Posted by: mw23 | October 29, 2009

“Living in Peru” – Speaks the truth!

Short blog here, I was pretty amazed when I read an excellent article on a popular expat website here in Peru.

From this website, I’ve generally come to expect frivolous trumpeting about how great life is in Lima. You can count on the columns of to be long-winded unbalanced accounts of life in the country. These articles conveniently ignore the country’s more common aspects. To use BBC as an counter example, you can’t always count on LivingInPeru to tell the ‘full story’.

I read a great article recently though that spoke true to Peruvian business culture, I’ve posted it below.


Diego de la Torre
President of the Global Compact

Steve Jobs, founder of Apple, began his work in a garage. Erasmo Wong started his empire with 50 square meters. According to the Global Entrepreneurship Monitor, Peru has more entrepreneurial spirit than any other country.All companies begin modestly. It is only when they begin to think big that they become global players.  To do this, the founder often has to overcome what I call the “51% syndrome.”

In many cases, a company’s retained earnings and its capacity to take on debt restrict its ability to finance expansion into new markets.This is why it is often necessary to open the company to other investors/venture capital funds and/or float the company on the stock market to find the resources needed to grow on a global scale.

All of this requires modern culture, more sophisticated financial engineering and good corporate governance. Let’s take, for example, a Peruvian company like Bembos, which has been able to successfully compete in the local market with the fast food titans of the world. Nothing is stopping Bembos from developing a plan for international expansion, beginning with the Hispanic markets in Florida and California and later making the leap to the rest of the USA and later the world.

To do this, the company needs the financial resources to open hundreds of locations, which will only be possible if it issues shares on the stock market to attract fresh capital that will be invested according to a robust and professional business plan. A serious investment of time and strategic planning is necessary to ensure successful share issuances. Optimization requires a new management approach that takes executives beyond mere roles of insurance premium negotiators and telephone bill watchdogs.Floating a company on the stock market means that the founders will not hold more than 51% of the company and will have to learn to live with other shareholders and a professional management that is capable of producing results in other markets and establish successful strategies for growth beyond national borders. More importantly, company owners must be open to the fact that all operations will be carefully scrutinized by analysts and the hundreds or perhaps thousands of investors who share company ownership either directly or through pension funds.

Many Peruvian businessmen are not prepared to move beyond the 51% syndrome. As such, it will not be easy for our companies to become global players. There are notable exceptions however, including Cia de Minas Buenaventura, the only Peruvian company with a full listing on the New York stock exchange and several-time winner of awards for best corporate governance in Latin America. Fortunately, the new generation of businessmen has more training and is accustomed to open and competitive markets. This is the only way Peruvian companies can become global players.



  1. no se gana pero se goza!!

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s


%d bloggers like this: