Latin Trade (English Edition) - Sep/Oct 2011

YOUR BUSINESS SOURCE FOR LATIN AMERICA WWW.LATINTRADE.COM SEPTEMBER/OCTOBER 2011

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BRAVO BUSINESS

AWARDS 17Recognizing Excellence in

Government, Businessand Social Development

Cover inspired by artist Carlos Cruz-Diez

LATIN TRADE SYMPOSIUM SPECIAL ISSUE TOP BANKS

Leonel FernandezDominican Republic

Alberto Aleman ZubietaPanama

Alex BehringBrazil

Agustin CarstensMexico

Laurence GolborneChile

Martin MigoyaArgentina

Marcelo OdebrechtBrazil

Luis Carlos Sarmiento GutierrezColombia

Luanne ZurloUnited States

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we use our expert local knowledge to help you enjoy what makes a destination unique. At Nordelta,

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this just 30 minutes away from Buenos Aires, one of the most vibrant and colorful cities in the world.

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SOME THINGS YOU CANT TAKE BACK IN YOUR SUITCASE.

How can you improve the composition of a

meal adored by millions without changing

the taste? How can you evolve a famous

menu without disappointing your loyal

customers?

Arcos Dorados, the worlds largest manager

of the McDonalds brand, accepted the

challenge in Latin America. After all,

times are changing and consumer needs

and preferences are always evolving.

That is why Arcos Dorados is now

bringing new choices to the menu of the

McDonalds restaurants in Latin America.

The changes started in October in Brazil,

and will expand to other Latin American

countries as of November. This initiative is

part of the commitment to our consumers

well being, yet never forgetting about

the pleasure of a genuinely delicious

McDonalds sandwich.

But what changes are these?

Basically more vitamins and minerals,

but less sodium, sugar and calories,

as recommended by the World Health

Organization.

Great news for the little ones:

the new McFries portion has fewer

calories, in order to fit into childrens

balanced diet. The bread and cheese of

our sandwiches, the McNuggets and the

ketchup all had its sodium levels reduced

by 10%. The fruit juices had a 40%

reduction in added sugar in the past year.

And, finally, some delicious news:

now, theres fruit for dessert in any

Happy Meal combination.

The main menu has also evolved.

Now, the Combos can come with a salad

a mix of green leaves and tomatoes

as a side dish. In addition, we reduced the

sodium in the bread, ketchup and cheese

used in all sandwiches.

Youre probably wondering: what about

the taste? Dont worry about it :

Arcos Dorados dedicated two years in

research along with its suppliers to ensure

that the modifications in our menu

would not change the taste of your

favorite dish.

Simple changes, simply perfect.

At McDonalds, even successful recipes can be improved.

s

ers

of

Arcos Dorados dedicated two years in

research along with its suppliers to ensure

that the modifications in our menu

would not change the ttasastete ooff yoy ur

favorite dish.

Simple cchhanges,simplyy pperfect.

4 LATIN TRADE SEPTEMBER-OCTOBER 2011

CONTENTS SEPTEMBER/OCTOBER 2011 VOL. 19 NO. 5

Features 27 BRAVO Business Awards 17: The 2011 Winners 30 Lifetime Achievement: Leonel Fernandez, President of the Dominican Republic 32 Innovative Leader of the Year: Laurence Golborne, Minister of Public Works of Chile 34 Financier of the Year: Agustn Carstens, Governor, Bank of Mexico 36 Distinguished Service in the Hemisphere: Alberto Alemn Zubieta, CEO, Panama Canal Authority 38 CEO of the Year: Marcelo Odebrecht, CEO, Odebrecht 40 Dynamic CEO of the Year: Luis Carlos Sarmiento Gutirrez, CEO, Grupo Aval 42 Emerging CEO of the Year: Martin Migoya, CEO, Globant 44 Investor of the Year: Alex Behring, Co-founder and Managing Partner, 3G Capital 46 Humanitarian of the Year: Luanne Zurlo, President, Worldfund

49 INDUSTRY REPORT: Latin Americas Top 100 Banks: Strong Growth, Good Outlook

Financial institutions in Latin America increased their assets by nearly 30 percent on average in 2010. Top bankers from the region weigh in on the prospects for continued growth.

58 Top 100 Banks: Latin Americas leading banks ranked by assets as of year-end 2010.

62 Top Banks by Country: The top five financial institutions in Argentina, Brazil, Chile, Colombia, Mexico, Peru and Venezuela.

64 Winners and Losers: The financial institutions that posted the biggest percentage gains and declines in assets and net income.

66 COUNTRY REPORT: Dominican Republic Moves Ahead

The tourism champion is increasingly boosting its other sectors, including mining, finance, telecommu-nications and infrastructure.

76 Latin American Tourism Champion 78 Santo Domingo Metro: Full Speed Ahead

80 COMPANY REPORT: South American Boost for General Motors

How Brazil and the rest of South America are play-ing a key role in the automakers global business.

