Business in the United States may be sputtering, but in Latin America, many companies expect their best year ever in 2010 and even better results for 2011, the August session of WorldCity’s CEO Club found.
Software company Adobe Systems is seeing its Latin American sales jump more than 30 percent this year to new highs and expects to show strong gains next year too, said Marta Clark, director of sales for Latin America and the Caribbean. The company just opened in Chile as part of a regional expansion, she said.
Household appliance maker Electrolux also is setting new records in the region, as Latin America’s middle class grows and snap up refrigerators, microwaves and other gadgets in countries as diverse as Brazil, Chile and Venezuela , said Joao Claudio Guetter, president for Latin America and the Caribbean.
Stoking the growth is a boom in Brazil, Latin America’s heavyweight with nearly 200 million residents and a roughly $2 trillion economy slated to expand an Asia-like 7 percent this year. Brazil accounts for about half of Electrolux sales in the Latin region and is growing faster than other markets, Guetter said.
Brazilian business is so hefty indeed that automaker GM recently opted to set up its South American headquarters there. GM used to manage its Latin America, Africa and Mideast operations from South Florida and then, temporarily ran them from its international headquarters in China.
But other multinationals see problems in locating a Latin American headquarters in Brazil.
Healthcare products company Novartis chose Miami as its regional hub for four main reasons: ease of air travel to Latin America; potential to attract bi-cultural talent; security; and relative cost, said Carlos Garcia, president for Lain America. Miami still scores higher on those counts than Brazil, Garcia said.
It also helps that Miami remains a neutral site outside of the region’s big markets. “Setting up a Latin American headquarters in Sao Paulo and staffing it with mostly Brazilians can be to the detriment of other countries,” because concerns for giant Brazil and its Portuguese-speaking culture may dominate, said Steve Bartley, managing director in Miami for Boyden, a global executive search firm.
Managing fast growth in Latin America presents challenges. Digital marketing firm Quaxar is busy finding new hires and potential partners in new markets, said Leonel Azuela, founder and managing partner. Quick expansion, he said, raises such tough questions as “How much control do I give up?”
Communications and logistics also gain importance. Resort chain Club Med is turning more to teleconferencing services, including Skype, to communicate more effectively across borders and keep travel costs down, said Xavier Mufraggi, president and chief executive for North America.
Videoconferencing is becoming so popular that many companies now use it for first-round interviews with potential executive hires, said Lorena Keough, managing director in Miami for Diversified Search Odgers Berndtson. Final interviews are later conducted face-to-face, she said.
To manage a soaring flow of e-mails, Jim Fendell said his transport companies developed a software program in-house that groups messages by action item. The program helps employees new to a project to follow the conversation and “increased our efficiency,” said Fendell, president of Aeropost International Services and other ventures now posting double-digits gains in Latin America.
Besides growth, participants face other challenges in Latin America.
For media, there’s concern over an increase in protectionist legislation and taxes in some countries, said Eddy Ruiz, executive vice president and general manager for Latin America for A&E television networks.
Higher taxes also are a concern in some Caribbean nations that have seen their U.S. tourism slip in recent years, said Club Med’s Mufraggi.
Plus, there’s debate over the sustainability of Brazil’s growth after the country hosts the World Cup in 2014 and the Olympics in 2016, said Jorge Hurtado, director for Latin America for real-estate consultancy Aguirre Newman America. “The shining stars are capturing all the attention now,” he said.
The CEO Club is one of six event series organized by World City on international business topics. The Club is sponsored by the University of Miami School of Business Administration, telecom company Telefonica and law firm Becker & Poliakoff. The next CEO Club meeting is set for Oct. 8.