Category: FDIB Latin America 2014

May 23, 2014

Escape from the stoney faced living gods

It was possible to escape from the Moai today, and see a different side of Rapa Nui, but to do so, I had to scale the largest volcano (there are 70 on the island) and view one of the more interesting “competitions” that distinguished the civilization that followed the stoney ones.  The society that emerged from the 17^th century wars focused on the life giving birds that came to the island, bestowing eggs and meat.  The migration in the spring (September) marked one of the strangest games this side of Olympus.  The clans vied to capture the first egg of the year.  The bravest warriors would live on the top of the caldera, then scale the 1000 foot cliff to the sea below, swim to one of three nearby islets (about half mile), capture an egg, and return with it intact by swimming the half mile and rescaling the 1000 foot (it’s a sheer face).  The winner, or his clan chief, got the title of “birdman”, which replaced the “living god” of the statues, “Birdman” got to live in seclusion for a year–no doubt recovering from his feat. Interestingly, the center of the volcano (about 1000 feet down) was the main source of water in dry seasons.  Our guide said that islanders went down the slope to get water, bathe, and wash clothes; no doubt that prepared them for the dual meet of collecting bird’s eggs.

The afternoon we returned to the Ahu Moai, but with a difference.  We started at another volcano which had a red lava stone that was used for the hats on the moai, since it might have resembled the turbans or topknots the islanders wore.  As with the other quarry, the warfare resulted in abandoning the stones where they lay.  The huge stones (there were 40 numbered on the field) were transported 12 or 10 kilometers away to the ahus, to be placed on the moia on site.

Another visit was to a strange reconstruction of fallen moia.  The main reconstruction in the early 60s placed the statues facing the land (and guarding the people), but the statues kept falling.  There were seven of them, and someone figured out that these symbolically represented the founders of the island population, who apparently placed THESE statues facing Polynesia, whence they had come.  At least placed facing out, they stayed upright.

The last stop was in a lava tube–a cave, which for many years furnished housing for the population; some had holes which let in enough light to plant gardens, but the one we stopped at gave us an idea of the power of the volcanic explosions and their results.

The group in my bus was literally thrown together from all over the world–a young man from Northbrook, one from Florida, and I represented the US; a couple from Chile went both days with me as did a lady from Brazil and a young woman from Australia.  I also talked with a Swiss businessman who was here on holiday from his half-year in Paraguay.  And we met a sailor from Chile who had spent 26 days at sea getting here.  As you can tell by this description, this “navel of the world” is on a lot of people’s bucket list, and having been here, I can understand why.

Long day/ride tomorrow.  Happy holiday.

May 19, 2014
Chile
I had some expectations before I started this trip–about Brazil and Argentina. Sao Paulo was, I discovered, not the place to go to fall in love with Brazil, but the place to go to do business. It was rather like going to Shanghai without Beijing (without Rio? The Amazon?). Argentina was every bit as con carne, Belle Epoque, and tango as I expected (and probably more volatile economically than expected).

But Chile?

At best it was Marxist (Allende, whose palace, built in 1796, where the air force bombed and killed him on September 11, 1973, was our last stop tonight); followed by right wing dictator Pinochet; mines, especially copper, and Chilean Sea Bass, one of the cause célèbre of environmentalists; and earthquakes. It is, after all, on the Pacific Rim of fire.

I was, therefore, a little surprised on the road into Santiago to find a modern expressway (my 1990 entrance to Beijing was delayed by a donkey cart ahead of our bus on the two lane road), fronted by high rise buildings, modern hotels (including Western chains)–and the wealthiest South American country in terms of per capita income (about 20,000, or about 40% of the US); as one of the business faculty complained, “It’s too modern.”

Part of the prosperity comes from the copper mines, which makes Chile the “Saudi Arabia” of copper. The salaries of the miners is about triple the average salary, and when they settled strikes, miners get a bonus of $40,000, which accounts for the traffic jams, since the bonus goes into new automobiles.

