Art. Chilean Multinationals Contexts, Paths and Strategies

CHAPTER 10
Chilean Multinationals:
Contexts, Paths and Strategies
María Inés Barbero
Introduction
One of the most prominent aspects of the ‘Second Global Economy’
since the 1980s has been the development of multinational enterprises
(MNEs) with their base in emerging or middle-income economies. Their
presence has created a challenge, not only for MNEs from developed
countries facing new competitors in their domestic and foreign mar-
kets but also for theories of multinational enterprise, which to a large
extent have been constructed from the experiences of multinationals
from developed countries.
The objective of this chapter is to study the growth of Chilean MNEs,
analysing their expansion strategies and seeking to establish a dialogue
between theory and history. It is divided into four parts. The first focuses
on the phenomenon of the ‘emerging market multinational enter-
prise’ (EMNE), considering both historical and contemporary aspects.
The second analyses various theories of the MNE, emphasising recent
M. I. Barbero (*) 
Facultad de Ciencias Económicas, Universidad de Buenos Aires,
Buenos Aires, Argentina
© The Author(s) 2019 283

M. Llorca-Jaña et al. (eds.), Capitalists, Business
and State-Building in Chile, Studies of the Americas,
https://doi.org/10.1007/978-3-030-14152-3_10
284 M. I. BARBERO
contributions that attempt to characterise and explain the emergence

and development of EMNEs. The third focuses on Chilean multination-
als from a historical perspective, identifying their general characteristics
and analysing the paths, strategies and capacities of the twelve compa-
nies with the highest degree of internationalisation. The final reflections
identify the most noticeable features of these enterprises and re-exam-
ine theoretical approaches based on the evidence of the leading Chilean
multilatinas.1
Multinational Enterprises in Emerging

Countries (EMNEs)2
A MNE or transnational corporation (TNC) can be defined as a firm that
carries out foreign direct investment (FDI) as owner, or in some other
manner that allows it to exercise control over activities that add value in
more than one country (Dunning and Lundan 2008). Modern MNEs
emerged in the late nineteenth century; they expanded significantly after
the Second World War, and from the 1980s they became one of the key
vectors in the growth of the ‘second global economy’. Global FDI flows
have grown exponentially since the 1980s, soaring from US$59 billion in
1982 to US$1762 billion in 2015 (UNCTAD 2007, 2016).
This remarkable increase in FDI has been accompanied by qualita-
tive changes with regard to geographic origins, sectors of activity and
investment modality. On the first point, the growing presence of MNEs
from countries that were not among the richest on the planet histori-
cally is striking. These include upper middle-income economies (Spain,
Portugal, South Korea and Taiwan), emerging economies (Brazil,
Chile, Mexico, China, India and Turkey), other developing countries
(Egypt, Indonesia and Thailand) and oil-rich countries (United Arab
Emirates, Nigeria and Venezuela) (Guillén and García Canal 2009).
In 2008, 21,425 MNEs out of a world total of 82,035 multinational
firms had their origins in emerging economies (Guillén and García
Canal 2010). The share of developing countries in world stocks of FDI
grew steadily: from 7% in 1990, to 10% in 2000, 14% in 2010 and 21%
in 2015 (UNCTAD 2000, 2016). Nevertheless, the participation of
EMNEs is still quite limited at the very top level: the hundred largest
non-financial multinationals included only ten EMNEs, mostly Asian,
in 2012 (UNCTAD 2013).
10 CHILEAN MULTINATIONALS: CONTEXTS, PATHS AND STRATEGIES 285
With regard to economic sectors, the growing weight of services is

striking. Whereas the service sector represented around a quarter of
total world FDI in the early 1970s, by 2014 it had reached 64% (Jones
2005; UNCTAD 2016). With respect to modalities, companies have
used mergers and acquisitions as the primary means of undertaking
FDI. Simultaneously, the organisational forms adopted by MNEs have
evolved, with a general trend towards the de-verticalisation of large cor-
porations, outsourcing of many activities and the formation of alliances
with other companies which operate as clients, suppliers or partners in
innovation (Jones 2005). It should be noted, however, that many MNEs
are not truly global enterprises. Trade flows are still mostly regional, and
only a handful of large companies operate on a truly global scale. Most,
in contrast, continue to generate a large share of their profits in the
regions where they originated (Rugman 2005).
The expansion of EMNEs started in the 1960s, with several waves
of investment led by Asian and Latin American firms. Growth acceler-
ated sharply after 1990, with the emergence of the international business
system and the liberalisation of global trade (Chudnovsky et al. 1999).
Countries and regions established contact with each other through com-
plex trade and investment flows, while the revolution in Information and
Communications Technology (ICT) reduced the costs and increased the
benefits of internationalisation, facilitating the relocation of activities.
The segmentation of manufacturing processes, favoured by technological
change, has contributed to the formation of global value chains. Public
policy, for its part, has created more open, deregulated economies, stim-
ulating the exchange of goods and capital.
In emerging countries, more open economic policies since the 1990s
have resulted in higher levels of competition. This has, in turn, stimu-
lated local firms, faced with competition from multinational companies
in their domestic markets, to undertake offensive strategies themselves,
simply in order to survive. These strategies included internationalisa-
tion, either by deepening existing trends or expanding across frontiers
for the first time. Regional trade agreements also stimulated this process
(Casanova 2009). Simultaneously, the withdrawal of developed-world
MNEs from some mature sectors of economic activity opened up oppor-
tunities that EMNEs could exploit, often by acquiring competing firms
from the more developed countries.
286 M. I. BARBERO
Apart from these forces arising from changes in the global business
environment, the internationalisation of EMNEs was also possible thanks
to the development of competitive capacities that allowed them to posi-
tion themselves as relevant players in international markets. This raises
the question of whether older theories of MNE provide satisfactory
explanations for the behaviour and performance of EMNEs. Can existing
models of how multinational companies evolve and compete be adapted
to new realities, or does the impact of EMNEs on global competition
require new theories (Williamson et al. 2013)?
EMNEs and Theories of Multinational Enterprise3

Classical theories of multinational enterprise developed first in North
America in the 1960s, in the context of the marked expansion of MNEs,
especially from the United States, after 1945. Theoretical developments
in subsequent decades continued to be based largely on the experiences
of North American and northern European firms.4 It became accepted
that MNEs must possess certain advantages in order to overcome the
costs involved in doing business outside their home economies. A British
economist, John Dunning, developed the so-called ‘eclectic paradigm’,
also known as the OLI paradigm (standing for Ownership, Location and
Internalisation advantages), which integrated several alternative perspec-
tives in the mid-1970s. According to Dunning, companies which inter-
nationalise may enjoy, first, specific ownership advantages allowing them
to compete effectively in other markets. These include tangible (tech-
nology) and intangible (brand) assets. Second, they may exploit loca-
tional advantages which encourage them to establish subsidiaries in other
countries. Third, they may benefit from establishing subsidiaries overseas
which allow them to internalise marketing and/or supply chain activities
to create a competitive advantage that they would not otherwise obtain
(Dunning and Lundan 2008).
With respect to the motivations that lead a company to international-
ise, Dunning used a taxonomy developed by Jack Behrman (1972), who
identified three main reasons for FDI: resource-seeking (raw materials,
human resources); market-seeking (reasons to invest rather than export);
efficiency-seeking (rationalising production, obtaining economies of
scale or scope, reducing risks). Strategic asset-seeking (acquiring assets
in order to promote long term objectives and sustain or augment global
competitiveness) was added later (Dunning and Lundan 2008).
Other theoretical contributions have emphasised the need to consider

not only firm-specific advantages but also country-specific advantages
(CSAs) linked to the countries of origin and destination. Whereas the
former can be identified with the ownership advantages of enterprises,
the latter are the product of the factor endowment of the countries con-
cerned, as well as elements of the institutional, social, cultural and politi-
cal order (Rugman 2005).
The ‘Uppsala School’ of economists, for their part, focused on the
learning process that leads companies to internationalise, emphasising
that this occurs in stages, and results from a series of incremental deci-
sions taken by companies in accordance with their knowledge about the
destination markets. They thus emphasise, first, a sequence that runs
from exporting using agents, to establishing sales subsidiaries and even-
tually to production in the host country. They observed, second, that
the choice of host country seems related with psychic distance from the
home country, defining this as the sum of factors that prevent the flow
of information from and to the market (Johanson and Wiedersheim-Paul
1975; Johanson and Vahlne 1977).
The birth and development of EMNEs presents an enormous chal-
lenge for older theories based on the growth of North American and
European MNEs, in the light of differences in their experiences and
practices. Various authors have therefore questioned the relevance of
existing paradigms to explain the success and accelerated growth of
EMNEs, although positions in this regard have not been homogene-
ous, oscillating between radical negative responses which assert a need
for alternative theories (Mathews 2002, 2006), and more moderate
positions, which suggest using the experiences of EMNEs to enrich and
extend older theories (Guillén and García Canal 2009; Narula 2006;
Ramamurti 2009).
John Mathews argues, for example, that whereas firms already possess
the resources for internationalisation in conventional theory, EMNEs or
challenger multinationals internationalise in order to obtain resources,
particularly strategic assets and capabilities. In this light, he contests
the relevance of existing theory in explaining the internationalisation of
EMNEs, considering both the OLI paradigm and the Uppsala model
inadequate for understanding the development of latecomer firms from
emerging markets. He thus proposes an alternative paradigm, which he
calls LLL (linkage, leveraging, learning). Linkage involves the acquisition
of resources through different forms of collaboration with other firms,
288 M. I. BARBERO
allowing a newcomer to reduce the risks or uncertainties implicit in

undertaking operations in foreign markets. Latecomers can then leverage
these links to appropriate resources. Linkage and leveraging give rise, in
turn, to a learning process and facilitate accelerated internationalisation,
enabling numerous small and medium companies to operate on a global
scale, integrated into international networks and competing satisfactorily
with classic MNEs (Mathews 2002, 2006).
Mauro Guillén and Esteban García Canal are among those holding
more moderate positions. From the perspective of the resource-based
view of the firm, they attempt to identify the specific characteristics of
what they call the ‘new multinationals’, but without proposing an alter-
native theoretical paradigm. Unlike Mathews, they argue that EMNEs
internationalise both to acquire intangible assets, through the forma-
tion of international alliances and the purchase of companies in devel-
oped markets, and to take advantage of assets they already possess. These
often lie in the management, organisational and political skills they have
developed through their experience of operating in contexts of high
uncertainty, institutional weakness and regulated markets. With respect
to existing theories, they claim that recent changes should not neces-
sarily imply rejecting them completely: EMNEs may lack classic advan-
tages in technology or marketing, but have developed others instead.
With respect to stages of internationalisation, they recognise that some
EMNEs have expanded across borders gradually, commencing with
investments in neighbouring countries, while others have engaged in
rapid internationalisation in search of strategic assets, by means of alli-
ances or acquisitions (Guillén and García Canal 2009, 2010).
Other recent phenomena, although not exclusive to EMNEs, have
also led to questioning of existing theories. Among these changes, the
concept of ‘born global’ companies merits attention. These are com-
panies which have sought competitive advantages through the use of
resources and the sale of products in more than one country ever since
their foundation (Oviatt and McDougall 1994; Cavusgil and Knight
2015). Such firms are generally intensive in technology, specialised in
niche markets and with flexible structures which have allowed them to
access suppliers and clients around the world from the start.
Such theoretical debates (and the summary here provides only
an indication of their intensity and complexity) provide a stimulus
for research on Latin American multinationals (multilatinas) and an
opportunity to reappraise theories in the light of the concrete historical

experiences of such firms. Moreover, much of the work that academ-
ics have published on EMNEs focuses very strongly on Asia and, to a
lesser extent, what had been peripheral European countries, like Spain.
The international comparative literature has tended to neglect Latin
American examples.
The Chilean Multinationals
The Internationalisation of Chilean Companies