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COVER ILLUSTRATION: DAVID NAVAS

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34 36 38

30 40 42

4644

Bank of America Merrill Lynch is the marketing name for the global banking and global markets businesses of Bank of America Corporation Lending, derivatives, and other commercial banking activities are performed globally by banking affi liates of Bank of America Corporation, including Bank of America, N.A., member FDIC. Securities, strategic advisory, and other investment banking activities are performed globally by investment banking affi liates of Bank of America Corporation (Investment Banking Affi liates), including, in the United States, Merrill Lynch, Pierce, Fenner & Smith Incorporated and Merrill Lynch Professional Clearing Corp., all of which are registered broker dealers and members of FINRA and SIPC, and, in other jurisdictions, by locally registered entities. Investment products offered by Investment Banking Affi liates: Are Not FDIC Insured y May Lose Valuey Are Not Bank Guaranteed. 2011 Bank of America Corporation.

Client commitment.

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Taking your opportunity further.

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CONTENTS

The Scene 12 Sales Rev Up for Porsche A hit SUV model is driving sales

for the German luxury carmaker.

14 The Cat Runs Fast Caterpillar outpaces more than 20

multinationals when it comes to revenue growth in Latin America.

16 Whats In a Name? What happens when two compa-

nies use the same name for the same product?

18 Job Hunting Via Text Messages

A service connects job seekers with hiring companies using mobile technology.

20 Brazils Homemade Drones Unmanned aerial vehicles take to

the skies for agricultural use and environmental enforcement.

Opinion 22 The Contrarian John Price, managing director of

Americas Market Intelligence, makes the case that Latin America presents better market opportunities compared to China ...at least in the short term.

24 The Bottom Line Argentinas economy has been

transformed over the past decade but the country must make some hard choices to secure its long-term future, writes Alberto Bernal-Len of Bulltick Capital Markets.

Tech Trends104 Copa Pioneers Mobile Check-in The carrier is the first in Latin

America to introduce digital board-ing passes for mobile devices.

On the Road 101 Mexico City A practical guide for the business

traveler visiting the Mexican capital.

102 Ask the Concierge Advice from Agnes Ignacio of the

Four Seasons Hotel in Mexico City.

Made In: Ecuador112 Bananas Although the United States is the

leading destination for the popu-lar fruit, bananas are gaining fans in Eastern Europe.

Editors Note8 Recharge Latin America

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SPECIAL SUPPLEMENTURUGUAY: A NATURAL DESTINATION FOR BUSINESS, PAGE 89


EDITORS NOTE

Recharge Latin America

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While Latin America has reason to be proud of its economic growth in recent years, the region needs to implement a series of reforms to make it much more competitive.

Here are our 10 top recommendations:1. Improve Institutions. As the Swiss-

based World Economic Forum says: Exces-sive bureaucracy and red tape, overregulation, corruption, dishonesty in dealing with public contracts, lack of transparency and trustwor-thiness, and the political dependence of the judicial system impose significant economic costs to businesses and slow the process of economic development. WEF is speaking in general terms, but these complaints clearly describe most of Latin America today.

2. Lower Corruption. Despite the eco-nomic growth in recent years, corruption remains at dangerously high levels through-out Latin America. Part of the problem is the lack of a professional civil service, but the region also has weak law enforcement and judiciaries that enable corrupt officials to act with impunity.

3. Better Education. Quality higher edu-cation and training are crucial for economies that want to move up the value chain beyond simple production processes and products, WEF rightly points out. Improving Latin Americas wealth starts with decent educa-tion for the majority that today cant afford private schools.

4. Improve Security. Crime and insecurity remain a major problem in most countries in Latin America. Part of the problem is cor-rupt law enforcement, but also the fact that even honest police officers are underpaid and under-trained. The insecurity is adding an unnecessary cost to the private sector in the form of private security, higher insurance premiums and losses from theft.

5. Improve Infrastructure. The cost of exporting from Latin America is unneces-sarily high because of inefficiencies in infra-structure. A study by the Inter-American Development Bank shows that the regions exports to the United States pay freight rates that are, on average, 70 percent higher than those from the Netherlands, in part because of inefficient ports. If those ports were to improve to U.S. levels, that would lower costs about 20 percent. But seaports arent the only problem. Latin America also suffers from inadequate roads (especially in the case of Colombia) and airports (especially in the case of Brazil). Part of the problem is a lack of investment by the regions governments. Latin America currently invests only about 2 percent of its GDP on infrastructure instead of 5-6 percent, as it needs to, as Luis Alvarez Satorre, president for Latin America, Europe, Middle East and Africa for British Telecom, has pointed out.

6. Liberalize Imports. Latin America needs to remove protectionist barriers to imports. Countries such as Brazil and Argentina (which have significant protec-tionist measures in place against imports) are only hurting their own consumers and com-panies, who have to pay more for products that arent locally produced. If Latin America were to reduce tariff rates to U.S. levels, that would reduce transport costs by 9 percent, the IDB estimates.

