In September during summer break, 28 students from UCLA Anderson’s full-time and fully employed MBA programs visited Lima and Cusco for the in-country week of the CGM’s global immersion course, “From Emerging Market to One of the World’s Fastest Growing Economies: Transformation of the Peruvian Economy and Business Opportunities,” led by distinguished professor and Latin American expert Sebastian Edwards, Henry Ford II Chair in International Management. This was the fourth global immersion course to visit Peru and the second to be led by Edwards.
During the course, students learned the way in which economic policy in Peru – one of the most successful countries in Latin America in the last decade – affects business opportunities. An important feature of the course was that it put Peru’s case in context with that of the rest of the Latin American nations (with special mention to Argentina, Brazil, Mexico, Chile and Venezuela). The course also analyzed the way in which politics affects both economics and policy. Before the in-country week, on-campus class sessions addressed some of the most important economic, business, social and political aspects of the country, cultural issues as well as social and business challenges. During the week in Peru, students heard from prominent business leaders, academics, politicians and senior policy makers, as well as successful entrepreneurs. A number of Davos-style conversations and moderated conversations helped illuminate Peru’s economics and business environments with a particular focus on sectors that are key to the Peruvian economy. Students also met with and had the opportunity to hear from successful UCLA Anderson alumni. They thoroughly enjoyed their time in-county, learned a great deal, were inspired, met good friends and enjoyed a truly immersive and memorable experience together. The week also concluded with a visit to the most familiar icon of Inca civilization - Machu Picchu.
On the first day in Lima, the inaugural speakers provided terrific context and foundation. At the Central Bank, students heard from Renzo Rossini, general manager who provided an excellent overview of Peru’s fundamentals and economic outlook, including vis-à-vis Latin America. He addressed growth, inflation and the reduction of poverty since 2002 and explained that after hyperinflation in the late 1980s and early 1990s, monetary policy was reformed and inflation decreased dramatically. Cesar Martin Menaranda, head of the investor services division at Proversion, discussed promoting private investments in public infrastructure through private-public partnerships (PPP). Proversion is a public executing agency, attached to the Ministry of Economy and Finance, that promotes the incorporation of private investment in public services and public infrastructure works. He talked about the various projects that the organization is involved with, ranging from sanitation to energy and mines and from education to tourism and culture. Students also heard from Antonio Menchelli, CEO of Urbanova Inmobilaria, the real estate arm of the Peruvian conglomerate, Breca. The company has been a major player in the development of Lima and firmly believes in sustainability.
During the week, students learned about the main sectors of importance to the Peruvian economy. The mining sector is, and has always been the key to the country’s economy. Peru has 13% of the world's copper reserves, 4% of its gold, 22% of its silver, 7.6% of zinc, 9% of lead and 6% of tin reserves, according to the most recent data of the Peru's Ministry of Energy and Mines. Students heard from Raul Benavides, vice president of Buenaventura, a Peruvian precious metals company engaged in the mining and exploration of gold, silver and other metals and the first mining company in Latin American to be listed in New York. Benavides described how mining is evolving from an industry that was very aggressive to the environment to one that is regulated with better parameters. He explained how companies such as Buenaventura are dealing with social and political challenges that did not exist when his father established company. After mining, the fishery sector is the most important sector in Peru. Students visited the TASA fishing plant. TASA is a leading Peruvian company in the fishing sector and the first producer and exporter of fishmeal and fish oil in the world. The company has contributed to reducing poverty, increasing GDP, creating full employment and foreign exchange. At TASA, Cayetana Aljovin, chairwoman at Sociedad Nacional de Pesqueria spoke about anchovy fishing in Peru. Anchovy fishing is the dominant catch in the country and has been recognized worldwide as an industry that respects the environment and works for the sustainability of the resources. Students had the opportunity to tour the plant and learn about the process of fish meal and fish oil. They also visited the control room to understand how NIR analysis provides rapid analysis data for better decision making in food and agri-production processes.
