SUMMARY (VI Pódium)
by Philippe G. Nell, Honorary Ambassador, Latin American Chamber of Commerce in Switzerland
The aim of the sixth podium was to reflect on Latin America’s key challenges for business. The Covid crisis has created significant turbulences. Societies still face today very important difficulties. The situation is all the more complex that the region is characterized by unemployment, informality, inequality, corruption, lack of legal security, weak institutions and is strongly affected by climate change.
The podium covered four panels and a brief presentation of doctoral theses on Latin America.
Panel 1: Perspectives of the Swiss-Latin American business relations
The impact of the Covid crisis has been very serious for Latin America with a GDP decline of 6.7% in 2020. For 2021, forecasts estimate a recovery with a GDP growth of 4.4%. Several countries are benefiting from an increase in commodity prices and in export revenues. The Covid crisis has led to an increase of the external debt and a strong impulsion to e-commerce and digitisation with new opportunities. The basis for a new social contract is stronger and health systems are being improved with higher expenditures. Education remains very important and economic integration should be strengthened.
Companies continue to face significant problems for doing business with administrative regulations and bureaucracy. Swiss firms are established for the long term in Latin America and could increase their footprint in particular in Fintech, Cleantech and infrastructure.
Entering the Latin American market is a big issue. Many firms do not proceed well. They need support. The key issues can be summarized with two words: understand and implement. In 2020, the two largest South American countries, Brazil (124) and Argentina (126), did not rank well in the World Bank’s Ease of Doing Business Report. On the other hand, Chile (59), Colombia (67), Costa Rica (74) and Peru (76) are better classified. Swiss firms can benefit from the support of Switzerland Global Enterprise (S-GE) to facilitate market entry. S-GE has established Business Hubs in Sao Paolo, Mexico and Santiago and also cooperates with the Swiss Chambers of commerce in each Latin American country.
Two projects of the International Institute for Management in Lausanne were briefly presented. They highlight Swiss-Latin American cooperation. The first one aims at helping a community to export a local natural product to Europe providing advice and financing. The second one analyses the impact of investment by going in the field to listen to the reality and to understand. Finally, it was pointed out that the region faces many challenges including social ones and a rapidly increasing inflation. It was also stated that Latin America presents opportunities but has a problem of image.
Panel 2: Business resiliency, competitiveness and innovation
This panel focused on how companies faced the Covid crisis. How did they react internally with their employees and how did they help their clients to overcome critical situations.
Swiss Re helped its clients to recover and to be resilient; digitisation contributed significantly to maintain activities. Firms faced significant challenges and had to take into account the various family situations of their employees. What is required is vision; it is necessary to work for a more resilient world and to look for solutions.
For DreamLab Technologies, resilience is part of the DNA of Latin American people. Despite social crises and inflation, there are great opportunities to move out of primary product dependence into services and taking advantage of the Fintech explosion.
For CEMEX, the Covid crisis required firms’ processes to be reviewed with full digitisation at the global level and new forms of interactions with clients. In addition, CEMEX adapted its own facilities to produce disinfectants helping thereby governments to face the health crisis with essential supplies.
ABB has also taken the opportunity of the pandemic to accelerate the process of digitisation. Clients have invested in digitisation to become more efficient and to optimize electricity management.
Finally, the start-ups Nutrix (healthcare innovation based on big data) and MyoSwiss (robotic technologies applied to rehabilitation and mobility learning) emphasized the importance to cooperate in innovation setting a triangle : firm-university-client. Market studies, design of product and price are also essential and must be based on local surveys. Start-ups and well-established Swiss firms in the Medtech and Cleantech work closely with universities and research centres to invent new products and processes.
Panel 3. Dual education in Latin America
Switzerland is a reference for dual education with widely developed apprenticeship programs for young people aged 16 to 20 years old. The key challenge of apprenticeship is the cooperation between the public and the private sectors. Switzerland has one of the lowest youth unemployment rate in Europe mainly due to its apprenticeship system. About 70% of youth enters apprenticeship. Such an education also leads to very high positions. The former CEO of UBS started his career as an apprentice. So did the present CEO of Coop, the second largest global retail distributor in Switzerland. It must be highlighted that nowadays apprenticeship can be complemented with a one-year study granting access to Swiss universities, universities of applied sciences, engineering schools and other high-level institutions.
Professional and technical education of youth is a great challenge in Latin America. It faces significant hurdles: first, to get the support of business and second to overcome resistance to enter a non-University education at age 16 or 17.
In Colombia, SENA (Servicio Nacional de Aprendizaje), active in apprenticeship, faces four main issues:
b) Resources: coordination between the private and the public sector
c) Historical and cultural background
d) Systemic: responsibility of each party. Legal bases would be required as well as sectoral solutions.
It was also pointed that with digitisation, the personality of young people does not evolve as it used to. In addition, with the pandemic we face changes in mentalities that must be taken into account.
