Latin America is a market that is still a big mystery for many. While it’s biggest country, Brazil, has been recently on the headlines because of political instability, it is back on the growth track after some years of deep recession… this depicts the region a bit, unstable, unreliable in the short term, but a fantastic opportunity for long term growth. But what are the challenges in LATAM? What’s this market even like? To answer these questions and more, we’ve invited Jef Fernandes, Supply Chain Leader in Brazil and has experience across the region and as well in the United States.
[Music]Daniel: Hi I’m Daniel Torres Dwyer. Welcome to LS International’s career success podcast. Latin America is a market that is still a big mystery to many. While it’s biggest country, Brazil, has been lately on the headlines because of instability. It is actually back on the growth track after some years of deep recession. This depicts the region a bit, unstable, unreliable in the short term but a fantastic opportunity for long term growth. But what are the challenges in Latin America? What’s this market even like? To answer these questions and more, we’ve invited Jef Fernandez, who’s leading Coty’s supply chain in Brazil and has experience across the region in the United States. Hi Jef, thanks for being with us today. How are you?Jef: I'm fantastic. Thank you Daniel for inviting me and thank you all for having me for the next minutes.Daniel: Excellent. So, yes, as I mentioned before, today we’re going to speak about what makes Latin America different as a market to work in. But first of all, I want to hear from your perspective as a Latin-American and as a Brazilian, when you worked with Unilever in the US what aspects surprised you more about the work culture there?Jef: Well, it was a fantastic experience. I was there for five years working for Unilever. I did my Master as well in Michigan State.Jef: And I would say that discipline. The American people and the companies they are very very disciplined and they really follow the rules for when we think about a positive aspect is this. But on the other hand, Daniel, the discipline also can take a little bit about flexibility out of the business, yeah and out of the people. Then I see these two aspects: the discipline has a very positive but the lack of flexibility as something kind of negative on the US work culture. Daniel: Changing topics Jef, as a supply chain leader who’s had leadership roles in Brazil, specifically, but also in Latin America as a whole, what do you think the main challenges in supply chain are in the region?Jef: Well, a great question Daniel. I think each country has their own issues but I can see traveling all over Latin America, I can see infrastructure as one of the major for all the countries. When I think about Mexico, Colombia, and Central America and also down here to South: Brazil, Argentina and Chile. Infrastructure is a huge issue. Also, tax, tax and tax.Jef: Then tax is totally different state by state, country by country and this makes difficult to make, let’s say, regional business integration. Yeah, forget about that. It would be almost impossible now to think about something like Europe where the majority of the regions and countries are integrated. Then, the other thing about Latin America that is very difficult is political lack of stability. You are doing business in the country then suddenly they change the president and then everything changed; the tax change, the economic situation change and then you have to act really fast and must be very flexible to quickly adapt to that the new situation. Then these three things for me the major issues and the major challenge in the Latin-American market.Daniel: Okay. And in the same way Jef, that you moved from Brazil to the US, what the advice would you give to people that do it the other way around so that they go from the US or North America or Europe, also another developed market, that moves down to Brazil, what advice would you give to those leaders?Jef: I have great friends all over the world. When they come to Brazil, I give them ... personally, I give them advice, enjoy the experience, be open to adapt and to understand the culture and try to understand the reason why without huge judgments. Otherwise you're going to be saying “oh this is good but this is bad” and then you cannot enjoy the whole experience. When I have people coming from, let's say, from business perspective, when they ask me there are a couple of suppliers, they ask me, “oh I want to go to Brazil, I want to do business in Brazil, I want to have a plant, I want to do investments”. I say two things to them. Be bold and shoot to the long-term because Brazil is not an easy country and Latin America, not an easy region. Then if you are not bold enough to sustain your investments for let’s say 10 years, don't even try to come; you’re going to be probably losing or gaining money in the short term and then you can get very excited but in the next cycle , you're going to lose money and then probably you're going to be disappointed. Then think about your long-term in the region and then you're going to be fine and you have to be very... very bold and you know not fear of ups and downsJef: Because the lack of maturity in the region is one of the key drivers of opportunities, then you have to be prepared.Daniel: And what about in terms of team leadership? Is there any advice that you give there for people moving into Brazil?Jef: Well, the culture is different but when you get specifically to Brazil, I think that the teams and the people here they are really, really open. You don't have to prove anything to get their attention and confidence. They're going to follow you if you are pointed to the right direction with the right energyJef: And different from the US for instance where people get, take a little time to rely on youThen after that, they can also embrace and support you very well. In Brazil, I think from the very first minute, they going to support you, yeah and even though you are not speaking the language or if you don't know the culture, I think the Brazilian people or any employees are very very supportive and open as well.Daniel: Okay, interesting. So, maybe you don’t have to make as much the point of proving yourself as a leader before you have the credibility of the people then.Jef: Exactly... exactly, that is the point. Daniel: Okay, very interesting. And, actually, speaking again about the region, going to ask you a difficult question here because as you said, “Things can be unpredictable” but what potential do you see for the Latin American economy over the next 10 years?Jef: Well, this is a million questions. Yeah, million dollar question. Well, what I see is a political shift that is driving economic shift. The Latin America is getting less populist and driving more for a more structured way to do politics and this is driving back the growth that the region is basically well-known for. Then one example is Brazil; Brazil expecting to grow 2 to 3% a year for the next two to three years. And I think this is very reasonable and easy to believe. Consumption in the region is getting higher and higher. I think the people is getting used or got used to increase the consumption level. There is some political instability that makes people to hold a little bit on that but as soon as the political issues in Brazil and some other areas go through, I think they going to be back to consumption. As well, if you think about concentration . Daniel, Brazil is basically very concentrated in the Sao Paulo region and some other citiesJef: That has almost 20 million people. If you go to Mexico, they are very concentrated close to Mexico City. Then if you go to Argentina very close to Buenos Aires then. If someone from abroad wants to make an investment, they will invest in one or two stores or they are going to put a plant close to the big city. There is no... It is not a huge investment short-term.Jef: If you think about Europe, I think I have one example is like Sepohora, which has like a thousand stores covering, let’s say Europe. And I was having a conversation with a French GM and he was from a city of 50,000 people and they have a Sephora in the city with 50, 000 people.Jef: In Brazil, we have I think not probably now two or three stores and they’re all in cities that are above a million people.Jef: Then this is a kind of way Latin-America and Brazil is shaped right now; very concentrated big cities, political instability but shifting to a more stable and economic growth is getting back to the region. Yeah, you see Peru that is a more small economy but keeps growing. Chile is getting a little bit more in stable but keeps growing. Argentina is a question mark but when we go for Mexico, Mexico will take advantage of the US economy in probably a few years from now.Daniel: YeahJef: Then yeah these have let’s said a great opportunity.Daniel: Yeah. Well, thanks for ... Jef, thanks for answering the million dollar question. Hope our listeners win more than even a million dollars by following your advice. So, thanks a lot again for being here today with us. Jef: Thank you. Thank You Daniel for the time and if you guys have any questions, I can answer through my LinkedIn or if you have more questions just shoot to Daniel , then he's going to get to me. Thank you guys. Daniel: Yeah and thanks to all the listeners. Of course as Jef said, feedback is more than welcome. You can contact him, you can contact us and I look forward to having you again here with us on our next career success podcast. Have a great day.[Music]