Chilean multinationals are a particularly significant case for a reappraisal
of the path and strategies of multilatinas from a comparative perspective.
The concrete historical experience of these companies over the long term
allows us to identify their strengths and weaknesses as well as the motiva-
tions and modalities of their foreign expansion.
Although the foreign assets of Brazilian and Mexican multination-
als surpass those of Chilean firms, Chile possesses the greatest number
of multinationals in relation to its GDP among Latin American coun-
tries, and is the only one in the Top 20 ‘Home Economies’ listed by
UNCTAD for 2015 (UNCTAD 2016). In América Economía’s 2015
ranking of the 50 biggest multilatinas, ranked by an index of interna-
tionalisation, there are 12 Chilean companies, 13 from Mexico and 12
from Brazil, even though Brazil’s GDP is nearly seven times that of Chile
and Mexico’s almost six times larger.5
In 2015 the stock of direct investment abroad by Chilean companies
totalled US$106.6 billion, spread over more than 60 countries on five
continents, about half of the stock of inward FDI in Chile (DIE 2016).
In 2015, as Table 10.1 shows, Chile was the most dynamic country in
Latin America with regard to outward FDI, in the context of a general
slowdown in the multilatinas’ pace of expansion (CEPAL 2016).
Although Chile occupies this dominant position as a source of FDI,
the continuous expansion of Chilean MNEs only began in the 1990s. It
lagged behind other countries in the region, such as Argentina, where
outward FDI commenced very early, gaining momentum in the 1970s.
Since the 1990s, however, the steady growth of Chilean FDI has enabled
the country to reach third place in the region with regard to its stock of
outwards FDI and to achieve the highest ratio of FDI to GDP.
290 M. I. BARBERO
Table 10.1 Latin America and the Caribbean (selected countries): annual flows
of outward foreign direct investment, 2005–2015 (in millions of dollars)
Country 2005–2009a 2010 2011 2012 2013 2014 2015
Argentina 1471 965 1488 1055 890 1921 1139

Brazilb 14,067 26,763 16,067 5208 14,942 26,040 13,498
Chile 5117 9461 20,252 20,555 9872 12,915 15,794
Colombia 2786 5483 8420 −606 7652 3899 4218
Mexico 6250 15,050 12,636 22,470 13,138 7463 12,126
Trinidad 282 0 1060 1681 2061 1275 717c
and Tobago
Venezuela 1438 2492 −370 4294 752 1024 1112c
Latin America 32,091 61,302 60,919 55,993 50,465 55,803 47,362
and Caribbean
aSimple averages; bThe figure for Brazil 2005–2009 does not include reinvestment of earnings, so it is
not directly comparable with the figures from 2010 onwards; cData for the first nine months of 2015
Source CEPAL (2016)
Table 10.2 Stock of Chilean foreign investment by destination country (in mil-

lions of dollars)
Country Stock in December 2015 Percentage of total Chilean FDI
Brazil 27,780 26.1

Colombia 18,065 16.9
Argentina 18,047 16.9
Peru 16,755 15.7
United States 8527 8.0
Uruguay 4559 4.3
Canada 1825 1.7
Mexico 1463 1.4
Others 9082 9.0
Total 106,604 100
Source DIE (2016)
Chilean FDI has been linked closely both to the evolution of the
Chilean macroeconomy and to the opportunities generated by the
global economy, especially within Latin America, where it has been
concentrated (see Table 10.2). Of the total stock of Chilean FDI at
the end of 2015, 81.3% had gone to six Latin American economies:
Brazil, Colombia, Argentina and Peru stand out, with 75.6% of the total
investment among them (DIE 2016). After the 1990s Argentina became
increasingly less relevant as a destination for new investment, which
favoured the other three countries instead, in particular Brazil. However,
investment in North America has also increased in recent years. The
United States was the main destination for Chilean FDI in 2015, with
27.6% of the outflow.
The conditions of the Chilean economy (country-specific advantages)
provide a partial explanation of the internationalisation of Chilean firms
from the 1990s. The early implantation of pro-market reforms by the
military dictatorship of General Augusto Pinochet (1973–1990) obliged
economic agents to operate in an open, deregulated economy, in which
building competitive advantages became a necessity. In the face of this
‘competitive shock’, companies had to become more efficient in order to
operate satisfactorily in a market open to imports and the establishment
of subsidiaries of foreign multinationals.
Although liberalisation seriously threatened local companies accus-
tomed to operating in the context of a closed, protected economy, it
also generated new opportunities, due to falling prices for imported
inputs and machinery, greater access to finance and the opening of
activities to private capital which had previously been reserved for the
public sector (Del Sol 2010). Liberalisation also worked as a mecha-
nism of selection in which companies that survived were those most
capable of adapting to the new context. Once consolidated in the local
market, they could expand abroad, first by exporting and later through
direct investment (Albeck and Huth 2014). The privatisation of state-
owned companies offered numerous opportunities to private-sector
firms which possessed the resources to acquire them. In many cases
they were sold at prices below their market value and under conditions
that were far from transparent, thus generating a significant transfer of
resources to the business sector (Informe Comisión Diputados 2004).
The state also offered subsidies for certain activities, such as forestry
investments, which stimulated the development of the pulp, wood
and paper industries, now one of the leading sectors in the Chilean
economy.
Chilean multilatinas also enjoyed a series of advantages linked
to the economic and political context of the country after the 1990s.
The restitution of democracy and the acceleration of growth within a
framework of institutional stability had the spillover effect of reducing
country risk and, consequently, making it easier to access international
292 M. I. BARBERO
financing. After surviving a serious crisis in 1982, Chile embarked on

a sustained period of growth that continued after the transition to
democracy. From 1990, Chilean companies began to issue American
Depository Receipts (ADRs), enabling them to reduce their financing
costs and accumulate sufficient resources to fund their expansion abroad
(Del Sol 2010). At the same time changes to the financial system imple-
mented during the military dictatorship led to the consolidation of a
well-funded capital market. Pension Fund Administrators (AFPs), man-
aged by private companies, became an important source of funds. In
2010 over half the large international Chilean companies had an AFP as
shareholder (Finchelstein 2012).
The Chilean state has not explicitly promoted foreign investment by
the private sector, nor has it stimulated the creation of national champi-
ons or regional leaders. However, it developed an ambitious strategy to
improve the country’s international linkages by signing free trade agree-
ments with important commercial partners. It has also taken other meas-
ures favourable to Chilean multinational firms, such as lifting exchange
controls (Calderón Hoffmann 2007).
From the companies’ perspective, internationalisation was funda-
mentally a response to the need to obtain greater economies of scale
and enter larger markets, and in some cases to access natural resources
as well, given the limited size of the domestic market and the nar-
row specialisation of the Chilean economy in certain sectors of activ-
ity.6 Foreign expansion has been sustained by changes that companies
had been making gradually from the mid-1970s, not only in terms
of access to inputs, machinery, and foreign capital and investment in
assets and resources, but also significant transformations in business
strategies and management, including the professionalisation of the
latter (Del Sol 2010).
With regard to changes in the macroeconomic arena, as well as inter-
nal transformations within firms, progress in Chile occurred earlier
than in other Latin American countries, many of which did not initiate
reform processes until the end of the 1980s and beginning of the 1990s.
Chilean companies learned how to operate in a deregulated economy
and accumulated experience during the period when state-owned enter-
prises were privatised, acquiring a first-mover advantage in terms of what
Del Sol (2010) has called ‘liberalisation know-how’.
The Role of Business Groups in the Process

of Multinationalisation
Pro-market reforms generated profound transformations in the Chilean
business world. Muñoz (1996) characterises the period as one that saw
the emergence of a new business class, possessing greater autonomy from
the state than its predecessors. Undurraga (2012) claims that the new
business elite that emerged from the process of economic liberalisation
is distinguished by a ‘managerial revolution’. The training of executives
in postgraduate programmes overseas, mainly in business schools in the
United States, has been a central element in this.
The main actors in the process of internationalisation were diversified
business groups, the dominant form of organisation among large Chilean
companies. Their number has grown appreciably since the late 1980s.
In general terms, such groups comprise several firms (some listed, some
not), controlled by a holding company, with a pyramidal structure and
highly concentrated ownership (Lefort 2010). Analysing the evolution
of the leading business groups over time allows us to distinguish three
categories. The first contains traditional groups, such as Matte, Angelini
or Luksic, which were already in existence at the beginning of the 1960s
and now exhibit a high degree of diversification. Second, some groups
originated in the mid-1960s and became consolidated in the 1970s,
such as Cruzat Larrain or BHC/Vial, which grew largely due to priva-
tisations but were seriously affected by the 1982 financial crisis. Third,
‘new groups’, including Paulmann, Solari and Del Río, Said and Sigdo
Koppers, emerged in the 1980s, although many were offshoots of exist-
ing companies (Paredes and Sánchez 1996).
As other chapters in this volume have suggested, several Chilean busi-
ness groups date back to the mid-nineteenth century and the export
boom that characterised the economy before 1914.7 New groups
appeared after the First World War, but increasingly within the framework
of a closed and protected economy in which the state assumed a key role
in resource allocation, especially following the establishment of CORFO
(Corporación de Fomento de la Producción) in 1939. In 1970 the state
totally or partially controlled 68 companies operating in key sectors of the
economy, from large-scale copper mining to public services and manufac-
turing (Islas Rojas 2011). State participation in the economy increased
markedly during the Allende government (1970–1973) when over 500
294 M. I. BARBERO
private companies were nationalised via acquisitions or expropriations. In

