Sorry these wouldn't upload earlier. Here are some of the tango videos--they're amazing!
The second one uses the Tango de Roxanne from Moulin Rouge if you're interested!
Tuesday, January 17, 2012
Argentina Fun Fact: The famous Café Tortoni, established before 1880, is considered the mecca of tango.
Argentina Fun Fact: Their beef is said to be the best beef found in the world.
Argentina Fun Fact: Those in Buenos Aires dress elegantly and are very fashion-conscious individuals. Outside of the capital, it is more casual.
South America Fun Fact: You are expected to tip 10% for certain services, such as a taxi ride or a server at a restaurant.
Chile Fun Fact: They are the world’s largest producer of copper.
Chile Fun Fact: You will find sausage at a lot of places due to German influences.
Tip: Don’t wear a lot of fancy jewelry out. Although South America is relatively safe, people may try to steal your jewels and have been known to go to extremes in the past when times were bad.
Tip: Women, make sure you have a bag that goes across your body and keep it on the front of your body instead of behind you. There are pick-pocketers in South America and they will snatch a normal purse or try to dip into an open purse.
Tip: Pack throw away containers for your bathroom supplies so when you come home, you don’t have to worry about it breaking in your bag and ruining any of your clothes.
Tip: If you do buy any liquids and must put them in your carry-on, try to find a container to put it in such as a bubble-wrap container so it won’t break in your bag.
Tip: Make a list of common phrases before you travel. Some suggestions include: How much does this cost?, Where is the bathroom?, Thank you, Excuse me, etc.
Thursday, January 12th
Today we got up, packed up our belongings, and checked out of the hotel. We went to the beach but on our way our guide made a couple of spots. He showed us a church on the highway where people travel to for the Immaculate Conception on December 8th, which is a holiday in Chile. They close down the highway we were on and people walk from Santiago to the church. It is about a 2-3 day trip. I thought it was really cool that their nation has such a deep faith.
We stopped in Valparaiso, which was beautiful. The buildings stacked up so high on the hills and were all different colors. The navy is huge there and they had many academies and universities. We stopped along the port, where Chile ships out most of their exports and it was amazing. There was a huge temperature difference between Santiago and the port. It was only about 72 degrees.
We got to shop in some open markets and then we got on the bus to go to Vina Del Mar, which is the most popular beach and is on the Pacific Ocean. Many Argentines come there for vacation. The water was ice cold and was coming up pretty high onto the beach. The beach definitely got a lot more packed during the late afternoon. We got some lunch and just sat on the beach with the sand in our feet. It was a beautiful sight. We hopped back onto the bus and headed out to the airport. Ciao Santiago!
Overview of Santiago:
· Lots of graffiti but less trash than Argentina
· Great music in the streets
· Amazing weather. Not too hot, but just a slight breeze.
Wednesday, January 11th
This morning we got up and went to go visit the winery, Concha Y Toro. It was named after the founder and was established in 1883. It is the biggest winery in the country and the largest exporter of wine. Carmenere is the signature wine in Chile and the grape isn’t grown anywhere else in the world. The grape originally came from France and Chile is the largest producer of pure Carmenere in the world. Eighty percent of the harvesting is done by hand and the rest is done by machines. They use little water and angle the leaves correctly in order to get maximum sunshine. They are looking for smaller, firmer grapes with lots of sugar.
I thought it was fascinating that the vines live for around 40-50 years. Who knew? I also found out that the Cabernet Sauvignon is the king of the red wines and that they look for the best soil, climate and vine available. We got a tour of the grounds and then she took us down to the Devil’s cellar. They made up a myth about the devil being down there because people kept breaking in and drinking the wine. The people were very superstitious at the time so it stopped the stealing. We got to see all of the French and American oak barrels and I learned that they keep wine in the American oak barrels around 10 months while French oak barrels are between 14-18 months.
I also learned that you can turn a red grape into a white wine depending on the amount of pressure you put on it when you are crushing the grapes. The tour was just really, really interesting and very informative for someone who hasn’t drank a lot of wine.
Concha Y Toro is the second largest vineyard in the world. The Andes Mountain and the Pacific Ocean provide a natural barrier and help lead the company to excellence. Then it was time for the actual wine tasting. Our first wine was a Marques de Casa Concha Chardoney. You could taste the peaches, pineapples, and apricots and it was very fruity and sweet. It would go well with something creamy. The second wine was a pinot anoir and it tasted like chocolates and cappuccinos. There wasn’t a real wine smell at first and it would go great with lunch or cocktails.
The third wine was a Merlot and you could taste cherries when you drank it. It was very smooth. The fourth wine was a Cabernet Souvergnoir and it was definitely drier than the others. The last wine we tried was the Camerne, which is unique to Chile and it was my personal favorite.