Peru's climate and different geographical zones also make it an important agricultural nation. Diego Acosta, category manager at Agricola Cerro Prieto (ACP) addressed agribusiness in Peru. ACP is engaged in the production, packaging, and marketing of high quality agricultural products, including avocados, table grapes, green asparagus and organic blueberries, four crops that allow for continuous cash flow throughout the year. Peru is a major supplier of crops such as asparagus because of its unique climate. Initially, many were of the opinion that blueberries could not grow and thrive in Peru as a fruit, but now Peru is one of the world’s biggest producers and exporters in the world. Since Peru enjoys the ability to ship its fruit by sea, producers have also been able to gain a substantial margin on sales. The Peruvian textile history began five thousand years ago when weavers from pre-Inca and Inca cultures mastered the natural fibers of cotton and alpaca. Today, Peru's textile industry employs approximately 250,000 people, and textiles and garment manufacturers account for more than 30 percent of the non-traditional exports in Peru. Peru produces some of the best cotton in the world and is renowned for its superior fiber length, strength, and consistency. The country also provides 80% of the world's supply of alpaca wool. Students learned more about the sector from Eduardo Elias, president of Textile Sourcing Company (TSC), a Peruvian integrated company founded in 2012 from former Textil San Cristobal S.A., as part of the biggest textile group in Perú. TSC is a full vertical operation from spinning to knitting, dyeing, cutting, sewing, packing, shipping and delivery which allows the company to have the shortest supply model in the region. He described the three drivers of value: quality, design and brand and talked about pricing and manpower management and the impact of exchange rate fluctuations. He also described how China and e-commerce are hurting the Peruvian textile industry and the impact of automation and AI.
Peru produces 30,000 tonnes of solid waste per day – 50% organic, 25% recyclables (not organic) and 25% non-recyclables. However, only around 3% of the recyclables is recovered today in Peru. Pipo Reiser, co-founder of Sinba, a social enterprise working with the Peruvian culinary sector explained how one restaurant generates the equivalent waste of 100 households and shared with students how Sinba creates solutions to help improve waste management and formalize waste collections. Students later had the opportunity to learn about financial inclusion from Adriana Chavez, CFO at MiBanco. The company was founded in 1998 as the first Peruvian bank to specialize in micro-finance. MiBanco offers products and services oriented to the micro and small enterprises, such as working capital, fixed assets, scope and commercial store building credits, fixed term savings, money exchange and money transfer to other countries. Students learned how MiBanco uses behavioural finance and is in the evolution of its business model, using technology for greater efficiency.
Students visited UTEC Ventures. Founded in 2014, UTEC Ventures is the edtech startup accelerator of the University of Engineering and Technology and is seen as one of the main contributors to the Peruvian startup ecosystem. Professor Edwards moderated a conversation on innovation initiatives in Peru and the entrepreneurial ecosystem with three entrepreneurial-minded panelists. Jose Deustua, managing director at UTEC Ventures was joined by Daniella Raffo, managing director at Aporta, the social innovation laboratory of the Breca group that works with the Group’s business units to maximize their social and environmental impact on stakeholders and uses the power of business for a force for good; and UCLA Anderson alumna Yvonne Quiñones (’15), co-founder and CEO at Urbaner, a platform that redefines logistics and gives companies access deliveries on demand. Students heard how much harder it is for companies to get funding in Peru versus the U.S. and how in general, women entrepreneurs seem to perform better. Students really appreciated hearing inspiring stories of entrepreneurs and especially two successful female entrepreneurs. Students also had the opportunity to hear from another successful UCLA Anderson alumnus Marco Moreno (‘01), managing partner at Creuza Advisors who hosted the group at his office. Moreno talked about the country’s transformation. He described Peru from 1985-1990 and then from 1990-2018 under Alberto Fujimori and the five administrations post Fujimori and explained that while they had different ideologies, the economic model remained the same. He touched on Peru’s investment landscape and explained that the VC ecosystem is in its early stages and that private equity has a limited track record. He also discussed the contagion effect in Latin America. Hugo Santa Maria, chief economist and managing partner for economic studies at Apoyo Consulting also provided a terrific overview on the Peruvian economy. He discussed specifically the “crises” years (1980’s and early 1990’s); the deployment of a new economic model which was “market oriented” (the 1990’s); then the “rock star” years (2003-2013); resiliency under adversity (2013-2016); then the “what on earth is going on” years (2016-2020); and the obstacles that the country has to overcome, such as a dysfunctional political system, constant turnover of key government authorities, a lack of continuity in public policies, procrastination in decision making in the public administration that require “political capital,” and since public opinion is key, the risk of “microeconomic populism.”
A visit to Lima would not be complete without a visit to LUM, The Place of Memory, Tolerance and Social Inclusion that explores the 1980–2000 conflict between terrorist groups and Peru's government. LUM contains pivotal moments to understand the events between 1980 and 2000 and presents information on Shining Path (SL) and the Tupac Amaru Revolutionary Movement (MRTA), as the ones that sparked the violence, as well as showing the profound inequalities and the absence of the State that caused it to spread. Professor Edwards likes to incorporate an art/cultural session into the week which adds another dimension to the experience. At the LUM, students heard from Miguel Cruchaga, a Peruvian architect, intellectual and politician who talked about the country’s architectural history and explained the different styles in Lima throughout the years. He discussed the Huacas, incorporation of neo classical landmarks as in Europe and later the adoption of the international architectural style post 1940.
