After China/India, Latin America is the region capturing the greatest attention from corporate America. The region is being touted as the spark that could ignite greater global economic growth. Many companies are keen on grabbing the opportunity with both hands.
The latest to realize this is Netflix
The company's announcement aroused my curiosity as to what makes Latin America so attractive and, more importantly, which companies are making a beeline to put their flags in the region now.
The growing region
In the face of global economic troubles, the region is showing a lot of promise, after seeing a 30-year-high growth rate of 6% last year. Output growth last year stood second only to that of a fast-emerging Asia. The International Monetary Fund expects Latin America to grow at 4.6% in 2011 and 4.1% in 2012, significantly higher than North America. The region's domestic demand has been rising, and is expected to be the catalyst for future growth.
It's worth noting China's increased interest in Brazil. China has been Brazil's main trading partner for several years, and the relationship is all set to get stronger with China investing another $9 billion in the country this year, with half in the technology sector. Brazil constitutes almost 40% of Latin America's total economy and China has already claimed its stake.
Many companies are either already in or gearing up to be in the region. The best part is that Latin America is proving to be fruitful for the companies.
Enjoying the Latin benefit
Latin America has been acting as a revenue booster for companies doing business in the region. Google's
Similarly, satellite television provider DIRECTV's
In general, companies are riding the consumption wave in these markets. Avon Product's
There seem to be strong reasons for companies to set up a stronger base in the region, and the craze has hit companies across almost all the industries. France's Total SA
Israel-based pharmaceutical company Teva Pharmaceutical
Food major Kraft Foods also has plans to invest heavily in Latin America, after witnessing surging demand for its products like Tang in the region. Retailers are also pinning hopes on these countries for growth and expansion.
Given the way the region has been coming up, these companies seem to be on the right path. Going the Latin way is expected to do well for them; at least investors can hope so.
The Foolish bottom line
With the way Latin America is boosting revenues for companies, and given the optimistic forecasts for growth, all I can say is, if you come across a company that has plans of entering or foraying deeper into the region, you now know of a few reasons why you may like to keep an eye on that company and its stock.