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bUSiness CHILE THE VOICE OF THE CHILEAN-AMERICAN CHAMBER OF COMMERCE N°273, JULY 2011 Social Protest in the Facebook Age TRADE TESTIMONIAL AVIATION REGULATIONS SPECIAL REPORT Picture Perfect Opening the Skies The Value of Loyalty DISPONIBILIDAD REGISTRADA Líderes en Leasing Operativo de la Región Más de 33 años de liderazgo en la industria. Confíe en el número uno, confíe en RELSA. CONTENTS bUSiness CHILE 6 TRADE TESTIMONIAL THE VOICE OF THE CHILEAN-AMERICAN CHAMBER OF COMMERCE N°273, JULY 2011 Picture Perfect A photo booth business created by four US entrepreneurs and their Chilean partner reveals how the Start Up Chile program is promoting innovation. 42 LIFE IN THE SLOW LANE 8 AViation REGUlations 37 ECONOMIC SNAPSHOT Gobi Desert Social Protest Opening the Skies Chile Day 2011: Hospitality in the Facebook Age Foreign operators will soon be London Calling TRADE TESTIMONIAL AVIATION REGULATIONS SPECIAL REPORT able to operate domestic flights The annual Chile Day event, held Our intrepid explorer Picture Perfect Opening the Skies The Value of Loyalty in Chile which is good news for in London this year, gave British gets lost in the Gobi passengers but Chile’s smaller investors the opportunity to desert and discovers 12 carriers are worried. learn about Chile’s advantages. Social Protest in the that those who have Facebook Age the least to give often COVER StorY BREAKFast 12 38 give the most. Social media have Social Protest in the changed the way Marching Towards Facebook Age Development demonstrations in Chileans are using social media Minister Cristián Larroulet Chile are organized but to demand a say in decisions that told AmCham members that opinions differ about affect them but political parties protests over higher education whether they are must channel their energy into have not distracted the changing the balance constructive solutions. government from its goal. of power. 19 SPecial REPort 40 INTERVIEW The Value of Loyalty Protecting Chilean © 2011 AMCHAM CHILE Reproduction in whole or in part is Airlines, large retailers and Consumers SPECIAL REPORT strictly forbidden without permission telecommunications firms Juan Antonio Peribonio, 19 from the publisher. Opinions expressed in are using loyalty programs to director of Chile’s National The Value of Loyalty bUSiness CHILE are those of the authors Consumer Service (SERNAC), and do not necessarily reflect those of reward their best customers, Chileans can collect AmCham or bUSiness CHILE. We accept no but are they worth the cost? talked to bUSiness CHILE responsibility for the accuracy of the articles about the La Polar crisis points or kilometers and any unforeseen errors. bUSiness CHILE with almost every is published monthly, 10 months a year and the state of consumer and mailed free of charge to AmCham 27 SPOTLIGHT protection. purchase and redeem members. Letters are welcome. They should be accompanied by the author's name US-Chile FTA: them for everything and daytime telephone and sent to A Motor of Opportunity from free flights to [email protected] For reasons of AmCham and SOFOFA organized space limitation, AmCham reserves the movie tickets, but what a seminar in June to discuss the right to edit letters published. do companies gain from Advertising inquiries should be addressed benefits of the SU -Chile FTA and to AmCham's Sales Department: Paulina investing in customer Dellafiori: E-mail: cristina.ordenes@ the opportunities for Chilean amchamchile.cl; Phone:2909741. Fax 2120515 exporters. loyalty? Av. Presidente Kennedy 5735, Torre Poniente, Of.201, Las Condes, Santiago de Chile; E-mail: [email protected]; EDITORIAL BOARD 2011 www.amchamchile.cl; www.businesschile.cl CHAIR, Kathleen Barclay, Asesorías KCB; VICE CHAIR, Karen Poniachik, British American Tobacco Chile; VICE CHAIR, Manuel José Vial, Grupo Vial Abogados; PAST CHAIR, Michael Combes, Marco Chilena; GENERAL EDITOR, Julian Dowling, AmCham Chile; ASSISTANT EDITOR, Daniela Valda, AmCham Chile. ProdUCTION K & D Comunicaciones Ltda. Olga Kliwadenko, MEMBERS General Manager, 11 de Septiembre 1945 - Of. 213, Providencia. Phone: 481-6940 / Jaime Bazán, AmCham Chile; Ruth Bradley, The Economist; John Byrne, Boyden Consultores Chile; Richard Diego, 481-6941, Cell: (09) 874-0619; Royal Bank of Canada; John P. Dill, Project Management; Francisco Garcés, Banco de Chile; Claudio Hohmann, D&S; e-mail: [email protected]; Javier irarrázaval, The Walt Disney Company Chile; Charles Kimber, Celulosa Arauco y Constitución; Olga Kliwadenko, [email protected];www.kyd.cl K&D Comunicaciones; Gideon Long, BBC; Vincent McCord, Asesorías e Inversiones CarCon; James Newbold, Tanager Enterprises; Patricia O'Shea, AmCham Chile; Roberto Ossandón, Ossandón Abogados; Rodrigo Silva, Silva & Asociados; Printed in Quebecor World Chile, Mitch Larsen, U.S. Embassy; Paulina Dellafiori, AmCham Chile. bUSiness CHILE July 2011 3 AMCHAM GLOBAL SPONSORS 2011 4 July 2011 bUSiness CHILE Editorial Chile – Seeking a Summer of Prosperity Demands for better and more effective education, a sign of