Tag Archives: Latin America

China Plans $2 Billion Latin American Investment via IADB

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China Invests via IADBAccording to a recent report by Reuters, China plans on investing roughly $2 billion to back various projects in Latin America and the Caribbean, both in the public and private sector. As an intermediary for China’s funding, Inter-American Development Bank (IADB) will execute the projects, according to a statement released by the organization this past Saturday.

By all accounts, the Chinese contribution is a substantial one, with the People’s Bank of China planning to co-finance up to $500 million in IADB public sector loans, and as much as $1.5 billion in private sector credit. According to the IADB, this will all become available over the next three to six years, stating that the ultimate goal of the fund will be to “alleviate poverty and boost competitiveness.”

On their side of the deal, China has already invested tens of billions of dollars into countries such as Mexico and Argentina over the last ten years, as well as investing into a number other projects in the region. Their primary goal has been to acquire strategic assets or companies in valuable regional sectors like as minerals, energy companies, and even food products. This new injection of capital comes as great news for IADB, which looks to use it as a stepping-stone to help bridge the poverty gap, as well as stimulate an already growing regional economy.

This past March, the IADB along with China’s export-import bank announced a joint $1 billion dollar investment fund for the region to be used for public and private sector investments, demonstrating a clear desire to connect with various prominent institutions all across the continent. Using March’s investment as a blueprint, both parties are confident that this latest round of investment will not only be fruitful for them, but also help build an economic foundation for the region that will pay dividends for many years to come.

To get access to the top financial institutions and executives in Latin America, check out Latin Target Finance Plus. We give you instant access to the most competitive names in LatAm finance, and give you the most current, and comprehensive information available today.

Why China Needs Latin America

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China’s dominance in production is far from breaking news for anyone involved in global business. But with a slowing economy in both Europe and North America, recent overall demand for Chinese goods has become stagnant, and has even dropped substantially over the past two years. That is not the case in Latin America, however, where demand for Chinese goods is steadily growing, and shows no signs of slowing down. Trade numbers are up by nearly 15% across the region, and forecasters are predicting similar growth over the next few years to come.

Latin American Demand Keeps Chinese Trade High, Despite Economy

According to China’s General Administration of Customs, global year-on-year exports dropped from 21.1% in 2011, to 7.3% in 2012. Likewise, China’s foreign trade rate increased by only 5.8% in 2012, a number which makes up only half of their anticipated target rate for the same time period. These low numbers were directly contributed to the European debt crisis, as the European Union is China’s chief trade partner. As a result, China has had to focus on increasing trade in other markets to help bolster the numbers.

The market that has been most successful, as of now, has been Latin America; specifically Chile, Peru, Mexico, and Brazil. In the same time span last year, China increased its foreign trade with the region at a rate of 12-15%. Yang Wanming, the Chinese ambassador to Chile, has called this increase “remarkable”, and with good reason. Chile has had a free trade agreement with China since 2006, and the two countries have a bilateral trade value of USD $34 billion, a figure that’s nearly doubled over the past ten years.

What Do Latin American Markets Have to Offer?

For the most part, Latin America as a whole is a good market economy, and is ideal for trade due to many of its countries’ forecasted growth potential. With Peru, Brazil, and Chile all expecting 4-6% growth in the next five years, it’s important that China and other countries begin to build positive trade relationships now. The purchasing power in the region is at its highest, and the demand for foreign cars, electronics, and consumer goods is surging at an unprecedented rate.

According to Wanming, “Three years ago, we didn’t see any Chinese cars in the streets of Chile. But now, Chinese carmakers hold a 12 per cent share of the market. It’s an amazing exchange, isn’t it?” Likewise, in Brazil, forecasters expect trade value with China to surge as high as USD $80 billion in 2013. The formula, in both cases, is that regional consumer spending power is high enough to merit the steady importation of goods. And with little to no trade restrictions in these countries the potential for foreign imports is seemingly limitless.
The growing Latin American demand for foreign goods and services is a good indication of regional economic development. Mutilatinas and LatAm Multinationals have accelerated this growth, and with it, the demand of the consumer. By expanding homegrown businesses and jobs, these companies have also helped create a great demand. A demand that leads to revenue for foreign companies willing to take on the market in Latin America.