The Chilean miracle began in the mid 80s, with the overthrow of General Pinochet, and the gradual opening of markets and the economy. In fact, some of the steps began earlier, when generals decided to lower tariffs to make Chilean companies globally competitive. As one of our speakers pointed out, it was easier for a dictatorship to do so, even though it hurt business supporters of the generals. Other Latin American countries followed the model. The changes from the mid 1980s in terms of ownership of goods, of life expectancy, and decline in the percentage of poor, are impressive. In 1950, the index was 100; today it is 437, most of the change coming since the mid 1980s, the percentage of poor has shrunk from 45% of the population to 14% today. 46% of the population owns automobiles, a rough indication of the size of the middle class. And life expectancy is 79, the same as the United States. And the social changes–especially with a woman president–are equally impressive; divorce became legal in 2003.

One of our visits was to a foundation whose role is to increase innovation in the country. The joint public private organization has put its energy into four basic areas, that coalign with the nation’s big business, or strengths. One, of course, is mining: how to make it more efficient, such as ways to monitor the pipelines that transport the chemicals. A second area is agricultural. One of the foundation’s early accomplishments was turning salmon into a profitable export item, and selling the turnaround for a profit. A third area is in efficient use of water. The foundation has pioneered a water week, important for a country that is on the cutting edge of desert, with some areas that have not seen rain in 300 years. The final area involves energy–since this is another country in Latin America with fossil fuel shortages. Some of the emphasis has been on wind, and when we were in the mountains yesterday, we certainly understood why.

The major challenges as one of the speakers–a Columbia University Ph.d. in economics who is chairman of the Economics department of the University of Chile–outlined for us: how to sustain growth of 5%, particularly in an economy 50% of whose exports are still in copper; the answer there is move up the value chain and diversify into, say processing (China is only a purchaser of raw materials here, but has also started to export automobiles); the other is to narrow the gap between rich and poor. In developed countries, the rich 20% are 6–7 times richer than the poor; here, it’s 14X. Consequently, tax and other government policies are in question under the second term of the woman president.

One interesting fact came up when we visited the University of Chile, the leading school in the country. We were at the School of Business, and it’s pretty apparent in all three countries we visited that the great hope for the future lies in education. I was consequently amazed when I discovered that basically you decide on your career at age 17 when you a) take the national college entrance exams, and b) decide on a course of study. If you matriculate as an undergraduate business/econ major at the University of Chile, you have two years of introductory courses–only business and economics classes, and then two years of specialized courses in your business major. “No liberal arts classes,” I inquired? “No.” I wonder what my liberal arts colleagues at Illinois Wesleyan might say about that…..or rather, I know….

Today is the last full day of the FDIB trip. What a wonderful journey of discovery for me! And I hope, through this blog, for you, too!

May 18, 2014

What’s not to like about a sleepy Sunday in the Andes?  Santiago is sheltered by the Andes, and so we were able to drive about 25 miles out of town to a resort/farm/ranch (fruit trees, honey bees, vinyards) about 4500 feet high, surrounded by snow-capped peaks.  We spent the day hiking, or horseback riding, or sitting in the sun alongside a roaring mountain stream waiting for our lamb to be roasted.  What’s not to like?  Other than if we were here in the dead of winter (it’s “November” now), we’d be able to teleski–they’d take us up in a helicopter and let us ski down the hill. Or if we were here in the summer, when the roaring mountain creek accommodates whitewater rafting.  What’s not to like?

May 17, 2014

It’s chilly in Chile, where we landed two hours ago, a country nestled between the Andes (crossing at night was not too exciting) and the Pacific.  And it is chilly here–around 10 degrees for a high, and dry; our guide said average rainfall is 8  inches, and a desert in the north is supposedly the driest place on earth.

