Optimism, excitement & opportunity
Examples of positive Latin American business outlooks are popping up everywhere lately. In Joachim Bamrud’s recent piece, CEO’s Optimistic About Latin America, he makes the point that multinationals seeking global growth, are realigning their focus on this region and expecting it to pay a lot of dividends and soon!
The also recent article, At a Glance: Colgate looks to Latin America for revenue growth published by Associated Press takes it further by providing hard numbers that support targeting this region. In the case of Colgate, Latin America makes up the largest pie piece, 28% of company revenue. Higher prices in Brazil, Mexico and Colombia has led this recent growth which actually reached 6.5% during the last quarter, while other regions like the US saw sales decline sharply. Amazingly, the region comprised of Europe and the South Pacific represents only 21% of total revenue, followed by Asia and Africa at 20% and finally, North America at a mere 18%.
Other companies on this “pro-Latin American” path include Nokia, the Finnish global leader in wireless phone manufacturing, US-based Emerson, the UK-based InterContinental Hotels Group, Adobe, Global Crossing, H.P. and Microsoft.
Demographics, global events, proximity & security
The reasons are many. Over all Latin America’s middle class continues to grow rapidly. As the economic situation improves for the masses, so does the crime rate, especially in Colombia and Brazil where much of this new growth has been found. Brazil is growing at lightning speed in anticipation of hosting the World Cup in 2014 and the Summer Olympics in 2016. In fact, Brazil has never seen so much FDI pour into their banks—a situation that in the short-run looks favorable but in the long, could turn on them if they can’t generate the expected growth returns. Colombia is another shining star. The last decade has seen the government make tremendous strides in the fight to stamp out narco-terrorism. As a result, they too are seeing tremendous growth. Finally, Peru and Chile, despite their smaller market size also offer multi-nationals a relatively safe and robust environment in which to plant some ‘investment’ seeds.
Growth markets right "next door"
This Pan-American strategy should be viewed as a wake-up call for US Based organizations that make a good widget, but have chosen to sell it only in the US or have only ventured into countries that can be reached through ground transportation like Mexico and Canada. The time is now to adopt the strategies of the smaller more nimble European companies who for decades have thrived by adapting their products, packaging and marketing approaches to suit the needs of new and very different consumers in very different markets…often next door!
If you don't export, or only do so to a couple of countries, don't despair. Yes, you are missing opportunities....but even recognizing that puts you well ahead of most US companies. And having recognized it, now you can begin to change it. Contact Consilium Global Business Advisors to explore how we can help you identify optimal markets and assist in the steps required to establish, develop or improve your international business development initiative.