The Emergence of Latin Multinationals:
Spain, Mexico and Brazil
Javier Santiso
Deputy Director/Chief Economist
OECD Development Centre
World Economic Forum  Chile 25-27 April, 2007
1 Spain and Latin America: A Helping Hand
2
New Emerging Multinationals: Mexico & Brazil?
3
Conclusions
2
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The IBEX 35: A Latin Flavour
Percentage share on total
capitalisation
Capitalisation of 7 major companies
from Ibex 35
Santander
15%
90000
80000
70000
60000
50000
Others
38%
Telefónica
13%
40000
30000
20000
10000
BBVA
12%
0
SantanderTelefónica BBVA
Endesa Iberdrola
Repsol
YPF
Gas
Natural
Iberdrola
Repsol
3%
6%
YPF
6%
Gas
Natural
Source: Bolsa de Madrid, October 2006.
Endesa
7%
60% of Spanish capitalisation
3
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Latin America: a helping hand for Spain
Percentage of sales to Latin America
60%
50%
40%
2004
2005
30%
30%
20%
10%
0%
Repsol
YPF
Gas
Natural
Iberdrola
Endesa
Santander Telefónica
BBVA
Source: OECD Development Centre 2007, based on Annual Reports.
4
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Spain: a helping hand for Latin America
Number of employees in Latin America
Number employees
600,000
500,000
400,000
Latam employment 2005
total employment 2005
299,347
300,000
131,968
200,000
100,000
61,543
2,894
0
Iberdrola
Endesa
Gas
Natural
Repsol
YPF
BBVA
SantanderTelefonica TOTAL
Source: OECD Development Centre 2007, based on Annual Reports.
5
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Spanish multinationals: a helping hand for Latin America
Fiscal contribution of Telefónica
per country in 2005
Euros Millions
3000
2500
2000
1500
1000
500
0
Total fiscal contribution Euro 7266
3500
Fiscal contribution of Telefónica
as % of GDP in 2005
0.70%
0.60%
0.50%
0.40%
0.30%
0.20%
0.10%
0.00%
Source: OECD Development Centre 2007, based on Telefónica Annual Report.
6
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Spanish multinationals: a helping hand for Latin America
Waiting time for fixed line installation
80
72
70
Months
60
50
40
49
40
30
18
20
10
0.40
0.15
0
1998
2005
Brasil (TeleSP)
1990
2005
Argentina (TASA)
0.40
0.13
1990
2005
Chile (CTC)
1994
2005
Perú (TdP)
Source: OECD Development Centre 2006, based on Telefónica data.
7
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Spain has become one of the leading direct foreign
investors in Latin America
Total FDI stock to Latin America Vs.
cumulative Spanish flows
Spanish FDI flows to Latin America
35000
1,000,000
900,000
800,000
Millions US Dollars
25000
20000
15000
10000
700,000
600,000
500,000
400,000
300,000
200,000
5000
100,000
Source: Ministerio de Industria Turismo y Comercio de España, 2006.
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
0
1993
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
0
1993
Thousands Euros
30000
Source: UNCTAD, World Investment Report 2006.
8
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Spanish multinationals have a huge stake
in Latin America
Major European companies' sales to Latin America
(more than 10 percent of their total sales)
60%
50%
% sales LatAm2004
% sales LatAm2005
40%
30%
20%
10%
T. B B
M VA
Te ov
le iles
Sa fon
nt ica
an
d
IN er
B
Po N EV
r t es
ug t l
al e
T
D el.
ia
g
T e eo
na
E
B n r is
HP de
B sa
i
Ib llito
er n
dr
ol
H
a
G
o
as l c
i
R Na m
ep tu
so ra
lY l
C PF
im
C po
B lari r
ei an
er t
s
U dor
ni f
le
ve
r
S
Sy u
n ez
B g en
G
G ta
ro
u
B p
a
E r ye
ic r
ss
R on
ho
A di
Te rc a
le elo
co r
m
It.
0%
Source: OECD Development Centre 2007, based on Annual Reports.
9
‹#›
…leaving other European firms far behind
European companies' sales to Latin America
(5-10 percent of total)
12%
% sales LatAm2004
% sales LatAm2005
10%
8%
6%
4%
2%
0%
t
r
t
i
n
t
e
r
F
e
a
S
h.
at
n a Fia
ul uzz ens eo dvik on o rge uid into
SH age AS
ki cco lijk
M fou
al
a
Sc lta
o
a
g
E
G
r
m en
e
q oT
B
N
A in k
B ie m eu
A
an Se La f
ry
Li
CH arr Par
h e lk sw
R
u
S
n
P
r
S
c
Ri
i
b
o
A
C
o
o
d
A
K
B
R
V
Ca
CI
Source: OECD Development Centre 2007, based on Annual Reports.
