie, Vice President and Branch Manager Latin America Center, Charles Schwab; 21. John Price, Contributing Editor, Latin Trade magazine; 22. Ferdinand Kurt, Regional CEO Americas, Panalpina.
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88 LATIN TRADE NOVEMBER-DECEMBER 2012
Latin Trade Symposium and 18TH Annual BRAVO Business Awards 1. Juan Benavides, CEO, Falabella; 2. Douglas Orane, Non-Executive Chairman, GraceKennedy Ltd.; 3. Alejandro Ramírez Magaña, CEO, Cinépolis; 4. Raúl Calfat, CEO, Votorantim; 5. Carlos Slim Domit, Chairman of the Board, Telmex, Grupo Carso, Grupo Sanborns, and CoChairman, América Móvil; 6. Andrés Gluski, President and CEO, The AES Corporation; 7. David Bojanini García, CEO, Grupo Sura; 8. Julio Velarde, Governor, Central Bank of Peru; 9. The winners of the 2012 BRAVO Awards.
The 18th annual BRAVO Business Awards ceremony Th e 2012 BRAVO Business Awards were received by an
outstanding group of corporate and government leaders. Th ose
recognized for excellence in business, government and social
activities were Sebastián Piñera, President of Chile; Julio Velarde,
President of the Central Bank of Peru; corporate presidents Juan
Benavides of Falabella, David Bojanini of Grupo Sura, Raul
Calfat of Votorantim, Andrés Gluski of AES, Alejandro Ramírez
of Cinépolis, Carlos Slim Domit of Grupo Carso and Sanborns,
and the social entrepreneur Douglas Orane. Al of the winners
have a single trait in common: they brought dynamism to the
growth of their countries, their companies and their projects.
Sebastián Piñera and Julio Velarde deserve much of the credit for
the economic success of their countries. Th is year’s distinguished
honorees were represented by an outstanding group of corporate
leaders that have set out on a path of internationalization that
calls for higher levels of entrepreneurial sophistication. All have
become true global players.
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NOVEMBER-DECEMBER 2012 LATIN TRADE 89
18TH Annual BRAVO Business Awards Gala 10. Herman Bern, President, Bern Panama, Miriam Bern, wife of Herman Bern; 11. Alex Russell, Vice President Finance Latin America, Emerson Latin America; Juan Donoso, Strategic Planner Latin America, Emerson Latin America; Adriana Aristizábal, Guest of Anuar Barake; Anuar Barake, Vice President Latin America, Emerson Industrial Automation; Karina Bernoti, Guest of Alex Russell ; Lauren Donoso, Guest of Juan Donoso; 12. Ricaurte Vásquez, Vice President Government Affairs and Public Policies, General Electric; Amanda O’Mealley, Guest of Ricaurte Vásquez; 13. Guillermo Cortina, Managing Director Latin America, Bank of America; Astrid Carati, Guest of Guillermo Cortina; Carlos Ibáñez, Managing Director, Bank of America; Gerardo Obregón, Director, Bank of America; 14. Pamela Córdova, Copa Airlines, Sales Manager; Marvin Santos, Sales Executive, Copa Airlines; 15. Claudio Fiorillo, Partner and Human Capital Lead for Argentina, Deloitte; Michel Chancy, Secretary of State for Animal Production in the Ministry of Agriculture, Haiti; 16. Soraya Ramírez, Marketing Manager, ARES Distributors; Juan David Ariza, Vice President Latin America, ARES Distributors; Reyna Mora, Trade Marketing Manager, ARES Distributors; 17. Dolores Figueras Iraola, wife of Fernando Iraola; Fernando Iraola, CEO Latin America and Mexico, Citi Group; Paloma Blanco, wife of José Antonio Blanco; José Antonio Blanco, CEO, Citi Peru.
90 LATIN TRADE NOVEMBER-DECEMBER 2012
18TH Annual BRAVO Business Awards Gala 1. Nelson Telemaco, Vice President Client Management Group, AIG; Mercedes Fernández, Business Development Manager, Latin Trade Group; Enrique García, President and CEO, CAF -Banco de Desarrollo de América Latina; Elzbieta Pruszynska, President, Ice Branded Content; Jaime Cohen Szulc, President, Goodyear Latin America; Emilio Fortou, Regional Business Leader Global Commercial Expansion Team, Visa; Luisa Fortou, wife of Emilio Fortou; 2. Clay Sawyer, Director of Marketing Latin America & Caribbean, InterContinental Hotels Group; Paula Casás, Manager Marketing Programs Latin America & Caribbean, InterContinental Hotels Group; 3. Jorge Becerra, Senior Partner and Managing Director, The Boston Consulting Group; Sonia Dula, Managing Director Latin America Wealth Management, Merrill Lync; David Bojanini García, CEO, Grupo Sura; María Cristina Restrepo, Sales Representative Colombia and Panama, Latin Trade Group; 4. Juliana Miranda, guest of Paul Adan; Paul Adan, Vice President Development Caribbean and Latin America, Marriott International, Inc.; Cristina Vyaina, guest of Javier Marquina; Javier Marquina, Partner, SMM Property Advisors; 5. Enrique Ramírez Villalón, Cinépolis, Alejandro Ramírez Magaña, CEO, Cinépoli; Bernardo Martín del Campo, Cinépolis; 6. Fernando Sánchez, International Regional Manager Latin America, Charles Schwab; Diana Jaramillo, guest of Fernando Sánchez; Emile De Boyrie, guest of Nilda De Boyrie; Nilda De Boyrie, Vice President & Branch Manager Latin America, Charles Schwab.
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92 LATIN TRADE NOVEMBER-DECEMBER 2012
18TH Annual BRAVO Business Awards Gala 1. Francisco Aristeguieta, CEO, Citi Group; Felipe Larraín, Minister of Finance, Chile; Enrique García, President and CEO, CAF -Banco de Desarrollo de América Latina; 2. Joseph Audi, Chairman and CEO, Interaudi Bank; Bishop Georges Abiyounes, Guest of Joseph Audi; Carlos Slim Domit, Chairman of the Board, Telmex, Grupo Carso, Grupo Sanborns, and CoChairman, América Móvil; 3. Silvia Clarke, Senior Account Manager, Latin Trade Group; Mary Anne Young, Senior Vice President, Hamburg Sud; Jeffrey Young, Guest of Mary Anne Young; 4. Scarlett Álvarez, Vice President Chief Stakeholder, The AES Corporation; Brian Miller, Executive Vice President, General Counsel, The AES Corporation; Andrew Vesey, COO, The AES Corporation; Adriana Gluski, wife of Andrés Gluski; 5. Barbara Haar, Guest of Jerry Haar;Jerry Haar, Director, Professor and Research Fellow, FIU, College of Business; Florencia Jiménez Marcos, Managing Partner, Biscayne Bay Group; Xavier González-Sanfeliu, Managing Partner, Alsis Funds; Carmen González-Sanfeliu, Regional Vice President of Sales Latin America, Intelsat; 6. María Lourdes Gallo, Publisher, Latin Trade; Raúl Calfat, CEO, Votorantim; Katia Bouazza, Managing Director, HSBC.
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