turning science into business - amcham chile completo business chile mayo 2012.pdf6 may 2012...

The voice of The chilean-american chamber of commerce n°279, maY 2012

business chile

Trade TesTimonialTechnicolor chips, naturally

sernaC FinanCieroDefending financial consumers

speCial reporTmobile marketing

Turning Science into Business

May 2012 3business chile

Contents

Technicolor chips, naturallya Chilean entrepreneur has realized her dream of producing multicolored chips made from native potatoes and other vegetables.

TRADE TESTIMONIAL

12Turning science into businessChile has excellent scientific research capability, but it needs more investment to turn the results of that research into business opportunities.

COvER STORy

6

8 SERNAC FINANCIERO

Defending financial consumersit’s early to judge if Chile’s new financial watchdog will have a significant impact on consumer protection, but it is a step in the right direction.

18mobile marketing: betting on smartphonesChilean businesses are creating mobile marketing campaigns to catch the attention of busy consumers and gain their trust.

SpECIAL REpORT

EDITORIAL BOARD 2012CHAIR, Kathleen Barclay, Asesorías KCB; VICE CHAIR, Karen Poniachik, British American Tobacco Chile; VICE CHAIR, Manuel José Vial, Grupo Vial Abogados; PAST CHAIR, Michael Combes, Marco Chilena; GENERAL EDITOR, Julian Dowling, AmCham Chile; ASSISTANT EDITOR, Mariana Ossa, AmCham Chile.

MEMBERSRodrigo Ballivián, AmCham Chile; Ari Bermann, 3M Chile; Pelayo Bezanilla, Coca-Cola de Chile; Ruth Bradley, The Economist; John Byrne, Boyden Consultores Chile; John P. Dill, Project Management; Francisco Garcés, Banco de Chile; Javier Irarrázaval, The Walt Disney Company Chile; Olga Kliwadenko, K&D Comunicaciones; Gideon Long, BBC; Vincent McCord, Asesorías e Inversiones Carcon; James Newbold, Tanager Investment; Roberto Ossandón, Ossandón Abogados; Rodrigo Silva, Silva & Asociados; Mitch Larsen, U.S. Embassy; Paulina Dellafiori, AmCham Chile.

PRODucTIOnK & D Comunicaciones Ltda. Olga Kliwadenko, General Manager, 11 de Septiembre 1945 - Of. 213, Providencia. Phone: 481-6940 / 481-6941, Cell: (09) 6601-5505; e-mail: [email protected]; [email protected];www.kyd.cl

Special RepoRt

Mobile MarketingWith chilean consumers increasingly using their smartphones to research products before deciding what to buy, companies need to invest in mobile marketing to stay ahead of the competition.

Do You tattoo?Santiago eneldo is convinced he needs a (discreet) tattoo on his near perfect body, but what should it say?

© 2012 AMchAM chILEReproduction in whole or in part is strictly forbidden without permission from the publisher. Opinions expressed in bUSiness CHILE are those of the authors and do not necessarily reflect those of AmCham or bUSiness CHILE. We accept no responsibility for the accuracy of the articles and any unforeseen errors. bUSiness CHILE is published monthly, 10 months a year and mailed free of charge to AmCham members. Letters are welcome. They should be accompanied by the author's name and daytime telephone and sent to [email protected] For reasons of space limitation, AmCham reserves the right to edit letters published.Advertising inquiries should be addressed to AmCham's Sales Department: Paulina Dellafiori: E-mail: [email protected]; Phone:2909741. Fax 2120515 Av. Presidente Kennedy 5735, Torre Poniente, Of.201, Las Condes, Santiago de Chile; E-mail: [email protected]; www.amchamchile.cl; www.businesschile.cl

life in the SloW lane

12

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THE VOICE OF THE CHILEAN-AMERICAN CHAMBER OF COMMERCE N°279, MAY 2012

bUSiness CHILE

TRADE TESTIMONIALTechnicolor Chips, Naturally

SERNAC FINANCIERODefending Financial Consumers

SPECIAL REPORTMobile Marketing



Chile’s close relationship with the United States could be the key to unlocking its biotechnology potential. BREAkFAST34

engaging employeesWhat makes a company a great place to work? Kimberly Clark, which is ranked the best company to work for in latin america, has the answer.

32Defending Growth through Domestic channelsdespite external risks, Chile’s surprisingly strong internal demand seems poised to drive economic growth above the regional average this year.

24Teaching intellectual PropertyChilean school students are learning about the importance of respecting intellectual property through an innovative Us embassy program.

SpOTLIghT

ECONOMIC SNApShOT

38

INTERvIEw36Peering into the Past from chiledr. Charles alcock of the Harvard-smithsonian Center for astrophysics spoke to bUsiness CHile about the Giant magellan Telescope.

May 20124 business chile

AmChAm GlobAl SponSorS 2012


What do chips made from Chilean potatoes have in common with new business opportunities in biotechnology, mobile applications for smartphones and grade-school students simulating the development of computer games?

all of these topics are discussed in this month’s issue of bUsiness Chile. all are innovations that reflect exciting new value-added opportunities for jobs and exports.

all are based on intellectual property.intellectual property is also an area where the

Chilean government has focused its attention in order to attract investment, reduce tax evasion and crime, and enhance the country’s ability to compete in the global services industry.

at the same time, the office of the United states Trade representative (UsTr), for the sixth consecutive time, included Chile on its priority Watch list for failure, in the view of the United states, to comply with its commitments to protect intellectual property as established in the Us-Chile Free Trade agreement.

What does this mean for Chile?it is, of course, an unfortunate area of disagreement

between two countries which have a strong relationship based on shared values. it is because of these shared values, and the value generated to both sides, that a solution should be achievable.

But more importantly, it is the question central to Chile’s continued growth and economic wellbeing. We live in a world where services and value-added products receive premiums and where Chile has natural advantages such as those discussed in this month’s cover story on biotechnology. strong intellectual property protection is needed for Chile to

capitalize on these advantages. some would argue that now is not the time, or

that the costs may be too high, or that the country already does enough to protect ideas. But the lack of investment behind the opportunity clearly demonstrates that something needs to be done for the country to achieve its full potential.

The question is always framed as to when and how the necessary changes should be implemented. But is this really the right way to look at this important policy issue for Chile?

perhaps more consideration need be given to the speed of change. is Chile moving fast enough to take full advantage of the ideas generated by its people? Can more people be employed in better jobs faster? Can foreign investment be accelerated in this area?

in a highly competitive world, where time frames are increasingly shorter, Chile may be losing an opportunity that will not come again. We can see from the examples discussed in this month’s issue – biotechnology, new food products and smartphone applications – that a broad base of opportunities exist for Chile in the important and growing area of innovation and ideas.

Unlocking this potential is key for Chile to move to the next stage of development. We, at amCham, believe that the strong academic and business links between the United states and Chile can help to make this happen. We support the initiatives of the two governments to make these opportunities a reality as reflected in the Chile-massachusetts and Chile-California agreements. We believe in Chile’s ability to grow and flourish in a future of ideas.

Growing into a Future of Ideas

Editorial

boArD oF DIrECTorS eXecuTive commiTTee PRESIDENTJavier irarrázaval, The Walt Disney company VICE-PRESIDENT; CHAIR LABOR AND HUMAN CAPITAL COMMITTEEcarolina valdivieso, Kimberly clark

SECRETARY GENERAL; CHAIR LEGAL COMMITTEEmichael Grasty, Grasty, Quintana, majlis & cía

TREASURERfelipe cerón, aes Gener

PAST PRESIDENTricardo García, camanchaca inc.

EXECUTIVE DIRECTORrodrigo ballivián, amcham DirecTors Pablo achurra, aramark sudamérica chair TraDe anD inTernaTional business

fernando concha, citigroup CHAIR FINANCE AND CAPITAL MARKETS

Gonzalo iglesias, coca cola de chileCHAIR CORPORATE AFFAIRS AND SUSTAINABILITY COMMITTEE

luiz marcelo moncau, microsoft chile

enrique ostalé, Walmart Karen Poniachik, british american Tabacco chileVICE CHAIR EDITORIAL COMMITTEE luis siles, ibm de chile mitch larsen, u.s. embassyEX OFFICIO

aDvisorY council rubén covarrubias, universidad mayor

alfredo ergas, enersisVICE CHAIR FINANCE AND ADR COMMITTEE

Guillermo ochoa, 3mchair commerce anD business

mauricio ramos, vTr Global com

Kathleen barclay, Kcb asesoríasCHAIR EDITORIAL COMMITTEE

AmCham Mision Statement“Promote free trade and business between Chile and the United States"


Technicolor Chips, Naturally

ll entrepreneurs, of course, have a dream but, for 37-year-old Carolina echenique, it is literally true. a dream inspired her

to launch Tika, the company that now exports red, purple and yellow chips, made from native Chilean potatoes and other vegetables, to France and, soon, spain and the United states.

it was in october 2008 that she dreamt of making brightly-colored chips. so vivid was the dream that, the very next day, she resigned as a lecturer at the agronomy schools of two santiago universities and, in the garage of her house, started experimenting.

potatoes were the obvious

choice. But she also tried lots of other vegetables - eggplants and radishes among them - before settling on two varieties of potato - one red and the other purple - grown in southern Chile around puerto montt and on the island of Chiloé as well as three varieties of sweet potato and one of beetroot.