Peru is known for its gastronomy and is home to some of the best restaurants in the world. Peru has 28 of the 34 climates and 84 of the 114 microclimates of the world, influenced by factors such as the Andes and the ocean currents. In Lima, students visited the San Isidro market and were given a tour of the market by Ignacio Barrios, founder and owner of Urban Kitchen who explained the origins of Peruvian food and the importance of ingredients in modern Peruvian gastronomy. Following the tour, students visited Urban Kitchen for an evening culinary experience where they also learned the importance of history of Peruvian food and how it became one of the most important in the world. They divided into four groups to learn how to cook traditional Peruvian cebiche and lomo saltado, as well as causa with prawns and huancaina sauce and octopus and black olive sauce. Students also learned how to make the transitional Peruvian picso. UCLA Anderson alumni also joined the evening together with a student from the entering MSBA Class of 2020 who lives in Lima.
In Cusco, Carlos Milla, president at CARTUC, the regional Chamber of Tourism provided an overview of the tourism sector in Cusco and its impact on the local economy and discussed the sustainability of the current growth in the number of tourists visiting the Sacred Valley and Machu Picchu. Peru is highly dependent on Machu Picchu with 85% of inbound tourists visiting the site. He explained that the region experienced huge growth between 2008 and 2013. The growth of the middle class has also been remarkable however there is an important part of the population that is still vulnerable. Looking to the future, he sees huge potential in certain areas, including mining of lithium, hydro-energy, water basin management and tourism. He also sees poverty declining and more people being integrated into modern society. However, there are also some challenges, including corruption and the informal economy, among others. Cusco has also become an attractive market for retail investment due to its high rate of foreign tourists and development of modern spaces dedicated to transforming the quality of life of thousands of Cusqueñian families. Students heard from Patricia Guzman, sales and marketing coordinator at Real Plaza, the largest developer and operator of shopping centers in Peru about how the company has been a pioneer in bringing modernity and investment projects to provinces, transforming the quality of life of thousands of Peruvians and generating employment opportunities. The final speaker of the week was Heidy Aspilcueta, director of operations at Medlife, an NGO that partners with low-income communities in Latin America to improve their access to medicine, education, and community development initiatives. Cusco is surrounded by an indigenous population that continues to live in extreme poverty. Aspilcueta explained how Medlife partners with the local communities to improve access in these areas and help integrate the communities into the modern economy.
During their time in Lima and Cusco, students also enjoyed tours of each city. In Lima, students visited the historical colonial district and enjoyed a walking tour from Plaza Mayor, the birthplace of Lima which is surrounded by the Government Palace, Cathedral of Lima, Archbishop's Palace of Lima, the Municipal Palace, and the Palace of the Union. They toured Basílica y Convento de San Francisco which aside from a church and monastery, also contains a library and catacombs. They also visited the Adobe Pyramid Huaca Huallamarca, an archaeological site in Peru, located in the San Isidro district. In Cusco, students walked to Korikancha / Church and Convent of Santo Domingo. Possibly the most sacred and important building in the entire Inca Empire, Korikancha was the name given to the Inca Temple of the Sun. They toured the famous San Pedro local market and drove to Sacsayhuaman, a citadel on the northern outskirts of Cusco where they walked around the site and the best-known zone of Sacsayhuamán which includes its great plaza and its adjacent three massive terrace walls before embarking on a short walk to Cristo Blanco. The group ended the week with a visit to the most familiar icon of Inca civilization - Machu Picchu. Some students hiked up to Intipunku (Sun Gate), one of the most important archeological constructions around the Machu Picchu and others walked to the Inca Bridge. Everyone walked around the inside of the citadel and learned more detail around the history of Machu Picchu. Declared a Peruvian Historic Sanctuary in 1981 and a UNESCO World Heritage Site in 1983, Machu Picchu was voted one of the New Seven Wonders of the World in a 2009 worldwide Internet poll. At the conclusion of the week, some students stayed a few extra days to hike in the mountains, others headed to various parts of Latin America while a number of students headed home with fond memories, new friends, alpaca gifts and a greater understanding and appreciation of Peru.
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