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Latin America: On the up: family business in Latin America

Melanie Stern is a freelance journalist based in the UK.

Carlos Slim, the world's richest man, is the figurehead of a Latin American trend of family businesses ascending to powerful global positions. And many believe that, despite concerns about corruption, this trend will continue if the environment for business improves at the current rate. Melanie Stern analyses the state of play for the region's business families

ARGENTINA
Population: 39.0 million
GDP (at market exchange rates): $214.3 billion
Inflation: 12.6%

Don't cry for us Argentina … : As the ink on this issue of FiB dries, Argentina's first elected female president, Cristina Fernández de Kirchner, is settling into her new throne – the one that her husband, President Nestor Kircjner, occupied before her. As the country is now run by a family business, it can be hoped that it will look favourably on similar enterprises.

Consumer trading is particularly well starred as the country transforms into a wealthy middle-class nation and the election of a female president will surely have a trickle-down effect on female consumers, ever better educated with better opportunities to advance into well-paid jobs.

Recovery after the economic crisis of 2001 has been encouraging but difficult, with unemployment still high. However, Argentina's growth since then makes it one of the best economic performers in Latin America on the back of its strong export market, although foreign investment needs more encouragement after the credibility damage Argentina sustained from the 2001 crisis.

Family businesses include Capsa, an oil exploration company majority-owned by the Gotz family, and the Techint Group, an industrial group operating all over the world, founded by Italian immigrants and run today by the fourth generation of the Rocca family.

Family Business Friendliness Rating: 4 (out of 5)

CHILE
Population: 16.4 million
GDP: $145.8 billion
Inflation: 2.6%

Open doors, open arms, open markets: Chile is the best country in Latin America for doing business according to the Latin America Business Chronicle, enjoying the status of a "developed developing country", a clear regulatory environment that treats Chilean and foreign businesses the same way, and presents opportunities for vigorous competition against the background of political stability.

Copper remains the country's top export, making up 9% of GDP and gains are moving north as commodity prices rise globally, with family-owned corporations, such as Antofagasta, the mining outfit listed on the London Stock Exchange and owned by the Luksic family, benefiting.

There are throngs of small family-owned businesses in Chile, but larger, well-known ones are not so common. Wineries continue to feature heavily, with family ownership dominating – but not always Chilean family ownership. Chile's Arestu Group, for example, has teamed up with German winery A Racke Company for a joint venture, Espiritu de Chile.

Family Business Friendliness Rating: 3

COLOMBIA
Population: 46.3 million
GDP: $136.0 billion
Inflation: 5.7%

No more Narcodollars?  The old cliche of the family-run drug cartel notwithstanding, President Alvaro Uribe's Colombia says it is cracking down hard on crippling corruption – so much so that one of the president's cousins, a national legislator, is one of a clutch of senior officials facing prosecution for allegedly shady political ties with paramilitary groups heading up business protection rackets and drug running.

The president has a vested interest in ending the reign of terror of these groups on industry, since his father, then a wealthy landowner, was assassinated in 1993 by the Revolutionary Armed Forces of Colombia, or FARC.

One of Colombia's foremost family firms, brewing giant Grupo Bavaria – maker of Peroni – sold most of its shares to SABMiller and de-listed this October from the Colombian Stock Exchange after defending itself against allegations of making illegal payments to paramilitary protection rackets in May.

Amid the fury, foreign investors are making headway in Colombia, particularly as many family companies are selling some of their holdings to fund expansion in a country with high borrowing costs. However, observers think this new dawn could mean trouble for some big family businesses, who won't be able to rely on being the lords of a closed and uncompetitive market once foreign money has a stronghold.

Family Business Friendliness Rating: 2

MEXICO
Population: 107.4 million
GDP: $840.0 billion
Inflation: 4.4%

Home of the family business uber-brand: No other Latin American country beats Mexico for dynastic clout. Its economy is practically led by the hands of legendary business families like the Slims and their Telmex behemoth, the Zambranos of top global building materials supplier Cemex, and the Saba clan, who have been selling to the pharma industry for over a century.

Smaller yet no less powerful holdings, such as Grupo Salinas, the electronics chain that has made a fortune by selling low-cost products to Mexico's poor, mirror the titans in the cult-of-personality management that defines Mexico for many commentators as a boy's club.

These companies, while possessing undeniable business smarts, also enjoy lax regulatory burdens that make competition hard for the rest. As the big boys in Mexican business are frequently family-run, blood, not oil, as was the case previously, is increasingly what powers this economy and its relations with the world.

But only the richest blood gets a look in: those running smaller family firms may have to be either prodigious, or get lucky, to climb into these echelons. Latin American Business Chronicle voted Mexico one of three best Latin American companies to do business in.

Family Business Friendliness Rating: 3

VENEZUELA
Population: 26.9 million
GDP: $181.9 billion
Inflation: 20.8%

An economy behind dark glasses: An oil-rich nation with more than 60% of its households living in poverty, President Hugo Chavez's Venezuela has a reputation for being as dangerous on the streets as it is in the business world. While Chavez has denounced the country's rich, as any socialist worth his salt should, his government doesn't mind doing business with them.

Most of the media is family-controlled, and the sector's relationship with the government is said to be a little too cosy – though for family companies that obviously paves the way for success in the country, if they can stomach the status quo.

Venezuela's media sector attracts a lot of controversy for being controlled by a handful of powerful families – most prominently Grupo Cisneros – but outside of that, notable family businesses include Grupo Merand, 100% family-owned supplier to the construction and oil exploration industries, and Caracas-based brewery giant and Pepsi distributor for the country, Empresas Polar.

Family Business Friendliness Rating: 2

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