Europe for sale: the crisis buffeting the Old Continent opens doors for a new landing of Latin American companies in the region.

Author:Manaut, Sergio
Position:STRATEGY: MULTILATINAS
 
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In 1890, the shoe manufacturer Alpargatas ventured out of Argentina to open a foreign affiliate in Uruguay. In 1905, the agricultural firm Bunge & Born followed its Buenos Aires neighbor. They were pioneers. Some companies opened shop beyond their national borders, but they were more the exception than the rule. The region gained relevance only as the developed economies wallowed in the crisis that struck in 2008. Favorable macroeconomic data sparked the birth and consolidation of big Latin American companies--mainly Brazilian and Mexican--that have gone out to play in the global league. "The boom of the multilatinas coincides with the growth of the region, whose markets remained small. As well, these companies knew how to benefit from their experience navigating in turbulent waters," says Enrique Iglesias, secretary general of the General Secretariat of Spanish America.

Now they want more. But first, a bit of history. The origin of the Latin wave may be explained by certain factors. It's not an accident that many multilatinas focus on exploitation of raw materials such as mining, extraction of fossil fuels and food production. These natural competitive advantages were first brought into play by the boom emanating from China and India, who became major customers for raw materials. Thus, natural resources loom large for the multilatinas. There we see Petrobras, Pdvsa, Vale and Grupo Mexico. The multilatinas also compete in mature consumer product sectors such as food and drink: Femsa, Bimbo, Mar frig, Arcor, Concha y Toro, and Brasil Foods are in no-holds-barred battles with rivals the size of Dannone or Nestle. Then there's Embraer in the segment of medium-sized commercial aircraft, and Brightstar in sectors with a large component of technology.

THE SECOND WAVE

Ramon Casilda, author of Emerging Latin America, argues that "Spain bet on Latin America and today that region has to bet on Spain." While asking for reciprocity, he forgets an important fact: the Spanish companies entered the region to take advantage of the low prices arising from the privatization wave. Do such bargains exist today in Spain and Europe?

A recent report from the Economic Commission for Latin America says the current situation in the European Union could open new possibilities for trans-latinas, especially in terms of acquisitions. The Commission argues that the loss of value and the need for capital by some companies could help the trans-latinas continue...

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