After our wine tasting, we had another presentation about Concha Y Toro. They are a world-class winery player and have been around for over 128 years. In 1994, they were the first winery to be listed on the NYSE. They recently formed a partnership with Manchester United, the famous soccer team. They also recently acquired Fetzer vineyards in California. They have been growing at an average rate of 18% and have had a volume growth of 10%. Seventy percent of their wine is exported while only 16% is kept here domestically. In 2010, they had $117 million in sales and have an export market of $511 million. They export to over 135 countries and have Argentine subsidiaries as well.
The winery’s growth is due to brand building, exclusive focus on wine, quality consistency, investments, innovation, strong distribution networks and a portfolio of wineries. They have worked hard to have a very successful business model.
Europe is their #1 client with England being their highest single country. The winery has been #1 in most markets its exported to and they have any different sub brands available. They have worked very hard on their marketing strategies and use trucks, billboards, TVs and subways. They have a similar fire theme going on with their Casillero del Diablo wine. They have been fortunate to receive many different awards, including the highest score for a Chilean wine. From 2005-2010 they reinvested $348 million into projects.
They have especially looked at making the winery environmentally friendly. They are looking at climate change to see their carbon and water footprint. They were the first winery to estimate their water footprint and have formed a responsible water management team. They bought Feltzer because they believed that they were a very sustainable brand.
Concha Y Toro is in second place among the most powerful wine brands in the world. They are second in volume worldwide as well. They have started to have a presence in Asian markets, especially with supporting Manchester United because they have over 300 million fans worldwide. They want to continue to focus on having a positive experience when you come to visit. One way they are going to be doing this is by transforming the Devil’s Cellar into a state of the art theater and experience tour.
I really enjoyed the wine visit today. Like other wineries, they focused on quality and on the growth of the vine itself. This vineyard, however, is only focused on wine. Many other vineyards produce wines as a second business but for Concha Y Toro, it is their one and only focus. They went into detail about their marketing strategy an how the myths and traditions of the winery are part of it. Now I know what brand to buy when I get back to the states!
Finally, a dog I can play with.
Alison and I went to the hotel pool and laid out and took a nap during the afternoon. The wine tasting wore us out! (although I was really appreciative for the cheese board). We watched a movie, caught a quick dinner at a small Bohemian restaurant in a neighborhood a few blocks away. It was once again delicious. Heather had some difficulties ordering her special cheese pizza so we had to switch waiters to someone who spoke English. It was pretty entertaining. Great day!
Tuesday, January 10th
Today is our business visit day. Our first stop is to Dole, the fruit company. This was one of my favorite presentations since we’ve been here. Doleis a U.S. company based in California and is the largest distributor of fresh fruits in the world. In Chile, they grow apples, stone fruits, pears, grapes, etc. They implemented a counter cyclical cycle, so one area produces apples and then the other area doesn’t. Then when that area can’t produce a certain product (ex: change of seasons) it changes to a new area that can.
Dole is mainly known for bananas and pineapples, but they aren’t grown here in Chile. Chile does have great grapes in the north. The Chile branch of Dole was established in 1981 and is in 58 countries. There are 10 packing and cooling plants in Chile. Dole uses mostly independent growers but they do set certain quality standards that all of their growers have to abide by. Dole has been very successful with fresh cut salad domestically, but they can’t export it because it will go bad by the time it is delivered.
Dole definitely focuses on quality products. One example would be that they use juice, not syrup, in their fruit cups unlike other companies. Reliability is also very important. They make sure that their customers are getting the same quality of fruit by implementing regulations with their growers. The customer is the most important thing. They have specific sizes, colors, and specifications that Dole always follows. Machines that have an optical reader can now spot fruit by the size and color and sort accordingly.
After discussing some of the background about the fruit, we talked about the financial aspects of the business. Economic fluctuations occur during the month can lead into losses even though you didn’t do anything. Receivables cause this problem. The exchange rate is important because it will help them determine how things are going to vary. On the balance sheet, the trade receivables and inventory are the highest areas. They have been trying to make estimates for production and turn it over to sales in order to get clients. If there is a shortage one year, then they may have to go out and buy fruit from other independent growers and then sell it.
When there is a high supply, this causes the price to be lower and then the customer has an advantage. Right now, blueberries are really popular because they are very healthy so demand is increasing, therefore creating more of a market. Dole is very into health. Their executives have even implemented a research center to help the community and also to help Dole make a profit.
