Archive for the ‘Chile’ Category

Chile is pretty hot

May 18, 2012

Ms. K Brown (Cockatoo member) is currently touring South America, and has filed this illuminating report on Chile’s economy and lifestyle.

“Tourism is becoming increasingly important, just behind copper, forestry and fisheries in terms of its contribution to Chile’s GDP as well as being the biggest employer. And the eco-tourism segment is very important in conserving Chile’s natural heritage.

I recently visited Huilo Huilo, a biological reserve in the middle of the Patagonian Andes in southern Chile. It is basically a cluster of hotels, cabins, lodges and camping grounds. Montana Magica has 40 rooms embedded in a man-made mountain, complete with a waterfall rising out the top, trickling down the windows. Hotel Baobab is more modern, consisting of 55 rooms in a futuristic looking, wooden pyramid. A new section, shaped like a mushroom, will have another 50 rooms. The hotels are interconnected by a myriad of walkways.

The lodges and cabins are set further from the main hotels to provide privacy. Golf carts are available to deliver those lodgers to the hotels’ main facilities. Add to this a couple of restaurants and bars, and more relaxation areas than anyone can find time to visit, and you have a 4 star hotel hidden away in the forest, surrounded by lakes, volcanoes and waterfalls.

Good things

Tourism is a great provider of employment – for example, Huilo Huilo has 80 hotel employees and 30 tour guides. This doubles in summer when the hotel is full every day. Graduates from non-tourism fields are flocking to this industry.

Environmental conservation – Huilo Hulio was declared a UNESCO Biological Reserve in 2007, enabling local hotels to leverage this into their designs, and marketing themselves to nature lovers. In return, the hotels are funding various conservation projects in the local community.

Friendly staff – Chile is known for its friendly locals. Even with a language barrier, they will always try to help or at least offer a greeting and a smile. As in other countries in South America, it’s wise to take directional advice with a grain of salt – because locals are so friendly, they will give very convincing directions without a clue of how to get there.

Pisco and wine – Chile is renowned for its pisco (grape brandy) and vineyards. Chileans are quick to offer tours and tastings, and work closely with hotels to provide transfers and information to lure you in.

Internet – Chile has the highest level of Internet penetration and computer ownership in Latin America.

Atmosphere – As with most SA countries, it’s common to see locals dancing on the spot in stores, restaurants and in the street. The local music can be either great or terrible, and you’ll hear a surprising amount of English-speaking songs. The locals will happily sing away to every lyric, without any understanding of what it means. The bigger cities feature big name acts – Roxette, Bob Dylan and Duran Duran all played during my 5 days in Santiago.

English – is now part of the curriculum at most Chilean schools. Chilean kids sing out “Hello, good afternoon, bye” to typical looking Gringos, such as me. It’s probably the current extent of their vocabulary, but it’s humbling.

Not so good things

Sewage systems – Chile, like many SA countries, doesn’t have the sewage systems to handle many of the objects that folk in developed countries put down the toilet. It’s quite daunting when asked to place used toilet paper in the bin. It reminds you that you’re in a developing country.

Gringo pricing and tip assumptions – Chileans are very quick to make judgement about your financial status and they adapt their pricing structures to suit. One tour operator quoted me an obviously inflated tour price and without missing a beat, quickly chimed “You’re a rich Australian though, so you can afford it”. I was not impressed! This disparity in pricing is apparent everywhere. The airlines will offer a price for local Chileans and almost double the price for non-residents.

Corruption – while less of a problem than in other SA countries, it’s still an issue. The owners of a Ma and Pa pizza shop in one regional city (they lived in Canberra for 12 years) explained that certain forms of corruption are still very apparent. For this reason they’re returning to Australia within the year. As the husband explained, “if you apply to the local Town Hall for a licence permit, unless you have a lot of money or know someone at the top, you will be waiting a very long time.”

Natural Disasters – Chile has 36 of the world’s active volcanoes. While this may boost its tourism attractiveness, it also means you must be on high alert. Towns such as Pucon have volcano eruption lights around town – red, yellow and green. Add to this the fact that Chile is the boundary between two tectonic plates and you have good reason to sleep with one eye open. The last significant earthquake (2010) measured 8.8 on the Richter Scale. It killed 525 people in the city of Conception – hardly in keeping with the city’s name!”

Latin America’s emerging multinationals

April 15, 2009

“Latin American companies have fallen through the cracks,” says Lourdes Casanova, a lecturer in strategy at INSEAD and author of Global Latinas: Latin America’s emerging multinationals.