By november 2009, she was ready to go and hasn’t stopped since. it wasn’t long after the chips appeared in delicatessens, up-market restaurants and hotels in santiago that she got a call from the Jumbo supermarket chain asking to place an order - a request that, worried about her production capacity, she initially turned down - and other supermarkets soon followed.

“now, i’m everywhere,” says echenique. Tika chips are, indeed, on the shelves of 700 points of sale along the length of the country and, although around three times the price of traditional chips, not only in high-income neighborhoods.

Their expansion to a more mass market was helped last year when the company decided to cut its prices by 22 percent - a drop of 1,000 pesos (around Us$2) on the largest 212-gram bag. “We wanted to take advantage of the scale economies that were appearing as

sales volume increased to extend our reach,” says echenique.

Timing appears to have been part of the secret of the success of Tika chips. as people became more interested in healthy eating - itself a sign of Chile’s growing prosperity - Tika filled a niche, until then largely empty, by providing a natural snack that is, at the same time, easy to serve, tasty and visually attractive.

“people want a snack that’s really natural, without colorants and chemicals,” says echenique. “and, except in the case of the two potato varieties where we add a tiny bit of low-sodium salt, the only sodium is what comes from the vegetables.”

supermarkets like them too, according to echenique. The margin is attractive, she says - although unwilling to go into details - and the turnover fast.

exports have followed, first to Uruguay starting in mid-2011, and, because they are sold there in duty-free shops, that also opened the door to the Brazilian market. “We didn’t target Uruguay, they contacted us through our website,” reports echenique.

another contact through the website added France to the list - where they are sold in the Galeries lafayette and le Bon

sales of Tika chips have, like their name which means flower in Quechua,

blossomed since their launch just over two years ago and are now making

their first inroads into export markets.

aBy ruth bradley

TrADE TESTImonIAl


marché stores in paris - while, in spain, they are poised to appear in the repsol convenience stores and, in the United states, in duty-free shops and a number of other outlets in California and Florida, thanks to echenique’s participation in a tour organized by the proChile export promotion agency.

Growth prospects

echenique is loath to give sales figures. she says, however, that, at the company’s plant in Quilicura, a suburb of northern santiago, its 35-strong workforce currently turns out some 20 tonnes of chips a month or, in other words, the equivalent of around 95,000 of the 212-gram bags that sell for just under 3,000 pesos in santiago supermarkets.

partly because it has been light on investment, the company has been profitable from its first month, she says. she bought its first machines in auctions and the initial investment was just Us$10,000, partly a loan from her husband - “every cent paid back” - and partly raised by echenique herself by selling some jewelry.

since then, apart from seed capital of some Us$65,000 which the company received from the government’s economic

development agency (CorFo), its growth has been financed out of cash flow. only recently has it taken out its first bank loan in order to increase working capital.

eighteen months ago, echenique was joined in the company by rodrigo Gutiérrez, a cousin of her husband, who had just finished an mBa at Babson College in the United states. That has helped, she says, by freeing her from the financial and administrative part of the business.

But, with sales tripling last year and, helped by (still small) exports, projected to increase four-fold this year, Tika is growing at a dizzying speed. Fast growth is complicated, admits echenique - “frightening and motivating at the same time”.

one concern is that the company depends crucially on its supply of vegetables, produced mostly by small farmers - “who are growing with Tika,” says echenique. But, apart from their capacity to keep pace with the company, there are the vagaries of the weather and the seasons.

Frying vegetables to produce chips isn’t that straightforward. Changes in their humidity or starch content can make an enormous difference to the final result. “any company’s chips are

quite different depending on the season,” says echenique.

Then, of course, there’s the risk run by any successful product - being copied. so far, Tika doesn’t have any real competitors in Chile, says echenique, and potential rivals - like the Terra chips that began to be imported from the United states soon after Tika’s launch - aren’t as “natural”, she argues. They have, in fact, helped, she says, by expanding the supermarket space allotted to natural snacks where, before, “we were alone against the traditional giants”.

But Tika is still vulnerable. Chips can’t be patented - “it’s like trying to patent a hot dog,” says echenique - and only one of its processes has intellectual property protection.

she is not, however, deterred from what she describes as her “adventure”. if all goes according to plan, a whole new line of Tika products, comprising seven different snacks, will hit the supermarket shelves in august. no details are as yet available but rumor has it that they will see the company branching out from vegetables into seeds.

Ruth Bradley is a freelance journalist based in Santiago and a former editor of bUSiness CHILE.

Technicolor Chips, Naturally

chilebUSiness

carolina echenique, Tika


ot a problem with your bank? if so, you’re not alone. in march, Chile’s new financial consumer protection agency - the sernaC Financiero -

received over 7,000 complaints, including those submitted online and in person, about inappropriate charges, unilateral changes to contracts, difficulties in terminating services, abusive extrajudicial collection fees and misleading or incorrect advertising.

This represents a 92% increase from the number of complaints related to the financial market that were received in the same period of last year.

“This is a good sign, it shows the sernaC Financiero is working,” says Juan antonio peribonio, director of Chile’s national Consumer service (sernaC).

This new division of sernaC, which opened its doors on march 5, was created as part of a new consumer protection law approved in november last year. it is too early to judge its effectiveness, but it has made consumers more aware of their rights, says peribonio.

“There is an important asymmetry in the information available to the consumer,” he says. “our

chile’s new financial consumer watchdog aims to inform consumers about their rights and defend them against dubious credit practices, but with limited resources and powers of enforcement can it really make a difference?

GBy Julian Dowling

SErnAC FInAnCIEro

Defending Financial Consumers

Juan antonio Peribonio, sernaC

“The sernac financiero is an important step forward in protecting financial consumers.”

challenge is to give confidence back to the consumer.”

Chile’s banking sector has a well-earned reputation for being solvent and well-managed, which has grown in light of its stability following the 2008 global financial crisis. last year, total loan placements grew 12% year-on-year, representing around 70% of Gdp.

“let’s not forget that the main role of the banks is solvency, stability and the permanent development of the means of payment,” says Jorge awad, president of the association of Banks and Financial institutions (aBiF).

Banks are also responding to consumer demands by improving their after-sales service, he says. so why are consumers clamoring for greater protection?

paradoxically, the answer lies partly in Chile’s success. as the economy has grown in the last two decades, so too has the demand for banking services. Chile’s financial system has been staggeringly successful in extending financial services to a much wider segment of the population. Today, more Chileans than ever – over 12 million - have access to banking services.

However, as banking coverage has expanded, especially amongst low-income segments, more families have got into debt by consuming beyond their means. over 22 million credit cards have been issued in Chile, about four for every working Chilean, including 18 million by non-bank issuers, such as department stores.

The problem is that these issuers are not regulated by the superintendency of Banking and

Financial institutions (sBiF) and recent revelations of dubious credit practices by some of them have shaken the financial sector. The most important involves la polar, a Chilean department store that unilaterally renegotiated the debts of over 1 million customers.

But the demand for better consumer protection has been growing for decades. “There is no doubt we needed to level the playing field in favor of the consumer,” says peribonio.

president piñera promised, during his election campaign, to beef up protection for financial consumers, partly by creating the sernaC Financiero.

“Today is a good day for customers of financial companies, for small

and medium companies, and also our middle class,” he said when the legislation was approved in november.

empowering consumers

The new law will come into force gradually. The first stage, implemented in march, was the

publication of a list of financial consumers’ rights.

These include information about the total cost of a loan, the conditions required for it to be approved and the reasons it may be denied. loan quotes are valid for seven days, which is designed to give consumers time to shop around. This is aimed


at increasing competition between banks and lowering the cost of borrowing, says peribonio.

Crucially, the regulation also aims to put an end to the practice by which banks offer “tie-in” products, such as health insurance, with credit card or loan contracts. now banks must put these in a separate contract so consumers know what they are signing up for.

another important change is that accountholders have the right to request that their account be closed within 10 business days if all debts are paid. like the recent implementation of mobile number portability in Chile, this aims to give consumers back the “freedom of decision”, says peribonio.

as for the banking sector, aBiF’s Jorge awad is reluctant to comment on the new norms until they are approved by the office of the Comptroller General, which is expected in may. However, their aims – namely education, transparency and protection - are positive depending on how they are implemented, he says.

educating financial consumers is an important part of the solution and banks are voluntarily making more information available so customers

SErnAC FInAnCIEro

hernán calderón, ConadeCUs

“We lost a great opportunity to improve the law to better protect consumers.”

Jorge awad, aBiF

“The main role of the banks is solvency, stability and the permanent development of the means of payment.”

can compare products, says awad. “The regulations need to be clear

that a loan application is a request, not a right,” he says.

Consumers, however, are not impressed. according to Hernán Calderón, president of the national Consumer association (ConadeCUs), the law is a small advance, but does not go far enough.

“sernaC is simply an observer that can evaluate bad behavior but not control it,” he says. “all the measures that could benefit the consumer are voluntary.”

still, he admits some changes are positive. For example, the sernaC has created a team of 40 observers (ministros de Fe in spanish) who are empowered to witness possible infractions of the new law in the field.