7. Reduce & Simplify Taxes. Latin America needs to lower its tax rates from todays average of 27. 3 percent (higher than the 25 percent worldwide average, according to KPMG) to 17 percent, like countries such as Chile and Singapore have implemented. Meanwhile, the tax system needs to be dra-

matically improved. It takes an average of 187 hours per year to prepare, file and pay corporate taxes in the United States, but the average in Latin America is 544 hours, with Brazil setting a world record of 2,600 hours, according to a Latin Business Chronicle analy-sis of data from the World Bank.

8. Improve Health Systems. Latin America should provide universal health coverage for its citizens. However, rather than just beefing up public hospitals, govern-ments should provide coverage at both public and private hospitals. Latin Americas private hospitals generally are far superior to their public counterparts. As WEF points out: A healthy workforce is vital to a countrys com-petitiveness and productivity.

9. More Privatizations. Although Latin America already went through a significant privatization process in the 1990s, it still has several state assets that can easily be sold off, helping to finance social spending. Theres no reason why, for example, Chiles copper giant Codelco (the worlds largest copper producer) should remain in state hands. Meanwhile, Brazil can easily sell off Banco do Brasil (Latin Americas largest bank) as well as more of its shares in Petrobras (Latin Americas largest company).

10. More FTAs. Last, but not least, Latin America needs to increase the number of free trade agreements it has with the outside world. Brazil again remains a laggard and a stark contrast to countries such as Mexico and Chile, which have seen their exports and economies benefit from a large number of FTAs within and outside of the region.

These recommendations will open up markets and let entrepreneurs thrive, thus reducing poverty and boosting wealth.

Joachim Bamrud,Executive [email protected]

Port in Recife, northeastern Brazil


EXECUTIVE DIRECTORS ROSEMARY WINTERS

[email protected]

MARIA LOURDES [email protected]

EXECUTIVE EDITORJOACHIM BAMRUD

[email protected]

MANAGING EDITORMARY SUTTER

[email protected]

GRAPHIC DESIGNERSELVIN CHI

[email protected]

CONTRIBUTING EDITORS GABRIELA CALDERON (research), MARK LUDWIG

CORRESPONDENTS Argentina: Charles Newbery Brazil: Thierry Ogier (So Paulo), Taylor Barnes (Rio de Janeiro)

Chile: Gideon Long China: Ruth Morris Colombia: John Otis France: Ilan Moss Mexico: David Agren, Ronald Buchanan Panama: Sean Mattson

Peru: Lisa K Wing Spain: Guy Hedgecoe Venezuela: Jose Orozco

CONTRIBUTING PHOTOGRAPHERS Brazil: Paulo Fridman Chile: Helen Hughes

Costa Rica: Juan Carlos Ulate Peru: Alejandro Balaguer USA: Matthew Pace

TRANSLATION: Alejandra Labanca, Douglas Rojas-SosaCOPY EDITORS: Nancy Dahlberg, Julio Llerena, David Wisor

EVENTS & CONFERENCESEDITORIAL DIRECTOR

Jane Bussey, [email protected]

EVENTS & SPECIAL PROJECTS MANAGER Ana Pion, [email protected]

SALES & CIRCULATION SALES REPRESENTATIVES

Miami/Pan-regional sales: Silvia Clarke, Senior Account Manager, [email protected] Fernandez, Business Development Manager, [email protected]

Ana Berger, Special Projects Coordinator/Online, [email protected]/Panama: Mara Cristina Restrepo, [email protected]

India: Stephen Dioneda, [email protected]

CIRCULATION COORDINATOR Claudia Banegas, [email protected]

LATIN BUSINESS CHRONICLERosemary Begg, Marketing Associate, [email protected]

MANHATTAN MEDIACHAIRMAN

RICHARD BURNS

CHIEF OPERATING OFFICERJOANNE HARRAS

ACCOUNTS MANAGER KATHY POLLYEA, [email protected]

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THE SCENETHE SCENE

Porsche is zipping along in Latin America, a region where the lux-ury carmaker has dramatically grown over the past decade.The German automaker has seen

its Latin America and Caribbean sales jump tenfold from 269 vehicles in 2000 to 2,569 last year.

Matthias Brck, president and man-aging director of Porsche Latin Amer-ica, attributes the growth to network development; new model lines; and market development in key countries.

We started with a handful of deal-ers who were technically importers, he says. Now we have 17 importers servicing over 25 countries with 40 dealers.

Porsche Latin Americas headquar-ters in Miami has nearly tripled (from

6 to 17 employees) but the single big-gest driver of unit sales has been the introduction of a line of sport utility vehicles, the Cayenne, which red up Porsches regional standing.

Its perfect for Latin America suited to the road conditions and safety conditions, Brck says.

In 2010, Cayenne models accounted for 60 percent of all Porsche units sold in Latin America, equivalent to 1,374 SUVs. Within that, the V6 model is the best-seller.

