Sección o Parte de un Documento 1995 es 382.3 B584L(58739) Corden, W. Max Coediciones NAFTA AMERICA LATINA LIBERALIZACION DEL INTERCAMBIO NEGOCIACIONES COMERCIALES TRATADOS ZONAS DE LIBRE COMERCIO FREE TRADE AREAS LATIN AMERICA TRADE LIBERALIZATION TRADE NEGOTIATIONS TREATIES NAFTA Una zona de libre comercio en el Hemisferio Occidental: posibles implicancias para América Latina Incluye Bibliografía En: La liberalización del comercio en el Hemisferio Occidental - Washington, DC : BID/CEPAL, 1995 - p. 13-40 Proyecto Apoyo al Proceso de Liberalización Comercial en el Hemisferio Occidental http://hdl.handle.net/11362/1510 2014-01-02T14:51:16Z 2014-01-02T14:51:16Z Made available in DSpace on 2014-01-02T14:51:16Z (GMT). No. of bitstreams: 0 Previous issue date: 1995 POLÍTICA COMERCIAL Y ACUERDOS COMERCIALES TRADE NEGOTIATIONS COMERCIO INTERNACIONAL E INTEGRACIÓN INTERNATIONAL TRADE AND INTEGRATION Texto 192 desarrollo productivo T he top 20 multinationals in Chile in 2010: retail, forestry and transport lead the international expansion Miguel Pérez Ludeña Unit on Investment and Corporate Strategies Santiago, Chile, October 2011 This document has been prepared by Miguel Pérez Ludeña, Economics Affairs Officer with the Unit on Investment and Corporate Strategies of the Division of Production, Productivity and Management, Economic Commission for Latin America and the Caribbean (ECLAC), with assistance from Álex Rodríguez Toscano, in the framework of the Emerging Markets Global Players (EMGP) project, an initiative of the Vale Columbia Center on Sustainable International Investment (VCC). The views expressed in this document, which has been reproduced without formal editing, are those of the authors and do not necessarily reflect the views of the Organization. United Nations Publication ISSN printed version 1020-5179 LC/L.3399 Copyright © United Nations, October 2011. All rights reserved Printed in United Nations, Santiago, Chile Member States and their governmental institutions may reproduce this work without prior authorization, but are requested to mention the source and inform the United Nations of such reproduction. ECLAC - Serie Desarrollo productivo N° 192 The top 20 multinationals in Chile in 2010: retail, forestry and transport lead… Index Introduction .............................................................................................. 5 I. Highlights .......................................................................................... 7 A. Profile of the largest 20 TNCs from Chile ................................. 7 1. Major drivers ....................................................................... 7 2. Concentration ...................................................................... 8 3. Main industries .................................................................... 9 4. Geographic distribution of foreign affiliates ....................... 9 5. Small country, large companies .......................................... 9 6. Ownership and status ........................................................ 10 7. Transnationality Index (TNI) ............................................ 10 8. Location of head offices, official language and management................................................................ 10 9. Top mergers and acquisitions ............................................ 11 10. Top Greenfield announcements......................................... 11 11. Changes in foreign assets, sales and employment ............. 11 II. The big picture ................................................................................ 13 A. Recent developments ................................................................ 14 Bibliography............................................................................................ 17 Annex ....................................................................................................... 19 Serie Desarrollo Productivo: issues published .................................... 27 3 ECLAC - Serie Desarrollo productivo N° 192 The top 20 multinationals in Chile in 2010: retail, forestry and transport lead… Table index TABLE 1 TABLE 2 TABLE A.1 TABLE A.2 TABLE A.3 TABLE A.4 TABLE A.5 TABLE A.6 RANKING OF THE 20 LARGEST TNCs FROM CHILE, 2010 .......................................... 8 CHILE: SNAPSHOT OF THE TOP 21 MULTINATIONALS, 2009 - 2010 ....................... 11 CHILE: THE TOP 20 TRANSNATIONALS: KEY VARIABLES, 2010............................ 21 CHILE: THE TOP 20 MULTINATIONALS, REGIONALITY INDEX, 2009 ................... 21 CHILE: THE TOP 20 TRANSNATIONALS: STOCK EXCHANGE LISTINGS, 2010 ................................................................................................................... 22 CHILE: TOP 10 OUTWARD MA TRANSACTIONS, 2007-2010 .................................. 22 CHILE: THE TOP 10 OUTWARD GREENFIELD TRANSACTIONS, ANNOUNCED, 2007-2010 .................................................................................................. 23 CHILE, TOP 20 TRANSNATIONALS. BOARD MEMBERS AND HIGH EXECUTIVES BY SEX ................................................................................... 26 Figure index FIGURE A.1 FIGURE A.2 FIGURE A.3 FIGURE A.4 FIGURE A.5 CHILE: BREAKDOWN OF THE FOREIGN ASSETS OF THE TOP 20 TRANSNATIONALS, BY MAIN INDUSTRY, 2010 ......................................................... 