Monday, September 14, 2009

Nature of doing business in Latin America

I begin this blog wondering if I will ever publish it or not. After spending almost 10 years of my life in Latin America, I find my biggest challenge and illusive dream is building a more significant business in this culture. For whatever reasons, I still find myself fully comfortable and enjoying life in this culture. Yet, in business and in social situations...I still sense being an "outsider", foreigner...or "Gringo"...and while I feel I am almost half Latino by now, in the eyes of other Latinos I am quite sure they see me as "the Gringo". I speak Spanish and have a pretty good read on my Latin friends by now...but I think they still don't see all of me or my acculturation because of my exterior image. I still watch American football though I have learned to appreciate futbol/soccer as well. My humor is still "gringo" oriented. My mannerisms are still a bit more restrained and emotions less outward than the typical Latino. For me this is a mixed bag...

It is a "mixed bag" because WASPS like me are acknowledged as coming from a successful, rich country. We get in some doors that others can't because everyone is interested in how "rich" we are or what advantages and ideas we can bring to local causes and businesses. On the other hand, I believe there is a constant "tendency" to try and "get one over" on the Gringo...maybe a form of "get even" for some latent sense of Latinos being disenfranchised from the "American dream". Maybe it even goes back 150+ years to when the USA took much of the southwestern area of the United States by force and encroachment from Mexico. It really wasn't that long ago when you think about it.

Without going too far down that road of historical perspective, I do think some backdrop of that past reflects on current dynamics between Latin American and North American relations. Latins still view Americans as sometimes friend, sometimes foe. There is still a sense of their being "conquered" by both European and North American white culture, yet Latins also aspire and embrace the imaging and "front" of success and consumerism. These people like to shop just like their "gringo" neighbors, and easy credit hit this culture quite a bit later than North America and I fear the abuse and ease of debt will cause some economic problems in this region somewhat behind the curve that has hit North America.

While Latin culture has been quick to imitate American consumerism and styles, they have not been quite so quick to adopt our concepts of democracy and free enterprise. In light of their histories, its not hard to understand why. These Latin countries in most cases have fewer then 150 years as independent, sovereign nations/states. They developed in the aftermath of the Spanish "conquistadors" who gave them most of their identities, mores, legal and governmental customs. So, they started out as subjects of a European King or queen...and never quite grew away from their acceptance of subservience to "authority". Tie into that the thorough adoption of Catholicism in huge majorities and you have the ultimate chemistry for poor, simple masses following their leaders, whether political or religious, into various states of submission. If there are uprisings against authority, it is not so much based on individual pangs of patriotism or desire for freedom than rather a sudden disgust at finding themselves totally victimized and manipulated...normally by people whiter and richer than they are.

One of the reasons democracy and free enterprise are such fleeting concepts, not just in Latin America, is because a majority of the world is much more comfortable being told what to do and taken care of rather than live independently and freely. For hundreds of years a majority in these countries have taken for granted the "caste system" they live in. The darker skinned people tend to do the menial labors and support the households of "whiter", more noble folk. The educations, dowries and estates stay in the same few, whiter families century after century.

Politically in Latin America like other regions in the world we are seeing another pendulum swing from "capitalism" and "free enterprise" towards socialism or further left ideologies. The poorer countries in Latin American seem to be rushing towards socialism or versions of communism behind simpleton leftist leaders like Chavez in Venezuela, Evo Morales in Bolivia or Daniel Ortega in Nicaragua. You have the haves fighting the have-nots politically in Honduras, Guatemala and Salvador. The bigger economies in the region like Brazil, Colombia, Chile, Argentina and Peru tend to be more balanced towards socialistic democracy...whatever that is. The military in many of these countries is almost an independent arm of government which is wooed and managed as well as possible by whatever party or leader is running their governments. Honduras is just the latest example of a President losing control and respect from his military...which basically acted in support of the wealthy elite in the country against the President's move towards a "Chavez" style dictatorship supported on the shoulders of the masses who live in poverty.

A key to peace in these countries...and anywhere in the modern day to have a balanced policy of economic growth while taking care of the social needs of the whole population. Corruption and treachery have been the modus operandi in most of these Latin countries for over the last century. Only now are you seeing any true concerted efforts by SOME governments supported by the people to clean up their systems and watch the money trail of these various political leaders. Here in Panama the pendulum is currently switching to a fervor of retaliation against recent political robber barons who have been caught raiding funds before leaving their offices in this past administration. Of course, the new President is from the wealthy elite class and does not need to raid funds to sustain his future or his policies. Many leaders throughout Latin America have come from destitute, middle or low class backgrounds or the military. When in office, there is an unwritten code that it is alright to enter office a pauper and leave a multi-millionaire. I'm not sure if this is any more outrageous than those who buy their offices through ill gotten gains in past generations and then get elected to protect the wealthy elite or the corporate complex. That happens in some first world countries I know of.

Politics aside, it seems business and financial institutions thrive in Latin America no matter what happens politically. It is my thinking that if a person or company can stay away from politics while doing business...they can succeed while staying above the fray of political machinations, but it is a tough tight rope to walk on through these countries.

Before I turn this into a "book", let me summarize for this chapter of a very large theme. Doing business in Latin America is more about the relationships you establish over a period of time than they are about the most winning ideas or cost effective proposals. This is for a variety of reasons:

-No one believes you just because you said it was so. They need proof and assurance.

-Image is very important. Business people in this region for the most part "dress for success". Men dress formally for business at all levels, and middle to upper class women never leave their homes during the business week without looking their best. No hair curlers or jeans even for stay at home moms...and men don't wear shorts in the city even in this tropical Panama climate. Foreigners need to take this into consideration if they want to "relate" to business associates here.

-Relationship is more important than price and most cases

-Cronyism and nepotism is the standard custom in business. They may fight within their family and even steal from each other, but no third party person should speak disparagingly of a family member of theirs, especially in business.

-The sales cycle is much longer and few are in a hurry to make decisions in general. Plan on taking your time, building the relationship and dickering and dealing. No one ever accepts the first "price".

-Token gifts and "doing favors" is not considered corruption in these cultures. It is expected. Also, a favor is expected to be reciprocated at some point in time.

I have more thoughts but I believe the above is important enough and much to ponder for now. I think there will be a "Part 2" on this blog covering some of these points:

Bureaucracies that inhibit growth and enterprise

Business ethics and rule of law

Lack of a middle class

More cultural differences and mores

Work ethic

Nature of the "deal"

Keys to success

Until then, it is never too early to start your relationship building process. If you are thinking of doing business or marketing in these parts...come on down. We are here to help and share our experiences if we can.


William Smith said...


thanks for your insight. I'm a gringo professor that once a year comes to Panama to teach a university course, "Business Ethics" (yes you read that correctly).

I will very much enjoy reading more of your comments and would also welcome further insights on this topic.

edward said...

Thanks for your comments William. I think I will start working on the "Part 2" of this blog. Have some recent new experiences that will probably be of interest to someone.

Email me your email address and I will put you on my blog update list. Also would be glad to sit down with you next time you are in Panama. Maybe together we can strategize how to bring more business ethics to this region :)