"After a big win is when you will be most vulnerable to bad decision-making. Take time off, clear your head, and humble yourself". Ian Cassel.
From Denmark to Latin America 1.0. José Miguel Zevallos
This article was originally published in the DealHaus Connector Magazine in Danish. We often hear our business peers say that “Information is Power and lacking of Information is a Weakness”, and we often believe -and have confirmed, for the good or for the bad - that is true. In my recent experience here in Denmark, when approaching Danish executives that are defining their companies' growth strategies, the vast majority of them disclose that they are not currently including Latin America in their plans. That happens however not because their interest in the region is null, but rather because they don't have the relevant information on-hand, information delivered in an expedite, easy fashion. This article thus is the first attempt, the first pill to take, in a travel called Getting to know Latin America -from the Danish businesses perspective. As every first step, let's start from the basics. How do we define Latin America? Is Latin America and South America the same concept? Everybody speaks Spanish in Latin America, right?. By definition, Latin America is the subregion of the whole Americas where the Romance languages are spoken -far mostly Spanish and Portuguese, but also French. With an area closing the 20 million km2 -or the 13% of the global surface-, Latin America group more than 20 countries that stretches from the southern border of the United States to the edge of the South America sub-continent. Latin America (or Latam as is usually abbreviated) is then a diverse and quite big place, that goes beyond purely geographical definitions. In terms of its demographic features, almost 600 million people live in the area, with about 80% of them inhabiting the cities, many of them including among the most populated urban centers in the world. For that reason is Latin America the most urbanized region worldwide. According to the International Monetary Fund, the economy in the region is powered up with a GDP PPP figure of 7,531,585 million USD, a larger one than those of India, Japan and the UK combined. Thinking on business opportunities, the minimumto derivefrom these fact-based,introductory paragraphs so far could be represented in this little but meaningfulword: potential. I bet that, up to this moment, the business-minded reader have traced some lines regarding how their products or services would look like in the region. That means the reader, thus, is also foreseeing potential beyond. Identifying common potential industry sectors that are booming along the whole region might be a tricky business, as there could be substantial differences from country to country. However, industries like Oil and Gas, Mining and Metals, Retail and Consumer products, Infrastructure and Agribusiness are nowadays hot trends in the region. On top of that and transversely across industries, Technology and Internet are also registering boosting levels of adoption. As every thing in life with potential, there are definitely challenges to embrace and barriers to be prepared to overcome before we can realize and cash out over our investment. And dealing with the Latin American market is not the exception. In short, Latin America is a melting pot of cultures divided as we mentioned, in more than 20 countries. That simply means differences among countries in e.g. ease of doing business, taxes, corruption perceptions, equality levels, etc., situations we need to be aware of. But along with the challenges come bright sides and opportunities. One of my favourites, when we learn about doing business in Latin America, is the GDP per capita comparison between the region and other emerging places in the world. The per capita disposable income in Latin America is above 5,700 USD, a figure that surpasses China's 2.5 times and India's 4.5 times. A lot is being said about the potential of China and India in terms of their population record rates -which is undoubtedly true- but at the end, is the people's wallet which pays for our services. Another interesting feature to take account of is that a majority of the Latam's urban citizens -hence their businessmen or businessmen-to-be- are educated following the “western world” traditions and codex, which in theory facilitates to the Scandinavian executive the process of developing business relationships -in terms of timing, effort and confidence, to name some gains- in contrast with counterparts raised in other parts of the world. Following this line and pushing beyond the numbers, we canuncovering some real cases of success stories in the marketplace. For example, according to the Denmark’s Export Credit Agency (EKF), the company Detectronic has managed to place million kroner orders, “from the company's headquarters in the small Jutland town of Farsø to the Latin American food industry”. Finally, I don't want to miss the space to mention two ideas, that hopefully we have the chance to develop further in the future: One is the proximity of Latin America to the US market, both geographically and culturally speaking. Nowadays, the US is home to +45 millions of Hispanics, that in some cases could be turned into a great opportunity to attempt to enter the biggest market in the world. The second one is the Internet penetration level. Latin America is not a region off the digital trend, and, conversely, accrued 300 million people connected to the “net of nets”. Latin America is a young market by definition, where the younger, trendier and wealthier generations are fully engaged to the social media phenomena, as more than the 94% of Internet users are engaged in a social networking site as Facebook, Twitter or Linked In. That fact opens plenty of possibilities for both digital and non-digital Danish businesses, from the awareness, marketing and delivering perspectives. I hope this first outlook about Latin America have ringed some bells in the Scandinavian executive in regards to start considering the region while working with your teams in your next business developing strategies.