23 CHILE: FOREIGN AFFILIATES OF THE TOP 20 MULTINATIONALS BY REGION, 2010 ............................................................................................................... 24 CHILE: GEOGRAPHIC DISTRIBUTION OF THE FOREIGN ASSETS OF THE TOP 20 MULTINATIONALS, BY MAIN INDUSTRY, 2010 (PERCENTAGES) ................................................................................................................ 24 CHILE: FDI INFLOWS AND OUTFLOWS, 1990-2010 .................................................... 25 CHILE: INWARD AND OUTWARD FDI STOCK, 1990-2009 ......................................... 26 Box index BOX 1 LAN’S MERGER WITH TAM ............................................................................................ 15 4 ECLAC - Serie Desarrollo productivo N° 192 The top 20 multinationals in Chile in 2010: retail, forestry and transport lead… Introduction This report presents the results of a survey of multinational enterprises (MNEs) from Chile, carried out by the United Nations Economic Commission for Latin America and the Caribbean (ECLAC) and the Vale Columbia Center on Sustainable International Investment (VCC), a joint undertaking of Columbia Law School and The Earth Institute at Columbia University in New York. The survey, conducted in 2011, covers the period 2009-2010 and was undertaken in the framework of the Emerging Markets Global Players (EMGP) project, an initiative of the VCC that brings together researchers from leading institutions in emerging markets to generate annual reports on the leading MNEs in each participating country. The survey is also part of ECLAC’s ongoing monitoring of foreign direct investment (FDI) in Latin America and the Caribbean, including the rise of the translatin corporations, with the results regularly published in its report Foreign Direct Investment in Latin American and the Caribbean. The rise and expansion of transnational corporations from Latin America (translatins) have been documented and analysed by ECLAC in the annual series Foreign Direct Investment Report in Latin American and the Caribbean, which have been published continuously since 1997. 5 ECLAC - Serie Desarrollo productivo N° 192 I. The top 20 multinationals in Chile in 2010: retail, forestry and transport lead… Highlights The 20 largest MNEs from Chile (hereafter ‘the top 20’) collectively had USD 25 billion in assets abroad at the end of 2010. The list (see table 1 below) is headed by the retail company Cencosud, and retail, forestry and transport are the most important sectors in the list as measured by their foreign assets. Other industries represented on the list include food and beverages, mining, manufacturing, software, medical services, energy and construction. There is only one state-owned company in the list: ENAP. The other 19 are listed companies with no state stake in them. The combined foreign sales (excluding exports) of the top 20 in 2010 were USD 26 billion (table A.1) and they employed 159,238 workers abroad, most of them in the retail sector. They had a total of 101 100 foreign affiliates in 18 different countries, although the large majority of these firms have all their assets in Latin America and only two could be considered to have a truly global presence. During 2010, their assets abroad grew by 21%, a growth rate likely to be maintained in 2011, given the investment announcements made during the first half of the year. A. Profile of the largest 20 TNCs from Chile 1. Major drivers Chilean companies have enjoyed a consistently good business climate at home, helped by a stable macroeconomic environment and the country’s abundant endowment of natural resources. These factors are the key to their domestic growth, which has allowed them over time to accumulate the capabilities required for investing in other countries. 7 ECLAC - Serie Desarrollo productivo N° 192 The top 20 multinationals in Chile in 2010: retail, forestry and transport lead… The majority of the top 20 have expanded abroad in search of larger markets, after reaching a saturation point in Chile. This has notably been the case for retail, food and beverages, and transport companies. These companies have entered neighboring countries taking advantage of their physical proximity, the shared language and the similar levels of development. Another important group of companies in the list has benefited from the country’s natural resources to build their competitive advantage. The wood product companies (CMPC and Arauco, a part of the conglomerate COPEC) have replicated the business model used in Chile in Argentina, Uruguay and Brazil: they have a vertically integrated structure that includes managing the forests and processing the wood into products, which are sold either within the host countries or exported to third countries. SQM and Molymet, on the other hand, extract natural resources only in Chile and have distribution, marketing and processing facilities in other countries. in the list has benefited from the country’s natural resources to build their competitive advantage. The wood product companies (CMPC and Arauco) have replicated the business model used in Chile in Argentina, Uruguay or Brazil: they have a vertically integrated structure that includes managing the forests and processing the wood into various products that are sold either domestically or exported to other countries. On the other hand SQM and Molymet extract the natural resource in Chile only and have distribution, marketing and processing facilities