To find out more about the companies making the biggest moves in the region, and to get inside access to their decision makers, take a test drive of Latin Target. We provide instant access to sales and marketing intelligence, to help you develop key relationships with the people and businesses behind these growing economies. Visit www.latintarget.com to find out more.

Telefonica Delays Latin America IPO

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TelefonicaTelefonica has shelved plans for a stock market flotation of its Latin American businesses, multiple news wires have announced.

The sale, which had been expected to raise upwards of EUR6 billion (US$8 billion) for the heavily indebted company has been postponed due to a lowering of the pressure on the company to pay down its debt.

According to company sources cited by Bloomberg there was a possible lack of investor appetite for the floatation.

It had been previously reported that the company may fold the Latin American assets into a new Spanish holding company, and that it would then be listed on the New York stock market, with Telefonica (TEF) retaining the majority stake.

The company has a debt of around EUR50 billion and saw its debt ratings cut last year as ratings agencies worried about the ability of the company to maintain its creditworthiness. Since then a sale of a stake in its German operations and improved performance in Latin America has lifted the financial pressure somewhat.

Get access to Telefonica executives across Latin America with Latin Target.

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Crisis Economics: Why Spain Needs Latin America

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Why Spain Needs Latin America in 2013

Gone are the days of a new currency, and prosperous Euro-laden excitement. Gone are the days of heavy spending, and domestic growth potential. For Spain, the harsh lessons of economic misappropriation and stifling debt are a tough pill to swallow, but an all-too-common one these days for the Western European nation. With national debt and unemployment staggering the Spanish market, the country’s top companies have had to look elsewhere to build their profits and maintain steady growth. That “elsewhere”, for the most part, has been in Latin America.

With emerging markets growing at a steady pace in many countries in the region, Spanish companies have had success in selling their products and services, as well as expanding and growing their businesses in Latin America. All the while in Spain, struggling to stay afloat. While this type of Spanish success in the Americas isn’t necessarily a new thing, it holds a new kind of relevance considering the economic situation back home. The two industries that we see to be making the most out of these emerging Latin American markets appear to be Telecom and Banking.

Which Spanish Companies are Succeeding?

Companies like Telefonica S.A., Grupo Santander, and BBVA have all made significant impacts to their businesses by expanding in Latin American markets. By taking advantage of a common language, and having sewn their business roots early on, these companies have solidified a stronghold in many local markets. For example, Telefonica’s Latin American mobile brand, Movistar, which operates in 14 countries in the region, continues to grow, even as its Spanish counterpart shrinks. Companies such as Grupo Santander and BBVA have likewise made an impression through expansion in the region, operating in 5 (Santander) and 6 (BBVA) countries respectively, with current plans for further expansion in the near future.

How This Affects the Spanish Economy

While the issue of the Spanish debt crisis is far too complex to break down here, it’s safe to say that Spain’s biggest companies, from top to bottom, are feeling the pressure. This is why maintaining, and even expanding a strong market in Latin America is tantamount to staying alive financially as a whole. Latin Americans have more purchasing power than ever before, and are also investing in an unprecedented way. That means big business for companies like Telefonica, Santander, and BBVA. While this doesn’t exactly trickle down to the average Spanish worker, it does keep these businesses’ heads above water for the time being. Though it may be bittersweet, that’s still good news for the Spanish economy overall.

To get the best, most concise information available on Latin American businesses, and inside contacts with the biggest companies, contact us today. We connect you with the top decision makers in a variety of industries, including all three companies listed in this article. Check out our site for more info, and take a test run to see exactly what Latin Target has to offer.