The SUV segment is hotly contested, Brck notes. We have very strong com-petitors with very good cars, he ac-knowledges. We try to nd our niche.

He has high hopes for a smaller SUV that Porsche will introduce at the end of 2013.

Porsche continues to sell the sports cars for which it is globally renowned. Volume levels are not as high compared with the SUV, but we are the segment leader with our 911, Boxcar, Roadster and the 2010 Pana-mera, our four-door sedan, Brck says.

Within the region, Brazil zoomed into first place for Porsche in Janu-ary 2010. Import duties are very high in Brazil but customers are willing to spend the money, Brck observes.

For the full-year 2010, Brazil ac-counted for more than one-third of Porsche units sold 911 followed by Mexico at 18 percent (443 units) and Chile at 9 percent (225 units).

Business in Mexico has slowed be-cause of internal factors. People are not con dent, Brck explains, though he says Mexico will continue to grow for Porsche.

Middle-tier markets such as Pana-ma, Colombia and Peru are doing well, he adds, but a ban on all imported cars stalled sales in Argentina.

Brck is bullish for 2011 after post-ing a 33 percent annual increase last year. We expect to set a new sales record, he says.

Mary Sutter

[email protected]

Sales Rev Up for Porsche

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Sweet Markets 2010 per capita retail sales of chocolate in US$ COUNTRY Uruguay ............................................................$49.50 Argentina ......................................................... $30.00 Chile ..................................................................$28.00 Brazil ................................................................ $24.70 Venezuela .........................................................$12.30

Source: Euromonitor International

Top Trade Partners2010 Latin America trade in billions of US dollars RANK COUNTRY TOTAL CHANG 1 USA $636.3 27.3% 2 China $178.6 51.2% 3 Japan $66.7 40.2% 4 Germany $55.0 31.0% 5 Canada $48.4 26.2%

Note: Percent change for Canada, European Union members in local currency. Source: Latin Business Chronicle IS

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Regular exposure to sunlight is the best natural source of Vitamin D.

TWO REASONS TO CELEBRATE .

Join us celebrating the opening of The Westin Playa Bonita

in Panama and The Westin Guadalajara in Mexico,

our new hotels in Latin America.

Visit www.westin.com/latinamerica to learn more

and receive special benefits during your stay.

E L E M E N T O F

W E L L- B E I N G


THE SCENETHE SCENE

You can well say you can drop dead due to heart failure due to lack of resources. But no, I am prepared, I have got my pills.Petrobras CFO Almir Barbassa in Latin Business Chronicle.

I went to the University of Chicago, but its not a religion.Mexican Central Bank Governor Agustin Carstens in Th e Wall Street Journal on how he is not always orthodox on economic issues.

We only have Plan A; there is no Plan B.Carlos Rodriguez-Pastor, Chairman of IFH Peru, on his conglomerates bullish fi ve-year plans despite the new government of leftist President Ollanta Humala, as quoted by Bloomberg.

Th e key to Lulas success was a combination of luck and low expectations. Walter Molano from BCP Securities in Latin Business Chronicle.

Frankly, we need some of that in the United States.Donald Trump on President Ricardo Martinellis corporate approach to running Panama, as quoted by the Christian Science Monitor.

Th e surge in the urge to merge continues in Latin America. FIU professor Jerry Haar in Latin Business Chronicle.

I think there are protectionist forces in our country and in the United States that dont care about development and prosperity in this part of the world.Canadian Prime Minister Stephen Harper during his visit to Colombia in August 2011.

Quoted

While its no secret to Latin Trade readers that Latin America is a global growth star, research by Latin Business Chronicle shows which multinationals are bene ting most from that boom.

According to the online publications Latin Multinational Index, which tracks quarterly revenue growth of more than 20 leading multinationals operating in Latin America, U.S.-based Caterpillar is the undisputed star.

Last year, Caterpillar increased sales in Latin America by 57.7 percent to $6.2 billion. That was nearly twice the growth rate of runner-up Volkswagen. The Ger-man auto giant boosted its Latin America sales by 29.8 percent to $17.9 billion.

During the rst half of 2011, Caterpil-lar also did well, boosting rst-quarter revenues in Latin America by 84 percent and second-quarter sales by 34 percent.

Caterpillar has been helped by strong growth in mining and construction in Latin America. Mining customers are increasing their investment, which is driving signi cant demand for our large mining products and higher parts sales, Caterpillar said in its second-quarter earnings release.

Brazil was the largest contributor to higher machine volume in Latin America last year. The countrys mining sector led by Vale (the worlds second-largest mining company) bene ted from

THE CATRUNS FAST

strong demand in China last year. In fact, Vale is the multilatina that grew its rev-enues most last year, according to the Multilatina Index from Latin Business Chronicle.

Mexico contributed the second-highest volume growth in 2010 for Cat-erpillar. Positive factors were lower interest rates, higher mining production and a more than 30 percent increase in exports, the company said in its 2010 annual report.