in other countries. TABLE 1 RANKING OF THE 20 LARGEST TNCS FROM CHILE, 2010 (Millions of US$) Company Ranking 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Industry Cencosud COPEC Group CMPC LAN Sudamericana de Vapores Falabella Embotelladora Andina Ripley Sonda ENAP SQM Cervecerías Unidas (CCU) Madeco Sigdo Koppers Carozzi Banmédica CGE Molymet Salfacorp Concha y Toro Total Retail Forestry/Energy Forestry Transport Transport Retail Food and Beverages Retail Software Energy Mining Food and Beverages Metals Manufacturing Food and Beverages Health services Energy Metals Construction Food and Beverages Foreign Assets 6,072 3,400 3,338 2,858 2,237 1,850 800 715 616 586 494 305 301 263 250 242 221 149 90 87 24,873 Source: ECLAC-VCC survey of Chilean MNEs, 2011. a The exchange rate is the one used by all Chilean firms, i.e. the official rate of the Banco Central de Chile as of December 31, 2010: USD 1 = CLP 468.01. b Forestry is the main industry of COPEC’s international activities, carried out by its subsidiary Arauco. Energy is the main activity of the group as a whole, which is carried out mostly in Chile, with only USD 280 million in foreign assets. Fisheries are the group’s third activity. 2. Concentration Over half of the total foreign assets in table 1 belong to the top three companies: the largest retailer Cencosud, the wood product company CMCP and the COPEC Group. The last is a conglomerate with subsidiaries in energy, forestry and fisheries. Most of its international investment is in forestry, through its subsidiary Arauco. The energy business is the largest overall, but with limited overseas investment, while fisheries are a more limited activity with no foreign assets of any significance. COPEC Group is 8 ECLAC - Serie Desarrollo productivo N° 192 The top 20 multinationals in Chile in 2010: retail, forestry and transport lead… presented as one in the ranking, but the analysis by industry considers its forestry and energy subsidiaries separately. Forestry companies CMPC and Arauco (the COPEC subsidiary) hold 30% of the foreign assets of the top 20. But the retail companies Cencosud, Falabella and, to a smaller extent, Ripley have higher sales abroad, since retail is a less capital-intensive industry. Retail companies also dominate the figures on employment abroad, since their operations are very labor-intensive: over 100,000 people work for Cencosud, Falabella and Ripley outside Chile, representing 67% of foreign employment by the companies in the list. Considering the size of the country, table 1 does not show an unusual concentration of foreign assets in a small group of companies. 3. Main industries Three sectors concentrate 78% of assets abroad of the companies in the list: retail (Cencosud, Falabella and Ripley), forestry (CMPC and COPEC through its subsidiary Arauco) and transport (Sudamericana de Vapores and Lan). Food and beverages have 6%, with Embotelladora Andina, CCU, Carozzi and Concha y Toro. Energy has 4%, although companies in this industry (COPEC operations in energy, ENAP and CGE) have relatively few investments abroad relative to their size. Other industries included in the list are software (Sonda), mining (SQM), metals (Molimet and Madeco), manufacturing (Sigdo Koopers) health services (Banmédica) and construction (Salfacorp). (See Anex figure 1). It is notable the absence of financial services among these companies and the relatively small role of electricity generation and distribution. In fact, there were important Chilean companies in both industries in the 1990s, but they were all subsequently bought by international groups. 4. Geographic distribution of foreign affiliates One of the most notable features of the international expansion of Chilean companies is the very high concentration in neighbouring countries. If we exclude affiliates that provide only marketing services, or those established in offshore financial centers, 16 companies in the list have all their affiliates in Latin America (table A.2). The universal tendency for companies to focus their international expansion on neighbouring countries, especially if they also share the same language or culture, was reinforced in Chile by the Chilean MNEs’ search for a similar customer base, so that they could replicate their homecountry strategies. This was especially the case in retail, transport and food and beverages. Forestry firms also looked for conditions similar to those in Chile, especially forest space where they could replicate the same strategy. Very few firms went abroad looking for a different factor endowment or market conditions. The only exceptions here are the oil-exploring investments of ENAP in Egypt and the cases of Molymet and SQM, which are discussed below. In the last few years, strong growth in most countries in South America has provided additional incentives for focusing on these markets. Five companies in the list have their foreign affiliates only in Argentina and/or Peru. There are two notable exceptions to this focus on Latin America, both of them exporting mineral resources from Chile to process them abroad. The first is Molymet, the largest producer in the world of molybdenum, a metal used in many steel alloys that is usually obtained as a by-product of copper. The second is SQM which is a world leader in the production of lithium and iodine. Molymet produces its raw materials in Chile and has processing facilities in Europe, Mexico and China. SQM also obtains its primary product in Chile and transforms it into fertilizers and other products in many countries around the world. The other Chilean MNEs with subsidiaries outside the region are ENAP, which has a drilling concession in Egypt, and Sudamericana de Vapores, which has a presence in Europe and the United States. (See figure A.2. On the geographic distribution of foreign assets, see figure A.3.) 