These observers – spread around Chile at random financial institutions – are tasked with gathering evidence to use against companies found to be violating the law. However, their reach will be limited. “Having just over 50 observers for the whole country is clearly insufficient,” says Calderón.

multiplier effect

The sernaC Financiero is not just a witness - it can also levy fines, facilitate mediation, or launch class-action lawsuits on behalf of consumers.

For instance, it recently launched lawsuits against five banks and other financial institutions that risk fines up to Us$80,000 each for claiming, in their advertising, that their products are in line with the agency’s new norms.

a more important issue for consumers is harassment by extrajudicial collection agencies, which accounted for 12.8% of

complaints received in march. in this regard, sernaC is analyzing information gathered by its observers to see if legal action will be taken.

But there are not enough resources to chase every lead. sernaC Financiero’s budget for 2012 is around 1.2 billion pesos (Us$2.5 million), which is about 20% of sernaC’s total budget, but this will drop to 740 million pesos next year.

“We expect our actions to have a multiplier effect so other institutions do not commit the same infractions,” says peribonio. “if we had an army, it would be different but resources are limited.”

For this reason, mediation – except in cases like la polar where thousands of clients are affected - is preferred over lawsuits that can be time-consuming and costly. information about how banks are responding to cases of mediation will not be available until June, but sernaC is optimistic the results will be positive, says peribonio.

as happens today, however, complaints not resolved through mediation could end up in local courts. since no legal aid is available, this leaves consumers with the choice of defending themselves against the resources

of large corporations or hiring a lawyer. an alternative proposed by ConadeCUs is that part of the income collected through fines could be used to pay consumers’ legal fees, which is similar to the peruvian system.

“mediation is not enough, we need a service to defend consumers,” says Calderón.

sello sernac

The second stage of the law, to be implemented later this year, involves a voluntary process by which banks will be able to request sernaC’s seal of approval, known as the sello sernaC.

To become certified, banks must submit all contracts for revision and create a three-pronged system to address complaints that includes customer service, mediation and, as a last resort, financial arbitration.

Expertos en ServiciosAlimentación & Gestión de Instalaciones

M I N E R I A S A L U D E D U C A C I O NE M P R E S A S &I N D U S T R I A S

Julian Dowling is Editor of bUSiness CHILE

according to peribonio, this is the “heart” of the new law because it guarantees consumers a certain level of customer attention.

“Banks will line up because they will realize that consumers prefer institutions with the certificate,” he says.

But so far the signs aren’t promising. arturo Tagle, Ceo of Banco de Chile, Chile’s second largest bank, said last november that his bank will not seek the certification because submitting its contracts for revision would take time and affect its competitiveness.

even if other banks decide to seek the certification, a better way to protect consumers would be modifying the law to stop abusive interest charges and give consumers the ability to sue in cases of possible antitrust violations, says ConadeCUs’ Calderón.

overall, however, Chile’s financial

system is healthy, stable and competitive with some exceptions. la polar drew attention to abuses by some credit issuers but, looking at the glass half full, it also had the effect of catalyzing political will to strengthen consumer protection legislation.

“Thanks to la polar, Chile’s financial system is one of the most scrutinized on the planet,” says peribonio.

Ultimately, the success of the sernaC Financiero will depend to a large degree on how banks react to the new norms, but it is a much-needed step forward in consumer education and protection.

“The future is very promising for the financial consumer,” says peribonio. “But our work is just beginning - we have a lot to do.” chilebUSiness


t the Zañartu Technology park in a residential area near santiago’s national stadium, young men and women in lab coats and

facemasks are hunched over test tubes and petri dishes, working on new treatments for health problems like cancer and diabetes.

around 200 researchers and postdoctoral students from Chile and the United states work at Zañartu, which is run by Chile’s life sciences Foundation that nurtures promising biotechnology start-ups.

The Foundation, created 15 years ago by world-renowned Chilean biochemist pablo Valenzuela with colleagues Bernardita méndez and mario rosemblatt, is funded mainly through public grants, but it also does research on behalf of local universities and Us companies.

most of the research is focused on supporting export industries such as aquaculture, mining, forestry and agriculture. The idea, however, is that a few of the start-ups supported by the Foundation will make discoveries that allow them to move into international markets.

But that remains, for now, just a dream. The Foundation has spawned a few companies like andes Biotechnology, which has

a

Turning Science into Businesschile has a high level of research capability in the biotechnology

sector, but it needs to attract more investment and build

relationships with universities and venture capitalists to turn the

results of that research into business opportunities.

COVER STorY

By Julian Dowling

achieved breakthroughs in cancer treatment, but none have made the leap to the lucrative Us market.

Valenzuela, a former academic at the University of California, san Francisco, who co-founded the firm Chiron – now part of novartis - that developed a vaccine for Hepatitis B, knows what it takes to succeed in the industry but he has yet to replicate that success in Chile.

“Chile remains a small and irrelevant player in biotechnology,” he says.

despite the quality of research at Valenzuela’s Foundation and other research centers around the country, few Chilean firms have leveraged discoveries into technology exports. one exception is Crystal lagoons, which exports a technology to keep large lagoons clean, but this is an isolated case.

Globally, the biotechnology industry has rebounded from the

Pablo valenzuela,life sciences Foundation

“We need to catalyze productive relationships between the united states and chile.”

2008 financial crisis. Companies in Canada, europe and the United states raised Us$25 billion in 2010 - equaling the average for the four

years before the crisis, according to ernst & Young’s 2011 Global Biotechnology report.

around 81% of this was raised in the United states, much of which is concentrated in the states of California and massachusetts where, not by coincidence, many of the world’s top universities are located.

“Biotechnology needs new discoveries that come out of the big universities,” says Valenzuela. “We have very little of this in Chile.”

another problem is the size of its market. Unlike Brazil, the region’s leader in biotechnology, Chile does not have a large market for companies to sell new products.

Then there is the issue of money. many research programs usually fail before one discovery allows a company to break even. as a result, average investment in a biotechnology company globally


COVER STorY

felipe camposano, asemBio

“chile has great human capital and research capability, but this is not known in the united states.”

Gonzalo herrera, FondeF

“We need to produce business out of our good research capabilities.”

is around Us$200 million. But coming up with this amount is difficult in Chile.

comparative advantages

despite its disadvantages, no one is denying Chile’s biotechnology potential. Us-based life sciences investment firm Burrill & Company’s 2011 industry report predicts Chile is positioned to become a “springboard for biotechnology companies” looking to invest in latin america and the world.

Given its inverse growing season to north america and varied geography, Chile has all the ingredients to become a biotechnology hub. This also helps explain why multinationals like pfizer, BasF, Bayer and roche have a presence here.

Chile’s long coastline and sunny climate offer ideal conditions to grow algae and seaweed to produce biofuels, which could reduce the country’s dependence on imported hydrocarbons.

some progress has already

been made in this area. in march, national airline lan operated the first flight in latin america – from santiago to Concepción - fueled by second-generation biofuels produced in partnership with local fuels distributor Copec.

But perhaps Chile’s biggest advantage is its human capital. its scientists are recognized worldwide for their calibre and, unlike other emerging economies, it does not suffer from a brain drain problem – Chileans who study abroad usually come home.

“a new generation of scientists has returned to Chile, bringing with them a new approach and way of doing things,” says Felipe Camposano, president of the Chilean association of Biotechnology Companies (asemBio) and general partner at venture capital fund austral Capital.

some of them now lead research centers like the life sciences Foundation. But finding skilled people is only part of the equation. For Chile to grow in biotechnology, especially in the promising biorenewables and

health areas, it needs to invest more in research.

falling short in r&D

Chile’s investment in research and development – the cornerstone of the biotechnology industry – is embarrassingly low for a country aiming to become developed this decade.

at barely 0.4% of Gdp in 2010, or around Us$900 million, this is well below the average of 2.3% invested by oeCd countries, according to figures from the economy ministry. per capita, the United states invests 20 times more than Chile in r&d.

“Chile has fewer researchers than seattle,” laments Valenzuela.

The government launched tax incentives last year designed to double investment in r&d by 2014, but private sector spending still accounts for less than half of total investment.

This is partly due to the country’s natural resource-based economy. Forestry, mining and agriculture companies have little incentive to invest in innovation, especially when prices for commodities are high, notes asemBio’s Camposano.

most research and development spending in the United states comes from a few technology companies, like Google, based in silicon Valley. “We need one or two companies doing this in Chile,” says Camposano.

it is, however, a Catch-22 situation since creating a biotech multinational, like California-based Bayer, takes huge investment in research – and, often, a dose of good fortune. That’s where public support is crucial.

investing in science

in the last decade, Chile’s government, in conjunction with local universities, has made an effort


to support research by increasing funding for the national Commission for scientific and Technological research (ConiCYT) and the export development agency (CorFo).

“We are starting to see good results from public investment in biotechnology over the last seven years,” says Camposano.

ConiCYT’s scientific and Technological development Fund (FondeF), worth some Us$30 million in 2012, seeks to strengthen ties between universities and businesses while promoting projects that have practical applications outside the laboratory.

its grants - which are awarded competitively - can only finance up to 70% of a project’s total cost, while the university or research institute must put up at least 15% as well as obtaining a minimum 15% from a firm or other outside backer.

nearly half of the 54 projects approved by FondeF in 2011 had some biotechnology component and most of these were in the natural resources sector, says FondeF’s director, Gonzalo Herrera.