Meanwhile, Caterpillar volume more than doubled in Peru, the third-largest contributor to volume growth in Latin America last year. Peru bene ted from a 200 basis point reduction in interest rates, increased exports and a 14 percent increase in manufacturing production, Caterpillar said.

The company has also boosted the number of employees in Latin America from 10,776 in 2009 to 15,220 last year.

Caterpillar has been an avid supporter of the United States free trade agree-ment with Colombia, which was signed in February 2005 but suffered from repeated delays in winning U.S. congres-sional approval.

Not only is Colombia one of Caterpil-lars 10 largest U.S. export markets by country, but it is also one of Americas closest allies, Caterpillar Chairman and CEO Doug Oberhelman said earlier this year. The U.S.-Colombia Free Trade Agreement will promote U.S. exports and support American jobs. The agree-ment is also a validation that Colombia is a good place to conduct business. Perhaps more importantly, it will bolster understanding and improve living stan-dards of citizens in both countries.

Since other FTAs went into effect in Latin America, Caterpillar exports have dramatically increased, it points out. Last year, exports to Mexico were up ve-fold, three-fold to Chile and by more than 60 percent to Peru.

Caterpillar expects to continue doing well in Latin America, pointing to the re-gions estimated GDP growth rate of 4.5 percent. Our outlook assumes contin-ued growth in construction spending and mining production, the company said in the second-quarter earnings release. PA

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THE SCENE

Companies put a lot of thought into product brands and names, but what happens when two companies use the same name?Thats the case with France-based

Pernod Ricard SA and U.S.-based Bacar-di, which both produce Havana Club rum.

Meanwhile, cigar brands such as Cohiba and Partagas are both manu-factured by two separate companies Cuba-based Habanos SA and U.S.-based General Cigar Company.

Pernod Ricard produces the Havana Club that is manufactured in Cuba, while Bacardi manufactures its version in Puerto Rico.

Havana Club was originally created by the Arechabala family in Cuba in the 1930s, but the family assets were con s-cated in 1960 after the Cuban revolution.

Pernod has been using the Havana Club brand since 1993, when it formed Havana Club International, a joint ven-ture with the Cuban state company Cu-baexport.

Meanwhile, Bacardi acquired the rights to the Havana Club name from the Arechabala family (in exile in the United States) and applied for a U.S. trademark of the brand in 1994. That application had been opposed legally by Pernod.

While Pernod successfully sold Ha-vana Club in Cuba and internationally boosting sales from 400,000 cases in 1993 to 3.5 million cases today, accord-ing to Bloomberg Bacardi in 2006 launched the Havana Club brand on the U.S. market.

Whats in a Name?

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Playtime 2010 retail value of toys and games in US$

COUNTRY Mexico .......................................$2.1 billion Brazil.........................................$1.9 billion Argentina ............................$575.9 million Chile ....................................$480.2 million

Source: Euromonitor International

More AdsAnnual advertising expenditure in Latin America in US$

YEAR .......................... AD SPEND ............... CHANGE2009 ............................ $27.1 billion ................. 2.0%2010 ........................$31.3 billion ................ 15.7%2011* ...................... $33.4 billion ................. 6.7%2012* .......................$36.1 billion ..................8.1%2013* ...................... $39.5 billion ................. 9.3%

Notes: Figures include TV, radio, print, digital and outdoor investments. *2011 estimate. Projections for 2012 and 2013.Source: ZenithOptimedia

SAME NAME, DIFFERENT PRODUCTS: Havana Club produced by Bacardi (left) and Pernod Ricard (right).

Thanks to the U.S. embargo against Cuba, no Cuban-made products can be sold in the United States. However, Per-nod argued that the launch of the second Havana Club brand would confuse con-sumers and violate its trademark.

In August, a U.S. Court of Appeals ruled in favor of Bacardi that there would not be any confusion.

Although Cubaexport registered the Havana Club trademark in the United States in 1976, the U.S. Congress in 1988 made trademarks con scated by the Cuban government unenforceable in the United States.

Meanwhile, cigars often used in conjunction with rum are facing their own trademark confusion. Cohiba and Partagas are manufactured in Cuba by Habanos SA, a joint venture between state company Cubatabaco and French-Spanish tobacco giant Altadis. They also are manufactured in the Dominican Republic by U.S.-based General Cigar Company (a unit of Swedish Match).

A third brand Montecristo is manufactured both in Cuba (by Habanos SA) and in the Dominican Republic (by Altadis itself), thus allowing the latter version to be sold in the United States. H

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THE SCENE

Through his world travels, Assured Labor CEO David Reich had met smart people who could not nd jobs. In his former profession as an equity analyst, he encountered executives complaining about nding workers.

His solution was to integrate mobile technology within an online job-search platform at Assured Labor, the U.S. company Reich co-founded in 2008 with a fellow MBA student at MIT Media Lab and other partners. They focused on non-ex-ecutive positions, particularly those in the mid- to lower-pay ranges, in Latin America. Those candidates were not on the traditional job-posting websites, Reich says.

