Audio Transcript Auto-generated
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okay, we will continue with the market selection.
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So let's go to the next one.
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So we were saying that the last one, the type
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of last type of distance, is the economic distance on.
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We were saying that economics, the instance is essential for
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companies whose international competitive advantage lies in exploding the difference
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between rich and poor countries such as textile companies.
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For example, the economic distance has to do with the
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asymmetries between rich economies and poor economies in every conceivable
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way gross domestic product, infrastructure, productivity and more.
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Here it is important to highlight that with respect to
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the ability to manage their institutional environment, multi Latinas have
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developed significant advantage off residence in the face off political,
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administrative and economic uncertainty.
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So you're internationalization.
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Strategies are not primarily determined by your search for more
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security or predictable environments.
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The internationalization of strategies off multi Latinas have to do
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with the resources and capacities with which their domestic competitive
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advantage is constitute.
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So in the general case, ah, parent off internationalization emerged
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that makes multi Latinas is as a company that seek
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regional rather than global opportunities on that prefer mergers on
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acquisitions as a model country when creating their own subsidiaries
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in destination countries.
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Those who resources are highly aggregated in the domestic context.
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Our patient with the internationalization process, while companies that have
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resource is easier to transfer across the borders, opt for
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more accelerated processes.
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Now we're going to see the molds, the months off,
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entry of the ways off entry.
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Uh huh.
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I m sorry.
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So now we will know the diversity of Modoff entry.
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That it's a form chosen by the company's toe tow
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carrying out their exit to foreign markets is manifest stated
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in three modalities.
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Direct and indirect sports.
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Contractual corporations agreements that you can that you have license
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concessions or agents on franchises on shareholders cooperation agreements.
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True direct investment abroad that can be carried out in
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two ways through its UN subsidiaries, whether commercial and productive
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on to join a joint ventures.
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So the different firms off the different forms of entry
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or ways of entry are characterized by a certain interrelated
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variables, such as the degree of control.
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The commitment off resource is the cost of exit, the
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potentiality to gain knowledge and much more.
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Exporting is the simplest and most traditional method of starting
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the internationalization off a company.
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The product is kept in the place off regime from
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where the markets are supplied on the products may undergo
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some modification, if any, of the markets required when a
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company does not have the means to manufacture a broth
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when the foreign market is very attractive.
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But there is high uncertainty for example, AH, high political
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risks. In a country, the least risky option is expert.
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So this expert implies the sales off a product in
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a territory other than the national one with inerrant complication
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off crossing borders.
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Custom procedures on the difference in currencies, languages.
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The legislation's our economic and commercial environment.
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So in the international context, a license is a contractual
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agreement between companies from different countries through which the company
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of Region grants a foreign company a right to use
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a production process.
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Ah, patent our registration trademark or any other tangible asset
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to change off on initial fixed payment or a or
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a periodic one.
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Such a, such as a fix, amount off each unit
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salt or a percentage off total sales or profit.
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Or but, for example, if a car company wants to
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sell in Latin America, it can grant a license toe,
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another Latin American company to manufactory.
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The other company is authorized to use a brand on
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production system.
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In the case off, transferring a license control over the
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business is lost by not having to rebuild the production
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system. So the local company, Where's the Cost Off?
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The license if we Talk about Franchises, is another contractual
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agreement that constitutes a variation off the license license concept.
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The franchises consists off a special type of license for
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retail distribution, according to which the Fried Child's in company
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does not simply limit itself toe authorizing the use off
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its ran, as in this case, off the traditional license
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but provide the company franchise off a product or a
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standardized system off operation on marketing at the point of
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sale. In other words, the Franchising company is in charge
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off perfecting on EC, standardizing the system so they're going
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to give them everything.
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But they are gonna produce our the product in their
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installations or in the facilities, so internationalization can ultimately take
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place through investment abroad.
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So companies without the international experience are more likely to
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choose low risk or shares or shared months off entries
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such as joint venture well.
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Does that do have experience may prefer acquisitions or Greenfield
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investments. So joint venture or join the joint venture is
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a contractual agreement based on the exchange off shares or
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the creation of a company.
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So it's not America agreement, but rather a direct investment
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on important risk is assumed in this type off off
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venture, since the entire internationalization process is not control.
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So the joint venture is a contractual agreement between two
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or more companies.
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On the international level, it consists off a foreign company
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on a hump company that contribute capital on other type
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of assets, such as technology or machinery, to create a
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new company in the local company, market sharing, ownership and
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control of the company.
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Normally, the foreign company contributes capital and technology, while the
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local partners contributes capital knowledge of the local market on
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access to it.