One of my readers (David) corrected my history of the tango, which is from the Belle Epoque period–before world war I, which was the height of affluence in Argentina, and the joy of much of our tour of the city today.  The Plaza du Mayo, which is where the Cathedral is located, also housed the royal governor’s quarters and the Pink Palace that at one time, I believe, was the Parliament building.  The square is the major scene for protests, including, Saturday morning, the veterans of the Falklands (Malvinas} campaign 30 years ago.   The stunning cathedral, built in classical style (you can hardly be the Paris of South America without aping Paris), and looking like the Parthenon from the outside, also houses the body of Jose San Martin, the liberator who in the Plaza sounded the call to revolution from the French on May 25, 1810.  From what I understand, while he drove the Spanish out of Argentina, Chile and Peru (that’s the Argentine version) followed by civil war in Argentina (the 3 Spanish viceroys eventually divided into 8 countries) which lasted until the 1850s, when I believe San Martin’s body was brought back from Paris.  The tomb rather resembles Napoleon’s.  Not having participated in two world wars which altered the face of Europe and Asian pretenders to be Paris (e.g., Saigon and Shanghai), much of the Belle Epoque remains intact, which makes the wide boulevards and statues appropriately majestic for a capital city.  I think I took more pictures today than in the previous week combined.

We also went to one of the harbors, the Boca neighborhood, where the former run down Italian area. has been gentrified, painted with bright colors, and turned into a boutique/craftsy art area, with handicrafts and local goods such as Havanna, a wonderful chocolate rich with caramel.

The third area was Recolleta, another Belle Epoque resting place–so to speak; it’s a cemetery whose mausoleums are way over the top housing the remains of politicians, lawyers, doctors, and Evita, who is buried with her brother in an elaborate tomb that is the destination for most tourist traffic.  Eva Peron–who died I believe in 1952, still exercises a magnetic charm in Argentine politics.  The cemetery is the equivalent of the one in Paris that has the remains of Jim Morrison of the Doors–there’s that Paris connection again, built when Argentina was one of the 10 richest countries in the world.

We had a great lesson in doing international business when we landed at the airport in Chile.  One of our faculty was pulled aside and informed that there was a banana in his carry on, and fruits and vegetables were strictly forbidden in the country.  Since the faculty member (“Not me”) had mistakenly checked the customs box that he was not importing anything, he spent ½ hour in a special room apologizing profusely, signing documents that would surface should he ever do the same again, saved primarily by the Florida International assistant who was Spanish speaking.  A great lesson, as I tell my students, on the hazards of doing international business.

I’m just glad it was “not me”.

Tomorrow we get to sample the Andes, and I’m really looking forward to it.

May 15, 2014

Buenos Aires, the harbor city situated on the enormous delta of the Rio de Plata, has a population of around 3 million.  The area around the city is roughly 13 million of Argentina’s 40 million.  Thus, it gave us a wider look at life in Buenos Aires when we went about an hour out of the city to visit a factory.  It was an easy hour on an expressway, until we got to an industrial district for our visit.

The company smelled good—Saporiti manufactures flavors and colors for food manufacturers. Today, chocolate was one of the flavors being produced, and as a chocoholic, I was ecstatic.   Founded in 1927, Saporiti’s  current CEO is 3^rd generation, who left a profession as an MD to take over the family business, and discussed some of the carryover between the two types of jobs. With 130 employees, $70 million in sales, and branches in a number of Latin American countries from Mexico to here, the owner discussed his plans for expansion, which included a look at the substantial Hispanic market in the United States. He did note, however, that as a mid-sized company, he was limited in his ability to supply a vendor like Coca-Cola, which demands similar taste around the world.  He stated that he was able to supply some niche products to big brands (I thought he mentioned a yellow cola, Inca Cola, in Peru).  The most interesting thing I learned from this manufacturer (surprisingly, manufacturing employs just over 20 per cent of the workforce, while agriculture, a big exporter, employs 5%) was that one of his efforts to create business, if not competitive advantage, is moving downstream.  He will work with a manufacturer to create a new flavor, and (for a fee?) not sell it to others in the same product category, providing research and development assistance to the small and medium sized companies he serves.  In addition, he will provide his expertise to his clients to purchase the right machinery.  Forecasting has got to be a great challenge since he has no “captive” audience; it’s difficult to get new business, but he said if the manufacturer is satisfied, he seldom changes a supplier—too much risk of a “different” taste.  Some of his ingredients take 2 or 3 months enroute (cocoa comes from Africa) further muddying his ability to manage supply and demand.  As he pointed out, he has a large warehouse to anticipate demand.