5. Small country, large companies Chilean MNEs have a level of outward investment that can be compared with the top companies from Brazil or Mexico, despite coming from a much smaller economy. Considering 2009 assets, Cencosud 9 ECLAC - Serie Desarrollo productivo N° 192 The top 20 multinationals in Chile in 2010: retail, forestry and transport lead… would be the 7th company in the Mexican ranking and the 6th in the Brazilian one.1 Moreover, companies in positions 10 to 20 in the Chilean ranking have a higher level of assets abroad than their Brazilian peers do. This highlights again the relative importance of Chile as an outward investor in Latin America. 6. Ownership and status Only one company in our list has any percentage of state ownership – ENAP, which is fully state-owned. Chile’s privatization of state-owned enterprises started earlier than in other countries in the region and was very thorough. There are only two important state-owned companies in Chile: the energy company ENAP and the copper-mining company Codelco, which is the largest company in Chile and the largest copper producer in the world. Codelco has no significant assets abroad yet but has announced its intention to start a modest international expansion through joint ventures. Given the size of the company (total assets USD 20 billion), even a modest international expansion would put CODELCO among the top 20 in a few years’ time. All of the top 20, with the exception of state-owned ENAP, are listed on the Santiago stock exchange. Lan, SQM, Embotelladora Andina, Cervecerías Unidas, Madeco and Concha y Toro are also listed on the New York Stock Exchange (table A.3). Note, however, that despite being listed, most of these companies are controlled by a family holding and float only a very small percentage of shares on the market. 7. Transnationality Index (TNI) The Transnationality Index (TNI) is calculated as the average of three ratios: foreign assets to total assets, foreign sales to total sales, and foreign employment to total employment. The TNI of the 20 companies in the list is 29%, meaning that, on average, slightly less than a third of the activities of these companies is located abroad. Within this, of course, there are notable variations. Two companies stand out for being more active abroad than in Chile. The first one is Embotelladora Andina (TNI of 61%), which has managed to consolidate an important presence in the large Brazilian beverages market. The second is Sonda (TNI of 63%), a software company with subsidiaries in most large Latin American countries. The two transport companies also have high TNI values: Sudamericana de Vapores 62% and LAN 42%. These are, however, somewhat special cases, as the nature of their business makes it hard to determine the geographical location of many of their assets and earnings.2 At the other end of the scale, with a TNI value below 10% are two energy companies (ENAP and CGE), the diversified company Sigdo Koopers, and the export-oriented winery Concha y Toro. See below for the most recent international expansion of Concha y Toro. 8. Location of head offices, official language and management Chile is a very centralized country, with almost half the population, and more than half the GDP, concentrated in the capital Santiago. With the exception of Sudamericana de Vapores, a shipping company located in the port city of Valparaíso, all Chilean companies have their headquarters in Santiago, including those that have their main production facilities in other cities in Chile. All of them have Spanish as their working language and very few of them have foreigners among their top management. The composition of their boards and top executives by sex shows a male dominance far beyond the average in developed economies. There are only two women sitting on the boards of these 20 companies, 1 2 See SOBEET and VCC (2010), “Brazilian multinationals positive after the global crisis” and IIE-UNAM and VCC (2010) “Impact of global crisis on Mexican multinationals varies by Industry”, at http://www.vcc.columbia.edu/content/ emerging-market-global-players. Like most shipping companies, Sudamericana de Vapores registers most of its vessels with its subsidiaries in Panama, independently of the routes on which they opperate. LAN’s assets are primarily composed of aircraft and aeronautical equipment, which are used throughout the different countries in which it operates. 10 ECLAC - Serie Desarrollo productivo N° 192 The top 20 multinationals in Chile in 2010: retail, forestry and transport lead… among 184 men. This is only 1% female representation, against 12% for European companies. 3 If we also include the top executives of the companies, women represent 4% of the total (table A.6). 