Funding is also available through the Basal Financing program for scientific and Technological Centers of excellence, which was created in 2006 by the national innovation Council for Competitiveness (CniC). To date, 13 centers have benefitted including the life sciences Foundation.

But the funding available from public sources is still insufficient, says Herrera, who notes that with more resources FondeF could finance a third of the projects that apply, versus 20% currently.

even so, this is not the main bottleneck in the industry, he suggests. many projects that receive subsidies come up with good ideas but most languish for years or – as in the case of salmon vaccines - are sold to foreign firms at an early stage only for Chile to buy them back later.

The reason, says Herrera, is that Chilean universities do not understand how to market their discoveries internationally.

“We have good research in Chile but there are some weak links in the chain in terms of business development and financing,” he says.

chile biotech

Chile’s venture capital industry has taken off in the last few years. Today, a handful of local funds, including aurus Bios, Copec-UC and austral Capital, together invest about Us$20 million annually. aside from Brazil, this is the most in latin america, but it is still a fraction of Us investment.

putting things in perspective, venture capital in northern California alone is worth Us$1.8 billion annually, followed by massachusetts with Us$1.4 billion. However, partly thanks to Chile’s close commercial ties with the United states, more Us venture capitalists are becoming aware of Chile’s biotechnology potential.

last december, Chile signed an

agreement with massachusetts that includes the exchange of human capital and knowhow in the biotechnology area. Through this agreement, Chile has been invited to take part in the world’s largest biotechnology fair, the Bio international Convention, to be held in Boston this June.

asemBio, in partnership with the government’s trade promotion agency proChile, will participate in the fair as part of a project launched last year to promote the brand Chile Biotech in the United states. amCham will also lead a business mission to Boston including member companies.

“We have enough cases in Chile to show we are doing interesting biotechnology, we have good human capital and research, but this is unknown in the U.s.,” says asemBio’s Camposano.

The idea is that exposure in the Us market will attract venture capital and companies interested in doing research in Chile, while enabling Chilean firms to learn about their competition.


– is an obstacle for entrepreneurs, says miguel sánchez, director of the industry association ChileBio which represents Us companies dow agrosciences, monsanto, pioneer and syngenta.

even if the law is changed, which may not happen for years, the cost of obtaining approval for new food products in export markets is an impediment to innovation, says sánchez.

“We need regulations that facilitate this process,” he says.

another challenge for companies is managing their intellectual property once they have made a discovery. in this regard, Chilean firms need to take better advantage of the patent Cooperation Treaty, which Chile joined in 2009, to obtain patents in export markets and benefit from licensing their discoveries, says FondeF’s Herrera.

realistically, Chile’s hopes of becoming a biotechnology platform for the region may be optimistic given its current level of investment. Chile can’t afford to spend billions of dollars on science given its more pressing priorities – health and education to name two – but, as Valenzuela points out, money is not everything.

Capitalizing on Chile’s advantages, including its human capital, network of free trade agreements and relationship with the United states, requires political will and cooperation between universities, companies and government agencies.

of course, serendipity plays an important role in science – you never know where the next solution to global challenges like healthcare, energy, water scarcity or food security could come from – but Chile can create the conditions to increase the chances it will happen here.

“a lot of the conditions are created by having the will and resources,” says Felipe Camposano. “You never know where the next solution will come from.”

COVER STorY

“Biotechnology has to be international from the very beginning,” says Camposano. “it’s critical for Chile to participate in the global landscape.”

short cut via california

pablo Valenzuela agrees that the United states is key to the long-term development of biotechnology in Chile.

“When you are in Chile’s situation, you have to do something creative,” he says.

The solution, he suggests, is to create a “short cut” by catalyzing productive relationships between Chilean researchers and Us companies to facilitate the exchange of people, ideas and investment possibilities.

The science and Friendship program, created by Valenzuela’s Foundation a decade ago, is part of this strategy. The program has so far brought over 170 Us doctoral students to Chile, partly by luring them with the country’s natural attractions.

“We don’t have nobel prize Winners to attract scientists, but we have natural beauty,” says Valenzuela.

When the students return they spread the good word, which has

Julian Dowling is Editor of bUSiness CHILE

miguel sánchez, ChileBio

“high regulatory costs are a brake on biotechnology development.”

led to professors, venture capitalists and now Us firms following in their footsteps, says Valenzuela.

The Us biomedical firm medivation, for example, operates a lab at the Foundation and California-based Bio architecture lab (Bal) is doing cutting-edge biofuels research in Chile.

“This shows we can do good research here, but the idea is to start our own companies,” says Valenzuela. “To transform science into something that has a greater impact on the economy we need entrepreneurship.”

appetite for innovation

part of the solution is connecting research centers, entrepreneurs and government institutions, which is where the non-profit technology transfer institute Fundación Chile aims to make a difference.

increasing the agri-food sector’s competitiveness and productivity is important given the growing global population and recent food price increases, says andrés Barros, manager of food products and biotechnology at Fundación Chile.

“Chile has the advantage of large areas of land in the north with high levels of solar radiation, which creates optimal conditions for cultivating microalgae with interesting nutritional properties,” says Barros.

in general, however, it is a challenge to get companies in Chile’s food industry to invest in innovation. some, like nestlé, have created research programs, but it is a struggle to get firms involved in the research and development process, says Barros.

“The real challenge is making developments in food biotechnology economically sustainable,” he says.

Then there are the regulatory obstacles. a ban on the commercialization of genetically-modified crops – currently seeds can be produced in Chile for export only

chilebUSiness


With chilean shoppers increasingly reliant on their smartphones

for product information and reviews, businesses need to create

mobile marketing campaigns to catch their attention and build

sustainable relationships.

Betting on Smartphones

By sebastián Pérez-ferreiro

SpECial rEporT

he headquarters of Happyshop - a start-up that bills itself as the first mobile shopping application that can be downloaded for free in Chile - has commanding

views of the andes from its perch on the 22nd floor of an office building in santiago’s well-to-do las Condes neighborhood.

a dozen employees sit at workstations that line the floor-to-ceiling windows, but this wasn’t by design; there was literally nowhere else to put them in an office where young programmers, graphic designers and sales executives are crammed into alcoves, a conference room and even the hallway.

Call it growing pains. since beginning operations in February 2011 and going live last november - after securing Us$1.5 million in financing from the Chilean venture capital fund aurus - the company

has teamed up with nearly 2,000 local businesses, including Falabella, sodimac and salcobrand. These allow Happyshop to place its Qr codes in their stores so customers can scan them with their smartphones to unlock coupons, discounts, and product information and reviews, while also racking up lanpass kilometers.

The app has been downloaded nearly 100,000 times in the iTunes store and the android market, according to vice-president of product development and co-founder, maría paz Gillet.

“When i imagined this company i thought of people in stores as web clicks. The user is having a digitally interactive experience while shopping,” says Gillet, who quit her job at retailer Cencosud to start the business.

“Happyshop offers brands a way to do smart marketing by influencing

T

Mobile Marketing:


consumers while they’re in-store,” she explains.

The company has recently secured its second round of financing and is readying for full expansion - evidenced by the fact that its staff has grown from three to 57 employees and is in dire need of larger offices, which Gillet is actively seeking.

broadband on the go

Happyshop’s growth speaks gigabytes about the current state of mobile commerce and marketing in Chile.

For starters, more Chileans now connect to the internet through a smartphone, tablet or laptop rather than a desktop computer. last year, according to the Transport and Telecommunications ministry, 2.9 million people had mobile broadband access, up from 638,787 in 2009.

as a result, mobile traffic is surging. according to Cisco’s Visual

networking index (Vni), mobile data traffic in Chile was 3,408 terabytes per month in 2011, up 73% from 2010 and equivalent to 1 million dVds each month or 9 million text messages each second.

The growth has been fueled by the arrival of smartphones such as the iphone and android-enabled devices and by the long-awaited implementation of mobile number portability this year, which lets users own their numbers, thereby taking away most of the risk of signing a service contract.

and those contracts may get cheaper as new carriers Falabella móvil and Virgin mobile compete with movistar, entel and Claro for mobile users.

To keep improving coverage in a market that boasts one of the highest penetrations of 3G (third generation mobile communications) in latin america, the Chilean government plans to auction 4G services - with

faster mobile ultra-broadband – next year in the hopes of having the technology ready for consumers by 2014.

Winning the Zero moment

Cheaper and faster broadband means that local shoppers will soon have more power at their fingertips to research a product in-store before making a purchase.

a new book by Google’s managing director for Us sales and service, Jim lecinski, describes the moment when you open your laptop or switch on your phone to find out about something you might buy as the Zero moment of Truth (ZmoT).

Understanding how to “win” this moment is now crucial to any marketing campaign, especially considering that 62% of latin american consumers carry out research online before shopping, including taking into account


feedback posted by others. one of lecinski’s tips for winning the

ZmoT is to upgrade your company’s website to make sure it is optimized for mobile devices. “if your site has Flash, an iphone won’t be able to see it,” says Javier Yranzo, digital marketing director at the santiago agency mayo digital.