Although initial market research took the team to Rio de Janeiro, where they studied how job-hunting Cariocas used technology, As-sured Labor went live in 2009 as a pilot project in Nicaragua. The budding entrepreneurs had lo-cal contacts in Managua and had partnered with wireless operator Amrica Mvil.

Given low rates of computer ownership and limited Internet ac-cess, the Assured Labor system minimized online time for job-seekers. They need only register once, at no cost to them, uploading their experience and other details. Proprietary software matches up seekers with existing openings and alerts the hiring company, which contacts prospects via text mes-sages to their mobile devices.

Operating as Empleo Listo, the service made a big splash. Assured Labor next headed north, launching in Mexico in October 2010.

In Mexico, there were more known job services, Reich says. We had to do a lot of educating in the market differentiating our-selves.

Sales, administrative (such as entry-level of ce) and operations constitute the biggest proportion of listings. Sales is a huge seg-ment for us, Reich says, noting that postings range from cashier at a Subway restaurant to insurance agent for Grupo Nacional Provin-cial.

The system was designed to be user-friendly for both sides. We have a orist shop that has posted a couple of jobs, Reich says. Com-panies pay to post, although a free option to post one job per month recently was introduced.

So far, about 100,000 job-seekers have registered and more than 800 companies have posted jobs in Mexico. Meanwhile, Assured Labor has teamed with media group Prisa Digital, which will give the service greater exposure, Reich says.

The company plans to enter a third country before year-end.

No one else in Latin America is doing this in the digital sphere, Reich says. They are still running ads in classi ed sections and work-ing with staf ng agencies. Mary [email protected]

Job Hunting Via TextMessages

Dilma Rousseff. The Brazilian president de-serves praise for her staunch ght against corrupt of cials despite the political cost it is having on her coalition.

Argentina. The country experienced Latin Americas highest growth in international arrivals last year and replaced Brazil as the regions second-most-popular destination, after Mexico, according to the Latin Tourism Index from Latin Business Chronicle.

Ollanta Humala. The Peruvian president deserves praise for naming a market-friendly nance minister and keeping the countrys well-respected central bank governor.

Canada. It has now implemented a free trade agreement with Colombia (beating the United States) and signed a new FTA with Honduras. Meanwhile, Canada has replaced Korea as Latin Americas fth-largest trade partner, according to Latin Business Chronicle.

Ecuador. The government has slapped import duties on completely knocked-down vehicles, a move that will hurt both foreign automakers and Ecuadorian consumers.

Chile. Despite being a Latin American leader in business climate and human development, the country also is a regional leader in strikes and protests.

Argentina and Brazil. The two countries have imposed restrictions on foreign com-panies reinsurance business.

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Retail Kings Country 2011 2010 Brazil ................ 1 ............. 5Uruguay ............2 ............. 8 Chile .................3 ............. 6India ................. 4 ............. 3Kuwait ..............5 ............. 2

Source: A.T. Kearney Global Retail Development Index, 2011. The index ranks 30 emerging markets by retail attractiveness and opportunity.

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THE SCENE

Brazils Homemade DronesHow AGX Tecnologia nds success developing and selling drones

SO CARLOS, BRAZIL The jeans-clad engineers pace with youthful eagerness in this bungalow-turned-of ce in So Carlos, Brazils nascent response to Silicon Valley. Ask them which contemporary Brazilian chal-lenges they are working on, and theyll give a smattering of responses: illegal commercial sand extraction, lost per-sons at night in the jungle, and arma-dillo holes rooting up farmers crops.

But this group is proposing one sur-prising solution for them all their development of increasingly sophis-ticated drones (Unmanned Aerial Vehicles), replete with the colors of the Brazilian ag and names such as Arara (parrot) and Tiriba (little parrot).

It ends up demystifying this equipment, to show that its not only restricted for military use but also something of daily use, says AGX Tecnologia consultant Jen John Lee in the basement of these homey head-quarters. Going against the trend of Latin American nations purchasing Isreali-made drones for drug-war po-licing and border patrolling, AGX uses only Brazilian technology developed at the nearby University of So Paulo and sees its target market in the nations growing agricultural industry and state environmental police forces

tasked with monitoring illegal extrac-tion of natural resources.

Brazils Federal Police is indeed implementing a eet of Israeli-made UAVs along its porous frontier to monitor drug traf cking. But the So Paulo Environmental Police has other objectives. They will be the rst team in the state to regularly employ unarmed UAVs to monitor threats in rural areas, such as deforestation and illegal shing.

For example, AGX used a series of temporal images to record illegal ex-traction of sand from a bed in the river Mogi-Guau for the police, says Bianca Kancelkis, the companys director for environmental projects. A piloted plane would both be more expensive because of skilled labor and need to have a take-off and landing strip of-ten not found near the remote areas where environmental crimes occur. (AGXs newest UAV has a wingspan of three meters and is launched simply by throwing it.)

