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Latin America: Land of Opportunity

12/4/2009 --

Ross alumni return to campus and share news of resilience beyond U.S. borders.

ANN ARBOR, Mich. — Latin America remains a healthy economic region despite ongoing market turmoil in the U.S. It has an appetite for people who can lead by example, influence a diverse group of customers and colleagues, and execute strategy, according to Ross alumni working in the area.

Graduates making an impact in Latin America shared their experiences with Ross MBAs at the second annual Hispanic and Latino Business Students Association Conference in November. The alumni — along with other business heavyweights in the region — said years of economic growth, debt reduction, export growth, stability in government, and economic policy set the stage for resilience in Latin America despite the 2008 meltdown of the U.S. financial system.

"The crisis didn't impact Latin America that much from a capital markets point of view," said Martin Valdes, MBA '04, vice president of Latin America investment banking at Citigroup Global Markets Inc. There are "pockets of liquidity" in the region, he said, including pension funds and sovereign wealth funds. And pension funds are becoming more flexible in the kinds of investments they make. "We have not seen a lack of liquidity," said Valdes.

In fact, the crisis created new business options for local financiers, attractive alternatives to many of the big, international banks affected by the collapse, noted Darys Estrella, MBA '02, CEO of the Dominican Republic Stock Exchange. Demand for financing didn't drop at all and more companies sought local sources of funding.

"This crisis was more of an opportunity for us, at least in the Dominican Republic," she said.

Another factor in Latin America's favor is that governments are increasingly stable and many have institutionalized economic policy. That means a change in government doesn't mean a radical change in economic policy.

"It's a great market to be in right now," Valdes said.

But finance in Latin America is not without its challenges. One of those is the regulatory environment. For example, the Brazilian economy is humming along nicely, but there's still too much red tape when it comes to opening or closing a business, said Osvaldo Nascimento, executive director for personal investments at Itau Unibanco in Brazil.

"The government is trying to simplify regulation, but it's not simple," he said. "The regulations are very old, so it's not easy. But we are improving and the government is focusing on that problem."

Estrella said she's run into similar obstacles in her attempt to integrate the Dominican Republic Stock Exchange with others in Central America. It makes perfect sense for a broker in Central America to have access to the DR exchange and vice versa, "but it's been a nightmare with regulators," she said.

So what does it take to succeed in this region? For Cristiano Camara, MBA '02, director of strategic planning and new business for Organizacao Jaime Camara, it's the ability to execute as a leader. Camara studied strategy at Ross, but found that strategies are pretty widespread around the world. A true business leader finds a way to work with diverse groups to achieve a common goal.

"A leader frames the problem, understands the actions, and communicates it clearly," he said. "It's hard to be a leader just by speech."

In Latin America, it is essential to understand different sensibilities in various countries, said Ernesto Solis, MBA '04, vice president of LAN Airlines in Chile. The airline works with governments in different countries; each has its own unique priorities.

LAN has succeeded at Ross in recruiting leaders who demonstrate an affinity for cross-cultural communication, Solis said.

"They come from different [undergraduate programs] and different backgrounds and they can understand different situations," he said. "They know how to face it and fix difficult problems."

The Latin American market also is a good proving ground for businesses seeking to reach low-income consumers at the base of the economic pyramid (BoP). Ross is widely recognized for its faculty expertise, research output, and ground-breaking courses detailing BoP initiatives.

"The base of the pyramid is a huge source of innovation that can translate to the mainstream," said Daniel Pagano (far right), MBA '00, regional manager at Natura, a Brazilian cosmetic and hygiene products manufacturer hoping to connect with the BoP consumer.

But it's a challenging market that requires new ways of thinking about product development, supply chains, and marketing, especially for Natura, which is committed to sustainable business practices.

"You're facing a different environment," Pagano said. "You're talking about big volumes on things like individual doses of shampoo. What's the environmental impact of that? It requires a new business model to address this public."

Latin America, he said, "is a great ground for understanding that."

Terry Kosdrosky



For more information, contact:
Bernie DeGroat, (734) 936-1015 or 647-1847, bernied@umich.edu