Dole has been implementing new products, such as grenadines and blueberries. Typically they avoid berries because they are hard to package and ship, but blueberries have been becoming increasingly popular. Dole exports a lot of the fruit to the U.S., but there is a fairly equal split between the U.S., Latin America, Europe, and Mid/Far East. They have a wide diversification of markets as you can see by their wide variety of customers. They don’t try to time the markets like mutual funds do.
Dole is starting to expand into the Asian markets. Asia has doubled their demand in the last 3 years for grapes and cherries. The U.S. and Europe have experienced recessions in the past few years and have turned more to domestically grown fruits. Dole’s response is to go to emerging markets, such as India, Argentina, and China. In the past, these markets have bought from local merchants but Dole takes advantage of when these growers are out of season. If they only can grow oranges during a 3 month period, then Dole will come in during the off season because they have operations worldwide. At this point in time, Chilean labor is scarce because the wages are higher for mining than for growing fruit.
Peru is the fastest growing country in Latin America according to their GDP rate. Dole is looking to expand after seeing these market indicators. In the future, Dole is looking to improve the plant packing lines and invest in new machines. Their philosophy is to reinvest in equipment as much as it depreciates each year.
Dole has also seen a higher demand for organic bananas. Dole’s biggest customers are Dole USA, Dole non-USA, Walmart, and Sharbatly (Saudi Arabia). There isn’t one dominating customer. They want to continue to add value services to Dole and give the best customer service possible.
The speaker then gave us some advice to succeed with an international company. You must be interested in other languages, be tolerant of others, be adventurous, have a supportive spouse and find a supportive group in your new location.
One question that we had was is there competition between the wineries and Dole for grapes? The truth is that there is no competition. They use 2 very different kinds of grapes. Dole wants the vines to develop a canopy around the grapes and they are manually harvested. These are great for table grapes. Wineries just want the grapes in order to smash them up.
The marketing for Dole (U.S. vs. Chile) is very similar. The labels are in English and they have the same campaign and logo. They both focus on quality and on health as well. I thought it was interesting that their marketing strategy could work so well with so many different countries. It was neat that they have a global brand.
One fact I thought was funny was that Chileans don’t actually eat a lot of fruits and vegetables because their diet consists of meat and potatoes! How funny.
Before we left, we got a big bag of Dole fruit including bananas and pineapples! Deliciousssss.
After our Dole visit, we went and ate lunch at the presidential palace in the basement where they have an art museum and restaurant. I got the Chilean Sea Bass, which was awesome. They are known for it! I felt so authentic.
Our next visit was to Banco Santander Chile. They used the same presentation from November 2011, which was shared to their shareholders. They recently sold 7.8% of the company to stakeholders. It is a Spanish owned bank and SAN is the ticker symbol. They are the strongest bank in Chile with over 12,000 employees worldwide. They are a subsidiary, not a branch of Banco Santander Spain. They are much more profitable than their competitors and are known as the best bank in Latin America. They are also known as the safest bank in Latin America.
In Chile, banks have 95% of the mortgages and Santander is #1 in the country in this area. Some of their strategies include to limit their treasury part because this reduces the risk of a loss. They get the most money from retailers and wholesalers. Their return on equity percentage is 22.9% and their efficiency ratio is 38.4%. This makes them #1 in the efficiency ratio area and they have an A+ rating according to the S&P.
Santander Chile is fairly independent from its parent company. Spain can’t easily take money away from the Chile bank. They would have to sell stock, borrow, etc. in order to get the money. Eight out of the eleven board members are unrelated to Grupo Santander, which makes them even more independent. Owners are liable with their own personal wealth if anything goes wrong. The bank is regulated by three different groups (including the SEC).
Chile’s GDP is $203 billion USD and copper is 50% of the exports. They export most of their items to Asia. A lot of the extra funds that the bank gets are used in case of a natural disaster or a recession to ease the pain. Chile is in a low risk environment, which is reassuring. On average Chile has been growing 4-5% each year. Local energy prices have caused inflation in the past and they do whatever it takes to keep inflation at 3%.
I thought it was interesting because the bank uses IFRS instead of US GAAP. As an accounting major, this interested me because I know that the U.S. has looked into changing to IFRS. Within the next 10 years, it wouldn’t surprise me if they made the change. The bank has 100% shareholders voting equity, which is labeled as “pure capital” and they expect the GDP to grow 5% in the next year.
One of their strategies is to gain new clients and get involved in more cross-over selling to increase the product usage. Cross-over selling is when you have different methods of financing and savings, such as a person having a checking and savings account and a debit and credit card. They want their customers to use various products. You can earn points when you have various products of the bank. It is better for the bank if their customers are cross-over customers instead of just a single account holder. At this point, the banks have a very low rate for lending and these are unsecured loans.