Nestlé emphasized that the issue of apprenticeship must be put in the context of socio-economic development under three key aspects: a) legal security; b) infrastructure; and, c) education (development of human capital). The pandemic had a big impact on youth depriving many young people of a job. Nestlé and other companies support jointly one million young people with the Pacific Alliance Youth Project. Efforts are being made to disseminate the apprenticeship model in Latin America. What is needed is to move from pilot projects to national programs with companies, governments and young people.
Two concrete projects were presented. First, in Uruguay, programs have been developed. A focus has been set on cybersecurity with a good support from the government. Despite five years of effort, it remains difficult to convince companies, young people and authorities. Apprenticeship still has a connotation of exploitation of young people.
Second, in Venezuela, the Henri Pittier Venezuelan-Swiss Institute for Knowledge was created in 2007. It offers an apprenticeship program including several months of theoretical and practical courses at the Institute and then technical training and experience in companies. The Institute works closely with and is supported by 14 firms namely Alivia Stump, Ascensores Schindler, Baumer Bave, Biotech Laboratorios, Clariant de Venezuela, Grupo Farma, Inversiones Resansil, Kpmg, Mediterranean Shipping Company, Nestlé Venezuela, Novartis Venezuela, Productos Roche, Productos Swissagro and Sika de Venezuela.
The Institute has an endowment of 4200 m2 for electrical, mechanical and welding workshops, classrooms, a library and other units. It is located at El Consejo in Aragua state, within the Hacienda Santa Teresa, and is recognized by the Ministry of Education.
The objective of the Institute is to impact the lives of young people by providing them with a technical education so that they can pursue a career in the industrial sector. A major achievement of the Institute is to change the life perspective of young people keeping them out of delinquency. It also strengthens interaction with their communities as they provide services repairing home appliances or vehicles. Firms include apprentices in shared-value models, pay them higher wages and teach them a number of skills including how to write a curriculum vitae and go through interviews. The Institute is proud to have 309 graduates. It is its best satisfaction. Although the Institute faces serious challenges in Venezuela today, it pursues its vision with wisdom and determination.
Panel 4. Convergence of the economy 4.0, digitisation, environment and value chain
The circular economy is playing a growing role. This leads to two key questions: a) From where does a product come from? b) Where does it go? We must ask ourselves how to define the future and if our model is not obsolete.
The OECD provides several guidelines on how to develop activities in a sustainable way. In Latin America, there is a lack of scientific knowledge to implement responsible management and a lack of sanctions. Widespread informality affects implementation.
For Bühler Group, the objective of environmental laws is to decrease the impact of firms on the environment. Some projects are not undertaken because the time is not ripe. It is essential to have a legal framework. Although business can adapt to new policies, stability is very important.
ABB focuses on the optimisation of products and sustainable processes. A transition toward solar energy takes place. New technologies enable to save energy (20 to 30%). The environmental impact must be diminished with less gas emissions in cities and less oil consumption for transportation. The interchange of knowledge between companies and professors as well as students is important. In Peru, it takes place with SENATI (Servicio Nacional de Adiestramiento en Trabajo Industrial), a dual education program under which students learn from their third semester within companies, under real working conditions. Nine out of ten graduates work in the first six months of having completed their studies and 89% find jobs related to what they studied.
In Santiago de Chile, ABB has established ABB University.
Source: ABB University Chile - ABB University (Training)
Its learning centre provides a wide range of trainings based on ABB's products, solutions and services to help ensure companies have the knowledge, skills and capability to meet their needs, and help them realize optimum business performance and efficiency.
ABB training programs for engineers, programmers, maintenance and operations staff provide the latest technical knowledge about ABB products and systems.
Theoretical and practical learning methodology is supported with equipment that allow attendees to experiment the processes in context, acquiring a higher level of expertise.
Finally, as everything will be digital in the future, the University of St-Gallen has established a new school of computer science. This topic has been included in all programs. Studies will incorporate thinking in digital value chains.
Three students presented briefly their ongoing research topics for their doctoral thesis. Sarah Bühler’s analyses professional training and apprenticeship in Latin America, Sabrina Tabares looks at attributes of hybrid business models contributing to ease tensions to operate in economy looking at the regulatory, normative and cultural aspects, and Letícia Vargas examines impact investment in Brazil with social benefits. All the projects are very interesting and thoughtful, and shall contribute to important policy areas.
In a nutshell
The VI Podium of the Latin American Day “Business Challenges” highlighted many opportunities as Latin America moves progressively out of the Covid crisis. Participants were provided valuable takeaways. Reforms and steps forward in areas such as education, health, legal security and institutions could provide a very significant boost to Latin America. Swiss firms are more than willing to play their part toward sustainable and inclusive societies and to promote dual education through apprenticeships. A great potential is right there!