1973, the state controlled (directly or indirectly) 596 companies, most of
them recent additions to the public sector (Hachette 2000).
The privatisations and the opening of the economy that occurred after
the military coup of 1973 brought significant changes in the Chilean busi-
ness structures. The liberalisation of trade had a negative effect on groups
involved primarily in import substitution, but it benefited those focusing
on the export of natural resources, those which had stronger ties with the
financial sector, and trading enterprises. Privatisations, in particular, rep-
resented a great opportunity for groups with financial resources, and they
contributed to an increasing degree of concentration in Chile’s business
structure. The process, under the military government of 1973–1990,
occurred in two stages. The first saw the return of firms expropriated
between 1970 and 1973 and the sale of other companies that the state
had acquired. By 1983 the number of public companies had dropped from
596 to 48, but the financial crisis of 1982–1983 led to some renationalisa-
tions. The second phase, after 1982, saw the reprivatisation of those firms,
and the sale of many large public companies which predated 1970, includ-
ing public services, financial institutions and a range of firms in other
activities (Hachette 2000). Privatisations continued after the return to
democracy, although the state retained ownership of some strategic com-
panies, such as CODELCO (copper) and ENAP (oil production), as well
as some other smaller ones (Salvaj and Couyoumdjian 2016).
Certain conglomerates organised around banks, headed by the
BHC/Vial and Cruzat Larraín groups, made the most of the early pri-
vatisations. In the early 1980s, each of these groups controlled more
than 70 companies, with a high degree of diversification and very high
levels of indebtedness, frequently denominated in US dollars (Islas
Rojas 2011). Following the 1982 crisis, most went bankrupt: some dis-
appeared, while others shrank noticeably. In contrast, financially solid
groups which survived the crisis, including some traditional conglomer-
ates, gradually expanded through the purchase of assets from state com-
panies, including the groups most affected by the crisis (Lefort 2010).
They thus became the largest business groups in the Chilean economy,
leading the process of international expansion, along with others which
did not participate in the privatisations but were capable of adapting to
the new economic and institutional conditions. Some of the groups born
after the privatisation of public utilities, particularly in electricity, were
pioneers in the first phase of internationalisation, although multinational
companies later acquired them.8
Stages in the Internationalisation of Chilean Companies

Despite some experiences of investment in Argentina in the 1970s and
1980s, the take-off in the internationalisation of Chilean firms occurred
after 1990. Four main periods can be identified. The first (1990–1995)
focused on the strong growth of investments in industry, energy
and other services in Argentina. The second (1996–2001) saw new
investments in electricity generation and distribution, reaching Peru,
Colombia and Brazil. The third (2002–2007) shows significant expan-
sion in manufacturing, mainly in Argentina and Peru, and air transport.
The most recent period, starting in 2008, has been characterised by a
decisive increase in investment in services, particularly retail, and manu-
facturing, strongly focused on Brazil, Colombia and Peru (DIE 2016).
The first two stages, in the 1990s, are tied to the process of matu-
ration and/or growth that several companies experienced in the wake
of pro-market reforms, as well as opportunities generated by economic
liberalisation elsewhere in Latin America, and the formation of regional
economic organisations. Companies from different sectors that had
developed their abilities to compete in the local market and had access
to financing initiated their foreign expansion. During this decade Chilean
FDI exhibited a high level of dynamism, growing at a faster rate than
other Latin American countries (UNCTAD 2010). Enterprises in sec-
tors facing high levels of competition in the domestic market gener-
ated economies of scale through internationalisation, thus reducing unit
costs. Most FDI was concentrated in the energy and manufacturing
sectors (especially food and beverages, copper processing, timber, pulp
and paper). The commercial sector was also significant, with the large
Chilean retail chains investing abroad. The most significant flows were
directed at neighbouring countries, led by Argentina and followed by
Peru and Brazil. In 1997, 79.3% of new investment went to Mercosur
and the remainder of Latin America (López 1999).
During the 1990s, several Chilean multilatinas developed links with
foreign firms, both within and outside the country, which provided them
with financial support and technological, commercial or production
know-how (Paredes and Sánchez 1996). Access to international financ-
ing, obtained mainly through credits/loans and the issue of ADRs, was
central to their ability to underwrite their foreign expansion. Foreign
financing also reduced the possible negative impact of outward invest-
ment on Chile’s balance of payments. Associating with firms in the host
economy provided financing, market knowledge and lobbying capacity.
296 M. I. BARBERO
Joint ventures with firms from developed countries supplied international

experience, prestige, know-how, financial contributions and the ability to
exploit international brands, although it also risked the loss of control
to the partners, something that occurred in the late 1990s, especially in
energy and banking (López 1999; CEPAL 2005).
Why did Chilean enterprises engage in FDI in the 1990s? In the trad-
able goods sector, resource-seeking and market-seeking, particularly in
Argentina and Brazil, provide explanations. In utilities, the possibilities of
further growth were limited by the size of the Chilean market, and priva-
tisation offered opportunities in other countries. Service companies (soft-
ware, banks, pension funds) internationalised in order to supply Chilean
firms already operating abroad. Retail firms sought to profit from owner-
ship advantages accumulated in the domestic market in order to exploit
greater opportunities in countries with relatively similar cultural, income
and consumption patterns but larger urban populations (López 1999).
The stock of Chilean FDI increased steadily during the 1990s and
2000s, climbing from US$154 million in 1990 to US$11.2 billion in
2000 and to US$41.2 billion in 2009. Chile had already become the
third largest foreign investor among Latin American countries, after Brazil
and Mexico, by the end of the twentieth century (UNCTAD 2010).
However, FDI outflows, which had grown steadily throughout the 1990s,
experienced a sharp contraction in 2001–2002 due to the Argentine cri-
sis and the acquisition of Chilean electricity companies by Spanish enter-
prises. Growth resumed after 2004, with annual outflows more than
tripling during the first decade of the century (Albeck and Huth 2014).
Although Latin America remained the main destination, after the begin-
ning of the century Brazil, Peru and Uruguay displaced Argentina, which had
been the principal recipient of Chilean capital in the 1990s. Investments also
grew in Mexico, Colombia and North America, mainly in the United States
(Razo and Calderón 2010). In sectoral terms, what stands out is the dyna-
mism of services and manufacturing activities, followed by energy, with lesser
participation from the agricultural/forestry and mining sectors (DIE 2016).
Another important change that occurred after 2000 was that other
MNEs acquired some of the Chilean firms which had internationalised
in the 1990s, especially in the electricity and financial sectors. However,
the opposite was also true: some Chilean enterprises acquired local and
foreign firms from other multinationals, or proved able to defend their
internal market against threats from large MNEs based elsewhere, for
example in the retail sector (CEPAL 2015; Calderón Hoffmann 2007).
Chilean Multilatinas Today: Productive Profile

and Internationalisation Strategies
The ranking that América Economía publishes each year shows the most
internationalised Chilean firms in comparison with multilatinas from
other countries. Table 10.3 lists the 50 multilatinas with the highest
degree of internationalisation, allowing us to focus on the path and strat-
egies of each of the Chilean companies in table.
Latam, the highest Chilean enterprise in the list (No. 3), is a mixture
of Chilean and Brazilian capital, resulting from the merger of LAN, for-
merly the Chilean national airline, and a Brazilian counterpart, TAM, in
2012.9 LAN was founded as a state enterprise in 1929 to transport pas-
sengers, cargo and mail. Its privatisation between 1989 and 1994 put it
under the joint control of the Cueto and Piñera groups, but after 2010,
when Sebastián Piñera sold his shares following his election to the presi-
dency of Chile, sole control passed to the Cueto group.10
After 1990, the company followed a clear strategy of expansion and
internationalisation which put it among the largest Latin American air-
lines. It benefited greatly from agreements on the liberalisation of air
traffic that Chile signed with various countries (Bravo Herrera 2004). Its
strategy of diversifying operations, in terms of the services it offered and
the geographical areas it served, made it one of the ten most efficient
airlines in the world (Rivera Urrutia 2014). The integration of cargo
and passenger services was central to this: Martínez (2015) considers it
‘the heart of its business model’. It allowed the company to improve its
efficiency and flexibility, acquire the capacity to adapt to changing situ-
ations and leverage synergies between its passenger and cargo services.
After 2006 it developed two different models of passenger transport: full
service for long-haul passengers and low cost for national flights (Juretic
and Wigodski 2013). In 2011, 28% of its income came from the cargo
business and 70% from passenger services (LAN 2011).
Three other developments in the business are worth noting. First,
LAN listed its shares on the New York Stock Exchange (NYSE) in
1997, providing it with greater access to foreign finance. Second, in
2000 it joined the OneWorld Alliance, initiating a programme for the
continuous renewal of its fleet, and engaging in bilateral alliances with
some of the largest global airlines, including American, Iberia, Qantas
and Lufthansa Cargo. This increased the number of destinations it
served. Third, it diversified within South America, forming subsidiaries
Table 10.3 The fifty largest multilatinas: nationality, sector and sales in 2015 (in millions of dollars), ranked by their
multinationalisation index*
Ranking Company Ranking Company Ranking Company
1 Mexichem (MX) 18 ISA (CO) 35 Grupo Argos (CO)

Petrochemicals (5708.2) Electric energy (1640.0) Cement (3821.7)
2 CEMEX (MX) 19 Gerdau (BR) 36 Arauco (CL)
298 M. I. BARBERO
Cement (13,050.1) Steel (12,227.1) Forestry/Pulp (5146.7)

3 Latam (CL/BR) 20 Sonda (CL) 37 Falabella (CL)
Air transport (9713.0) Technology (1256.3) Retail (10,938.2)
4 GrupoJBS (BR) 21 Copa Airlines (PA) 38 Softtek (MX)
Food (45,707.3) Air transport (2250.1) ICT (538.6)
5 Gruma (MX) 22 Marfrig (BR) 39 Vale (BR)
Food (3369.1) Food (5300.3) Mining (23,987.7)
6 Avianca-Taca (CO/SV) 23 Sigdo Koppers (CL) 40 CMPC (CL)
Air transport (4361.3) Construction (2414.5) Forestry/Pulp (4841.0)
7 Sigma (MX) 24 Ambev (BR) 41 Alicorp (PE)
Food (5409.1) Beverages/Liq Food (1935.4)
uor (13,107.8)
8 Arcos Dorados (AR) 25 Cencosud (CL) 42 Empresas Copec (CL)
Entertainment (2930.4) Retail (15,495.9) Multisector (18,109.8)
9 Ajegroup (PE) 26 Globant (AR) 43 Grupo Belcorp (PE)
Beverages/Liquor (1550.0) Technology (253.8) Chemicals (1185.0)
10 América Móvil (MX) 27 Tech Pack (ex Madeco) (CL) 44 Metalfrio (BR)
Telecomms (51,694.7) manufacturing (376.1) Manufacturing (250.6)
11 Tenaris (AR) 28 CocaCola FEMSA (MX) 45 Grupo Nutresa (CO)
Steel/Metallurgy (7100.8) Beverage/Liquor (8807.9) Food (2895.8)
12 Grupo Alfa (MX) 29 Grupo Sura (CO) 46 Arcor (AR)
Multisector (14,932.3) Finance (4430.0) Food (2120.2)
(continued)
Table 10.3 (continued)
Ranking Company Ranking Company Ranking Company