 

“Latin America has been undersold. This book wants to celebrate the success of the region and its multinationals.” Since 2002, Latin American firms have expanded aggressively on a global scale and investment in foreign countries has jumped accordingly. And commodities now account for less than 30%, with a range of products now accounting for the rest – IT services, steel, electricity, wine, cosmetics, oil and gas.


Until 1980, Latin American countries were the emerging market of choice. Brazil and Mexico had China-like growth. But during the 1980s (the ‘lost decade’ due to the debt crisis) the region’s growth stalled as Russia, China and India stepped up. Prompted by the strict policies imposed in the 1990s by the IMF and World Bank, Latin American governments began the privatisation of state companies, deregulation and tariff cuts.  

 

The deregulation brought a wave of foreign multinationals to compete against domestic firms. Latin American companies had to grow and expand internationally. “These companies had been growing in a protected environment before this,” Casanova says. “Now they felt threatened by foreign multinationals competing against them in their own region. The best defense was to attack.” During the 1990s, Latin American firms grew domestically and expanded into nearby regions and/or with the same language and shared history. NAFTA smoothed the way and enabled cross-border acquisitions. Now they are entrenched.

 

Source: INSEAD, Paris

Mauritius view of global issues

March 8, 2008

Mr. Nikhil Treebhoohun, now with the Commonwealth Secretariat we believe, is a very agreeable chap who was a keen participant in clustering initiatives when he was the CEO of the National Productivity & Competitiveness Council in Mauritius.

A few years back he wrote a very good thought piece based on his attendance at the World Cluster Congress in Paris. His take included the following.

  • The Congress was organised jointly by OECD and the French government and the assistance was quite impressive both in terms of the number attending (some 1,000) and the quality of the participants. The Congress was opened by the French minister for spatial planning and the environment, who stressed the need to take on board the social dimensions of development. One important element was her commitment to build alliances with countries of the Zone de Solidarité Prioritaire so as to ensure that developing countries are not further left behind by the movement towards globalisation.  
  • The case of local clusters is notable not just because of the economic benefits for the performance of firms but also because it draws our attention to the presence of a different entrepreneurial and local culture. 
  • This is based on a higher degree of inter-relation between economic and social ties.  The fact that enterprises are located together in the local territory helps to generate trust and a willingness to co-operate, which makes for a qualitative difference between networking locally and networking at a distance.
  • Secondly, there are trust relations among enterprises.  The case of transition countries shows how vital trust is to any form of coordination, which was often destroyed during years of undemocratic rule.
  • Thirdly, there is the notion of partnerships between private and public actors.
  • Fourthly, there is enhanced visibility of local actors and of the civil society. This is demonstrated for instance by the increased visibility of networks of women entrepreneurs at a local level.
  • Fifthly, stronger representations of collective local interests is important. This also involves closer links to the authorities.
  • Sixthly, agencies need to think about a new approach, where the actor is a group of enterprises, rather than an enterprise as an isolated economic actor.
  • Last, a new relationship between territorial proximity and the use of new technology is warranted. 

Some of the ideas and lessons that were discussed at the conference include:

  • The SPL (systèmes productifs locaux) is a concept being promoted by the French as their own variant of the Anglophone clusters and the Italians industrial district. The main difference between the cluster and SPL is that the French see SPL as encompassing social issues – i.e. the SPL are clusters aimed primarily at community development as a means to combat unemployment.
  • There was total consensus among all participants that there is no blueprint for cluster development.
  • Whereas at TCI Glasgow the general feeling was that a cluster could not be built from scratch, at least one dissenting voice was heard in Paris which mentioned how, starting from an idea to develop sport fishing, Chile ended with an aquaculture cluster employing 30,000.
  • France is going to help LDCs set up clusters.
  • Clusters are built on trust -managerial and knowledge resources are needed – clusters need to be embedded in the social and community model – clustering is a means for empowering local entrepreneurs – must move from firm to industry thinking – need for a local delivery mechanism and an anchor institution – information flows must be freely available and accessible e.g. US government has no copyright on information it produces.                                                             

Genetically Modified (GM) crops

February 6, 2008

A huge debate has broken out in Australia with the foreshadowed lifting of the moratorium in NSW and Victoria on the growing of GM canola.

