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For Latins, Takeoff Time


Editorials

FOR LATINS, TAKEOFF TIME

Quietly but impressively, businesses across a range of consumer industries are beginning to make their mark in Latin America. Promising startups are selling everything from sweets to software, while established conglomerates are gutting and restructuring their businesses, focusing on a more select group of products. Across Latin America, countries are entering a critical stage of development as they sell into a market of 470 million consumers in 28 countries (page 71).

A happy combination of factors is fueling this activity: Latin nations worked through their debt problems of the 1980s. They opened up their economies to trade, competition, and investment, and rising incomes soon provided a ready market for cheap housing and cheap refrigerators. A new class of managers and entrepreneurs, many of them educated in U.S. business schools, has taken the helm and embraced cross-border investments and productivity-enhancing technologies. Today, the wholesale cost of a T-shirt in Brazil is 75 cents, compared with 90 cents for a similar shirt made in China. Chilean companies have plowed $8 billion into investments abroad. Small companies routinely report profits on the Internet, and some seek capital through American depositary receipts.

For all this progress, though, the region is still underdeveloped in many ways. For businesses to prosper in this market, governments, too, must become more open and less corrupt. Basic institutions, from labor markets to tax structures, must be reformed. Still, a number of lively companies are models for how to sell to Latin American consumers.


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