13 Grupo Bimbo (MX) 30 Viña Concha y Toro (CL) 47 Fibria (BR)
Food (12,671.2) Beverages/Liquor (896.9) Forestry/Pulp (2828.2)
14 Ternium (AR) 31 Votorantim Cimentos (BR) 48 FEMSA (MX)
Steel/Metallurgy (7877.4) Cement (3940.8) Beverages/Liquor
(18,013.0)
15 Nemak (MX) 32 Embraer (BR) 49 BRF Foods (BR)
Automotive/car parts Aerospace (5695.9) Food (9033.1)
(4098.2)
16 Embotelladora Andina 33 Weg (BR) 50 Arca Continental
(CL) Beverages/Liquor (2646.8) Motor manufacturing (MX) Beverages/Liquor
(2738.3) (4419.8)
17 Masisa (CL) 34 Aeroméxico (MX)
Forestry/Pulp (1052.6) Air transport
(2714.0)
Country Abbreviations: AR Argentina; BR Brazil; CL Chile; CO Colombia; PA Panamá; PE Peru; SV El Salvador

Source Compiled by the author based on América Economía (2016)
*América Economía’s multinationalisation index is based on four indicators: the proportion of annual sales outside the home market, the proportion of
employees outside the home economy, geographic coverage, and the expansion of each company in the year in question
10 CHILEAN MULTINATIONALS: CONTEXTS, PATHS AND STRATEGIES
299
300 M. I. BARBERO
in Peru (1999), Ecuador (2003), Argentina (2005) and Colombia

(2009), partly through acquisitions, within the context of air transport
deregulation. After its merger with TAM, one of its main competitors,
LAN began to operate in Brazil, a highly regulated market accounting
for half the total air traffic in South America. LATAM Airlines Group
S.A. became the largest air transport group in Latin America (Juretic
and Wigodski 2013).
Embotelladora Andina, the second Chilean multilatina in the rank-
ing in 16th place overall, concentrates mainly on the production and
distribution of soft drinks and juices.11 It is the main bottling company
in Chile and second in Brazil and Argentina. Founded in 1946, with a
licence to produce and distribute Coca Cola products in Chile, it passed
into hands of the Said group, a conglomerate with investments in finan-
cial, industrial and real estate activities, and the leading business group in
Chile in 2016 (UDD 2016). Embotelladora Andina expanded through
investment in new bottling plants from the 1960s, as well as acquiring
other firms in the sector. In the early 1990s it started to diversify into
juices and mineral water, at the same time as it acquired bottling plants
in Argentina (1992) and Brazil (1994) and commenced the process of
internationalisation. In 2012 the firm merged with Embotelladora Coca
Cola Polar, which had operations in Chile, Argentina and Paraguay, thus
creating Coca Cola Andina and developing an intensive investment strat-
egy (Coca Cola Andina 2016).
The expansion of the firm was based on diversification within the
beverages sector, through the marketing of a mix of products: car-
bonated soft drinks, juices and bottled water. It produced its own-label
products as well as those licensed from Coca Cola, which generated the
largest share of profits. Another source of growth was backward inte-
gration (the production of packaging and other supplies) and forward
integration (fleets of trucks and vending machines). After 1990 inter-
nationalisation formed a fundamental part of its expansion strategy,
with the purchase of assets in Argentina and Brazil. It also began to
issue ADRs on the NYSE in 1994. In 2016, Coca Cola Andina owned
three plants producing beverages and one producing PET containers in
Argentina, two production plants in Brazil and one in Paraguay, as well
as numerous distribution centres in all the countries where it operated.
Chile provided 30% of its sales, Brazil 33%, Argentina 29% and Paraguay
8% (Coca Cola Andina 2016).
One of the strengths of Embotelladora Andina is its strategic alli-

ance with Coca Cola, which has granted it licences since its founda-
tion. Coca Cola took an 11% shareholding in 1996, later increasing it
to 14.4% (Coca Cola Andina 2016). Since the turn of the century, the
beverages and mineral water industries have experienced important trans-
formations at both a regional and an international level, and alliances
with large MNEs constitute a key strategy for multilatinas to position
themselves in the market (Calderón Hoffmann 2007). At the same time,
the Embotelladora Andina management has demonstrated its ability to
increase production and sales, achieving an efficient cost structure and
high profit margins (Feller Rate 2011).
Masisa is the third Chilean firm in the ranking and the 17th overall.
It operates in the forestry-timber sector, one of the most dynamic in
the Chilean economy, which possesses natural competitive advantages
but has also benefited from government policies to promote it since
the 1970s. In 2015, forestry products accounted for 2.6% of GDP
and 8.7% of Chile’s total exports (www.corma.cl). Since the 1980s,
the principal firms in the sector have adopted a strategy of expansion
and modernisation of both their primary and their industrial activi-
ties: this has involved integration along the value chain, diversification
within the sector and internationalisation, first through exports and
later through direct investment. This enabled them to overcome the
limitations of the domestic market, strengthen their vertical integration
and diversify production. The leading companies, Arauco, CMCP and
Masisa, have developed internal and external investment plans to aug-
ment their forestry resources and integrate their production towards
goods with greater added value such as pulp, paper, wood and panels
(Calderón Hoffmann 2007).
Although the main Chilean forestry firms are Arauco and CMCP,
whose total sales in 2015 were five times those of Masisa, the lat-
ter, which has specialised in the production and distribution of timber
boards, has become more internationally focused.12 In 2015, the firm
owned 10 industrial plants, 332 distribution centres and 198,000 hec-
tares of forest plantations in different Latin American countries. Some of
the central elements of its competitive strategy are operational efficiency,
integration in the value chain, the differentiation of products and brands
and a close relationship with customers, through its distribution centres,
known as Placacentros (Masisa 2015).
302 M. I. BARBERO
Masisa S.A., founded in 1960, was the first Chilean company to pro-
duce timber boards such as plywood and made its first investment in
forest lands after a few years. During the 1970s and 1980s, it expanded
in Chile, acquiring several of its competitors, thus consolidating its posi-
tion in the production of boards, and integrating vertically with the pro-
duction of inputs (self-adhesive resins) and the inauguration of its first
distribution centre in 1992. That year also saw the beginning of its inter-
nationalisation strategy, with the formation of a subsidiary in Argentina
for the production of boards. It established other subsidiaries in Brazil
(1995), Peru (1997), Mexico (2002), Ecuador (2002), and Venezuela
(2003), both through greenfield investments and acquisitions (www.
masisa.com). One motive for its external expansion lay in the saturation
of the internal market, but management also felt a need to broaden the
scale of its forestry activities. The leap in its production capacity trans-
formed it into one of the major Latin American firms in the sector. At
the same time, it advanced with its forward integration, developing an
extensive distribution network in different Latin American countries
(Calderón Hoffmann 2007). The company, which had been listed on the
Santiago Stock Exchange since 1970, began to issue ADRs on the NYSE
in 1993, helping its financing.
In 2002 Masisa, which had formed part of a Chilean group,
Pathfinder, since 1992, was sold to Terranova, part of the so-called
Grupo Nuevo controlled by Stephan Schmidheiny, a Swiss business-
man. Forestal Terranova S.A. had itself been founded in 1994, with
Schmidheiny’s investment company, Compañia de Inversiones Suizandina
(later the Grupo Nuevo), as the main shareholder, in order to take over
the management and administration of forestry companies owned by
Compañia de Aceros del Pacífico (CAP), which the government had
privatised in 1987. In 1997 Terranova started investing, through green-
field projects and acquisitions, in forest lands and industrial plants in
Venezuela and Brazil (1997), the United States (1998), and Mexico
(1999), and in trading subsidiaries in other Latin American countries, at
times in association with a Canadian firm, Masonite. As with Masisa, the
company developed a strategy of vertical integration, encompassing for-
estry, timber products (boards, mouldings, doors), the manufacturing of
inputs (resins) and distribution. Terranova shares started trading on the
Santiago Stock Exchange in 1994, and the company began the process
of registering with the US Securities and Exchange Commission in order
to raise capital through the issue of ADRs in 2004 (Terranova 2004;

Masisa 2015). The merger between Masisa and Terranova in 2002 meant
not only an increase in the scale of the enterprise but also the opportu-
nity to leverage synergies between the two companies in a highly com-
petitive industry. With this merger, Terranova became one of the three
main actors in the sector within Chile, and the number one in the timber
board business in Latin America.
SONDA, the fourth Chilean firm in the America Economía ranking
(in position number 20), forms part of a select group of multilatinas
operating in Information Technologies (IT), and is the most important
Latin American firm in this sector.13 It specialises in developing business
management systems (administration, industrial control and automatic
control) and offers technological solutions to medium and large compa-
nies in Chile and Latin America (Rivera Urrutia 2014). SONDA trades
and sells IT hardware, as well as providing services such as data pro-
cessing, servers, specialised consultancy, and software development and
exploitation. It obtained a listing on the Chilean stock market in 2006.
Two years later it was included in the IPSA (Indice de Precio Selectivo
de Acciones) index, which features the most traded companies on the
Santiago Stock Market. Three siblings, Andrés, Pablo and Maria Inés
Navarro Haeussler, control 59% of the firm’s capital (SONDA 2015). It
is the only Chilean company among the 50 most internationalised multi-
latinas that does not belong to a business group.
SONDA was founded in 1974, in association with Copec, the state-
owned oil company.14 In 1978, it signed an agreement to represent a
US company, Digital Equipment Corp. (DEC, today part of HP), in
Chile, and obtained its first comprehensive service contract with the
Asociación Nacional de Ahorro y Préstamo (the national association of
building societies). It was also responsible for the implementation of
the first computer systems for the pension funds that the government
had recently created (www.copec.cl). SONDA initiated its international
expansion ten years after its foundation, opening a subsidiary in Peru.
It then acquired local companies in Argentina (1986), Ecuador (1990),
Uruguay (1994), Colombia (2000). Brazil (2002), Costa Rica (2003),
Mexico (2004), and Panama (2011) (www.sonda.com). Its growth con-
tinued on the basis of further acquisitions in Colombia, Brazil, Mexico
and Argentina. Its operations outside Chile accounted for 60.4% of the
company’s turnover in 2015 (SONDA 2015).
304 M. I. BARBERO
SONDA’s knowledge base benefited from alliances and agreements

made with leading IT manufacturers and suppliers, enabling it to access
state-of-the-art technology. The company has formed alliances with lead-
ing global brands in IT equipment and software, including Cisco, EMC,
VMware, HP, SAP, IBM, Autodesk, Microsoft, Intel and Oracle (www.
sonda.com). Constant interaction with clients, partners and suppliers
drives innovation in the firm, as well as initiatives led by its own pro-
fessionals. The participation of universities, industry experts, consult-
ants and other specialists in events the company organises also plays an
important role in innovation. Its strategy has been based on integrating
digital systems for its clients, ‘the only business we know and we know
how to do well’, in the words of the company’s president. It replicates
this model in the countries where it has expanded, taking advantage of
the fact that companies frequently outsource IT services. Given the lim-
itations of the Chilean market, internationalisation has been essential to
the firm’s growth (Rivera Urrutia 2014).
Sigdo Koppers, ranked fifth among Chilean multinationals in the
América Economía ranking, is one of the most dynamic business groups
formed in the 1980s, with operations in North America, Latin America,
Asia and Europe.15 Its business model is based on diversification in the
supply of services to mining and industry, encompassing the entire value
chain in these sectors, although some of its companies are not directly
related to them. It organises activities in three areas: services (construc-
tion, industrial assembly, and transport and logistics), industry (rock
fragmentation, white goods, home appliances, high-technology plastic
film and petrochemicals) and ‘retail and motor’ (representation, distri-
bution, leasing and sales) (Sigdo Koppers 2015). The firm’s competi-
tiveness comes from synergies among its different areas, its operational
efficiency, products and process innovation, strategic alliances and the
acquisition of assets in world class companies.
The origins of the company go back to 1960, when a Chilean
firm, Ingenieros Asociados Sigma Donoso established a joint venture
with a US company, Kopper Co. of Pittsburgh, forming Ingeniería y
Construcción Sigdo Koppers S.A., today Sigdo Koppers S.A. The current
shareholding group bought the company in 1974 and initiated a pro-
cess of expansion and diversification, creating companies for the sale of
machinery, freight vehicles and cars. At the end of the 1980s and begin-
ning of the 1990s, it acquired several other companies, including Emec
(electricity), Compañía Tecno Industrial (CTI, home appliances) and