“When you build a site for a pC or a mac, you’re thinking big monitors, but a smartphone has a small screen so the content stays the same, but you change the design so people can read it on their phones,” he says.

someone from the marketer’s team should also be on social networking sites like Twitter and Facebook to answer questions and respond to comments from consumers about the brand.

But mobile marketing can also be proactive in generating buzz for a product. like Happyshop, other firms are taking advantage of the possibilities offered by Qr codes placed in strategic locations.

one example is mayo digital’s campaign to promote americanino jeans. a board with a Qr code was placed in college campuses around santiago, and when students scanned it with their mobile devices they received a text with a phone number. Upon calling, they were urged to strip off most of their clothes. Those who did were rewarded with free outfits from the brand.

The campaign video went viral and had around 25,000 views on YouTube by the end of april. “i tend to see the Chilean consumer as shy about taking out their phone and scanning a Qr code, but to young people it’s the most natural thing in the world,” says Yranzo.

mobile commerce

When Facebook announced it had bought the mobile photo app instagram for Us$1 billion in early april, the new York Times called the deal a “turning point” that consolidates the tech world’s shift from computers to mobile devices and the migration of content from websites to the self-contained world of apps.

SpECial rEporT


many smartphone users prefer using apps to browsing on the mobile web because they incorporate the phone’s hardware like the Gps and camera, while also allowing for content storage and higher browsing speeds.

apps are also essential for any company looking to mobile commerce to increase sales. That is one of the reasons why the state-owned lottery company polla Chilena signed a contract with local company 3G motion to roll out a mobile gambling application by the end of the year.

polla expects its app to generate 120,000 additional transactions annually. With a target audience of lower middle-class players over 40 years old, polla previously relied on in-store terminals and traditional adver tising.

However, to bridge the generation gap the company has gone digital during the last decade, creating a new website and even trying, unsuccessfully, to facilitate betting through sms messaging. Finally, a couple of factors have convinced polla’s management that mobile

devices are the way of the future.“When we saw the number of clients

and mobile phone transactions that banks achieved through their smartphone applications, we were astonished,” says polla Ceo edmundo dupré.

mobile phone penetration is already over 100% in Chile, with 17 million devices in operation. now with cheaper smartphones and growing competition among carriers pushing down prices, mobile commerce will become more accessible to lower income segments, says dupré.

The polla app will send lucky players a Qr code that they can then take to an agency to collect their winnings. in exchange for a commission, 3G motion will create the app, handle the relationship with the carrier, and collect the fees charged either to the player’s credit card or phone bill.

But selling lottery tickets or other products to customers on their smartphones depends on unrestricted access to the internet at all times, which has not always been the case in Chile. on January 4, entel’s network

went down, leaving 1.3 million Chilean users with no mobile service. movistar users also experienced an outage this year, and who can forget the service interruptions suffered by BlackBerry users throughout the region.

if having no service can be frustrating for users, imagine how it affects a company that relies on mobile commerce.

“You enter a lot of stores where you don’t get a phone signal,” says Gillet. “in the U.s., retail businesses realized how big a problem this was and installed WiFi or broadband repeaters inside their stores. The same thing will happen here because customers will demand it.”

relating to the customer

There are also less tangible challenges ahead for the mobile marketing sector in Chile, ones that hinge on culture and habit, according to sebastian Goldsack, president of the direct marketing association and dean of the school of Communications at pacífico University.

edmundo Dupré,polla

“mobile commerce will allow us to target a younger demographic.”

maría Paz Gillet, Happyshop

“happyshop offers brands a way to do smart marketing by influencing consumers while they’re in-store.”


SpECial rEporT

While most Us companies are talking about building relationships with customers, many businesses in Chile are still hung up on traditional marketing to promote their products or services, says Goldsack.

“With relationship-building, it’s about the dialogue and it doesn’t matter what platform you use - tomorrow it could be a hologram. as technology improves, the most important thing is how you relate to the customer,” he says.

if you try to grab the customer’s attention through every means possible, you risk becoming irrelevant, he warns.

Felipe Huete, Ceo of mZZo, a Chilean mobile content producer, agrees with Goldsack’s assessment. “There is zero value in sending an sms saying ‘drink Coca-Cola’. The platform begs for a more intelligent use: a coupon, or a quiz with prizes.”

as for treating the customer with respect, Huete still remembers how a couple of years ago mobile phone users would be bombarded by sms spam with virtually no way of opting out. But today what frustrates him more than anything is that the

mobile marketing budgets of a lot of companies are controlled by traditional advertising agencies that may not be a right fit for the budding sector.

“These agencies don’t have any idea about technology - they prefer traditional media such as television and radio because they know how to measure it,” he says.

Then there is the misconception that people in remote areas are disconnected. even though a partnership between the Undersecretary for Telecommunications, entel and ericsson has provided broadband coverage to 90% of Chile’s rural and remote populations, Goldsack believes that Chilean users are still underestimated.

“people in arica and punta arenas use smartphones as much as the rest of us,” he says.

The older demographic is also more mobile than marketers give them credit for. “it takes a dim-witted person to think that a 40-year-old woman can’t do her banking online, or that a 60-year-old can’t read a text message,” he says.

The smartphone has the potential to be used for advertising and broadcasting,

to receive feedback, and facilitate online transactions. it is a game-changer that gives marketers more ways than ever to connect with consumers.

“There are two types of clients: the ones that are slowly trying to do something with this, and the ones that know that smartphones are a medium of high-consumption and an integral part of any digital campaign,” says Yranzo.

even businesses without a mobile strategy will realize that their customers are increasingly mobile, says Gillet. “Then they’ll realize that this is the perfect platform to link customers’ online and offline activities.”

once you reach the audience, however, how do you get them to pay attention? in the end, just like with other forms of marketing, what will make or break a campaign are great deals and the virtues of the product itself.

“if the offer is relevant, it’ll work,” says Goldsack. “The medium should not be more important than the relationship. Form should not triumph over content.” chilebUSiness

sebastián Pérez-ferreiro is a freelance journalist based in Santiago

Javier Yranzo, mayo digital

“smartphones should be an integral part of any digital campaign.”

felipe huete, mZZo

“few brands are willing to invest in mobile marketing because traditional agencies don’t understand it.”

sebastian Goldsack, direct marketing association

“as technology improves, the most important thing is how you relate to the customer.”


SpoTlIGhT

he development of video games has become an increasingly attractive market for young entrepreneurs, especially due to the growing penetration of smartphone

applications around the world. in fact, in Chile there are over 20 companies dedicated to producing video games. But the growth of this industry in Chile, like others based on innovation, depends on better protection for intellectual property.

educating Chileans about the importance of intellectual property starts at school. For this reason, the Us embassy in Chile, in partnership with the Chilean affiliate of the Us-based non-profit licensing executives society (les), recently sponsored workshops for students between the ages of 12 and 14.

The workshops, held between march 29 and april 3, were led by two young americans: Katya Hott, a video game designer and educational content developer at e-line media, and edward Yoo, a video game producer at large animal Games. during their week in Chile, they taught almost 200

students at schools in punta arenas, peñalolén, and Valparaíso.

The students created their own video games and were then asked to “sell” them in a market without piracy and then repeat the exercise in a market with piracy. asked to

comment on the experience, one student said: “When we were playing without pirates it was fun, but when the pirates appeared we felt very bad because they were selling what i did without my permission”. Through these exercises the students were

Teaching Intellectual Property

by maría Pía aqueveque

a program sponsored by the us embassy recently taught over 200

chilean students how to design video games while also educating

them about the importance of intellectual property.

T

Katya Hott, e-line media edward Yoo, large animal Games


able to understand the concept of intellectual property, as well as the negative economic and social effects that piracy can have on a country’s development.

The results of the workshops were presented at amCham on april 4. Us ambassador alejandro Wolff, and les Chile president Gonzalo sánchez were amongst those in attendance. amCham president Javier irarrázaval highlighted that promoting intellectual property protection is one of amChams key concerns and that the Chamber continues to support initiatives in this area. in their presentation, Hott and Yoo emphasized the effectiveness of role-playing in the students’ understanding of concepts related to intellectual property.

Two main conclusions could be drawn from this initiative. First, and perhaps the most obvious, is that piracy and poor protection of intellectual property create a disincentive for creativity and innovation. second, that education and public awareness of respect for creator rights are essential.

ambassador Wolff took the opportunity to explain that among the many reasons why the United states supports protection for intellectual property is its impact on innovation and development, as well as the jobs it creates. “if others can take an idea as their own after it has been tried by someone else, they undermine the creator’s ability to recover the cost of his investment. This problem

is addressed by respecting and applying intellectual property rights, which also helps to ensure that the private sector has the incentive to invest in innovation,” he said.

in Chile there are two intellectual property laws: the Copyright law, which protects literature, arts and science, and the industrial property law, which protects innovation, trademarks and industrial designs, among others. The government celebrated World intellectual property day on april 26 by submitting a bill to Congress that proposes modifications to strengthen the industrial property law.

