Latin America’s Own: Multilatina Corporations
Latin America has been breeding champions for decades. It has created companies mighty enough to compete with the likes of America’s Wal-Mart or the United Kingdom’s BP. These companies’ operations spread across the Americas and beyond. Latin American Multinationals—or Multilatinas—are the result of years of economic prosperity in the region. After surpassing a series of crippling default crises in the 80s and 90s, the region’s economies started providing a suitable environment for company growth. Many governments also started perusing liberal economic policies that diminished barriers to international trade. Circumstances have changed, however, and the region’s current bleak prospects may bring difficulties in Multilatinas’ future development.
The first Multilatinas began in Chile, with the great revenue the nation earned from copper exports to China. They began investing in Argentine wine and during Argentina’s crisis in 2001 the first Multilatina emerged: Cencosud, a multinational retail company. Multilatinas have similarly emerged in many Latin American countries, and have developed a market for a myriad of goods. The general criteria for being considered a Multilatina is make sales of over $250,000 annually and to have established branches in more than one Latin American country. Leading in annual sales are, unsurprisingly, the Brazilian Petrobras and Venezuelan PDVSA, both of them oil exporters. The following 10 companies are producers and exporters of metallurgical and chemical industrial goods, telecommunication services, and food distributers.
One of these companies is CEMEX, considered a global leader in the building material industry. Last year, AmericaEconomica magazine awarded CEMEX the Multilatina Business 2014 Award due to its prominence not only in Latin America, but also in Asia, Africa and Europe, spreading across 34 different countries. It has the greatest internationalization, leading the Multilatinas with most foreign assets.
CEMEX is a showcase of what led to great Multilatinas. Three important factors shaped the growth of the company: leadership, human capital, and expansion. Lorenzo Zambrano, the former leader of CEMEX was known for his optimistic and perseverant outlook on the company, an attitude that permeated through the whole business. CEMEX’s association with Instituto Tecnológico de Monterrey, one of the best universities in Latin America, has also brought many great and innovative minds to the company. Finally, the expansion of CEMEX, as with other Multilatinas, is what brought the greatest success to the company. Headquartered in Monterrey, Mexico, CEMEX began expansion nationally. After becoming the greatest concrete industry in Mexico, the firm went overseas, often taking advantage of economic situations abroad, as with its expansion to Asia in 1997. Investment abroad, especially in developing countries, has led CEMEX to be recognized as one of the leading companies in the building material industry.
The effect of companies like CEMEX, and hundreds of other Multilatinas currently operating in the region, has been unprecedented and very positive. The past few years have been the first instance where the whole region has become unified in free trade, as opposed to belonging in customs unions. As Latin America becomes plagued in slow growth and low levels of investment and education, topped with political instability, the emergence of multi-Latina corporations has brought countries together as part of an innovative market. Thus, economic policy and access to capital, as well as tariff reduction for neighboring countries, have been largely homogenized in Latin America due to the presence of Multilatinas, for the region’s best. That said, all the region’s firms will have to continue seeking innovative approaches to survive in a stark economic climate.