y Enaex (explosives).16 It continued its diversification at the end of the
1990s with the creation of companies in a wide range of service, indus-
trial and commercial activities. In particular, it strengthened its position
in automobile distribution; in 2001 it associated with a Spanish motor
importer, Bergé, to form SKBergé and in 2008 linked with Santander
Consumer Finance.17 By 2005 Sigdo Koppers S.A. had established
itself as the holding company within the group, which was composed of
legally autonomous companies, with its shares traded on the Santiago
Stock Exchange and forming part of the IPSA index. In a complex
structure, six companies controlled 76.4% of the shares (Sigdo Koppers
2015 and www.sigdokoppers.cl). The Sigdo Koppers group ranked tenth
among Chilean business groups in 2016 (UDD 2016).
Sigdo Koppers began its international expansion in the mid-
1980s with acquisitions in Argentina in 1986 and 1990 (energy, white
goods) and the establishment of subsidiaries of Enaex and Ingeniería y
Construcción in Peru in 1993 and 1998, respectively. After the turn of
the century it made new investments in Argentina and Peru, before enter-
ing automobile distribution in Colombia in 2010, machinery leasing and
chemicals in Brazil in 2013, and machinery leasing in Bolivia in 2015,
normally by purchasing local companies. The acquisition of a Belgian
company, the Magotteaux Group, a leader in the production of grinding
machinery and crushing plant, mainly for the mining and cement indus-
tries, in 2011 was an important milestone in its international expansion,
giving it global impact. Under this deal the group incorporated twelve
production facilities in ten countries, most importantly in Belgium,
Brazil, the United States, Canada and Thailand, but also some estab-
lishments in France, China, Spain, India and Mexico, as well as 38 sales
offices in 24 countries. This formed part of a strategy to focus on mining
and industry, consolidating itself as a global company. The purchase of
Magotteaux, which had been founded in 1920, provided access to impor-
tant strategic assets. The company was recognised as a leader in technol-
ogy and innovation, with important centres for research and development
in Belgium, South Africa and Australia. The purchase of European firms
continued: Sigdo Koppers acquired Sabó Chile, a Spanish-owned firm
that produced ball mills, in 2012, and 91% of a French company, Davey
Bickford, one of the world’s largest manufacturers and distributors of
mining explosives, in 2015 (Sigdo Koppers 2015).
306 M. I. BARBERO
Cencosud (Centros Comerciales Sudamericanos S.A.), the sixth

Chilean company in the América Economía ranking (holding 25th posi-
tion), is one of the largest retail conglomerates in Latin America, with
activities in supermarkets, home improvement outlets, department stores,
financial services, shopping centres and real estate, and active operations
in Argentina, Brazil, Chile, Peru and Colombia.18 The Cencosud Group,
which incorporates all the firms, is one of those founded since 1980. The
Paulmann family owns 60% of the shares, which have been traded on the
Santiago Stock Market since 2004 (Cencosud 2015). Cencosud ranks
number 13 in the list of Chilean business groups (UDD 2016).
Retail and related activities constitute one of the most dynamic sectors
in the Chilean economy. Retail chains have managed to build solid com-
petitive advantages, sustained by a business model which leverages the syn-
ergies arising from different but related activities. This model developed
as a result of intense competition within Chile, where the limited size of
the market made profitability in any single retail activity very difficult. The
leading companies progressively closed the ‘integrated retail business cir-
cle’, adding department stores, home improvement outlets, supermarkets,
credit card administration, financial services provided through in-house
banks and real estate to their activities. The key to success was a combi-
nation of adapting best practices from the international leaders in the
industry, knowledge of local markets and diversifying the range of services
they offered (Calderón Hoffmann 2006). Chilean retail firms have conse-
quently managed to compete successfully with large multinationals, some
of which, like J. C. Penney and Carrefour, eventually withdrew from the
country (although not Walmart, which acquired the Líder chain in 2009
and had 40.9% of the retail market six years later) (Cencosud 2015). Apart
from its competitive strategies, Cencosud also benefited from trade liberal-
isation, which gave Chilean retailers access to duty-free imports and diver-
sified their offer to customers (Kandell 2013). Given the limitations of the
market, the large Chilean retail chains adopted internationalisation as an
expansion strategy from the early 1980s.
Cencosud’s origins lie in the retail experience of two brothers, Horst and
Jürgen Paulmann, who owned a warehouse in the south of Chile, and estab-
lished self-service restaurants and a supermarket chain there in the 1960s.
Inspired by the European model of large retail outlets, Horst Paulmann
opened a ‘Jumbo’ hypermarket in Santiago in 1976, the first real step in the
growth of the company (interview with Paulmann 2008). Cencosud then
began to expand by increasing the number of supermarkets it operated and
investing in real estate (the construction and operation of shopping centres).
Simultaneously, Cencosud embarked on internationalisation with

investments in supermarkets and shopping centres in Argentina
after 1982. These early moves set the tone for what would become
Cencosud’s internationalisation strategy: the development of commer-
cial centres combined with active participation in retail activities, particu-
larly supermarkets. It later added home improvement stores (under the
name of ‘Easy’), creating synergies with other product lines. Following
the 2002 crisis in Argentina, Cencosud strengthened its presence in
Chile, expanding its different business lines through further investments
in supermarkets and shopping centres. In 2003 it entered the financial
services sector by beginning to issue its own credit cards. In 2005 it
acquired the department stores of Almacenes París, which also had finan-
cial operations through its Banco Paris, and a travel agency, followed
by the purchase of Johnson’s, a small chain of department stores, from
Ripley in 2011 (Cencosud 2015).
Internationalisation accelerated after 2005, with an entry into
the Peruvian, Colombian and Brazilian markets, making the firm one
of the largest retail chains in all of Latin America. This expansion
was based both on greenfield investments and on the acquisition of
local firms (Blaisten in Argentina, Supermercados Wong in Peru, G.
Barbosa, Perini, Cardozo, Bretas, in Brazil) and subsidiaries of multi-
national companies (Home Depot and Disco in Argentina, Carrefour in
Colombia), as well as the establishment of joint ventures (with Grupo
Casino in Colombia, Bradesco in Brazil and Scotiabank in Chile)
(Cencosud 2015).
Techpack is the seventh Chilean firm in América Economía’s
2015 ranking of multilatinas, occupying the 27th position over-
all.19 It was founded in 2013 as a result of the division of the Madeco
(Manufacturas del Cobre) company into two business units: Invexans
(which possessed investments in an international cable company,
Nexans) and Techpack, which had industrial operations. The Luksic
group controlled both firms through its holding company, Quiñenco.
Techpack’s main assets at the time centred on the manufacturing activ-
ities of the old Madeco firm, including the production of flexible con-
tainers through its subsidiary, Alusa, which was sold in 2016 to Amcor
Holding SPA, an Australian multinational and an important producer
of rigid and flexible packaging globally. At the time of its sale, Alusa
was the main producer of flexible packaging in Latin America, with
plants in Argentina, Chile, Colombia and Peru (www.techpack.com;
Techpack 2015).
308 M. I. BARBERO
The origins of Madeco go back to 1944, when private shareholders

associated with CORFO founded the company to manufacture products
using copper and its alloys. Madeco and some private partners created
Alusa in 1961 to manufacture flexible packaging. The Allende adminis-
tration nationalised the company, but in 1983, during the privatisation
process, the Luksic Group acquired control by purchasing a majority
shareholding. The company expanded under this new ownership, mainly
through acquisitions. It entered Argentina in 1993 (greenfield invest-
ments, first in packaging, then in copper tubes), Peru from 1996 (manu-
facture of packaging via acquisitions) and Colombia in 2013 (packaging,
again through an acquisition) (Techpack 2015).
Beyond the later sale of its Alusa subsidiary to Australian capital,
the case of Madeco/Techpack offers a series of significant points for
the analysis of how Chilean companies became multinationals, since
it belongs to one of the largest and most diversified groups, the Luksic
group. At the beginning of 2016, through its two holding companies,
Antofagasta Minerales and Quiñenco, Luksic occupied 20th place in the
classification of business groups in Chile, but was first in terms of the
value of its assets (UDD, March 2016). Its investments spanned min-
ing, banking and other financial activities, manufacturing, the food and
beverages industries, energy, transport, port services and tourism (www.
quiñenco.cl). The origins of Luksic, one of the three most important tra-
ditional Chilean business groups which became consolidated in 1980s,
date back to the 1950s.20 Although the group already occupied a prom-
inent position at the end of the 1960s, it boosted their participation in
large companies following the 1982 crisis (Dahse 1983). In the words of
Andrónico Luksic Craig, president of the Quiñenco holding company,
‘they started to seek opportunities in groups that had disintegrated …
and took advantage of the opportunities of “reshuffling” their assets’
(interview with Andrónico Luksic 2008).
The internationalisation of Madeco was, without doubt, favoured by
the Luksic group’s ownership, which also carried out foreign investments
through other companies, such as Compañia de Cervecerías Unidas
(72nd in the América Economía listing, putting it 17th among Chilean
companies). However, the strategies of the individual firms were subordi-
nated to those of the group as a whole, which reorganised its portfolio of
industrial and financial investments after splitting the Madeco company
into Invexans and Techpack. The group disposed of Madeco’s indus-
trial businesses, opting instead to prioritise its links with Nexans, a large
international company and manufacturer of cables, in order to improve