positive or negative things to come? demands for a pristine Patagonia, demands for better The answer is that this depends on how established consumer protection in the wake of an apparent fraud leadership responds to the new demands. by a domestic retailer - this is the news capturing the For the political class, it means understanding that headlines of Chile’ s local media and causing the political, monetary solutions to issues including handouts are academic, and business communities much concern. no longer sufficient. Citizens, who are better-educated, Why are there so many demands? Why is this better-informed and more economically independent, happening in Chile – a highly successful democracy where want an active voice in how things are done – they want a broad base of the population has benefitted and where to participate in the process. If embraced, this change there has been such a significant reduction in poverty in can lead to better and more effective solutions to Chile’s the last few decades? Moreover, it is a country with a high future challenges. Ignoring this trend, on the other hand, is literacy level and relatively low levels of unemployment. a perilous road for the political class and for the country. What has happened to cause this apparent winter (in the For the business community too, recent events case of Chile) of discontent? provide challenges and opportunities. Consumers are Many speak of the impact of the revolution of social demanding more and better products and services. networks. The ability to communicate quickly and broadly Businesspeople who ignore these demands will has made it much easier to organize protests and to suffer – as has been the case of a local retailer which demand change. Some compare what is happening in apparently tried to take advantage of local consumers Chile to recent developments in the Middle East that have (see this month’s bUSiness CHILE interview with the toppled governments. director of SERNAC). But those who listen will flourish. Is that what is occurring in Chile – or is it something The ability of Chile’s large retailers, its airlines and its else? telecommunications companies to listen and adjust to The answer is yes... and no. Yes, social media do consumer demands has been a recipe for success – facilitate protests and this is a phenomenon that is success which increasingly requires vigilance and care occurring in Chile as in other parts of the world including as reflected by the growth of loyalty programs in Chile the Middle East, as discussed in this month’s bUSiness (see this issue’s special report). CHILE cover story. On the other hand, it is not the demand Excitingly, Chile is at a new crossroads, similar in for the toppling of a government. many ways to South Korea – where the move to a more The recent spurt of protests in Chile is more a reflection active and educated middle class meant a giant step of the growth of an increasingly empowered middle class in development. AmCham welcomes this movement – a result of the success of Chile’s economic and political and looks forward to contributing to a change that model. It is a reflection of a maturing democracy – and, as will finally transformC hile into a developed economy in any maturing process, it is not without growing pains. with opportunities for all. Now is the time to turn a So, what does this mean for Chile – is what is happening winter of discontent into a summer of prosperity. BOARD OF DIRECTORS EXECUTIVE COMMITTEE PRESIDENT GENERAL MANAGER Enrique Ostalé, D&S Alfredo Ergas, Enersis Javier Irarrázaval, The Walt Disney Company Jaime Bazán, AmCham Chile VICE CHAIR FINANCE AND ADR COMMITTEE Chile Karen Poniachik, Enterprises director DIRECTORS VICE CHAIR EDITORIAL COMMITEE Mauricio Ramos, VTR Global Com VICEPRESINDENT; CHAIR CORPORATE AFFAIRS AND VICE CHAIR CORPORATE AFFAIRS AND SUSTAINABILITY Fernando Concha, Citigroup Andean – COMMITEE SUSTAINABILITY COMMITEE Caribbean and Central America Region Luis H. Siles, IBM de Chile Charles Kimber, Celulosa Arauco y CHAIR FINANCE AND ADR COMMITTEE Constitución S. A. Carolina Valdivieso, Kimberly Clark Ramon Vergara, SCIP Group CHAIR LABOR AND HUMAN CAPITAL COMMITTEE TREASURER; Gonzalo Iglesias, Coca-Cola de Chile S.A. Kathleen Barclay, Asesorías KCB Felipe Cerón, AES Gener VICE CHAIR LABOR AND HUMAN CAPITAL COMMITTEE CHAIR EDITORIAL COMMITEE ADVISORY COUNCIL SECRETARY; CHAIR LEGAL COMMITEE Mitch Larsen, Embajada de los E.E.U.U. Michael Grasty, Grasty Quintana Majlis & Cía. EX OFFICIO Rubén Covarrubias, Rector, Universidad Mayor AmCham Mision Statement PAST PRESIDENT “Promote free trade and business between Chile and the Luis Marcelo Moncau, Microsoft Chile CHAIR TRADE & INTERNATIONAL BUSINESS Ricardo García, Compañía Pesquera COMMITTEE United States" Camanchaca bUSiness CHILE July 2011 5 TRADE TESTIMONIAL Picture Perfect The Start Up Chile program created by the Economy Ministry last year has had mixed results so far, but a new photo booth business created by four American entrepreneurs and their Chilean partner shows it is helping to promote innovation.