9. Top mergers and acquisitions During the last four years there have been only three foreign acquisitions by Chilean companies where the transaction value exceeded USD 100 million. The most important one, in 2009, was the acquisition by CMPC of a wood and pulp products plant in Brazil for about USD 1.4 billion. The other two were by CENCOSUD, both in 2007, and represented the entrance of this company into Brazil and Peru. Eight of the top 10 acquisitions are in Latin America. Of the other two, one is the acquisition of a Danish provider of freight-forwarding services by Navieras Ultragas, a shipping company that is one of the largest Chilean MNEs outside of the top 20. The other is Molymet’s venture in China, in a 50% partnership with a local company (table A.4). 10. Top greenfield announcements Of the top 10 announcements of greenfield investments from Chile (table A.5), 8 are in the retail sector: five from the leader Cencosud, one each from Falabella and Ripley, and the last from Parque Arauco, which is a real-estate developer of shopping areas. The largest announcement is from Sigdo Koppers, to set up a petrochemical plant in Peru in partnership with a local group, to be implemented this year (although announced two-and-a-half years ago). The other non-retail project is from CMPC, to install a paper-producing plant in Colombia. 11. Changes in foreign assets, sales and employment During 2010, total assets and sales of the 20 companies listed grew by 20% and 26% respectively (Table 2). Foreign assets and sales grew even faster (22% and 34%), reflecting the benefits for Chilean expansion abroad of strong economic growth both at home and in host countries. It should be noted that the figures reflect not only real growth in foreign assets and sales but also the effects of local currencies appreciating against the dollar in 2010, especially in Brazil, Argentina and Peru, where most foreign assets are located and most foreign sales are made. TABLE 2 CHILE: SNAPSHOT OF THE TOP 21 MULTINATIONALS, 2009 – 2010 (Millions of US Dollars) Variable Assets Foreign Total Share of foreign in total (%) Sales Foreign Total Share of foreign in total (%) Employment Foreign 2010 20 499 83 386 24.6% 25 028 100 035 25.0% 22.1% 20.1% 19 224 62 924 30.6% 25 723 79 020 32.6% 33.8% 25.6% na na Total Share of foreign in total (%) Source: ECLAC-VCC survey of Chilean MNEs, 2011. 3 Percentage of variation 2009 - 2010 2009 159 238 393 710 40.4% Within Europe this percentage varies substantially, from 38% in Norway to less than 4% in Italy and Portugal, but it has increased consistently in recent years. See the European Professional Women’s Network 2010 at: http://www.europeanpwn.net/index.php?article_id=8. 11 ECLAC - Serie Desarrollo productivo N° 192 The top 20 multinationals in Chile in 2010: retail, forestry and transport lead… II. The big picture The rise and expansion of Chilean MNEs is part of the growth of outward investors from Latin America as a whole. The rise of these ‘translatins’ has been documented and analyzed by ECLAC in its annual reports on Foreign Direct Investment in Latin American and the Caribbean since 1997. In 2006, ECLAC gave an overview of the translatins from Argentina, Brazil, Chile and Mexico, which concluded that companies from these countries tended to “move into neighboring markets, usually on the basis of natural-resource- and market-seeking strategies”. It found that the main translatins were in basic industries (steel, cement, forest products), food and beverages, and certain services like telecommunication. Since then, the importance of outward investment from Latin American economies has continued to grow, reaching its largest amount ever (USD 43 billion) in 2010. Chile has been one of the top three sources of FDI outflows in the region, together with Mexico and Brazil. In fact, over the last three years, outward FDI flows from Chile were the largest in Latin America, even though Chile’s population is less than one-tenth of Brazil’s and its GDP just over one-tenth. Chile is also a major recipient of inward FDI, usually the third in the region after Brazil and Mexico, ranking above larger economies such as Argentina and Colombia. The broad background to Chile’s FDI performance is furnished by 20 years of sustained economic growth, facilitated by an attractive investment climate. Over these past two decades, Chilean companies have been able to build capacities that then stood them in good stead in their international expansion. FDI outflows increased notably in the 1990s, reaching USD 4 billion in 2000. They declined to a ten-year low in 2002, following the Argentinean crisis of 2001, and then rose again, very rapidly after 2006. On the other hand, the most recent global financial crisis of 2008-2009 had a limited impact on Chilean outward FDI: outflows stayed 13 ECLAC - Serie Desarrollo productivo N° 192 The top 20 multinationals in Chile in 2010: retail, forestry and transport lead… flat in 2009, compared with 2008, and rose again in 2010 to reach almost USD 9 billion.