its global positioning (interview with Guillermo Luksic, Revista Qué
Pasa, 27 March 2013).
Position number 30 in the América Economía ranking is occupied by
Viña Concha y Toro, a leader in wine production in Chile and one of
the most recognisable brands in the world, with vineyards and wineries
in Chile, Argentina and the United States, and distribution subsidiar-
ies in Canada, Brazil, Mexico, Great Britain, Sweden, Finland, Norway,
France, South Africa, Singapore, China and Japan. In 2014 the company
exported 78% of its production to more than 140 countries, using an
extensive portfolio of brands (Concha y Toro 2016).21
The firm was originally founded in 1883 by a businessman, Melchor
Concha y Toro, who introduced plantations of Bordeaux grapes to the
Maipo Valley. In 1933 the company’s shares began to be traded on the
Santiago Stock Exchange. In 1957 it was sold to a group of partners
headed by Eduardo Guilisasti Tagle, who laid the groundwork for its
expansion. The principal elements in its strategy were vertical integration
(which was necessary to produce quality wines), investment in overseas
marketing (given the limitations of Chilean demand), and the develop-
ment of a product range to cover all market segments (interview with
Rafael Guilisasti Gana 2008).
The company started to export during the 1980s, and in the follow-
ing decade it invested extensively, with the backing of ADRs issued on
the NYSE, in the expansion of its vineyards and its operational capac-
ity. In 1994 it took the first step towards internationalisation with the
founding of Bodegas y Viñedos Trivento in Mendoza in Argentina. In
1996 it established a joint venture with Barón Philippe de Rothschild
from France for the creation of the Bodega Almaviva, which it intended
to produce premium brands. It subsequently continued to expand its
vineyards, develop new brands, strengthen its distribution chains and
widen its international scope. In 2011 it acquired Bodegas Fetzer in
California, one of the largest investments Chilean companies had made
in the United States. The controlling group of the company comprises
members of the Guilisasti family (Concha y Toro 2016). The Guilisasti-
Larraín Group ranked 20th among Chilean business groups by assets in
2016 (UDD, March 2016).
Several pillars supported the internationalisation of Concha y Toro.
As with other Chilean multilatinas, the saturated domestic market led
it to expand, in the first place through exports and later investments in
310 M. I. BARBERO
production elsewhere. Its competitive advantages lie in the professionali-

sation of its executives, the integration of its value chain, innovation and
development of its products (through the incorporation of technology as
well as alliances and acquisitions), and aggressive marketing techniques,
including its role as an official partner for Manchester United Football
Club since 2010 (Wolf 2012). Its branding strategy involved the devel-
opment and promotion of volume sales using large-scale brands, along
with restricted sales of premium brands, with the objective of gaining
a reputation with the global wine-tasting elite and achieving visibil-
ity through the award of high scores in contests and numerous prizes.
In 2007, premium brands accounted for 40% of its exports (Casanova
2009). This strategy allowed Concha y Toro to place its brands in dif-
ferent market segments, in the context of the growing international con-
sumption of ‘New World’ wines which had begun in the 1970s. It thus
took advantage of the positive image that had developed in Chile as a
‘country brand’ (Deshpandé et al. 2010).
Arauco (Celulosa Arauco), the tenth Chilean multilatina in the
América Economía ranking, is 36th overall.22 Arauco is the main for-
estry producer in Chile, the third largest producer of boards in the world
(with 27 production plants on three continents) and also in the third
place globally as a cellulose producer (with 7 plants in Chile, Argentina
and Uruguay). It forms part of the Angelini group, via Empresas Copec,
which is controlled in turn by a holding company, Antarchile. This group
is one of the largest and oldest in Chile, with origins that date back to
the 1950s. It based its expansion on a strategy of unrelated diversifica-
tion, operating in activities such as manufacturing, forestry, fishing, fuel
distribution, energy and mining (www.antarchile.com). In March 2016,
Antarchile ranked seventh among Chilean business groups overall, but in
first place according to its turnover (UDD 2016).
The origins of Arauco lie in two forestry companies founded by
CORFO in the 1960s, Celulosa Arauco and Celulosa Constitución. The
Cruzat Larraín Group acquired them during the privatisations of the late
1970s and merged them into Celulosa Arauco Constitución (CELCO),
which became part of the Copec oil conglomerate that Cruzat Larraín had
also acquired.23 Following the disintegration of the Cruzat Larrain group
after the 1982 crisis, the Angelini group, which had possessed interests
in forestry since the 1960s, obtained control of Copec and thus also of
CELCO. Arauco then commenced a process of expanding its forestry
and industrial investments, following its association with a New Zealand

company, Carter Holt, parallel to the growth and diversification of
Copec.24
The internationalisation of Arauco’s production started in 1996
with the purchase of Alto Paraná, a forestry enterprise and pulp pro-
ducer in Argentina. Arauco later expanded its forest lands and activities
in the pulp and timber industries within Argentina. In 2005 it initiated
its investments in Brazil by acquiring forest lands and companies in the
timber and chemical resin industries. Two years later it augmented its
presence in the Brazilian market by taking a minority share in Arapoti,
which Stora Enso, a Swedish-Finnish consortium and one of the larg-
est producers of paper, packaging and wood products in the world, had
purchased from International Paper. In 2009 it acquired another fibre-
board company (Tafisa, a subsidiary of a Portuguese firm, Sonae), as well
as forming a 50/50 joint venture with Stora Enso to purchase forestry
assets in Uruguay from a Spanish firm, Ence. It eventually inaugurated a
new pulp production plant there in 2014 (Empresas Copec 2015).
During 2012, Arauco acquired the whole of the shares of a panel
company, Flakeboard, incorporating six plants in the United States and
Canada. With this acquisition, added to the purchase of another panel
manufacturer, Moncure, in North Carolina in 2011, Arauco became a
leader in the production of medium-density fibreboard (MDF) and chip-
board in North America. In 2015 it began to acquire 50% of Tafisa, a
Spanish subsidiary of Sonae, finalising the deal in 2017. With the for-
mation of Sonae Arauco, Arauco had come to co-own a company that
operated ten industrial plants producing wood panels, located in Spain,
Portugal, Germany and South Africa (Empresas Copec 2015). With
an extensive network of sales offices abroad, Arauco exports to over 70
countries (www.sonaearauco.com).
The firm’s competitiveness has been based on a sustained investment
strategy (inside and outside Chile), significant cost advantages (in the sup-
ply of raw material and logistics) and vertical integration throughout the
value chain, including energy production using forestry by-products. In
addition, it conducts research and development activities in the forestry
sector through a subsidiary, Bioforest (Feller Rate 2015a; Arauco 2015).
Position number 37 in the América Economía ranking is held by
Falabella, tenth among Chilean companies by degree of internation-
alisation and third in terms of turnover. Falabella is one of the leading
312 M. I. BARBERO
retail firms in Latin America, with a presence in Chile, Peru, Colombia,

Argentina, Brazil and Uruguay.25 It operates with a multi-format
strategy, organised into five business areas: department stores, home
improvement outlets, supermarkets, financial services and real estate
activities. In an interview conducted in 2008, the then president of
Falabella, Reinaldo Solari, stated:
For us it is a logical process that the customer should satisfy all their needs
under one roof, with a system of integrated retail that delivers everything
s/he needs. This is why we have tourism, insurance, credit, we have a
bank, department stores, supermarkets and home improvement outlets …
We reach all sectors with this credit and we have reached sectors which the
banking system often does not reach – I am talking about the C3, D, E
segments. (interview with Reinaldo Solari 2008)
At the end of 2015 Falabella owned 459 stores, 40 shopping centres,

247 bank branches and e-commerce platforms, a sector in which it has
positioned itself as one of the main operators in the region. In 2015 it
generated 42% of its earnings outside Chile, more than half from its sub-
sidiaries in Peru (Falabella 2015). It has built its competitive advantages
on geographical and business diversification, synergies among its different
activities and a solid brand image. Its biggest income comes from retail
(department stores, home improvement stores and supermarkets), which
is in turn strengthened by its financial businesses (Feller Rate 2015b).
The company is controlled by the Solari, Del Río and Cuneo families,
who make up the Solari-Del Río Group, one of the new conglomer-
ates that emerged in the 1980s (Martínez Echezárraga 2015). In 1996,
it went public on the Santiago Stock Exchange, and in 2015 it entered
the Dow Jones Sustainability Emerging Markets Index (Falabella 2015).
In 2016, it held the second position in the composite ranking of Chilean
business groups, and third place for its level of assets (UDD 2016).
The origins of Falabella date back to 1889 when Salvatore Falabella
opened the first large tailor’s shop in Chile in Santiago. After Alberto
Solari (nephew of the founder) joined the company in the 1930s, the
firm expanded in scale, incorporating new products and opening new
shops. At the end of the 1950s, it inaugurated a department store, ini-
tiating a process of further expansion within Chile, both in Santiago
and in other regions. In 1980 it launched its own credit card (CMR
Falabella) and later entered the home improvement and construction
materials sectors in association with Home Depot in 1997. Falabella

acquired full control of this joint venture in 2003 and merged it with
Sodimac, belonging to the Del Río family, who had acquired it from a
cooperative in 1982. After 2002 it also invested in supermarkets in Chile.
Falabella initiated its international expansion during the 1990s, open-
ing its first department store in Argentina in 1993. It began to estab-
lish branches in the provinces bordering Chile and in provincial capitals,
before advancing towards Buenos Aires and introducing its credit card
and other services. The Argentine experience constituted an impor-
tant learning process, forcing management to adapt to a complex envi-
ronment with different norms and customs from those in Chile. As
a result, it reformulated its strategy for tackling other markets, putting
greater emphasis on local idiosyncrasies. Falabella entered Peru in 1995
by acquiring Saga, a Colombian-owned chain of department stores. As
in Argentina, its results were strengthened with the introduction of the
CMR credit card, a travel agency and an insurance business. After its
Chilean competitor, Ripley, established itself in Peru in 1997, Falabella
inaugurated smaller-format stores (Saga Falabella Express), but also
explored potential markets in the interior (Calderón Hoffmann 2006).
In 2008, the company entered Colombia by acquiring a department
store, Casa Estrella, and in the same year Sodimac initiated operations
in Argentina via a real estate alliance with Carrefour. Falabella developed
other alliances: in 2010 with Visa and MasterCard in Chile and Peru,
and in 2015 with Crate and Barrel for the opening of a store in Lima
(Falabella 2015).
Falabella gradually adapted its formats to different countries. While it
did start new ventures, it combined this with acquisitions and associa-
tions with both local companies and multinationals, thereby incorporat-
ing international brands to its stores. It replicates this business model in
different countries: ‘We try to take the model we know and with which
we have done well, as faithfully as possible, to all countries, but respect-
ing the cultures of each country’ (interview with Reinaldo Solari 2008).
Falabella’s internationalisation, like that of Cencosud, is indicative of
a more general process of change in the retail sector, characterised by
an increasing degree of concentration, the marketing expertise of large
retailers and the growing importance of the distributor’s brand, in the
context of the internationalisation process that has characterised the
entire retail sector (Rivera Urrutia 2014).
314 M. I. BARBERO
The Compañía Manufacturera de Papeles y Cartones (CMPC)

