Archive for August, 2012

Dr. Latin America or: How I Learned to Stop Worrying and Love the International Development

(Lessons Learned on Latin America’s technology and innovation investments)

Stanley Kubrick’s classic film feature title (Dr. Strangelove or: How I Learned to Stop Worrying and Love the Bomb, 1964), a masterclass of cynicism and irony on the nuclear bomb race, could be used as an analysis for the current reaction towards new markets, in particular, Latin America.

International Business Development has become almost a limerick in current corporate meetings. This sort of strange riddle conjures up the idea of deploying (all or part of) the company’s businesses in new and undiscovered lands. This, by way of international trade, foreign direct investments, or special structure of capital in the newfound lands.

For North American ventures, a European “invasion” could be considered as an option, but under the current issues of recurring economic crisis in the euro zone, the Old World has lingered in a particular ellipsis…. European investments still consider investing in other neighboring countries as well as the Eastern European Nations, of which some could still hold a certain margin of growth and development. The other option -the next option- is Latin America.

To relive the experiences of Columbus in a fabulous odyssey is what many small (and not so small) companies dream of. Under the spell of globalization, new countries came to rise –for different reasons- and now we are living the rebranding of Latin America as an investment haven under the North American and European current weather.

Brazil, Colombia, Chile, Argentina (to name just a few) comprise a very important market that has caught the attention of many companies, more precisely those in the technology and innovation arena.

These newfoundlands have few technological applications to consume, but enormous amounts of information, a capacity for spending and a sustained and growing middle class that considers new technologies as a basic means of personal and professional development. See the recent explosion of smartphones in the region, the unceased growth of internet and hi-speed connections. Latin America is aware, at the same time, of all the latest devices and applications available elsewhere, but not locally (from all things Apple, other Smartphones, Netflix et al, Spotify, Rdio et al.). Local consumers therefore know all of these products, but cannot access them directly. They are simply waiting for them.

That is why it is logical that many North American and European companies have decided to launch international campaigns in Latin America, with uneven results. The primary reason is the way the approaches have been designed, since many of them lack the know-how when attempting to integrate Latin American markets. It is incorrect to invest in Latin America with the eyes and vision of a European context and European rules. Doing business in Latin America implies a concrete prior knowledge of the commercial arena, players, competitors, politics, history, social implication, as well as managerial implications. It might sound funny, but it requires a history lesson. European businessmen know that in order to do business in China, major cultural adaptations and numerous types of concessions must be made.

Recent news in the region might be –prima facie- less encouraging to investors, as some circumstances in the traditional Latin American environment might be seen as a menace to investments and their necessary stability. Nevertheless, not all nations, nor all markets in Latin America, are reacting in the same way. Each nation deserves a particular treatment for investments, for capital structure and for any strategy for future investments.

As a part of many other prior requirements to consider before embarking in the big international leap to any Latin American market, some situations can be considered as crucial. Firstly, it is necessary to previously obtain the most accurate data on the market, analyzing potential competition, with the help of trustworthy sources. Secondly, to understand the reality of the timing, to know how to explain the real scope of the potential business in a cultural language that will be clear for the market needs, including all other cultural innuendos. And finally, to be aware of the differences that each country possesses in the process of developing business. In sum, before beginning the adventure, lower your guard and accept help. It’s all about how to learn to stop worrying and to love the international development.

Some sectors are still a priority for the Latin American markets: Technologies and innovations in general, the markets surrounding smartphones and the revamping of traditional sectors such as the music, book and film industries. It is still early to act in these markets, as the growth, luckily, is still ahead.

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