(figure A.5). One reason for this was that the main host countries of Chilean investment suffered only a mild and short economic contraction in 20094. Although some of the companies in the list may have limited their expansion in 2009 as compared with 2008 (a year not covered by this survey), most of them operate in sectors that were relatively resilient to the economic slowdown, such as retail, forestry, and food and beverages. The list includes no company in a sector more vulnerable to such a crisis, for example, heavy industry or durable consumer goods.5 Specific factors in Chile’s expanding outward investment include the following. Macroeconomic stability allowed companies to grow in the internal market and to access finance on better conditions than was the case for firms in other countries in the region. The privatization of state-owned enterprises and deregulation in key industries, started in the 1970s, created a competitive environment in industries such as energy, transport and pension-fund management. The relatively small size of the Chilean economy meant that several sectors showed a high degree of concentration from the 1980s onward, forcing some companies to look abroad for expansion. Finally, many of the largest MNEs have taken advantage of Chile’s natural-resource endowment to build their competitive advantages. It is especially significant that, apart from the horizontal policies mentioned above, improving the investment climate in the country and facilitating access to capital for all companies, there have been no specific government initiatives for supporting outward FDI. Some sectoral policies did promote outward FDI indirectly by allowing a degree of concentration in some sectors (notably retail) that facilitated the development of strong local groups that were later in a position to expand internationally. Another important Government policy that affected the level and composition of outward FDI has been the investment strategy of state-owned CODELCO, which until now has abstained from an international expansion. Thus there are no copper-mining companies in this ranking. Deregulation and liberalization in other countries in the region from the 1990s onward also played a role as an important pull factor in Chile’s expansion abroad. As noted earlier, Chile’s foreign investment is heavily concentrated in neighboring countries. This regional focus explains some of the ups and downs of Chilean outward investment: retreating after the 2001 crisis in Argentina and expanding rapidly after 2006. It also limits the diversification of FDI and leaves most Chilean firms highly vulnerable to a potential downturn in Argentina, Brazil and Peru. A. Recent developments The trend in recent years has clearly been towards an acceleration of investment abroad, driven by good returns in the home market and good opportunities in neighboring countries. This trend has continued in the first months of 2011 with some important announcements, including the acquisition by Concha y Toro of Fetzer Vineyards in the US for USD 238 million. This acquisition alone will triple the firm’s assets abroad and represent an important diversification out of South America. Sigdo Koopers is also expanding its activities in Peru, notably with the construction of a large petrochemical complex to be started in 2011. And in January 2011, Arauco (COPEC group) signed a contract for the construction of a wood and pulp plant in Uruguay with an estimated investment of USD 2 billion, the largest single FDI project ever in that country. Finally, LAN Airlines is now pursuing an important merger that will substantially increase its international scale (see box 1 below). 4 5 In 2009 Chilean GDP contracted by 1.6%, Brazil’s by 0.6%, while Argentina, Peru and Colombia experienced positive growth. All of them returned to high growth rates in 2010. (Economic Survey of Latin America and the Caribbean 2011, ECLAC, 2011. Santiago, United Nations Publication). CAP, the steel maker not included in the ranking, reduced substantially its investment plans in 2009 (both in Chile and abroad). 14 ECLAC - Serie Desarrollo productivo N° 192 The top 20 multinationals in Chile in 2010: retail, forestry and transport lead… BOX 1 LAN’S MERGER WITH TAM The airline industry worldwide is in a slow process of consolidation, as exemplified by the recent merger between Air France and KLM or the one between British Airways and Iberia. Many airlines in Latin America are also considering cross-border alliances and mergers in order to increase scale and access new markets that cannot be entered through organic growth for regulatory reasons. The forthcoming fusion of Chilean LAN with Brazilian TAM, announced in 2010, is the largest such deal in the region. LAN Airlines was privatized in 1989 and went through a series of ownership changes in the following years. In 1994, it reoriented its strategy towards international expansion. To this end, the airline established LAN Peru in 1999, LAN Ecuador in 2002 and LAN Argentina in 2005. Currently LAN is the largest passenger carrier in Chile, Ecuador and Peru, and the leading cargo operator in Latin America. In 2010, LAN and TAM agreed to form LATAM Airlines Group in a stock swap transaction valued at USD 3.42 billion. This would represent a large step in the internationalization of the company. According to plans, LAN shareholders will control 71% of the company. However, in order to comply with Brazilian regulations that forbid foreign investors from owning more than 20% of a Brazilian airline, the new company will have an original structure in which TAM shareholders will hold 80% of the voting rights, despite holding a minority of the shares. LAN had already faced a similar situation with its subsidiary in Peru, highlighting the regulatory barriers to cross-border mergers in this industry. As of this writing, the deal is on hold because of investigations launched in January 2011 by the Chilean competition authorities on whether the merger would have an adverse impact on the Chilean consumer. The expected date for completing the merger is March 2012. Source: Economic Commission for Latin America and the Caribbean (ECLAC) -VCC, drawing on http://www.valoronline.com.br/ online/geral/87/438299/criacao-da-latam-e-prorrogada-para-marco-de-2012. In the near future, as long as strong economic growth continues in both Chile and its neighbors, Chilean companies are likely to continue their expansion. In the long term, these companies will have to confront the need to diversify their base beyond South America and expand into other regions of the world. Many of them will inevitably lack the necessary scale for a truly global presence, a situation likely to generate takeovers by international groups of some of the companies in the list. This was the situation faced by electricity generators and pension-fund managers in the late 1990s (see footnote 5 above). 