Using this evaluation that was made by us, the police found the people who were doing this illegal ac-tivity, Kancelkis adds.

But AGX, which began running successful unpiloted ights in 2005, has its base in Brazils growing agro-

businesses and extraction industries. Its clients now include Dow Agrosci-ences and Fundecitrus, a non-pro t industry body that promotes healthy and environmentally friendly citrus crops in So Paulo. A UAVs abil-ity to y lower than a pilot would be comfortable doing, and for hours in controlled patterns that would tire a human, gives farmers economical op-tions to map their elds, Lee says. It also avoids the cloud cover that blocks satellite images. The basic AGX drone system including training and intel-ligence programming, which could, for example, count the number of oranges expected in a citrus crop costs 55,000 reais (about US$35,000).

Theres a series of advantages for being a national [all-Brazilian] busi-ness, Lee says. One of them certain-ly is the dominion of the technology. This allows us to not be dependent, technologically speaking. And another advantage of being 100 percent na-tional is, given that we dont have to import the technology, I end up having a competitive product, economically speaking. Its cheap.

Onofre Trindade Jr. has spear-headed the Brazilian development of drones for more than a decade with the University of So Paulo. The pro-fessor of mathematics and computa-tion says he has no attraction to the defense industry. If there is a market in Brazil, it is the civil, he says.

He adds as an example that the le-thal oods in hillside shantytowns that have become a yearly pattern in Brazil January mudslides in Rio de Janeiro were the deadliest on record and took more than 900 lives could be better predicted by drone technology than by manned ights in which pilots would be wary of ying in turbulent weather.

If you lose the equipment, you lose the equipment. But if you ful ll the mis-sion, how many lives could have been saved in this case? Trindade says.

Taylor [email protected]

Drones from AGX, here represented by the Arara model, are being used by companies like Dow.

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AGX

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At G4S, its called security sense. It maximizes the return on your security investment. Those who employ our strategic blend of manpower and technology can view and react to their security needs in a different, more holistic way.

If you can anticipate an incident, you improve your ability to deter it. If you can expose risk through data analysis, you can better mitigate it.


THE CONTRARIAN

China may be the market of the future, but Latin America is the market of today. Demographics, economic policy and competi-tion levels all favor Latin America as the mar-ket of choice for global companies in search of growth.

In the end, it will be China, not Latin America, that prevails as the worlds largest economy. China, both culturally and politically, thinks long term by investing in its competi-tiveness, starting with education and infrastruc-ture. Chinas climb in the world competitive-ness rankings in recent years contrasts the fall of most Latin American countries over the same period, including Chile, Peru, Colombia, Mexico and Brazil.

Yet, present global conditions are kind to Latin America. Surging global demand (start-ing in China) for commodities favors Latin America, home to more than a quarter of the worlds mining investment, 10 percent of its oil reserves and close to 45 percent of the globes arable land. Latin bourses, dominated by its resource companies, have led global equity growth since 2003, when measured in dollars.

With few exceptions, Latin American countries have taken an orthodox approach to managing their trade surpluses, enabling export and FDI earnings to strengthen currencies and recapitalize banking, unleashing historic con-sumption levels. In 2010, private consumption in Latin America was measured at $3.1 trillion, versus $2.2 trillion in China. Some predict that China will need until 2016 to outpace Latin American private consumption levels and even longer to overtake on consumer spending. In 2010, the average Latin American consumed more than three times the average Chinese citizen. Latin America boasts three times more than China the number of households earn-ing above $15,000, considered the threshold at which families begin purchasing global brands.

Thanks to Latin Americas distorted income distribution, it has six times more households than China earning above $75,000 per annum.

Part of Chinas impressive story is owed to a demographic zenith it is currently experienc-ing, with more than 72 percent of its popula-tion of working age (15-64). Over the last 20 years, that statistic has grown from a level of 65 percent as the single-child policy reshaped household structures. Going forward, Chinas population will rapidly age, bringing new burdens to households. Chinas future growth will rely on the challenging task of integrating its rural masses into the urban economy. By contrast, Latin America is urbanized, a painful transition that it undertook from the 50s to the 80s. Latin America is just now entering its own working-age growth wave, thanks to more working women and fewer children. Over the next 20 years, the percentage of working-age Latin Americans will grow from 63 percent to 71 percent, boosting household consumption.