The second business was a service business that exemplified the flat world.  It was an advertising agency that stressed its ability to deliver creative services globally.  One ad they showed us found a market in Canada, the United States, and Thailand, for example, proving, as one CEO I met in India in 2001 pointed out, the right business can be headquartered anywhere.  The two entrepreneurs who integrated their production company forward, adding an advertising agency, were passionate in their presentation about their creative abilities, and some of the spots they showed us certainly demonstrated that they’d taken a lot of film-making skills and added them to the world of marketing.  My favorite was a coffee ad with a hand coming out of the coffee cup slapping someone awake.  I did not need it for their presentation!

It really hit me as we drove through their neighborhood looking at wonderfully solid homes of the rich (their office was a converted one-family many-room mansion that still had some elegant touches) that we were in the southern hemisphere.  As I looked up the street, I saw a beautiful sugar maple that was orange and red, rather like the one outside my home in Bloomington—in late October.  Here, 31 degrees south of the equator, it is climatologically mid-November.  If you love fall (and I do) you might consider moving to the southern hemisphere when it’s spring up North—if that’s not too confusing!

May 14, 2014

When I went for a walk this morning, I got really confused; I could not tell whether I was in Vienna, Budapest or Paris.  I had been warned that the city was deceptively European, an impression confirmed later when we walked between our visits through the main square—with statues of San Martin—surrounded by palaces built by land barons late 19^th century with Empire roofs that could have been in any one of those cities.  As our local guide gushed, this is the “Paris” of South America. The area where our hotel is located is on Reconquista (maybe referring to the Spanish reconquest of Iberia from the Moors, maybe referring to the independence movement in Latin America, a by product of the Napoleonic wars, started when Napoleon put his brother on the throne of Spain) and Paraguay streets, but could—with its cobbled narrow streets and small shops be somewhere in Europe.  But in the 19^th century EVERY civilized city wanted to be Paris. (Not sure what that says about Chicago….)

Our first visit today was in a building that could have been a palace; built in 1914 to house the Navy Department, its gilded doorway, wooden library, comfortable old boy chairs was in fact nicer than some of the palaces I’ve been in in Europe.  Coincidentally, it was the 100^th anniversary of the opening of the building, and there was a celebration welcoming brass from the South American navies.  I felt a little out of place without gold braid, but we were there to visit with a lawyer who has sat on Argentina’s judicial committee for a number of years, a body instituted 20 years ago to provide choices for judgeships to the President, who until then had put his own men (usually men) in for life with few checks or balances.  Remember, I said the civilian rule in this part of the world is fairly recent—remember the Falklands War?

His talk brought to mind some of the hazards of the flat world—hazards especially to the losers.  As I’ve told my students, neither organizations nor people react well to change, and the existence of the nation-state and political parties and different interests serves as speed bumps in that flat road.  In the case of Argentina—a country of 40 million, 13 million of whom live in the environs of Buenos Aires—there’s a tug (as there is in most countries) between the protection of jobs and the protection of consumers, for whom the flat world means greater access to goods, usually for less.  As in Brazil, the effort to protect jobs has sometimes prevented businesses from adapting to competition.  In addition, the system is riddled with corruption and businesses with inefficiencies.  As in other Latin American countries, there is an election in the next year, and businesses, we were told, were reluctant to invest until then.