15 ECLAC - Serie Desarrollo productivo N° 192 The top 20 multinationals in Chile in 2010: retail, forestry and transport lead… Bibliography SOBEET (Sociedade Brasileira de Estudos de Empresas Transnacionais e da Globalização Econômica) and VCC (Vale-Columbia Centre) (2010), “Brazilian multinationals positive after the global crisis” 7 December 2010, hhttp://www.vcc.columbia.edu/content/emerging-market-global-players. IIE-UNAM and VCC (2010) “Impact of global crisis on Mexican multinationals varies by Industry”, 14 December 2010; http://www.vcc.columbia.edu/ content/emerging-market-global-players. ECLAC (Economic Commission for Latin America and the Caribbean) (2006), Foreign Investment in Latin America and the Caribbean, 2005 (LC/G.2309-P), Santiago, Chile, May. United Nations publication, Sales No. E.06.II.G.44. ECLAC (Economic Commission for Latin America and the Caribbean) (2011) Economic Survey of Latin America and the Caribbean 2010-2011, Santiago, Chile, May. United Nations publication, Sales No. S.11.II.G.3. 17 ECLAC - Serie Desarrollo productivo N° 192 The top 20 multinationals in Chile in 2010: retail, forestry and transport lead… Annex 19 ECLAC - Serie Desarrollo productivo N° 192 The top 20 multinationals in Chile in 2010: retail, forestry and transport lead… TABLE A.1 CHILE: THE TOP 20 TRANSNATIONALS: KEY VARIABLES, 2010 (USD milliona and number of employees) Rank by foreign assets Company 1 2 3 Cencosud COPEC Group CMPC 4 Lan Sudamericana de Vapores 5 6 7 8 9 10 11 12 Assets Total Sales Foreign Total Employment Foreign Total Foreign No. of foreign affiliates TNIb (%) No. of host countries 13 573 16 828 12 876 6 072 3 400 3 338 13 236 13 743 4 219 7 153 2 776 1 431 126 530 19 182 15 068 69 925 5 645 6 435 51% 23% 34% 4 4 6 4 3 6 6 786 2 858 4 832 3 527 18 967 7 989 42% 6 6 3 218 2 237 5 452 2 506 9 944 7 078 62% 8 4 Falabella Embotelladora Andina 14 067 1 850 8 930 2 600 81 354 32 901 28% 3 3 1 502 800 1 742 1 167 6 855 4 324 61% 5 2 Ripley Sonda ENAP SQM Cervecerías Unidas (CCU) 3 167 1 122 5 733 3 373 715 616 586 494 2 107 952 8 180 1 830 442 526 319 1 061 20 863 10 882 2 950 4 327 4 381 8 651 333 254 22% 63% 8% 26% 1 8 8 12 1 8 4 9 2 461 305 1 791 352 5 490 1 070 17% 1 1 712 2 204 805 1 175 8 038 1 550 1 064 1 263 100,254 301 263 250 242 221 149 90 87 24 873 418 1 834 990 1 510 4 298 1 298 1 514 808 78 877 131 278 340 443 119 344 129 50 25 645 2 416 13 793 8 601 13 611 7 168 1 432 24 277 3 216 393 710 1 286 826 2 404 2 640 345 300 2 452 392 159 238 42% 11% 31% 23% 3% 19% 9% 7% (29) 4 5 1 3 7 4 9 1 100 2 2 1 2 2 4 3 1 18 13 Madeco 14 Sigdo Koppers 15 Carozzi 16 Banmédica 17 CGE 18 Molymet 19 Salfacorp 20 Concha y Toro Total (average for TNI) Source: ECLAC-VCC survey of Chilean MNEs, 2011. a The exchange rate used is the rate of December 31, 2010: USD 1 = CLP 468.01. b The Transnationality Index (TNI) is calculated as the average of the following three ratios: foreign assets to total assets, foreign sales to total sales, and foreign employment to total employment. It is expressed as a percentage. The TNI for four firms is calculated without foreign employment data and shown in parentheses. TABLE A.2 a CHILE: THE TOP 20 MULTINATIONALS, REGIONALITY INDEX , 2009 (Percentages) Latin America the Caribbean North America Cencosud COPEC CMPC Lan C. Sudamericana de Vapores 100% 100% 100% 100% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 50% 13% 13% 25% 0% 8 100% 100% 100% 100% 88% 8% 0% 0% 0% 0% 0% 17% 0% 0% 0% 0% 0% 25% 0% 0% 0% 0% 0% 25% 0% 0% 0% 0% 13% 25% 3 5 1 8 8 12 13 Falabella Embotelladora Andina Ripley Sonda ENAP SQM Cervecerías Unidas (CCU) 100% 0% 0% 0% 0% 1 14 Madeco 100% 0% 0% 0% 0% 4 17 15 16 12 18 19 20 Sigdo Koppers Carozzi Banmédica CGE Molymet Salfacorp Concha y Toro Average and totals 100% 100% 100% 100% 25% 100% 100% 89% 0% 0% 0% 0% 0% 0% 0% 1% 0% 0% 0% 0% 50% 0% 0% 4% 0% 0% 0% 0% 25% 0% 0% 4% 0% 0% 0% 0% 0% 0% 0% 2% 5 1 3 7 4 9 1 100 Transnationals name 1 3 2 4 5 6 8 9 10 11 7 Western Europe East Asia the Pacific Middle East North Africa 0% 0% 0% 0% No of foreign affiliates 4 4 6 6 Source: ECLAC-VCC survey of Chilean MNEs, 2011. a The Regionality Index is calculated by dividing the number of a firm’s foreign affiliates in a particular region of the world by its total number of foreign affiliates and multiplying the result by 100. There are no foreign affiliates of Chilean transnational corporations in Sub-Saharan Africa, Eastern Europe and Central Asia, South Asia or Developed Asia. 21 ECLAC - Serie Desarrollo productivo N° 192 The top 20 multinationals in Chile in 2010: retail, forestry and transport lead… TABLE A.3 CHILE: THE TOP 20 TRANSNATIONALS: