Doing Business in Peru

April 17th, 2008 Chulucanas, Peru

Frankfurt Fair Order and Consortium

Several pottery associations sent show pieces to one of the largest handcraft fairs in the world. From this fair, an order for 2000 pieces was obtained. My association had 2 of the sample pieces chosen and therefore is responsible for an order 720 pieces. In order to pursue similar opportunities in the future, the 5 associations of Chulucanas are forming a business consortium. My counterpart NGO, Cite Cerámica, has brought in a consultant to help in the formation of said consortium. We have been meeting weekly with the presidents of each association.

The consultant´s name is Antonio. This guy understands business. Although Peruvian he spent the first few minutes chewing out all the presidents for their inexcusable tardiness, explaining how time is money and such tardiness demonstrates a lack of respect for those left waiting. From the start I knew I was going to like this guy. After spending several years between Washington, DC and Paris as a marine, he really understands what it is that keeps Peru from advancing.

Expanding the Pie, not the slice

In my opinion, one of the main reasons Peru doesn´t develop as it should is because most Peruvians refuse to work cooperatively. Everyone is always out for himself. In order for an individual to have more it isn’t necessary to take a larger slice of the pie. This would require that some other individual take a smaller slice. In general Peruvian society fails to see that if instead the pie is expanded, it’s possible for all to enjoy more. I can´t tell you how many times I have drawn 2 concentric circles in the dirt road in order to explain this concept. Some get it. They just have trouble convincing others work together with them.

Perhaps because Peru is a nation that has continually been conquered, the people lack all sense of trust in cooperation and in each other. At some point though, excuses become just that: excuses. The other day my Peruvian friend Alfredo complained to me how you can´t trust anyone because they are always trying to scam you. For instance, while buying fruit in the market the other day Alfredo picked a ripe peach. The vendor exclaimed, “Perhaps you want two?” After nodding indifferently, the vendor quickly grabbed another peach and tossed both into an opaque plastic bag and double knotted it. When Alfredo arrived home he discovered one savory peach and a rotted one. Needless to say, Alfredo will not be buying fruit from this stand again. This shortsightedness is a plague infecting all of Peru. The perfect example is a story Antonio told that he claims is the most frustrating story of his career as a Peruvian business man.

Before consulting, Antonio owned an industrial fishing company that ranked #1 in Peru. He attended an international seafood fair in Boston where he met a business man from Florida looking to buy a particular kind of shrimp. Although he wasn´t actually in the shrimp business himself, he knew someone who had this particular kind. So the American business man flew to Peru to meet with Antonio and his contact. The Floridian proceeded to check the quality of 10 different cases chosen from random. He sized up the texture, the smell, size and taste of each of the 10 cases. He was content and informed Antonio´s contact that he would send a fax within 48 hours confirming a deposit of $50,000 into his bank account for the first container. The contact would profit $8,000 a container and Antonio would profit $2000 a container as the broker. The American stated that he would need 8 containers a month.

When the fax came through, Antonio´s contact exclaimed, “Look how trusting these Americans are. Lets take the money and run.”

Antonio, “Are you stupid? You want to forego $10,000/container by 8 containers a month for only $50000. Were talking almost a million dollars a year in profit.”

“Well, since he is your contact, we´ll send the first container.”

Upon arrival, the American calls, “Peruvian scammers! Half the container is of the quality we agreed upon. The other half is practically garbage.”

“Well, fine! I´ll send another half container”

The American never ordered another container. And this is why Antonio lives a frustrating life. The most shocking part of this story is that this is just one of thousands of similar stories occurring every month all around the country.