Coca-Cola Invests over US$ 1bn in Chile’s Future

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The world’s largest soft-drinks producer aims to make a big investment in
Latin American markets with a USD billion-plus investment strategy in Chile. The Atlanta based beverage giant, whose brand is the world’s most recognizable, has laid out a 5-year plan that will see major development in their distribution strategy, as well as significant investments into sustainability projects. The company has already made progress by building a new $200 million bottling plant for Embotelladora Andina.  Andina made headlines earlier in 2012 by merging with Embotelladora Polar, ranked #374 on the Latin Target 500 list, making it Coca Cola’s second-largest partner in the region.

Coca-Cola has a history as a dominant player in the Latin American market as represented by Fomento Economico Mexicano (FMX), which owns 53.7% of Coca-Cola FEMSA, ranked #61 on the Latin Target 500 and valued at $8,941.7 million. The combined partnership of both FEMSA and FMX makes it the world’s second largest bottler of Coke products; a statistic not lost on the people behind the company’s newest Chilean investment plans. In fact, shares of FEMSA have even exceeded those of the American beverage maker in the past year, making a whopping $14,557.7 million, as compared to Coca-Cola USA, which posted $4,690.0 million over the same time frame.

What are Coca-Cola’s investment goals with Andina?

According to Coca-Cola Andina President Juan Claro:

“This new plant is aligned with the vision we have at Coca-Cola Andina to be a benchmark of sustainability – a very attractive company with sustainable development and innovation. We want to make a difference as a company that cares about providing a quality work environment, cares about the environment, contributes to the country and to the community, and focuses on efficiency in the growth of our production, marketing and logistics.”

Sustainability seems to be the name of the game across the board, and Coca Cola believes that within this sustainability concept, it will not only lead the way in responsible business practices in the region, but turn a healthy profit as well.

Why Chile?

Simple. In the past few years, Chile has transformed itself into a power
ful center for business development and international trade. With limited trade regulations and business development potential ranking amongst the most favorable in Latin America, Chile is a prime location to tackle the regional market, especially in neighboring southern cone states like Argentina and Brazil. With the growth of Andina, as well as Embotelladora Polar, Coca-Cola can vastly expand production in an area that’s already “thirsty” for industrial growth.
Coca-Cola’s $1.3 billion investment into the South American nation is a good sign for other companies looking to invest in there. Stable, sustained growth, something that had long eluded many Latin American nations, appears to be on the horizon for Chile, which is going through their biggest economic boom in decades. And the market for consumer goods in the greater region appears ready to explode, with both the World Cup and Olympics coming to Brazil in the next few years.

For more inside access to Coca-Cola FEMSA and scores of other powerful Latin American businesses, contact us today. At Latin Target, we provide you with access to key decision makers, as well as give you comprehensive lists of the top ranked companies and their executives. For more info, check out our Facebook, Twitter, and LinkedIn pages, or call us at (312) 265 6538.

 

Harnessing the LATAM Mobile Data Traffic Explosion

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The increasing coverage of 3G, 3.5G, and 4G networks and greater penetration of low-cost smart devices has significantly increased the revenue generation opportunities of mobile broadband service providers in Latin America. Mobile broadband is emerging as a likely substitute for fixed broadband in metropolitan areas, both in the residential and corporate segments. By the end of 2011, handsets already accounted for 80.5 percent of all mobile broadband connections.

In a new report, Frost & Sullivan finds that the Latam market generated revenues of $6.74 billion in 2011 and estimates this to reach $34.41 billion in 2017, driven by increasing demand for mobility, penetration of smart devices, and convergent services and bundles.

Changing Consumer Behaviors

“Consumer behavior has changed in recent years, resulting in higher demand for mobile Internet to access social network applications, instant messaging, mobile voice over Internet protocol (VoIP), and many other value-added services and applications,” said Frost & Sullivan Telecommunications Team Leader Renato Pasquini.