The main purpose of this reform is to address Chile’s continued appearance on the priority Watch list of the United states Trade representative (UsTr), which lists countries that have failed to adequately protect the intellectual property of Us companies. The main reason Chile has remained on this list for five consecutive years is that, from the United states’ point of view, it has not fulfilled its intellectual

property-related commitments in the Free Trade agreement signed between both countries in 2003.

as the students in Hott and Yoo’s workshops learned, the world grows based on ideas and innovation, but when these ideas are not protected, creators do not receive what they need to keep producing and the incentive to innovate is reduced.

innovation is an important source of competitiveness and economic growth. But in countries with weak intellectual property laws, creators are faced with three choices: they develop their ideas but end up bankrupt; they never develop new ideas in the first place; or they leave and go to other countries with stronger laws.

if Chile is to achieve its goal of becoming a developed country by the end of this decade, it must improve its laws in order to establish an intellectual property framework that fosters a more competitive and modern country.

maría Pía aqueveque is Director of research & special Projects at amcham

chilebUSiness


AmChAm nEwS

AmChAmCOMMITTEES

on april 5, the Finance and Capital markets Committee met with Juan andrés Fontaine, former economy minister and president of Fontaine Consultores. The

title of his presentation was "Chile towards development: opportunities and risks", which included an analysis of the current international economic scenario.

on april 20, the Finance and Capital markets Committee heard from Jpmorgan Chase executives michael Quinn, managing director of global trade services; doug Hirai, executive director & assistant general counsel; and alejandro rubilar, executive director at Jpmorgan Chile. rodrigo novoa chaired the meeting in the absence of the Committee’s president, Fernando Concha. The theme of the meeting was “Guarantees for non-Fixed assets”.

on april 24, amCham’s Human Capital Committee met with Fernando Hurtado, a partner at Hurtado abogados, ignacio García, a partner at Baker & mcKenzie and Fernando Villalobos, legal adviser to the labor ministry. Carolina Valdivieso chaired the meeting which focused on legislation to improve the labor market.

Juan Andrés Fontaine, Fontaine Consultores

Alejandro Rubilar, JP morgan Chile; Rodrigo Novoa, Saldivia, Contreras, Inalaf, Wurth & Verdugo Abogados; and Doug hirai with michael Quinn, JP morgan Americas

Fernando hurtado, hurtado & Abogados; Carolina Valdivieso, AmCham; Ignacio García, Baker & mcKenzie, and Fernando Villalobos, Labor ministry

Wildlife Conservation Society President at AmCham Lunch

Steven Sanderson, Wildlife Conservation Society; Kathleen Barclay, Asesorías KCB, and Javier Irarrázaval, AmCham

on april 19, amCham president Javier irarrázaval and several amCham board members hosted a luncheon for dr. steven sanderson, president and Ceo of the Wildlife Conservation society (WCs). dr. Barbara saavedra, WCs director for Chile, and Juilie Kunan, WCs director for latin america and Caribbean programs, also attended.

dr. sanderson had just returned from a visit to Karukinka in Tierra del Fuego where he led an expedition involving business leaders from Chile and several WCs trustees from new York.

He discussed the important role conservation plays in global competitiveness and Chile’s unique placement due to the country’s stores of high-latitude carbon in its southern forests and peat lands. This provides a potential global leadership opportunity for Chile in managing its overall carbon footprint and, in doing so, improving the competitiveness of its export-based economy.

amCham president irarrázaval explained what Chilean businesses are doing in this area and the two groups agreed to explore areas of potential cooperation.

The WCs will highlight the importance of its Chile program during its annual gala at the Central park Zoo in June where Chilean scientist and national prize winner, dr. Juan Carlos Castilla, will be recognized for his lifetime achievements.


ProChile at AmCham

Alejandro Buvinic, ProChile Washington; Alejandro Cerda, ProChile New York; Rodrigo Ballivián, AmCham; Claudia Ibáñez, ProChile; Gustavo Rodríguez, ProChile miami and Francisco Correa, ProChile Los Angeles

The idea for a softball league in santiago came up in march when a series of informal games were played one sunday afternoon among various teams, including a team from amCham.

The games, organized by david edwards from the Us embassy and Craig Grinham from Team Canada, were such a success that a decision was made to create a league. The league currently has teams representing amCham, the Us embassy, the Canadian embassy, Bechtel, and teachers from nido de aguilas international school.

The amCham team played its first games on april 22 - a doubleheader against a strong team from the Canadian embassy. amCham won the first game 17-14 and the second 13-6. amCham members can keep track of the team and the league standings on the website:

http://santiagosoftball.weebly.com/ The amCham team is still looking for more players - all

members are welcome to sign up and come out to play.

AmCham Wins Softball Games

AmCham softball team: (Top Row, L to R) Alex Grasty, Rodrigo Ballivián, Eduardo madrid, michael Kaye, Pedro Pedrique; (Bottom Row, L to R) Juliana Gil, Ignacio Ballivián, michael Grasty Jr., Pedro Pedrique Jr., michael Grasty.

amCham participated with the Us embassy in expomin, the second largest mining fair in the world, held at espacio riesco on april 9-13.

executive director rodrigo Ballivián took the opportunity to meet with mining minister Hernán de solminihac and Us ambassador alejandro Wolff. maría pía aqueveque, director of research & special projects at amCham, also gave a speech on the theme of the local business environment:

“more investment means more production, and more production means more demand for goods and services for mining. However, the mining industry increasingly requires integrated solutions, which means it not only needs providers that offer technology and innovation but also training,” she said.

amcham at expomin 2012

on april 20, representatives of the government’s export promotion agency proChile gave a presentation at amCham about the agency’s role in helping Chilean companies do business in the United states.

Claudia ibáñez, head of the United states department, was joined by commercial attachés alejandro Buvinic (Washington), alejandro Cerda (new York), Francisco Correa (los angeles) and Gustavo rodriguez (miami), who described the main areas of business in each of these states and what proChile is doing to increase the presence of Chilean companies.

one of proChile’s activities this year will be organizing the Business executive Workshop, in conjunction with adolfo ibáñez University, on october 24-28 in miami.

AmCham's Rodrigo Ballivián with mining minister hernán de Solminihac and US Ambassador Alejandro Wolff


On April 12, the 12th annual Salmón awards for the best Chilean mutual funds were announced in a ceremony at the Club El Golf in Santiago. CorpBanca, which was one of 14 fund managers recognized at the ceremony, won first place in five categories and third in another.

The awards, given out by the Association of mutual Fund managers (AAFm) and the business newspaper Diario Financiero, were determined based on the risk-adjusted returns on mutual funds in 2011.

CorpBanca Sweeps Salmón Awards

CorpBanca executives: Javier Ramírez, Alessandro Norero, Daniel Thenoux, matías Silva, and Nicolás Nassar

Entel placed first in the Corporate Social Responsibility category in the seventh annual Por el Chile que Soñamos (For the Chile we Dream About) awards organized by the regional ministerial office (SEREmI) of the magallanes and Chilean Antarctica Region.

Entel and its partner, the newspaper La Prensa Austral, won for a project that has provided information technology equipment and training for teachers and students at the Dellamira Rebeca Aguilar School in Punta Arenas.

"We are very pleased to have contributed to the connectivity of the school that will allow 55 children and their seven teachers to access information and tools to provide a better quality of education,” said Entel’s CSR manager, marlen Vásquez.

Entel Dials Up CSR Award

Alejandro Toro, managing director of La Prensa Austral; marlen Velásquez, Entel, and miguel Schweitzer, head of SEREmI in magallanes

Fundación minera Escondida (FmE) and Fundación Telefónica have brought an exhibition of works by Pablo Picasso from Santiago to FmE’s building in Antofagasta. The exhibition runs from April 20 to June 3, 2012, and entrance is free.

The show belongs to the Fundación Picasso-museo Casa Natal in Spain and is comprised of 60 etchings and lithographs by the artist. To promote the exhibition, FmE has prepared an intensive programme of interactive visits for the general public, families and school students.

"We are very happy because the exhibition was popular in Santiago and will be shown at our home, Antofagasta, in the FmE building’s exhibition center," said Edgar Basto, president of minera Escondida.

AmChAm mEmbErS nEwS

Edgar Basto, minera Escondida

Escondida Brings Picasso to Antofagasta


ExECUTIVE aPPoinTmenTsPedro Arleo is the new

director of sales and marketing at General motors Chile. The executive is a mechanical engineer from Argentina’s National University of La Plata and obtained a master's degree in business administration from the Institute for Entrepreneurial Development of Argentina (IDEA). he joined the firm in 1995.

Pedro Arleo, General Motors

Pablo Fernández is the new director of innovation in the Faculty of Economics and Business at the Universidad del Desarrollo. he is a commercial engineer from the Pontificia Universidad Católica with a master’s degree in management science and engineering from Stanford University. he specializes in issues of public policy and innovation.

Pablo Fernández, UDD

Deloitte Chile Leads Auditing Firms

For the fifth consecutive year, Deloitte has topped the list of the principal auditing and consulting companies in Chile, known as the Big Four, in terms of annual revenues, according to the local securities regulator (SVS).

Deloitte had a market participation of 33% last year with total revenues of 49.8 billion pesos (some US$102 million), followed by PricewaterhouseCoopers with 28% and revenues of 42.8 billion pesos.

“Being number one is the result of our daily dedication to provide value solutions to our clients,” said Deloitte Chile CEO and managing partner, Jorge Rodríguez. Deloitte employs 1,800 professionals in Chile.