Overall, Chile doesn’t have a lot of debt. Only 16% of the workforce has a mortgage in Chile. They are hoping to see an increase in deposits in the next few years and they focus on paying long term loans with long term resources (and vice versa). Some of their strategies are to deepen their focus on commercial banking, improve client relationship management, expand efficiently and manage risk conservatively. They also want solid growth and a sustainable return on equity. One area that they know they need to improve on is customer relations.
The bank is hitting the breaks on loaning money to low income people because they are riskier and they are shifting their focus to people who save more. The bank is increasing the presence of ATMs, distribution centers, and call in centers. One question I had was what happens if you are unable to collect? The bank’s strategy is to get ahead of other creditors by keeping up relations with the clients and getting to them sooner to collect the money. They have also implemented risk management tools and set their prices according to the risk premium.
It costs a branch about 3 years to break even, so this is why they are building more ATMs versus actual branches. They have seen a huge jump in online banking. Older customers don’t trust banking on computers so they still have the traditional banking methods. Customer deposits can be insured or uninsured.
The main goal of the bank is to raise money in order to lend it out. The bank is primarily a business and is responsible to its shareholders.
Santander presentation shown above
Our next visit was to the Santiago Stock Exchange. It is called the Bolsa Comercio Santiago and is Chile’s primary exchange. At the beginning of the presentation, they showed us a safety video in case of an emergency. When we first entered into the building, we had to go around back because the front entrance was closed. Students who were protesting about the high tuition costs had come in to hang signs about how tuition wasn’t traded. They were going to keep the front locked until things settled down.
The stock exchange was established in 1893 and it was mostly comprised of mining companies until the 30’s. This is a meeting place for buyers and sellers to engage in mutually beneficial transactions. Securities are sold in order to raise capital. Stockbrokers act as agents and act in the best interest of the customer. Retailers grew through these stocks.
The superintendencies of securities ensures that every transaction is handled correctly. The most common thing to be seen in this exchange is stocks. There are still debt securities, which provide a fixed rate of return. Negotiations between brokers are submitted electronically so no one is really actually in the physical room unless they just want to use the computer systems instead of their own personal computer. This advanced internet system helps brokers trade in real time and the stock exchange ensures that the trade occurs on the terms agreed upon. The stock exchange index tracks changes in the price of the stocks and displays them on the large board. The stock exchange has received many awards over the years. They increased 250+% and have 164 new stocks registered.
The issuers are the public corporations and the investors are institutional investors and individual investors. The intermediaries are the brokers and are the only people who can legally trade. There are 232 stocks listed but there are also money market instruments, which is 60% of what is traded. There are also fixed income instruments. The stock market competes in both debt and equity markets and they have 48 shareholders and 32 brokers. The house of brokers consists of 21 independent brokerage houses and 11 institutional brokers owned by banks. The exchange is a listed company.
We then got some background information about Chile. The population is 17 million and they export $71.1 billion in copper, fruit, wine, fish, chemicals, paper, etc. The IPSA is the most important index and lists the top 40 companies. The IGPA are more general and contain about 100 companies and the Inter-10 index shows foreign companies. During the subprime crisis, the IPSA dipped down. One of the most traded companies is Santander, which I thought was funny since we were just there.
In 1917, everything used to be done verbally. In 1995, everything changed because there was a section of the trading room that was open to the public and another section for the traders. Now the traders don’t come here anymore (typically) and they trade from their own computer in their office.
One really interesting discussion point was when they discussed the MILA ,which is an integrated market that tries to make transactions easier between Chile, Peru and Columbia. It is very new and they are very excited about it. They are not working on an agreement with Argentina or Brazil because they are too big and it wouldn’t be good for them. Mexico is going to be joining because they are similar in size.
Each stock is in the national currency so you have to be able to make your own conversion. The exchange doesn’t manage the final investor, just the superintendencies. The market doesn’t currently trade commodities because there is so much excess supply that it is almost all exported. In a few years, they believe that the Santiago Stock Exchange will be the only exchange there.
Alison and I got home to the hotel and decided to go to an open market down the street. I got a purse and a cup and bought a nativity set for my parents. We walked by the library and then to Starbucks so Alison could see if she could find a Chile mug for her collection. Then we decided to go back to the hotel. It was really weird because we kept getting whistled at around town even though we were covered up. Very strange indeed!
Tonight we ate at a Peruvian restaurant at the Patio Bellavista. I got the “spaghetti” with seafood and it was more like lo mein. Absolutely DELICIOUS! Probably one of my favorite meals so far. We had a grand ol’ time at dinner, grabbed a drink at the bar and took a taxi home.