Eternos emergentes Asia y Amrica Latina

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Eternos emergentes? Asia y América Latina

• Lourdes Casanova
• Strategy Department
• INSEAD
• Email lourdes.casanova_at_insead.edu
• Casa de América
• Observatorio Iberoamericano de Asia Pacífico de
  Casa Asia
• 27 de marzo 2008

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Globalization is a 2-way street
As economic and political power shifts worldwide,
new champions are emerging regionally that
force us to rethink solutions to global and
industry challenges. How can old and new
champions collaborate in a highly competitive
global environment? Where are the natural areas
of collaboration? World Economic Forum. Davos. 26
Jan 2008
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far behind me-toos low-cost
the "Chang"solar-powered cell phone
Brazil sugar cane based ethanol
EBITDAs gt 50 in all new champions
Emerging markets Hardships ? Training ground to
expand
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In Accenture 2008
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In Accenture 2008
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The new JAGUARSEMERGING MULTINATIONALS FROM
LATIN AMERICA

• 334 of the top 500 Latin American MNCs gt US 1
  billion
• OFDI (2006) US40 billion (source ECLAC 2007)
• Phases
• 1 1970 1982 Natural market
• 2 1982 1990 Lost decade
• 3. 1990 2001 Privatization and deregulation
  competition
• 4. 2002 China and India demand of commodities
• Competition
• Economic boom

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Joined IDB/INSEAD research project

• From Multilatinas to Global Latinas. Ad hoc
  sample
• Investments in US or EU
• Excluded 100 state-owned, financial institutions
• Variety of sectors, sizes, public/private and
  countries
• Starting at the 90s
• Mexicans América Móvil, Bimbo, Cemex
• Brazilians CVRD, Embraer, Petrobras
• Emerging Global Latinas (SMEs)
• Concha y Toro, Natura, Politec, Pollo Campero and
  Astrid y Gastón

Not much public information about the
companies/opacity
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1. DRIVERS Macro and firm

• MACRO
• Economic volatility
• Liberalization policies ? competition at home
• Trade Agreements NAFTA, Mercosur (FTAs very
  important)
• Economic bonanza since 2002 commodities,
  increase demand from China and India
• Government role
• FIRM
• Seeking (stable) markets ? growth
• Competition at home ? best defense is to attack
• Perception of an opportunity
• Learn
• To compete
• Competitive advantage ?virtuous circle

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2. International Strategies

• Geographic diversification as hedging more than
  by product
• Where?
• 1st phase Natural Market language, history,
  proximity
• 2nd phase US/EU/Asia
• 3rd phase Rediscovery of natural market
• Brazilian companies more geographical diverse
  expansion (but started in Mercosur) than Mexicans
  (focused in US)
• How
• Domestic Greenfield
• International Acquisitions, JV (oil-mining)-
  alliances-network

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3. Global Latinas Uniqueness

• Dominant positions in home market
• Family owned conglomerates/national champions
• Entrepreneurial drive
• Strong (and long) leadership? fast centralized
  decision-making
• Beyond efficiency Branding and Innovation
• Survive harsh environment, different perception
  of risk
• Economic volatilily
• Strong competition in home market local and MNCs
• Management
• Not always professionalized management (network
  or family control)
• Stand alone international operations (not
  integrated)
• Take advantage of crisis cheap assets from
  foreign MNCs
• To acquire competitive advantage

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CONCLUSIONS

• Fierce competitors that excel at efficiency,
  innovation and risk management
• Internationalization
• Tap new markets, Build economies of scale
• Spread risk geographically
• Compete with multinationals
• Access to knowledge technology, cheaper capital

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Some questions for discussion

• Should governments encourage Outward Foreign
  Direct Investment?
• CVRDs public discussion
• Impact in host country
• Will they cooperate more?
• Will they have a development angle?
• Do they owe anything to their home country?