Bci was the official bank of the 2012 International Air and Space Fair (FIDAE) held in Santiago last march, meeting the financial needs of the organizing committee, exhibitors, service companies and the general public. FIDAE is the most important fair of its kind in Latin America and the fifth largest in the world.

Bci Checks in at FIDAE 2012

Defence minister Andrés Allamand; Ignacio Yarur and Viviane Nazal, Bci; and the Commander-in-Chief of the Chilean Air Force, Jorge Rojas Ávila

Jorge Rodríguez, Deloitte

Pablo Vargas, UDD

Pablo Vargas is the new vice-chancellor of administrative and economic affairs at the Universidad del Desarrollo. Vargas is a civil industrial engineer with an mBA from the Catholic University and has a long history working in the financial management area in multinational companies and local firms such as LAN Airlines and Cintra.


AmChAm pEoplE

on may 9, ramiro Garcés, Vice-president of Human resources for latin america at Kimberly Clark, was the guest speaker at an amCham breakfast at the radisson plaza santiago Hotel. The title of his presentation was "employee engagement as a Comparative advantage”.

Breakfast with Ramiro Garcés

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7 8 Gonzalo iglesias, coca cola de chile; carolina valdivieso, Kimberly clark chile, and ramiro Garcés, Kimberly clark latin america Paul fay, Telefónica, and rodrigo del campo, alto impacto mauricio Peñaloza, ernst & Young; caroline mackenzie, radisson hotel, and Pamela camus, american airlines Jorge fredes, colchones rosen, and ernesto Gasparoni, Kimberly cark madelaine rodríguez and valentina Peña, maestranza Diesel Peter Giacomini, radisson hotel; Ximena Pérez, american airlines; Gisella reveco, nextel, and ernesto byrne, radisson hotel alejandra Piña, beiersdorf; alejandro longa and catalina steinmeyer, corpbanca Jaime cereceda, Kimberly clark; lina maría rojas, bDi; martín chávez and nestor Paulizzi, Kimberly clark.

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Defending Growth through Domestic ChannelsBy brian P. chase

Economic Snapshot

chilebUSiness

These days there seems to be a plethora of doomsday scenarios that could impact Chile’s economic growth in the coming months. This column has previously highlighted an array of external and policy risks including europe, China, oil prices and inflation. But in this gloomy economic situation there is at least one bright spot: Chile’s surprisingly resilient and recently stronger-than-expected internal demand. although demand is ultimately affected by broader external factors, this could propel Chile’s economic growth above the regional average in 2012.

From may 2011 through January 2012, a Central Bank survey of economists showed a consistent decline in the 2012 average Gdp growth forecast, starting at 5.5% and ultimately bottoming out at 4.0%. This decline was primarily driven by global geopolitical and macroeconomic factors. However, the most recent data shows a noticeable bounce, reaching 4.6% in april. in addition, the Central Bank increased its forecast range to 4.0-5.0% from 3.75-4.75%, and more importantly raised its internal demand forecast to 5.3% from 3.7%.

The latest upgrades come on the back of strong imaCeC (Gdp proxy) readings of 5.5% and 6.1% year-over-year in January and February, respectively. Taken on a seasonally adjusted basis, the data looks even stronger, coming in at 9.3% in February. excluding the volatile mining sector, economic activity grew a healthy 6.9%.

domestic demand continues to be the key driver of Chile’s growth. The most relevant leading indicator is retail sales, which increased 12.4% in February year-on-year in line with higher consumer confidence levels (49.3 according to adimark’s index of economic perception, up from 2H11 readings in the low 40s). This has been helped by low unemployment, which reached 6.4% for the period december-February, the lowest such figure since 2007. The latest employment data from the national statistics institute (ine) highlights a historically high labor participation rate of 60% with the workforce continuing to grow.

brian P. chase Portfolio manager, head of Andean Equities, at Itau Asset management

Furthermore, despite tighter access to credit, expansion remains robust. in the latest Central Bank credit survey, 24% of banks reported more restrictive conditions for consumer loans while 23% reported tighter conditions for mortgages. despite efforts by banks to limit credit expansion in anticipation of potential legal reforms, credit quality remains solid while demand continues to grow. in the same survey, 6% of banks reported stronger demand for consumer loans, while 39% noted stronger demand for mortgages.

at the same time, credit demand from companies has also remained strong (over 30% of banks report stronger demand) with arguably less restrictive conditions, which should bode well for the investment side of the internal demand equation. an ad hoc survey of corporate capital expenditure plans tends to support this, with most companies in Chile looking to invest more this year on domestically oriented projects. There is particular dynamism in electricity, retail, mining and construction.

although external risks remain and we are likely to see at least temporarily lower activity readings in the coming months, Chile appears poised to defend growth through domestic channels this year and achieve levels of economic activity near the upper limit of the Central Bank range. This would place Chile at the higher end of the Gdp growth spectrum in the region (consensus 2012 Gdp growth at 3.4% and 3.2%, respectively, for Brazil and mexico).

brian P. chase is Portfolio manager, head of andean equities, at itau asset management

BOYDEN 21,5X28 Amcham.indd 1 16-03-12 15:43


hat makes a company a great place to work? Employees tend to give different answers to this question, but the US-based multinational Kimberly Clark

seems to have hit upon a successful formula: this is the third consecutive year it has been ranked the best company to work for in Latin America by the Great Place to Work Institute and it comes in ninth on the list of best multinational workplaces globally.

According to Ramiro Garcés, Kimberly Clark’s vice-president of human resources for Latin America, the main reason why people want to work for his company, which makes Huggies diapers and Kleenex tissues amongst other sanitary products, is that they feel “engaged”.

Garcés, who is originally from Colombia and works in Kimberly Clark’s head office in Atlanta, told AmCham members at a breakfast on May 9 that companies able to generate the “true commitment” of their employees will benefit from better financial results.

People, he said, should be the main drivers of business strategy. Kimberly Clark, which is present in 20 countries in Latin America including Chile, employs over 12,000 people in the region who Garcés described as the company’s “greatest asset”.

But how does a company engage its employees to create value? In Chile, this question is important given the increasing competition for skilled workers and the negative results of workplace satisfaction surveys across many industries.

The key, according to Garcés, is trust. He quoted management guru

Stephen Covey, who explained the idea in his book The Speed of Trust: “Financial success comes from success in the marketplace, and success in the marketplace comes from success in the workplace. The heart and soul of all of this is trust.”

Trust is built through credibility, fairness and respect, which combined with camaraderie and pride, make up

what Garcés calls the “five pillars” of a Great Place to Work. As for managers, they should be good listeners and remember simple things like thanking employees for their efforts.

He also emphasized the importance of internal communication, which Kimberly Clark takes very seriously. For example, Garcés recalled asking his driver Pedro, who regularly picks

brEAKFAST

Engaging EmployeesBy Julian Dowling

W


can learn from Kimberly Clark, such as the importance of establishing trust and facilitating communication.

As Garcés put it, anyone can copy his PowerPoint presentation, but actually putting its bullet points into practice is more difficult. “Dream big” Garcés urged those present at the breakfast, but – as Kimberly Clark has shown – your dreams must be built on solid foundations. chilebUSiness

Julian Dowling is editor of business chile

him up from Lima’s airport to take him to his hotel, how Kimberly Clark is doing in Peru. To his surprise, Pedro knew all about the company’s new projects and financial performance.

“It doesn’t matter what your job is in a company, all employees should know what’s going on,” he said.

Engagement also brings important economic benefits for the company’s stakeholders. A survey by the Great Place to Work Institute from 1997 to 2010 showed that the 100 best companies to work for in the world obtained results that were three times higher than the Dow Jones and S&P 500 average.

Similar results have been observed in Latin America. Garcés noted that an improvement in the Great Place to Work Trust Index has been correlated to an increase in Kimberly Clark’s operating profits in at least two countries where it has a presence.

Beyond better financial results, engaged employees will also help strengthen the reputation of the company’s brands and drive innovation of products and services. But creating a successful corporate culture starts at the top and business leaders must “walk their talk” to keep employees motivated and inspired, said Garcés.

Other benefits of Kimberly Clark’s leadership in the Great Place to Work ranking, which is based on the results of an employee survey, include an increase in job applicants and recognition from its clients.

It all sounds good in theory, but why has Kimberly Clark’s success not been replicated by other companies in Chile? While Garcés did not address this in his presentation, it seems there is more to engaging employees than checking off items on a list.

Corporate culture is shaped by the attitudes and expectations of both managers and employees. Chilean managers tend to be more top-down in their approach, which may be

best companies to Work for latin america 2012

part of the reason why some have difficulty earning the loyalty of their employees.

Another important factor is, of course, remuneration and benefits. A well-paid employee is much easier to “engage” than a poorly paid one.