The most compelling reason to focus on Latin America, however, is its weak but rela-tively fair competitive business environment vis--vis that of China. In all of Latin America, only one home-grown car assembler exists, a kit sports car maker in Mexico that sells exclusively to Europe. By contrast, in Chinas burgeon-ing car market, more than 50 domestic brands compete with global brands. Competition helps explain why Ford Motor Co. struggles to make a profit in Asia ($1 million in Q2, 2011, with losses in China) while it flourishes in Latin America ($267 million profit in Q2, 2011). PepsiCo earns close to 20 percent of its global profits in Latin markets, but flounders in China. In 2010, Pepsis Beijing joint venture had a 0.1 percent profit margin, and its newly acquired Shenzhen operation reported a 1.5 percent net profit margin. By contrast, Pepsi LatAm Foods posted a 14.5 percent net profit

in 2010. In spite of having its largest operations based in Hong Kong, HSBC, a leading global bank, makes more profit ($1.8 billion in 2010) in Latin America than in mainland China ($215 million). For more-mature product cat-egories, the contrast is even starker. Whirlpool, which markets its white-goods brands across 120 countries, tallies 24 percent of its global sales and about 40 percent of its profits in Latin America while barely selling 4 percent of its volume to Asian markets. Latin America is home to a handful of impressively competitive companies, but, by and large, domestic Latin brands do not compete effectively in most consumer and business categories. By contrast, Chinese companies are competitive, if not always for the right reasons.

Both Latin America and China are chal-lenging business environments where intellec-tual property can be stolen. However, in Latin America, U.S. and European companies can still apply diplomatic pressure to help enforce their IP rights. In China, the government often is the greatest perpetrator of IP theft high-speed train technology transfer representing the most recent and tragic example. The prolif-eration of international trade agreements signed by Latin countries provides a legal framework for protecting investments and arbitrating disputes. Resolving disputes with powerful Chinese companies or the government is by comparison a far more daunting task. It is little wonder that experienced global firms are rethinking where to bet on growth.

John Price is the managing director of Americas Market Intelligence and a 20-year veteran of Latin American competitive intelligence and strategy consulting. [email protected].

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THE BOTTOM LINE

Argentinas economy has changed radi-cally over the last nine years. According to offi cial statistics, the economic growth since the end of the crisis in 2002 from the year 2003 through 2010 reached an impressive rate of more than 7.5 percent year over year, a rate that was also one of the most interesting among emerging markets during that time. Clearly, the country went from living a pe-riod of total chaos (readers may recall the im-age of a Korean store owner crying as a mob looted his downtown Buenos Aires shop or those of desperate account holders gathered outside banks, trying to get their money out) to enjoy an economy functioning at a pace consistent with full employment.

As readers who have had the pleasure of visiting Argentina recently know, the situ-ation today is starkly diff erent compared to a decade ago. Looking just at Buenos Aires, the shopping centers of the Calle Florida are bustling and the restaurants of Puerto Madero are packed with tourists and busi-ness people. Flights are full, and the Friday afternoon traffi c from downtown to the airport is, frankly, ridiculous. Th ese are all signs of great economic energy.

Th e economic success of Argentina since 2003 is tied to a series of endogenous and exogenous factors. On the endogenous side, it is important to recognize the tenacity of the private sector and politicians to overcome the social chaos of 2001 and 2002. Adopt-ing emergency social measures and decid-ing to impose a tax on exports enabled the government of Eduardo Duhalde to stabilize the countrys economic and social situation in 2002-2003. Th e administration of Nestor Kirchner was able to maintain stability by implementing a suffi ciently responsible fi scal policy, one that helped Argentina avoid a total collapse amid hyperinfl ation.

On the external side, it is quite clear that

Argentina is lucky to abut a Brazil that was starting to grow (economically speaking) as well as to be one of the worlds most competitive countries in agribusiness. Th is turned Argentina into one of the biggest benefi ciaries of Chinas economic boom. High commodity prices and dramatically bigger harvests have enabled Argentina to increase the value of its exports from $25 billion in 2002 to an estimated $83 billion in 2011.

Now, as my father would say, it is a sin to tempt fate. Th e economic model adopted earlier has brought about great improve-ments in social welfare. But the model is not sustainable over time. Heres the main reason. It is impossible for Argentinas central bank to continue to intervene the markets with a negative interest rate policy stance. Accord-ing to a consensus of private estimates on the current level of infl ation, prices are rising by an annual rate of 25 percent, year over year, while the BADLAR rate (on bonds issued by the central bank) is low, at 11.3 percent (the average in June). Clearly, if saving implies that every day you have fewer resources, theres no other option but to consume. But like everything in life, nothing comes for free, and this strategy of promoting growth

to the point of monetary delusion will even-tually collapse.

Today, Argentina can choose to make diffi cult decisions in order to return to a strategy of sustainable growth. It needs to restore the credibility of the central bank and of monetary policy. It needs to encourage investment at the expense of consumption, even though political leaders will face a back-lash. Investors need to be able to have some trust in the statistics reported by the govern-ment. As some of my clients have comment-ed, If we cannot believe the offi cial data on infl ation, how can we have confi dence in the future business environment?

Whoever wins the next election faces an historic challenge. Build on what has already been built to ensure the future of the countrys children. Today you can. Before you could not.

Alberto J. Bernal-Len is head of research at Bulltick Capital Markets. Follow him on Twitter@AlbertoBernalLe.

Argentina: Securing the FutureBY ALBERTO J. BERNAL-LEN

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The shopping centers along Calle Florida in Buenos Aires are bustling thanks to the economic boom.

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