Growers of other crops are concerned about GM crops contaminating their investments. Canola growers themselves are concerned that their traditional export markets will not accept GM canola, and that the market will drop.

ABARE has just released a report ‘Market acceptance of GM canola’ that basically says no problem – go to www.abareconomics.com

People fail to realise that GM crops are now grown by more than 10 million growers in 22 countries. China, India, Brazil and Argentina are involved on a large scale, and the productivity benefits (less herbicides, higher yields) will provide them with a significant competitive advantage in domestic and export markets.

The consumer groups are another story. They are calling for full labeling of GM foods so that consumers can avoid them. The opportunity lies in the emerging global trend towards ‘truth in labeling’ – this includes eco-labeling, country of origin, and region of origin.

We predict that in five years time, the smarter food companies will be advising exactly what we are eating and from where it is sourced. They will be using this product information to strengthen their brand, to differentiate it away from generic brands and low-cost and low-quality imported product, and thus command higher prices.

Wine supply chains: Australia-South Africa-Canada?

February 17, 2006

Philippe Roy (Ottawa) writes ‘We continue to enjoy Australian wines in Canada, both reds and whites, all of a uniformly high quality, full bodied and lots of diversity in characteristics and flavours.

Can you do an article on Australian wine clusters, and invite other countries and regions to respond with wine cluster study reports? I can see Australia, NZ, France, Italy, Spain, Portugal, USA, South Africa, Chile, Argentina, all over a longer period of time. Winemaking is a multi-billion dollar industry globally.’ Cheers! Philippe Roy, Cluster Pathfinders, Ottawa, Canada. 

Professor Ian Marsh (Australian National University) replies
 
Australian wine industry has achieved spectacular success internationally – in just over a decade. While a number of environmental and external factors helped, the progressive development of a cluster structure introduced the critical element.

This is the central finding of a study Brendan Shaw and I conducted for the Australian Business Foundation. (See www.abfoundation.com.au).

The process began with the formation of a strategic plan for the industry (Strategy 2020). It  demonstrated the scale of the business development opportunities, particularly growth from exporting, the requirements for realising these opportunities, and why collaboration held the key. The opportunities exceeded what any producer could achieve by solo action. This report provided the grounds for ‘buy-in’ and collective ownership by producers.

The areas where collaboration and commitments were required from producers, researchers and marketeers were clearly specified. Industry leaders championed these proposals at industry conferences and forums.

Research and marketing agendas were established – and crucially, the agencies needed to drive collaboration were established. Where they already existed, the institutions adapted their programs to the new strategies. Over the course of a few years, 8 agencies were established or reformed to manage implementation. The most critical were the Australian Winemakers Federation (overall strategy), the Wine & Brandy Marketing Corporation (international market development) and the Grape & Wine Research Board (R&D).

In its appraisal of the industry, the respected Dutch assessor, Rabobank, scored the Australian effort against a variety of indicators e.g. natural advantages, economic context and the industry’s self-made capabilities. The Australian industry scored best in this latter category, clearly affirming the contribution of clustering to its ongoing success.   

Nigel Gwynne-Evans reports from South AfricaThe Wine Industry Plan is hot off the press. It is a commitment by the South African wine industry to deal with the legacy of a highly regulated economic environment and the challenges of increasing global competitiveness and discrimination along racial and gender lines. Aims to establish a “vibrant, united, non-racial and prosperous SA wine industry”.The South African Wine & Brandy Company is the key body, with 5 offices involved – Social & Economic Development; Human Resources Development & Training; Technology Innovation & Transfer (Winetech network); Generic Market Development & Promotion via Wines of South Africa (WOSA) and SA Brandy Foundation; Knowledge & Information Systems through SAWIS.  An interesting notion is a Wine Industry Scorecard (WIS) – to manage the process and create synergies. Each signatory will implement transformation strategies to be monitored by the SAWB.   Black economic empowerment will be attended to within all of these indicators.  A proposed checklist of indicators and benchmarks will be developed in the 10 categories:– Human resources development
–  Social upliftment & rural development
–  Business development, service providers & input suppliers
– Ownership & equity schemes
–  Governance systems & participation
– 
Quality & integrity
– Technology, innovation & transfer
– Market development & promotion
– Environmentally sustainable production practices
– Economic performance, efficiency & competitiveness.
 
The plan is available from South African Wine & Brandy Company – johan@sawb.co.za (Is there a window for technology transfer and supply chain initiatives between South Africa and Western Australia? Any interest, readers? – Editor).