Lunch was in an Argentine restaurant with pasta and the ever present grass- fed beef (90% of the cattle are grass fed), with some concession to the vegetarians in our midst (pasta).  The steaks were huge, as usual, and about half of it would have stood in for a meal for three days.  We were also introduced to a pancake called dulce la leche, a sweet crepe with caramel sauce that our guide said was too sweet for most Americans.   I had to confess to her that “my name is Fred, and I’m a sweetaholic”, but I confess (as did half our group), that the meaty lunch precluded much for dinner!

The second visit was to an entrepreneurial company that provides IT services in 30 countries, but is based in Argentina, showing that the flat world reaches here, too.It is the largest provider in Mexico and Argentina, third largest in Columbia, and has the largest number of Spanish speaking consultants for SAP.  They pointed out that the GDP has been rising, but so has inflation, ranging from 25-35% (wow), which led to a major devaluation in January, and the intervention of the government to control prices. The exchange rate last year ranged from 6 (legal) to 12 (black market), but the government has pegged the peso to the dollar ratio at 8-1.  I understand that you can go to the black market, though, and still get 10 or 11.  The government has also limited the outflow of dollars, which has led to a thriving black market in dollars, which bring a better ratio on the street.  The government is controlling prices, and pushing some industries more than others—e.g., IT services.  Neovis, the company we visited, is one of 1600 firms, employing 80,000 in Argentina.  Still, the major exports are agricultural—machinery and soybean, and the major imports are gas and oil.

I had a real treat—a dinner with one of my advisees who is studying this semester in Buenos Aires.  We made plans to meet before I came down here, and he took me to a local restaurant, and talked about the difficulties of doing business here, and shared his observations about what he’d learned, as much about himself as about Latin America.  He lived the Confucian saying, “It is a pleasure to welcome guests who come from afar,” and it was good to catch up with an IWU student.  He’s looking forward to going home (he studied in Barcelona as well, and says this is a tougher place to live than Europe), but admitted “it’s a great place to visit.”  As long as you don’t overdo the steak.  As I said, Argentina is a great place for meat, but I can feel my arteries hardening….I had pasta tonight.

May 11, 2014  bom dia from Sao Paulo

Just before I left Bloomington, my son David said,”Dad, you’ve never been to Brazil, Argentina, and Chile. I expect I’ll be reading a lot from the Lonely Planet.”  I want to assure him that I don’t have a copy of that standby, so what follows are sleepy observations over 6,000 miles south of Bloomington Normal.

I’d like to say it’s an easier flight than Asia, and it certainly is shorter—by about 3-4 hours.  In addition, the time zone change is only 2 hours (it’s two hours later in Sao Paulo than in Bloomington, lying south but also East).  But David is right: it is a new experience for me.

I can sort of thank the Pope that I’m in a Portuguese-speaking country.  Early in the age of exploration, he divided the world between his two major Catholic countries—Spain and Portugal—and what is now Brazil fell into the Portuguese partition.  That’s made the Portuguese language one of the most popular in the world because Brazil’s population is nearly 200 million, surprisingly overwhelmingly urban.  I think the figure I saw was 85%, with Sao Paulo at around 12 million, and the more famous—and once capital city, Rio de Janeiro, around 6 million.

Sao Paulo owes its founding nearly 460 years ago to the Jesuits, who came to convert the Indians. One byproduct was that the fields and mines that fueled the growth of Brazil (this was the age of mercantilism, when colonies existed to enrich the mother country) were staffed by African slaves, adding to what proudly has emerged as a multinational society.  Sao Paulo has Jewish, German, Japanese (yes, there’s a Japantown, but not a Chinatown) areas, among others.  In return for the language and the religion, Brazil made Portugal richer; Lisbon suffered a major earthquake in the middle of the 18^th century, and it was rebuilt in Baroque, made more baroque by the import of gold from Brazil. The churches in Lisbon are incredibly gilded!  Ironically, it was gold that led Brazil to declare independence from Portugal.  During the French Revolution, the royal family fled Portugal to settle in Brazil when Napoleon took over the Iberian Peninsula.  Apparently, when the King returned to Portugal, his son remained as Emperor of Brazil.  Son apparently got annoyed when dad raided Brazil gold to pay debts to Britain (the Brits should have settled for port wine, I think), and declared independence from Portugal.