Ultimately, there is no easily replicable formula for attracting and retaining the best people. Each company is unique with its own set of needs and corporate values, but there are things Chilean executives

1. Kimberly ClarkEmployees :12,228

Website: www.kimberlyclark.com

Industry: Manufacturing & Production

// Personal and Household goods

2. Telefónica Employees: 58,966

Website: www.telefonica.com

Industry: Telecommunications

3. Microsoft Employees: 1,599

Website: www.microsoft.com

Industry: Information Technology

4. McDonald’s Employees: 88,316

Website: www.mcdonalds.com

Industry: Hospitality // Food and

Beverage Service

5. DiageoEmployees: 1,200

Website: www.diageo.com

Industry: Manufacturing &

Production

6. Accor Employees: 6,676

Website: www.accorhotels.com

Industry: Hospitality //

Hotel/Resort

7. OracleEmployees: 2,838

Website: www.oracle.com

Industry: Information

Technology // Software

8. FedExEmployees: 2,927

Website: www.fedex.com

Industry: Transportation

// Package Transport

9. EdenredEmployees: 1,614

Website: www.edenred.com

Industry: Professional Services

10. SC Johnson Employees: 1,586

Website: www.scjohnson.com

Industry: Manufacturing &

Production // Personal and Household Source: Great Place to Work Institute


t the las Campanas observatory some 100 kilometers northeast of the city of la serena, engineers are blasting through rock to make room for the Giant magellan Telescope (GmT)

which could eventually capture images of the first stars formed after the Big Bang some 500 million years ago.

The Us$700 million project, which is being developed by a consortium of Us, australian and south Korean universities and research institutions, is racing against two others - the european extremely large Telescope (eelT) in the atacama desert and the Thirty meter Telescope (TmT) in Hawaii – to see back in time to the origins of the universe.

The telescope is not scheduled to start operations until mid-2021 but the wait will be worth it says dr. Charles alcock, director of the Harvard-smithsonian Center for astrophysics in Washington, dC, which is a partner in the project.

in march, dr. alcock gave a presentation at amCham and attended a ceremony with other Us and australian astronomers to launch the GmT site preparation work. He recently spoke to bUsiness CHile about the importance of the telescope and what Chile stands to gain.

Why build this telescope in chile?

Working in Chile has been very good for us. a decade ago we collaborated with the Carnegie institution and other universities to build the twin magellan telescopes at the las Campanas observatory. These have been enormously successful for a number of reasons: first, they are well designed and very reliable; secondly the combination of the geography at the foothills of the andes mountains and

stable winds from the northwest creates extremely favorable observing conditions.

These telescopes are very complicated engineering structures and they’re unique so it requires a highly trained, well educated staff and we’ve always had success recruiting in Chile. The legal regulatory situation is also very good as there are clear procedures for observatories to follow. establishing a telescope in the Unites states is very difficult by comparison because possible locations frequently have contested histories with indigenous populations.

What are the scientific goals of the telescope?

We have a pretty good idea how the universe evolved in its early years. Using radio astronomy we can make images of how the universe looked when it was 400,000 years old, which is remarkable considering it is now 13 billion years old. Back then the universe was very dull but somehow in the next billion years it turned into what we have today with stars and galaxies. The first stars appeared when the universe was about 500 million years old, which is just beyond the reach of our current telescopes.

light takes time to get to us, so the further away we look, the further into the past we can see. With the GmT we will be able to look far enough into the past to see the very first stars that came into being.

at what stage is the project currently?We’re in the middle of designing

the telescope which is a complicated process. The primary mirror – which is 25.2 meters across – is composed of seven segments and we’ve just about completed the first of these. These

are being made at the University of arizona and shipped to Chile in specially designed crates. Chile has a lot of experience moving large equipment due to the mining industry and the mirrors (8.4 meters diameter) are as large as they can be considering the engineering challenges.

are chilean astronomers involved in the project?

We have had discussions with the University of Chile, the Catholic University and ConiCYT (Commission for scientific and Technological research) about meeting the engineering challenges to make the telescope work. professor andrés Jordán at the Catholic University will be involved in designing an important instrument to detect planets like the earth around stars like the sun. This will help us in the search for life on other planets which in human terms is even more important than finding the first stars.

sounds interesting, but what is in it for chile?

Chilean astronomers negotiate a portion of the observing time of any telescope in Chile and for the GmT that will be 10%. so, with all of the telescope construction going on, Chile’s an extraordinarily privileged place to be for an astronomer right now. There are also opportunities to develop state-of-the-art instruments with the support of ConiCYT and universities.

also, our experience in north america and europe is that astronomy is a good way of attracting young people into science, even if most of them don’t end up becoming astronomers.

peering into the past from ChileBy Julian Dowling

a

InTErvIEw


could an earthquake damage the telescope?

Yes, it’s a big issue for us. The first thing is to make sure there is no catastrophic damage, but anytime there is an earthquake the optical systems have to be realigned. Given the recent experiences in Chile, it’s very clear we have to design this telescope to withstand a significant amount of shaking.

There are two other large telescopes in development including one in chile (the eelT). Which will be completed first?

modern telescopes have a useful life of between 30 and 40 years, so in the long term it doesn’t really matter but we are competitive people. some of the discoveries are so obvious that you don’t have to be clever; you just have to be first.

are there enough astronomers in chile?

There is no shortage of people in northern Chile with the educational background and attitude required to make these telescopes function. none of the projects are having trouble recruiting engineering talent, but the people who are the hardest to recruit are those who understand an entire project – that’s where astro-engineering could make a big contribution as an educational tool.

Where will the investment come from?

after alma (atacama large millimeter array), this will be the largest Us investment in astronomy in Chile. We are still talking with possible new partners, but the australians and south Koreans have each agreed to put in

10%. The other Us$650 million we expect to come from Us partners.

There is less of a tradition in Chile of corporations or wealthy individuals making gifts for astronomy, but there are a lot of Chilean businesses with strong connections in the United states that could help with fundraising.

how much of this money will stay in chile?

The construction contracts will be put out to bid and a significant portion of the budget will be spent on Chilean companies. The capability for constructing large, high-performance equipment in Chile is very high largely because of the mining industry, but also the construction industry is widely known to be high quality because of the survival of tall buildings during earthquakes.

chilebUSiness


By santiago eneldo

hat a question, you are probably asking yourself… But then look around and you will be surprised; they are everywhere! For a long time i was totally convinced i needed a subtle tattoo in a place only i (and those i wished to impress) would know about. However, as i spend many days a year at the

beach, this represented quite a challenge. But then suddenly the magic of my plan was shattered. Why? How?

i became aware of a trend with sports stars that has rendered the “subtle tattoo” obsolete. Body art has become all the rage. Gone is the small dolphin on a girl’s ankle or the simple “love you mom” on a male bicep. We are now talking full body tattoos with a noah’s ark of animal options, interlocking patterns, winding serpents and soaring angels. many of Chile’s best known soccer players have their arms (and maybe more) covered with a mosaic of tattoos; others apparently, have none!

of course tattoos are nothing new, they go back to our ancestors and were often part of the ritual passage into manhood or womanhood. However, the modern “mega tattooists” are athletes of extraordinary ability in every sport you can name – well, chess isn‘t really a sport!

What i find alarming is that these young men and women will grow into maturity, marry and probably have children. How do you live with the “body art” of your youth when you are 40, 50 or 60? it is extremely difficult to erase…

You may recall an actor named Billy Bob Thornton who was in love (Hollywood style) with angelina Jolie. To endorse this commitment angelina had “Billy Bob” tattooed on her arm. When she moved on to be with Brad pitt she supposedly said "i'll never be stupid enough to have a man's name tattooed on me again", but it required a messy laser job to remove the memory!

This very summer, at a beach in central Chile, i saw a smartly attired couple (not Chilean) wearing matching dark grey outfits with a dash of red and blue here and there. on getting closer i realized they were all but naked (just the essentials covered) and the outfits were actually head-to-toe tattoos. aside from the soles of their feet and the palms of their hands there was no “natural” skin to be seen. i was aghast! The investment in time, money, agreeing on appropriate (or inappropriate) themes, and then the explaining to friends and family: “well this represents Venus at dawn and over here is poseidon; oh, and here is the deer Frankie shot with a crossbow – yes, you can see the blood...”

as a soldier in a former life i well remember the standard tattoos (Blondes lie best, two four-letter words spelt over eight knuckles…) but also the pranks played on friends

when they had imbibed too much rum. a common prank was to wheel said “friend” into a tattoo parlor and have a girl’s name needled onto his arm, usually inside a heart. The next day a furious soldier would ask despairingly why he had “Betty” tattooed on his right arm when his wife’s name is Candice… The horrors of war!!

my favorite was a quite stunning and, i was told, very costly work of art. The guy must have been truly plastered. it was a full english fox hunting scene where the huntsmen were galloping up his chest; the hounds were bounding down his back and the fox was “going to ground” (as it is called) with only his bushy tail evident to anyone making a close enough inspection. Fascinating – but it is for life!!

so, what should i do? Tattoo or not tattoo? i am considering a few short, meaningful phrases and your opinion would be very valuable:

• Piñera – four more years• CamilaforDeputy–inCuba• Obama-Presidentforlife• I’mOK;it’stherestwhostink• LoveyouSandra/Betty/Candice/Camila4Everin the end i have decided to delay my tattoo because i

cannot for the life of me decide on what “statement” i wish to make. perhaps you can help me.

look around and i will bet you all of 5,000 pesos your best friend has a tattoo – and you never knew!!

Happy tattooing,

santiago eneldo

(suggested tattoos welcome at [email protected])

life in the Slow lane

WDo you Tattoo?

Líderes en Leasing Operativo de la RegiónMás de 33 años de liderazgo en la industria.

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