10
‹#›
…leaving other European firms far behind
% sales LatAm2004
6%
% sales LatAm2005
5%
4%
3%
2%
1%
0%
Volvo
Pernod
Ricard
Linde
Sabmiller Havas
Invensys
Saint Deutsche EADS Heineken
Gobain Lufthansa
CRH
Source: OECD Development Centre 2007, based on Annual Reports.
11
‹#›
ei
er
s
E r do
ic r f
S y sso
ng n
en
ta
Su
e
B z
a
T e C l yer
le ari
co an
m
t
I
t
Ib al
er i a
dr
C ol a
im
p
A or
rc
U elo
ni r
le
v
H er
ol
ci
m
G INB
as
Na EV
B tu
ra
G
R Gr l
ep o
so u p
lY
En PF
S a de
s
Po nta a
r t nd
ug e
al r
T
Te el.
Te na
le r is
fo
ni
Te
c
le
fo BB a
ni
ca V A
M
ov
.
B
percentage over total number of
employees
Spanish multinationals also generate some of the highest
employment rates in Latin America
Percentage of Employment in LA in 2005
(European companies with over 10% sales in LA)
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Source: OECD Development Centre 2007, based on Annual Reports.
12
‹#›
1 Spain and Latin America: A Helping Hand
2
New Emerging Multinationals: Mexico & Brazil?
3
Conclusions
13
‹#›
14
10
20
1
0
Pemex Petroq.
Vitro Vidrio
Plano
Verzatex
Grupo Televisa
Femsa
Desc Químico
Exports US$bn
Corp. San Luis
Grupo Vitro
Siemens
Mexico
Desc
Automotriz
Grupo Saltillo
Grupo Simec
Nemak
Idustrias
Penoles
Industria CH
Desc
Alpek
Grupo Modelo
Imsa Acero
Grupo Bimbo
Grupo Maseca
Grupo Cintra
Grupo Imsa
Grupo Mabe
Daimlerchrysler
Pemex
Gas&Pet.
Grupo Alfa
Pemex Ref.
Pemex
Leaders of the globalisation process in Latin America are
Mexico…
Major Mexican exporters in 2005
100,000
120
10,000
% of sales
100
1,000
80
100
60
40
Source: OECD Development Centre 2007, based on América Economía.
‹#›
Petrobras
Vale de Rio
Oderbrecht
Embraer
Cargill
Bunge
Volkswagen
Grupo
General Motors
Sadia
Gerdau
Daimlerchrysler
CST
ADM
MBR
Samarco
Caterpillar
Pedirgao
Braskem
Aracruz
CSN
Albrás
Volvo
Robert Bosch
Copersucar
Fiat Auto.
Seara Alim.
Petrobras
Shell
Siemens Brasil
Suzano
Acesita
Alunorte
Caraiba Metais
CBA
Pirelli Pneus
Coamo
Renault
Embraco
Copesul
WEG
Souza Cruz
…and Brazil
Top Brazilian exporters in 2005
8,000
Exports
15
% of sales
100
7,000
6,000
2,000
1,000
0
90
80
5,000
70
60
4,000
50
3,000
40
30
20
10
0
Source: OECD Development Centre 2007, based on América Economía.
‹#›
Emerging multinationals: from recipients to foreign
investors
Investments in 2006
Investments in 2000
90000
50000
80000
Inward
Outward
Inward
Outward
70000
60000
30000
20000
10000
US$ millions
US$ millions
40000
50000
40000
30000
20000
10000
0
0
-10000
Source: OECD Development Centre 2007, based on Thomson Datastream (Economist Intelligence Unit).
16
‹#›
Mexico and Brazil leading the investment trend abroad
Outward investments - Brazil
Outward investments - Mexico
20000
30000
16000
20000
15000
US$ millions
US$ millions
25000
12000
8000
10000
4000
5000
07
20
05
20
03
20
01
20
99
19
97
19
95
19
93
19
91
19
89
19
87
0
19
19
87
19
89
19
91
19
93
19
95
19
97
19
99
20
01
20
03
20
05
20
07
0
Source: OECD Development Centre 2007, based on Thomson Datastream (Economist Intelligence Unit).
17
‹#›
…and competing with China and India
Outward investments - China
Outward investments - India
30000
20000
16000
07
20
05
20
03
20
01
20
97
95
93
99
19
19
19
19
19
87
07
20
05
20
03
20
01
20
99
19
97
19
19
19
19
19
19
95
0
93
0
91
4000
89
5000
91
8000
89
10000
12000
19
15000
19
US$ millions
20000
87
US$ millions
25000
Source: OECD Development Centre 2007, based on Thomson Datastream (Economist Intelligence Unit).
18
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Capital flows from emerging markets are increasingly
important
SOUTH - SOUTH FDI AS A SHARE OF GLOBAL
FDI 1999-2003
SOUTH - SOUTH CAPITAL FLOWS BY TYPE,
2005
Total inflows
South-South
180
North-South
.