Although the market has vast potential, it is pegged back by regulatory delays on spectrum auctions, low spectrum caps, and lack of competition in distant regions and rural areas. In addition, users’ inadequate knowledge regarding smart devices restrains its adoption in several areas.

Data Traffic Explosion

These challenges are compelling mobile operators to formulate innovative strategies and service plans to deal with the data traffic explosion and obtain returns on investment. Further, national broadband plans implemented by Governments in Brazil, Chile, and Colombia are stimulating mobile broadband coverage.

Mobile operators also need to work on network upgrades, planning and monitoring as well as building WiFi hotspots for traffic upload, as it can minimize the impact of regulatory delays and mandates regarding tower installations.

“The mobile broadband service requires huge investments in backbone, backhaul, and other network elements,” noted Pasquini. “Mobile operators need to maintain reasonable service quality and generate free cash flow, without excessively affecting network usage.”

The Rise of the Multilatina

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The business world can be very unforgiving to a newcomer, and the hottest newcomer on the block these days is the MultiLatina.  But what is a MultiLatina, and where does it come from? In the past, the traditional hierarchy of where and how business is done has dictated the ebb and flow of international commerce. For years, there has been a clear geographic distinction between buyers, sellers, and producers. The stigma of being one, and not the other, has kept regional corporate dominance steady for the greater half of the past century. These days, that’s all changing, especially in Latin America.

In a region long stigmatized as wealthy in resources, but socially and economically unstable, some of the world’s strongest new companies have begun to emerge. They are profit-driven; they’re resource heavy, run on low operating costs, and are strategically poised to make their mark as leaders in the global business world. These companies are known as MultiLatina, and whether you know it or not, their rise to success has been in the works for years.

Defining the MultiLatina

The definition of a MultiLatina is a company or corporation that includes ownership acquired or controlled in a Latin American country that also operates other geographical regions, and has annual revenue of at least $500 million. In other words, a powerful global company domestically run and based out of Latin America. And while many of these MultiLatinas aren’t new, the rest of the world’s recognition of them is. This has a lot to do with politics, old business stereotypes, and the hyper-emergence of globalization in the past 20 years.

The impetus for this happened during the mid 90’s, when many Latin American countries de-regulated trade restrictions, allowing foreign companies to freely invest in their resources, and at a high profit margin. Seeing themselves as the proverbial “cookie jar” of the developed world, local companies needed to figure out a way to compete. If they were supplying the resources and labor, they needed a better return. The local market for Latin American products just wasn’t large enough, so they globalized.

Aggressively minded Latin business leaders began to work together in an effort to further deregulate the region, but this time with direct benefits to their continental neighbors, rather than foreign entities. Governmental pacts such as Mercosur and the Andean Common of Nations (CAN) allowed for better regional economic integration, and partnered with tax breaks and subsidies, helped birth the first wave of the MultiLatina.

Latin Target 100 MultiLatina BrandsWhats in store for the future?

While recognition of these companies may have been slow to start, their success in the past decade can’t be ignored. Corporations like Petrobras, Grupo Bimbo, American Movil, and Vale have produced both domestic and global profits that would rival any competitor, and they’ve done it their way. Having the resources to meet high demands, partnered with a less compartmentalized management style, and a much more fluid organizational structure, has been the recipe for success for the MultiLatinas. They also have an ideal geographic positioning, bridging the gap between Asian and European markets, while being directly accessible to both the Caribbean and the United States.

So what does the future hold for these Latin corporate juggernauts? Where will they fit in over the next 10, or even 20 years? The consensus in the business world is that if they can adapt to even further extend themselves into the global market, they will continue to grow. But with a unified-language workforce of around 500 million people, and seemingly limitless physical resources, all signs point to sustainability. Whether we acknowledge it or not, MultiLatinas are here to stay, and they have no plans on slowing down in the future.

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Andrew Jackson is a writer for Latin Target – a Database Services Company that ranks the Top 100 MultiLatinas, and is focused on giving in-depth insight and access to key executives within each of Latin America’s largest and most influential businesses.