STOCK EXCHANGE LISTINGS, 2010 Companys name Industry Domestic 1 Cencosud Retail Santiago Foreign 2 COPEC Forestry/Energy Santiago 3 CMPC Forestry Santiago 4 Lan Transport Santiago 5 Sudamericana de Vapores Transport Santiago 6 Falabella Retail Santiago 7 Embotelladora Andina Food and Beverages Santiago 8 Ripley Retail Santiago 9 Sonda Software 10 ENAP Energy Santiago Unlisted (SOE) 11 SQM Mining Santiago NYSE 12 Cervecerías Unidas (CCU) Food and Beverages Santiago NYSE 13 Madeco Metals Santiago NYSE 14 Sigdo Koppers Manufacturing Santiago 15 Carozzi Food and Beverages Santiago 16 Banmédica Health services Santiago 17 CGE Energy Santiago 18 Molymet Metals Santiago 19 Salfacorp Construction Santiago 20 Concha y Toro Food and Beverages Santiago NYSE NYSE NYSE Source: ECLAC-VCC survey of Chilean MNEs, 2011. TABLE A.4 CHILE: TOP 10 OUTWARD MA TRANSACTIONS, 2007-2010 (USD million) Date Acquirer’s name Target firm ‘s name Target industry Target country % of shares acquired Value of transaction 1 12/15/2009 CMPC Aracruz Cellulose SAGuaiba Forestry Brazil 100 1 430 2 12/16/2007 Cencosud Grupo Wong Retail Peru 100 633 3 11/17/2007 Retail Brazil 100 430 4 06/21/2010 33 93 02/27/2009 Transport Food and Beverages Denmark 5 G Barbosa Eitzen Bulk Shipping A/S Bavaria SA-Agua Brisa Bottled Colombia 100 92 6 07/05/2010 Inversora Cervecera SA Food and Beverages Argentina 100 88 7 11/16/2010 Cementos Portland SAC Cement Peru 30 61 8 01/14/2011 Cencosud Navieras Ultragas Investor Group Cervecerías Unidas (CCU) Cementos Bio Bio Investor Group Pesquera Exalmar Fisheries Peru 100 60 9 04/23/2009 Cencosud Easy Colombia Retail Colombia 30 60 10 05/19/2010 Molymet Luoyang High Tech Metals China 50 Total 38 2,985 Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of Thomson Reuters. 22 ECLAC - Serie Desarrollo productivo N° 192 The top 20 multinationals in Chile in 2010: retail, forestry and transport lead… TABLE A.5 a CHILE: THE TOP 10 OUTWARD GREENFIELD TRANSACTIONS, ANNOUNCED , 2007-2010 (USD million) Date Company Destination Industry Value of transaction 1 Jan 2009 Sigdo Koppers Peru Manufacturing 650 2 Dec 2010 Cencosud Brazil Retail 525 3 Jul 2009 Falabella Peru Retail 350 4 Jul 2010 Cencosud Peru Retail 230 5 Dec 2010 Cencosud Peru Retail 220 6 Dec 2010 Cencosud Argentina Retail 210 7 Jul 2010 Cencosud Colombia Retail 200 8 Oct 2009 Ripley Peru Retail 157 9 Dec 2010 Parque Arauco Peru Construction 10 Aug 2010 CMPC Colombia Forestry Total 90 75 2 706 Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of data from fDi Intelligence, a service from the Financial Times Ltd. a Some of these transactions may not have materialized as announced. FIGURE A.1 CHILE: BREAKDOWN OF THE FOREIGN ASSETS OF THE TOP 20 TRANSNATIONALS, BY MAIN INDUSTRY, 2010 1,80% 1,98% 4,37% 1,05% 0,97% Retail - Cencosud, Falabella Ripley 0,36% 2,82% Forestry - Arauco CMPC 34,60% 5,77% Transport - C.S.Vapores LAN Food and Beverages - Embotelladora Andina, Carozzi, CCU Concha y Toro Energy - ENAP, CGE Copec Sof tware - Sonda Mining - SQM Metals - Molymet, Madeco 20,41% Manuf acturing - Sigdo Koopers Health Services - Banmédica Construction - Salfacorp 25,85% Source: ECLAC-VCC survey of Chilean MNEs, 2011. 23 ECLAC - Serie Desarrollo productivo N° 192 The top 20 multinationals in Chile in 2010: retail, forestry and transport lead… FIGURE A.2 CHILE: FOREIGN AFFILIATES OF THE TOP 20 MULTINATIONALS BY REGION, 2010 (Number of affiliates) Europe North America 6 3 Middle East North Asia 4 6 Latin America the Caribbean 81 Source: ECLAC-VCC survey of Chilean MNEs, 2011. FIGURE A.3 CHILE: GEOGRAPHIC DISTRIBUTION OF THE FOREIGN ASSETS OF THE TOP 20 MULTINATIONALS, BY MAIN INDUSTRY, 2010 (Percentages)a Transport Energy 1% 3% 97% 99% Latin America Latin America Asia Middle East and North Africa (continued) 24 ECLAC - Serie Desarrollo productivo N° 192 The top 20 multinationals in Chile in 2010: retail, forestry and transport lead… Annex figure A.3 (concluded) Metals Mining 10% 15% 22% 25% 2% 35% 76% 15% Latin America North America Asia Latin America Asia Western Europe Source:. ECLAC-VCC survey of Chilean MNEs, 2011. a The following activities are entirely (100%) in Latin America: retail, foresty, food and beverages, health, software, construction and manufacturing. FIGURE A.4 CHILE: FDI INFLOWS AND OUTFLOWS, 1990-2010 (USD million) 16 000 14 000 12 000 10 000 8 000 6 000 4 000 2 000 Inflows 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1998 1999 1997 1996 1995 1994 1993 1992 1991 1990 - Outflows Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of data from Banco Central de Chile. 25 ECLAC - Serie Desarrollo productivo N° 192 The top 20 multinationals in Chile in 2010: retail, forestry and transport lead… FIGURE A.5 CHILE: INWARD AND OUTWARD FDI STOCK, 1990-2009 (USD million) 140 000 120 000 100 000 80 000 60 000 40 000 20 000 Inward stock Outward stock Source: UNCTAD. TABLE A.6 CHILE, TOP 20 TRANSNATIONALS. BOARD MEMBERS AND HIGH EXECUTIVES BY SEX Company name Cencosud COPEC* CMPC Sudamericana de Vapores Falabella Lan SQM Embotelladora Andina Ripley ENAP CGE Carozzi Sonda Men 21 46 12 26 36 19 17 17 40 19 26 12 15 Cervecerías Unidas (CCU) 20 Banmédica 16 Molymet 19 Madeco 16 Sigdo Koppers 14 Salfacorp 24 Concha y Toro 20 Total 435 Source: ECLAC-VCC survey of Chilean MNEs, 2011. 26 Women 1 2 0 1 3 0 1 0 1 2 0 0 0 3 2 1 0 0 0 1 18 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 1996 1995 1994 1993 1992 1991 1990 - •