90
80
.
70
US Billions
60
50
40
140
120
100
80
60
30
40
20
20
10
0
0
South-south FDI
160
% of Total flows to LDC
100
1995
Export revenues
Remittances
Syndicated Loans
Source: OECD Development Centre, 2007; based on
UN Comtrade datababase, World Bank.
1999
2000
2001
2002
2003
FDI
Source: World Bank, Global Development Finance, 2006.
19
‹#›
…and South-South flows are a key financing source, both in
Asia and Latin America
Total Outward Direct Invesment
from Emerging Countries
160000
140000
U$ Millions
120000
100000
80000
60000
40000
20000
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
1989
1988
1987
0
Note: The “Emerging
countries” category excludes
most African countries.
Source: OECD Development Centre 2007, based on Thomson Datastream (Economist Intelligence Unit).
20
‹#›
LatAm companies have multiplied their acquisitions at home
and abroad
Acquisitions in Latin America by LatAm companies in
2000-2006
(US$ billions)
Including internal market
Excluding internal market
O
th
er
s
bi
a
Co
l
om
a
Ar
ge
nt
in
le
Ch
i
o
éx
ic
M
Br
az
i
l
70
60
50
40
30
20
10
0
Source: OECD Development Centre 2007, based on BBVA Corporate Finance.
21
‹#›
…helped by the fall of cost of capital
Spreads of major emerging economies
in LatAm
Total outward FDI from LatAm
45000
Brazil
2500
Latin America
Mexico
40000
35000
30000
US$ millions
2000
1500
1000
25000
20000
15000
10000
500
5000
0
1/2007
5/2006
8/2005
4/2004
12/2004
8/2003
12/2002
3/2002
7/2001
11/2000
3/2000
6/1999
10/1998
2/1998
6/1997
9/1996
1/1996
5/1995
9/1994
12/1993
0
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
* Data for 2007 is estimated and includes
recent deals
Source: OECD Development Centre 2007, based on
Economist Intelligence Unit, 2007.
Source:
OECD Development Centre 2007, based on
Emerging Markets Bond Index - Global, 2007.
22
‹#›
…helped by the fall of cost of capital
US$ millions
Total LatAm outward FDI vs LatAm spreads
45000
40000
35000
30000
25000
20000
15000
10000
5000
0
Outward FDI
Spreads
500
400
300
200
100
0
2003
2004
2005
2006
2007
* Data for 2007 is
estimated and
includes recent deals
Source: OECD Development Centre 2007, based on Thomson Datastream (Economist Intelligence Unit).
23
‹#›
Increasing appetite for overseas expansion can also be
seen in other countries such as India…
RECENT INDIAN INVESTMENTS 2006
RECENT INDIAN INVESTMENTS
(EXCLUDING CORUS-TATA DEAL)
9%
26%
22%
US
Europe
Latin America
Africa
13%
US
Europe
Latin America
Africa
4%
22%
61%
43%
Target
Corus
Oil & Gas Assets (Campos Basin)
Omnimex de Colombia
Oil & Gas Assets (Brazil)
Greater Nile Petroleum (25%)
Glaceau (30%)
Shell Development Angola
Oil & Gas Assets (Syria)
Betapharm Arzneimittel
Hansen Transmissions
Eve Holding
Terapia
Total
Nationality
UK/NL
Brazil
Colombia
Brazil
Sudan
US
Angola
Syria
Germany
Belgium
Belgium
Rumania
Acquirer
Tata Group
Oil & Natural Gas
Oil & Natural Gas
ONGC Videsh
Oil & Natural Gas
Tata tea
Oil & Natural Gas
Oil & Natural Gas
Dr Reddy's Lab
Suzlon Energy
Suzlon Energy
Ranbaxy
Corp
Corp: China Group
Corp
Corp
Corp: China Group
Deal Value ($m)
7700
1670
850
820
783
677
600
581
572
562
548
324
15687
Source: OECD Development Centre., 2007; Based on Dealogic and local press.
24
‹#›
1 Spain and Latin America: A Helping Hand
2
New Emerging Multinationals: Mexico & Brazil?
3
Conclusions
25
‹#›
Conclusions
 Globalization strategies have turned into success
in Spain, Latin America and other emerging markets.
stories
 Multinational groups are becoming leaders in their domestic market
but also in foreign markets.
 In the future we will see more emerging giants from Latin America
and Asia taking over OECD-based firms and continuing to be at the
centre of the globalization process.
26
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Thank you!
For more information contact:
Javier Santiso: javier.santiso@oecd.org
Based on Santiso, J. (March 2007) “The Emergence of Latin
Multinationals”, OECD Emerging Markets network Working
Paper, OECD Development Centre, Paris.
27
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