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So it's important to know that in many countries international
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companies cannot invest in setting up a company unless they
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do so in association with luck and company.
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Since many governments in developing countries, such as, for example,
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India, they require international companies to form joint venture with
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local ones in which the later must on more U
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M than 50% of the capital off the new company.
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So in its own subsidiaries or affiliates, ease the company's
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controls the entire internationalization process.
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So the risk, they assume, is greater.
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The company can produce in the country of destination, but
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it's by its own means establishing AH production subsidiary.
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This subsidiary can carry out different activities such as, for
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example, final finishing, finishing off the product and packaging according
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to the standards or requirements off that country up to
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the production of part time assembly quality control, which implies
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manufacturing total manufacturing.
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This entry strategy is also known as direct investment abroad.
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Subsidiaries can be established as new operations or can be
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acquired by via mergers and acquisition off existing companies.
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Now I would like to talk a little bit more
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about they accelerate their growth off Asian multinationals.
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You only one second itself.
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Multinational companies from from emerging countries have bean a subject
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off recent interest on in particular the rise in power
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off Asian companies.
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But how?
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How are the governments of the region off the world
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supporting the economic development off these multinationals?
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The rights off Chinese companies has bean surprising.
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It has been very fast on especially.
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It happens after the global financial crisis in 2000 and
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eight, because from practically having Onley one only between four
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on 20 Chinese companies in the global 500 ranking.
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Now they have 100 on the level Chinese companies have
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internationalized, first in Asia on then in Latin America.
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Its presence is not a ball in Brazil, Mexico, Chile,
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Peru on in the last five years, also in Colombia.
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This has been a bit surprising for the region because
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it has been so fast.
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So you can see that Chinese companies, on one hand,
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they have a strategy, which is I strategy really based
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on rate dysfunction on Latino American companies.
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M on Latin American governments have less that type of
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strategy. So I think that there's bean has bean elite
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awaking awakening off toe that great force that they have
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on. I believe that we must rethink.
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We must see them as possible partners.
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Okay, They will also contribute to develop, develop that contribute
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to the develop off our countries.
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But we must think really we must like, be really
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clever and think about what we want to say for
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our countries on what we also want to But what
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we want to share on what we want.
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I am yeah, to share with other with Asian companies
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okay from the different sectors.
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So there's gonna be some sectors that we're gonna have
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more interest mhm to give toe other companies that are
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not Asian companies.
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So many multi multi Latinas have had a leading role
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at the global level, especially in primary sectors.
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But what can multi Latinas learn from these rapid growth
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from Asian companies?
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Wolf? On one hand, it has bean that they have
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not like, really worried too much about the short term.
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But they always think about growing in the medium on
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that are in the long term.
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So they have some a lot off patient.
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Okay, so that patient I am that helps them toe
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speed the growth on Also, it's something like really interesting
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because I am for the multi Latinas.
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It's, uh that part has been, like, really difficult.
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They are kind off.
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They're kind of afraid to internationalize.
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Think that the Asian companies are not so The Latin
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American companies, many times are like, kind of shy on
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dhe kind of afraid bond kind of concern about going,
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going, going abroad story.
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So the Chinese companies have saved.
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I'm not afraid of losing.
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I'm not afraid of making mistakes because I'm going to
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learn from that on that like fear.
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I think that it's something something that Latin America must
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learn on, not worry about being grown.
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Okay, because you always learn about when you when you
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fell in something, it's something that can help you to
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improve after that.
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As for the government roles in the fast paced development,
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the Chinese government in particular has played a decisive role
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in the rise of multinational companies.
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So we talk about the Latin American governments.
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What do you think they should do?
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It's funny how in China, clearly we see an alignment
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between businesses and government.
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So the government with the companies are the companies with
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the government, defined the strategy and follow it on complete
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with comply with it.
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Okay, so everyone is in the same line everyone, ones
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that the strategy is designed and the strategy is, um,
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agreed. Everyone follows a strategy here.
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We see often that ah government arise on the first
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thing that the government bond that the new government does
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is to criticize the previous one on change everything, even
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the colors.
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So that's something like really crazy.
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But it's something that has happened here in Latin America.
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So each government tried to do it gets its best.
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So or so we believe on.
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There are things that can be taken advantage off because,
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for example, innovation programs or productivity improvement programs are like
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long term programs, so we cannot see short term results
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when when we're talking about long term programs on, um,
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that's something that differentiate the Chinese or the Asian on
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the Latin American companies way.
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Don't think about that long term, okay, because the government
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does not help toe that because the government change constantly
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like every 34 or five years.