ranks eleventh among Chilean multilatinas and in 40th position over-
all in the América Economía listing.26 It is one of the principal Latin
American companies for forestry products, pulp, paper and tissues, own-
ing manufacturing plants in 8 countries and selling its products in more
than 45. The firm is a leader in the production of tissues in Chile, Peru,
Argentina and Uruguay, and has a growing presence in the Brazilian and
Mexican markets. It is among the largest global producers of pulp and
owns around a million hectares of forest lands in Chile, Argentina and
Brazil (Fitch 2015).
The Matte group owns 56% of the company’s shares. This group
ranks third in a composite ranking of Chilean conglomerates in 2016
but occupies the top position in terms of assets. It is the oldest of the
three traditional groups which consolidated their position in the 1980s
(UDD 2016). It has adopted a strategy of unrelated diversification, with
investments principally in forestry activity, banking, energy, telecommu-
nications and real estate. The group was established in 1920, with the
creation of CMPC, for the production of paper, cardboard and cellu-
lose using wheat straw. Between the 1930s and the 1960s, the company
gradually integrated production, with the purchase of its first radiata
pine plantations, and diversified its output with the manufacture of card-
board, newsprint, tissue paper and paper bags. From the mid-1970s it
launched a vast programme to establish eucalyptus timber plantations
and an investment plan to modernise and expand its manufacturing
plants (CMPC 2015). In the 1980s it entered the market for disposable
sanitary and baby products with the formation of Prosan, and in 1986 it
acquired Inforsa, a paper company that had belonged to CORFO (the
Vial group had acquired this firm during the first wave of privatisations
in the 1970s, but it had reverted to state control following the 1982 cri-
sis, before being re-privatised in 1986). With the purchase of Inforsa,
CMPC consolidated its position in newsprint and continued with its
industrial and forestry investments. In the pulp business, it formed a
joint venture with a North American company, Simpson Paper, in 1989
but took full control of the firm nine years later.
CMPC, which had started exporting in the 1960s, began producing
abroad in 1991 with the acquisition of a plant in Argentina that manu-
factured paper sanitary products. Two years later it sold 50% of Prosan to
Procter and Gamble, in order to establish a joint venture for the devel-
opment of disposable nappies and feminine hygiene products in Chile,
Argentina, Bolivia, Uruguay and Paraguay. This association with Procter

and Gamble lasted until 1998. During the 1990s, CMPC continued with
acquisitions in Uruguay (tissues) and Argentina (industrial bags, tissues)
and initiated operations in Peru (tissues), while also strengthening the
company in Chile with acquisitions and investments in the production
of pulp and corrugated cardboard. In 1995, it adopted the structure of
a holding company, dividing its main business areas among five subsid-
iaries: forestry, pulp (these would later be integrated into a single sub-
sidiary), paper, tissue and paper products (later absorbed by the paper
subsidiary). In 2000, it continued its expansion in Chile, by commencing
the production of plywood boards, and while its internationalisation in
Latin America progressed with acquisitions and investments in Mexico
(tissue paper), Colombia (babies’ nappies, tissue) and Brazil (pulp,
paper) (CMPC 2015).
In response to the pro-market reforms introduced after 1973 the
group initiated a process to transform CMPC (which accelerated follow-
ing the 1982 crisis). It increased its share capital, modernised and pro-
fessionalised its management, developed new commercial policies and
improved the production process both in the forestry sector and in the
manufacturing sector through the incorporation of modern technology.
Until the end of the 1970s exports had, above all, been based on Chile’s
comparative advantages in natural resources. However, from the 1980s
the company fostered its competitive advantages, based fundamentally
on improvements in management. One key factor in its international
expansion was its access to capital markets and an active policy of rein-
vestment of earnings (interview with Eliodoro Matte Larraín, president
of the company 2008).
Empresas Copec occupies twelfth place among the Chilean multilati-
nas in the América Economía ranking and position 42 overall. This is the
largest group of industrial companies in Chile.27 As already mentioned in
discussing Arauco, the Angelini group controls the firm via its Antarchile
holding company. Copec channels its investments and productive opera-
tions through subsidiaries and associated companies in forestry, fishing,
energy, mining and fuel distribution, among others (www.antarchile.cl).
However, forestry products and fuels are its main operations, together
accounting for 98% of pre-tax earnings (EBITDA) in September 2014.
Over a third of Copec’s long-term assets are located beyond Chile’s bor-
ders, and it makes nearly 40% of its sales in foreign subsidiaries, with a
significant share coming from Arauco (Empresas Copec 2015).
316 M. I. BARBERO
The company made a transition from a strategy focusing on exports

to one that involved production outside Chile, first in Latin America and
later in North America and other continents, principally through the
investments of Arauco, but also the other companies in which it partic-
ipated. The fishing company it controls, Corpesa, operates in Brazil via
a subsidiary, Selecta, which produces soya concentrates and it has shares
in FASA, a company dedicated to the production of high-quality protein
concentrates for animal feed (Empresas Copec 2015; Corpesca 2015).
Copec initiated its international activities in fuels in 2010 by acquiring
shares in a Colombian company, Terpel, which has a network of service
stations in Colombia, Ecuador, Panama, Peru and Mexico. Through
Inversiones del Nordeste another Colombian firm, Abastible, owns
five companies involved in the distribution and sale of liquid gas, a fac-
tory making gas cylinders and a fleet of trucks to transport gas in cyl-
inders or in bulk (Empresas Copec 2015). At the end of 2016, Copec
acquired the businesses of Exxon Mobil (a company, formerly known as
Esso, with which it had been associated in Chile for several decades) in
Colombia, Ecuador and Peru.28 Empresas Copec holds a leadership posi-
tion in its two main businesses, forestry and fuels. Its position as a low-
cost pulp producer globally, and its vertical and horizontal integration of
operations in the forestry business have afforded it competitive advan-
tages. In the fuel sector, it possesses a wide distribution network, effi-
cient logistics and operations in strategic locations (Feller Rate 2015a).
Conclusions
The historical and comparative analysis of the paths of these twelve
Chilean companies provides us, first, with a general profile of the most
important multilatinas based in the country. It is striking that eleven
of the twelve firms belong to business groups. Except for the case of
SONDA, all the other companies form part of (or formed part of, in
the case of TechPack) either the most important traditional groups
(Angelini, Matte, Luksic) or those that have grown more recently
(Cueto, Said, Paulmann/Cencosud, Solari-Del Río, Sigdo Koppers and
Guilisasti-Larrain).29 If we were to add to this sample another seven
Chilean multinationals included in the 100 most internationalised mul-
tilatinas, we would find that six more of these also belong to business
groups.30 In most cases, the groups are conglomerates whose ownership
is concentrated in the hands of one or more families, but they have pro-
fessionalised management.
Forming part of a group, apart from being an inherent characteristic

of most large Chilean (and Latin American) companies, certainly offers
advantages for the internationalisation of a company. One set of benefits
arises from the scale on which the conglomerates operate, the corporate
functions offered by affiliated companies, and synergies among them.
Many groups also own or have strong interests in firms in the financial
sector (banks, insurance and pension funds). At the same time, the size
and reputation of the groups ease access to financing both internally
(institutional investors, the issue of shares and bonds) and externally (via
debt or the issue of ADRs).
From the sectoral perspective, the companies analysed here special-
ise in two types of activities: the exploitation of natural resources and
processing industries linked to them, and retail trade. The first involves
companies operating integrated value chains based in forestry (Arauco,
CMPC, Masisa) and those in beverages (Andina, Concha y Toro). The
second includes multi-format retail firms (Cencosud, Falabella) with
activities in commerce, finance and real estate. Manufacturing companies
like Sigdo Koppers or Madeco/TechPack are tied in some way to mining
activities, either through the manufacture of inputs or metal products.
These are generally mature activities, corresponding to Chile’s produc-
tion profile, although LAN/LATAM and SONDA are exceptions.
It is significant that the sectoral profile of Chilean multilatinas has
changed over time. The rankings of the 1990s were notable for the pres-
ence of public utility companies (five out of fifteen). This remains true
today, although to a lesser degree: around 2005 there were still four in
the leading fifteen, but by 2010 the proportion had fallen to a mere two
out of twenty, including ENAP, the state oil company.31 Another sec-
tor that gradually slipped out of the rankings was financial services. In
both cases, this was due to acquisitions of Chilean firms by large multina-
tionals which were consolidating their presence in Latin America. Other
companies which have also recently disappeared from the ranking, after
their acquisition by foreign capital, are in pharmaceuticals (FASA), retail
(Ripley) and maritime transport (Sudamericana de Vapores).
With regard to the destinations for investment, the majority of
Chilean multilatinas are effectively regional multinationals, limiting their
radius of action to Latin American countries. The path of internation-
alisation has generally started in neighbouring countries (Argentina and
Peru), and then widened to other South American countries, mainly
Brazil and Colombia, but also Ecuador, Paraguay and Uruguay, and
finally to Mexico. However, some companies—Masisa, Concha y Toro,
318 M. I. BARBERO
Arauco and Sigdo Koppers—have expanded beyond Latin America,

with investments in North America by the first two and a much more
global presence in the cases of Arauco and Sigdo Koppers. In all cases,
geographical expansion outside Latin America arose through acquisitions
of companies in developed countries, and these have generally occurred
from 2011 onwards. This would indicate a path of gradual expansion
towards more distant markets and a global scope. In general, Chilean
multilatinas have combined greenfield investments and acquisitions of
local companies in making their foreign investments: the latter has been
more important, serving the key function of providing access to informa-
tion and knowledge about foreign markets.
With respect to the objectives for international expansion, mar-
ket-seeking investment has been a key driving force in the foreign expan-
sion of all the companies analysed here, given the limited size of the
Chilean market. In some sectors, such as the forestry complex and the
wine sector, this has been combined with resource-seeking, usually in
the form of suitable lands to increase production. In addition, in recent
years we have also seen some strategic asset-seeking via the acquisition of
North American and European companies on the part of Arauco, Sigdo
Koppers and Concha y Toro.
Having analysed the profile of the firms and the motives and modal-
ity of their expansion, it is worth asking what advantages these Chilean
multinationals possessed in order to compete satisfactorily in foreign
markets and to compare the empirical evidence with theories of multi-
national growth. First, it is clear that Chilean firms had some CSAs. The
early pro-market reforms and later high growth rates in a context of
institutional stability after the restoration of democracy provided a very
favourable environment for the internationalisation of these companies,
which, as noted already, had abundant access to internal and external
financing, were often favoured by free trade agreements, and could, in
general, benefit from Chile’s good international reputation. While affili-
ation with business groups and specialisation in mature sectors are com-
mon characteristics among multilatinas from any country, one particular
aspect of the Chilean multilatinas is the significant presence of firms that
were privatised in the 1970s and 1980s, to a far greater degree than in
other Latin American countries, a result of the significant changes that
occurred in the Chilean economy during this period, and their lasting
effect over time. The two phases of privatisations offered opportunities
both to traditional groups and to new ones. The exceptions are the retail
companies, SONDA in IT, and Concha y Toro in wine production. It
can be argued, therefore, that the internationalisation of the leading
firms was part of a broader process under which the Chilean private sec-
tor was reconstituted. This involved important property transfers and a
process of concentration, in the context of an open, deregulated econ-
omy and market-friendly public policies.
The CSAs combined with the capacity of Chilean companies to
develop firm-specific advantages in a competitive environment. These
included a remarkable change in organisational and management capaci-
ties (via the professionalisation of management and corporate restructur-
ing), and the ability to carry out incremental innovations and to develop
successful business models that could be replicated in foreign subsid-
iaries. Examples are the integration of the value chain in the forestry
complex, multi-format retail, the combination of cargo and passenger
transportation in the case of LAN, and related diversification in the wine
or beverage industries. Another pillar for the competitiveness of Chilean
multilatinas lies in their capacity to establish strategic alliances and joint
ventures with large international companies (the case studies have illus-
trated numerous examples of this), and their capacity to manage mergers
and acquisitions, most recently, in some instances, of firms in developed
countries. Membership of business groups has also facilitated economies
of scale, access to human, natural and financial resources, synergies among
companies, and an enhanced capacity to develop and implement new pro-
jects. The evidence of the case studies warns us against simplistic explana-
tions, which simply emphasise ‘liberalisation know-how’ or the transfer of
resources from the state to private enterprise, and offers a more nuanced
and complex perspective which also considers the business environment,
public policies, and the competitive capacities that firms developed.
With regard to timing, internationalisation has taken place gradu-
ally. After their initial foundation companies have tended to expand first
within the country (this applies to most of them, over several decades),
and invested abroad later. SONDA provides a clear exception to the rule.
Several started by exporting and only moved some time later to direct
investment. Companies have also tended to commence their interna-
tional growth in neighbouring countries, before advancing to others in
Latin America, and eventually, in some cases, reaching North America
and Europe.
320 M. I. BARBERO
Comparing the experiences of Chilean multilatinas with the dom-

