Global Players from Emerging Markets: Strengthening ... - Unctad

tail, pension funds, pulp, paper and minerals,
which pushed some Chilean enterprises to
internationalize at an early stage.
• The need to develop new and consolidate existing
export markets to increase scale (Cencosud, FASA,
Ripley, and Falabella) and to obtain international
financing (Enersis, Gener, Cencosud, Madeco,
Embotelladora Andina and CCU).
• Other push factors include the early shifts
in government policy towards liberalization,
which gave Chilean enterprises a considerable
advantage over their neighbours and other TNCs
with less experience operating in Latin America,
particularly in an environment of deregulation
and privatization. Some Chilean companies have
also developed new forms of businesses that have
allowed them to grow strong in the local market
and later pursue a strategy of internationalization
(Falabella and Cencosud).
The main pull factors were:
• Host country location advantages. Chilean
firms looked for the location advantages of host
countries for growth and access to new markets,
particularly in Argentina, Brazil, Colombia
and Peru. Improved policy environment of the
neighbouring countries through deregulation
and privatization and improved logistics and
distribution systems in host countries (ENAP and
Masisa) also played a role.
• Regional branding. For some enterprises, the
main target was to turn national into regional
brands (CMPC, Masisa, Lan Airlines, Farmacias
Ahumada, Falabella, Cencosud, and Ripley).
• Strategic partnership. Forming strategic alliances
and partnerships with foreign TNCs in host
countries (ENAP, CCU, and Embotelladora
Andina).
D. OFDI and implications for
enterprise competitiveness
There are three groups of activities, which
dominate enterprise internationalization by Chilean
companies. They are:
• A first group of firms that engaged in primary
activities, producing natural-resource based
manufactures and supplying basic inputs to the
industrial sector. The growth of these enterprises
has generally been strongly influenced by the
State. They have invested abroad, mainly in
Latin America in search of natural resources and
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markets, and are mainly involved in hydrocarbons,
mining and metal processing, and pulp and paper
activities.
• A second group includes manufacturing activities
such as beverages and beer. These enterprises
generally operate in alliances with global
operators or industry leaders.
• A third group comprises public utilities that were
transferred over to the private sector as part of the
reforms in the 1990s.
Some Chilean enterprises have demonstrated
that they have benefited from operating abroad
(e.g. ENAP), while some had negative experiences
(Falabella, Cencosud). In many cases, the success in
internationalization of Chilean firms, particularly in
establishing a strong regional presence, has resulted
in takeovers by foreign TNCs because of the strong
regional assets they had created. Some of the general
positive implications include:
• Resource-seeking. Enterprises such as ENAP have
increased their competitiveness and production
capacity as a result of operating close to the
natural resource supplies and expanded their
markets’ reach.
• Market-seeking. Other companies such as Arauco
and CMPC have strengthened their value chain
through vertical integration and supported their
trade channels, developing overseas distribution
networks.
• Acquisition of strategic assets. Through
acquisitions of strategic assets in the neighbouring
countries, some Chilean firms strengthened their
market position and increased the market share
for their products (Madeco, Masisa, Andina and
CCU).
Some of the specific implications for enterprise
competitiveness can be assessed by examining cases
of OFDI in selected industries.
(a) Hydrocarbons: resource-seeking and
control of value chain
• Access to natural resources. The importance
of reliable access to oil reserves has led many
oil companies to geographically diversify their
reserves and to form joint ventures with other
companies. For instance, the State-owned
Empresa Nacional del Petróleo (ENAP) began its
international expansion by seeking out reserves
that were scarce at home. Since 1990, ENAP
participated in various overseas exploration
and production projects to increase its own oil