Business

Learning to do it the Latin way

CEO Guy Jarvis sees the Americas as a huge growth area for his fast-expanding company

D’Arcy Jenish May 7 2001
Business

Learning to do it the Latin way

CEO Guy Jarvis sees the Americas as a huge growth area for his fast-expanding company

D’Arcy Jenish May 7 2001

Learning to do it the Latin way

CEO Guy Jarvis sees the Americas as a huge growth area for his fast-expanding company

D’Arcy Jenish

Ten years ago, while living in Miami and seeking fresh challenges, Toronto entrepreneur Michael Weingarten began looking for business opportunities in Latin America.

His first forays into the region, he admits, were not encouraging. He found Mexican buyers for computer components, but up to 20 per cent of the goods he shipped often went missing before reaching the customer.

In Brazil, he landed big orders for computer and photocopying paper but had trouble getting paid. “There are tremendous variations by population and culture, and there are all types of challenges,” says Weingarten. “But there are also endless opportunities. I would say there are billions and billions of dollars worth of opportunities.” Weingarten is in a position to know. The 46-year-old businessman is chairman of Commercial Consolidators Corp., a publicly traded Toronto company that distributes televisions, appliances, cellphones and many other consumer goods in more than a dozen Central and South American and Caribbean countries. This week, the firm is releasing annual results showing sales jumped from $45 million to over $100 million in the year ended Feb. 28, although that growth was partly due to three acquisitions. Profits have tripled to more than $7 million. And Weingarten believes the business climate in Latin America will likely get better—particularly if political leaders deliver on their Summit of the Americas commitment to create a hemispheric free-trade zone by the end of 2005. “I think you’d see a big increase in the flow of goods and services from north to south,” he says.

Ironically, Commercial Consolidators

established its beachhead in the region by doing business with Cuba—the one country excluded from the summit because of its communist government. The company began by acquiring TVs, fridges, stoves and other household goods in Southeast Asia and selling them to Cuban state corporations that control huge retail chains. More recently, it set up a government-owned factory to assemble TVs for the local market from components purchased from brand-name manufacturers such as Samsung, Philips and Sanyo. “From the start, we had a great deal of success in Cuba,” says Weingarten. “The Cubans lived up to every commitment they made to us.”

Over the past year, Commercial Consolidators has been on an acquisition binge aimed at diversifying its revenue stream and making its stock, listed on the Canadian Venture Exchange, more attractive to North American investors. The company has purchased Calgary-based Max Systems Group Inc., a distributor of laptops and computer components, Desig Inc. of Montreal, a developer of software for the hotel industry, and Yam International Communications Inc. from Miami, which handles the distribution of cellphones and wireless devices to telecommunications companies. CEO Guy Jarvis says Latin America was the source of 50 per cent of the company’s revenue in the fiscal year just ended, down from 95 per cent the previous year.

But the company plans to use the newly acquired subsidiaries to expand its presence in the region. Jarvis says Yam buys used cellphones and other products that have been handed back to telecom companies by American consumers upgrading to newer models. The company refurbishes the old ones and sells them in Latin America. He adds that Max Systems has the potential to become a major supplier of used laptops. “There is always a demand for older technology in emerging markets,” he says. “It’s a huge growth area for us.”

Latin America is a place of enormous potential, Jarvis says, but he suggests that companies breaking into the market start small and develop a good rapport with local partners. “They want to know you’ll be there tomorrow because a lot of people have gone in and sold discontinued or end-of-the-line junk,” he says. “Business down there is very relationship driven.” If the Free Trade Area of the Americas takes shape as planned, the relationship is bound to grow. C3