inant international business theories, at least two elements stand out.
First, although internationalisation constituted a learning experience,
strengthened by alliances and acquisitions, the companies had already
developed ownership advantages in the local market, which enabled
them to compete successfully abroad. In host economies they often
adopted innovations that they had already developed at home, for exam-
ple multi-format in retail. Second, foreign expansion was gradual and
started with countries that were geographically and psychically closer,
expanding later towards more distant territories. These points tend to
indicate the relevance of the OLI paradigm, the stage theories of the
Uppsala school, and arguments like those of Guillén and García Canal
which stress the continued validity of such theories, despite the need to
adapt them to the idiosyncrasies of the multilatinas and the context of
the ‘second global economy’ of the 1990s and early 2000s. Only in the
case of SONDA, which resembles that of other Latin American IT mul-
tinationals, does any firm seem to fall into the category of ‘born global’
companies and to conform in some respects with the LLL paradigm sug-
gested by Mathews.
Notes
1. Multilatina has become a shorthand term to refer to emerging-market
MNEs based in Latin America.
2. This and the following section are based on Barbero (2014).
3. Given the vast and complex literature that focuses on developing theories
of multinational enterprise, this following section presents only a rather
stylised version with the objective of providing a framework to analyse the
experience of Chilean companies.
4. For summaries of the development of this theoretical literature on inter-
national business, see Dunning and Lundan (2008, Chapter 4), and the
chapters by Dunning, Buckley and Casson, and Hennart in Rugman and
Brewer (2001).
5. The internationalisation index that América Economía calculates each
year is based on four indicators: the percentage of sales outside the home
country; the percentage of employees outside the home country; geo-
graphical coverage; and the expansion of each company in the given year,
see https://rankings.americaeconomia.com/2016/multilatinas/ranking.
6. The population of Chile in 1990 was just over 13 million, which rose to
18 million in 2015 (data.worldbank.org).
7. See especially the chapters by Nazer, Islas, and Salvaj, Lluch and Gómez
in this volume as well as the discussion in the Introduction.
8. On the development of the Chilean electricity industry, see the chapter by
Cesar Yáñez in this volume.
9. Latam is fourth among the top 12 Chilean firms in terms of total sales,
with sales of US$9713 million in 2015.
10. In 2016 the Cueto group occupied 22nd place in a general ranking of
Chilean business groups (UDD 2016).
11. In terms of turnover the firm occupies seventh place among the top
twelve Chilean multilatinas, with sales of US$2646.8 million in 2015.
12. In 2015 Masisa was tenth among the top twelve Chilean multinational
companies in terms of the value of sales with a turnover of US$1052.6
million. Some authors do not consider Masisa to be a Chilean com-
pany, since it has been controlled by Swiss capital since 2002, although
it is headquartered in Santiago. See, for example, Calderón Hoffmann
(2007), who includes it in a list of companies sold to transnational firms.
13. With a turnover of US$1256.3 million in 2015, it ranked ninth in terms
of sales among the twelve leading Chilean companies in the América
Económica list.
14. See Bucheli’s chapter in this volume for the history of Copec.
15. The firm ranks eighth in terms of turnover among the twelve leading
Chilean companies with sales in 2015 of US$2414.5 million.
16. Enaex, whose main shareholder was Dupont, was nationalised in 1972
and reprivatised in 1987, when it was acquired by the Claro Group, asso-
ciated with FAMAE and Austin Powder Corp of the United States. Sigdo
Koppers acquired a share in Claro Group in 1990. Emec and CTI were
sold in 1999 and 2011, respectively.
17. Its companies include Sigdopack (high-technology plastic film), SK Rental
(machinery leasing), SKK Montajes e Instalaciones (industrial assem-
bly and installations), Puerto Ventana S.A., Ferrocarril del Pacífico,
Compañía de Hidrógeno del Bio Bio and SK Industrial.
18. Its annual sales put it in second place among the twelve most internation-
alised Chilean multilatinas, with turnover of US$5495.9 million.
19. In terms of its turnover, US$376.1 million, Techpack occupied twelfth
position among Chilean companies.
20. On the early stages of the group, see the chapter by Gonzalo Islas in this
volume. Andrónico Luksic, the group’s founder, was closely connected
with Pascual Baburizza; his father had worked for Baburizza on his arrival
in Chile.
21. Viña Concha y Toro occupies eleventh place in terms of turnover among
the leading twelve Chilean multilatinas.
322 M. I. BARBERO
22. Arauco is fifth, based on turnover, among the twelve most international-

ised Chilean multilatinas, according to the América Economía ranking,
with sales of US$5146.7 million in 2015.
23. Copec was founded by private businessmen in 1934 to operate in the
business of fuel distribution: see the chapter by Bucheli in this volume.
It was nationalised during the government of Allende and then privatised
under Pinochet. The Cruzat Larraín group acquired Copec in 1976 and
began to diversify its activities. Renationalised following the 1982 crisis,
the Angelini group acquired it when it was returned to the private sector.
24. In 1991 International Paper, the largest global producer of cellulose and
paper, and a competitor of Arauco, took control of Carter Holt. This
resulted in a lengthy lawsuit which culminated, nine years later, in the
Angelini group’s acquisition of Carter Holt’s share in Copec (Bravo
Herrera 2004).
25. In terms of sales, Falabella occupies third place among Chilean multilati-
nas, with a turnover of US$10,938 million in 2015. In 2016 it entered
the Mexican market through an association with Soriana stores to exploit
the format of Sodimac.
26. The company is the sixth Chilean multilatina by turnover, which reached
US$4841 million in 2015.
27. Among the Chilean multilatinas it occupies first place in terms of consoli-
dated sales, which totalled US$18,109 million in 2015.
28. On Copec’s historical links with Exxon Mobil (formerly Esso), see the
chapter by Bucheli in this volume.
29. Masisa also falls into this category, as a company controlled by Grupo
Nuevo, whose main shareholder is a Swiss businessman.
30. The companies are SQM, Molymet, Banmedica, Ripley (sold in 2016 to
Mexican capitalists), CCU, ENAP (a state-owned firm) and Carozzi.
31. The rankings mentioned can be consulted in López (1999),
CEPAL (2005), and Muñoz et al. (2013).
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CHAPTER 10

María Inés Barbero

© The Author(s) 2019 283

contributions that attempt to characterise and explain the emergence

Multinational Enterprises in Emerging

With regard to economic sectors, the growing weight of services is

EMNEs and Theories of Multinational Enterprise3

Other theoretical contributions have emphasised the need to consider

allowing a newcomer to reduce the risks or uncertainties implicit in

opportunity to reappraise theories in the light of the concrete historical

The Chilean Multinationals

The Internationalisation of Chilean Companies

Country 2005–2009a 2010 2011 2012 2013 2014 2015

Argentina 1471 965 1488 1055 890 1921 1139

Table 10.2 Stock of Chilean foreign investment by destination country (in mil-

Country Stock in December 2015 Percentage of total Chilean FDI

Brazil 27,780 26.1

Source DIE (2016)

financing. After surviving a serious crisis in 1982, Chile embarked on

The Role of Business Groups in the Process

private companies were nationalised via acquisitions or expropriations. In

Stages in the Internationalisation of Chilean Companies

Joint ventures with firms from developed countries supplied international

Chilean Multilatinas Today: Productive Profile

1 Mexichem (MX) 18 ISA (CO) 35 Grupo Argos (CO)

Cement (13,050.1) Steel (12,227.1) Forestry/Pulp (5146.7)

Ranking Company Ranking Company Ranking Company

Country Abbreviations: AR Argentina; BR Brazil; CL Chile; CO Colombia; PA Panamá; PE Peru; SV El Salvador

in Peru (1999), Ecuador (2003), Argentina (2005) and Colombia

One of the strengths of Embotelladora Andina is its strategic alli-

to raise capital through the issue of ADRs in 2004 (Terranova 2004;

SONDA’s knowledge base benefited from alliances and agreements

(electricity), Compañía Tecno Industrial (CTI, home appliances) and

Cencosud (Centros Comerciales Sudamericanos S.A.), the sixth

Simultaneously, Cencosud embarked on internationalisation with

The origins of Madeco go back to 1944, when private shareholders

international company and manufacturer of cables, in order to improve

production elsewhere. Its competitive advantages lie in the professionali-

and industrial investments, following its association with a New Zealand

retail firms in Latin America, with a presence in Chile, Peru, Colombia,

At the end of 2015 Falabella owned 459 stores, 40 shopping centres,

materials sectors in association with Home Depot in 1997. Falabella

The Compañía Manufacturera de Papeles y Cartones (CMPC)

Argentina, Bolivia, Uruguay and Paraguay. This association with Procter

The company made a transition from a strategy focusing on exports

Forming part of a group, apart from being an inherent characteristic

Arauco and Sigdo Koppers—have expanded beyond Latin America,

Comparing the experiences of Chilean multilatinas with the dom-

22. Arauco is fifth, based on turnover, among the twelve most international-

Behrman, Jack R. 1972. The Role of International Companies in Latin America:

Feller Rate. 2011. Embotelladora Andina SA.

Rivera Urrutia, Eugenio. 2014. Empresas multinacionales latinoamericanas: Los

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CHAPTER 10

Multinational Enterprises in Emerging

EMNEs and Theories of Multinational Enterprise3

The Internationalisation of Chilean Companies

Table 10.2 Stock of Chilean foreign investment by destination country (in mil-

The Role of Business Groups in the Process

Stages in the Internationalisation of Chilean Companies

22. Arauco is fifth, based on turnover, among the twelve most international-