WorldCity Business Magazine

Miami at the crossroads

by Mary Dempsey

Miami has proven itself a dynamic hub not only for U.S. commerce, but for business in and out of Latin America. Now it must work on a more ambitious plan: to become the intersection between Latin America and Europe.

“Miami has been quietly and methodically building a powerful position in what I call the Magic City Triangle, which connects Miami to three continents: North America, South America and Europe,” Yuda Saydun, president of Genventure Corp., told participants at the DHL Connections briefing in late June. “We are the portal for the three points of this compass.”

The Europe-Miami-Latin America link has already been established. Air service through South Florida links European cities to Latin America cities, as do cargo routes. European companies have their Americas headquarters in Miami and more are arriving. Earlier this year, for example, British fund manager and investment advisory firm London & Capital opened its first U.S. office, not in New York, the nation’s financial center, but on Brickell Key. The Miami office is handling the firm’s business in both North, South America and Caribbean.

To maintain this momentum, however, Miami needs to take a hard look at its weaknesses, agreed our panel of speakers at DHL Connections, which alos included Diane Sanchez, vice president of Telefonica USA, of Spain, and Luc Bansay, vice president of The Apety Group, of France. The to-do list runs the gamut from bolstering trade relationships with other countries to markedly improving the quality of local public schools.

“I’m here to fire a warning shot across our own bow and to suggest a healthy dose of paranoia so we can ensure that our city doesn’t lose its leadership role at the crossroads between Europe and the Americas,” said Saydun of Genventure, an investment and acquisition advisory company in Miami.

Saydun warned that Miami’s privileged position as the connecting point for air service, trade finance and shipping between Europe and Latin America is far from secure. The European Union, he said, not only is eyeing more direct links to Latin America, but it is working to get the region to look across the Atlantic rather than north to the United States, a strategy that could potentially shut Miami out.

“The E.U. has a smart strategy to reach out to Latin America a written, explicit strategy that looks far beyond the almighty dollar,” said Saydun. “The EU is helping Latin American opinion leaders push for more meaningful democracy, and more regional integration that’s in addition to trade, economic and political cooperation. It all addsup to a better approach than the one the U.S. typically pursues,” he explained. “It’s more balanced, more complete. And, frankly, it’s more attractive to Latin American businesses, and government leaders.”

As evidence of Europe’s effectiveness, Saydun pointed out that the European Union spent less than a year forging a free-trade pact with Chile. A similar agreement between the United States and Chile took eight years. The E.U. is Latin America’s second-largest trading partner after the United States, with more than $140 billion in total trade annually.

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A $70-billion bet

While paranoia can be a good thing, Diane Sanchez, vice president of sales for global customers at Telefonica office in Miami, explained to the DHL Connections audience that Miami had become a pivotal role in linking Telefonica’s Madrid headquarters to its far-flung empire in Latin America

Telefonica, the single-biggest foreign investor in Latin America, has pumped more than $70 billion into the region since 1990. As a result, Telefonica has positioned itself to compete directly with Mexico’s Telmex for domination of the telecom industry in Latin America.

The company began investing in Latin America as a privatization wave hit the region in the early 1990’s. While other telecom operators rushed into the region and later fled when business soured, Telefonica rode out the wave. “We stayed because of the numbers and performance,” said Snchez. “We’ve got a company that’s entrenched in some markets and could subsidize other markets. Telefonica is here to stay.”

Miami, explained Sanchez, a former president of the NAP of the Americas, has become a cross-point for telecom traffic between Europe and Latin America, and, is now the world’s fifth largest telecom center. Telefonica is building on that through its operations here. Still, Sanchez warned that Miami is not taking full advantage of its opportunities. She says South Florida lets data communications zip through without tapping revenues that could be generated through local software applications and development.

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The Buck Stops Here

Not all Euro links to South Florida extend onward to Latin America. Miami has become a platform for some European companies looking to expand into the U.S. market. Bansay, vice president of The Apety Group, which represents the upscale French bakery chain Paul, explained that Miami was the perfect place for his company’s first U.S. bakery cafe. “People come to Florida from all over the world. They know French cafes.”

Apety Group unveiled its first Paul bakery cafe in North Miami in December, making it one of only 34 Paul bakeries outside France. The company plans to add 100 new Paul bakeries in Florida over the next five years. Bansay says the company evaluated potential U.S. locations by examining shopping patterns, especially at upscale retail establishments. Miami emerged at the top of the list of U.S. cities for luxury shopping habits.