Sao Paulo owes its prominence initially to agriculture.  There’s not much left from 450 years ago (the churches, though, are quite classic; the main Cathedral, the Se, is supposed to resemble Notre Dame in Paris), but there were some nice mansions once owned by coffee barons.  Brazil is one of the leading countries of the world in coffee production, which we savored at a local non-Starbucks stop on our tour of the city.  It’s also a major producer of sugarcane—and ethanol—which has led to a number of auto plants located in the Sao Paulo area, partly because the car engines need to be adapted to burn the “cleaner” ethanol fuel (ethanol from corn is expensive because the corn needs to be converted to the sugar that comes from sugar cane).

It is fall here, and getting cooler; which means the large homeless population is camping in the public parks.  There were a few squares downtown that I would love to have explored, but our guide exercised caution and kept us on the bus.  It will be interesting to follow the world’s greatest sporting event—as the world cup is (probably accurately, except in the United States) billed here, given the cost overruns and deadlines for facilities that might not be met, which begins in 33 days.  I’m glad we’ll be gone by then.  Someone said there ar e 8 million cars on the streets of Sao Paulo, but the government will probably do something like Beijing did (license plates dictated when people could drive); we may get a sense of the potential nightmare when we start our serious visits tomorrow.

I hope you all had a wonderful mothers’ day.  It’s celebrated here too.

May 21, 2014

 It seems appropriate that I landed on Easter Island on a Chilean national holiday, one that celebrates the valor (rather than the success) of the Chilean navy, since it was that navy the claimed Easter Island in the mid 1880s. Surprisingly, the first European to visit arrived on Easter, 1722–and he was Dutch.  Among my other predecessors was Captain Cook, who stopped here on his way to destiny in the Sandwich Islands. The human history of the island seems pretty grim–even before the Europeans, with settlement from Polynesia somewhere between the 4^th and 12^th century, overpopulation and environmental degradation preceding the European discovery.  As it is, the nearly 6000 Rapa Nui are part of Chile, attached to Valparaiso, nearly 2500 miles (and two time zones) away.  To put that in perspective, that’s the distance from Sao Paulo to Santiago, but the great mystery to me is not the statues (more on the in a minute–and for the next two days), but why no European state claimed the island before Chile.

I got in around midday, with enough time to wander nearby,  where there are both ceremonial platforms (ahu) and the carved statues (moai) within strolling distance.  The island seems lush, with palm trees (many of the species are replaced, but a few were saved) despite the volcanic soil.  I’ve got tours the next two days, and I’m expecting to be taken to the quiescent volcano.  The island is apparently the top of a 9000+ foot mountain that has erupted.

The number of visitors is limited to around 220 newcomers per day, with one flight from Santiago, and apparently another that goes from Tahiti to Easter Island to Santiago a few days a week.  The hotels are owned by local people; although Chile has welcomed foreign direct investment (and, in the case of the vineyard yesterday, foreign ownership/operations), there apparently is none on the island.  Hence, there’s no 5 star Hiltons or Marriotts.

Besides the sightseeing and the food, there’s fishing and snorkeling and scuba shops here, but watching the sun kiss the Pacific at dinner, this side of the island catches the waves.  I’ll probably get to see the whole island on my full day tour tomorrow.

I did get to watch the sunset through the clouds at a restaurant on a westward facing point. I had a local fish, called piki.  Must be for picky eaters.