World's richest man dominates Mexican economy

Peces, a seafood restaurant in Mexico City's Col. Roma, uses the slogan, "The only one that doesn't belong to Slim," a reference to the world's richest man, Carlos Slim.

By David Agren, Canwest News Service

MEXICO CITY — News of Mexican billionaire Carlos Slim Helu topping the annual Forbes list of the world's wealthiest individuals came as little surprise to many in Mexico, including social-activist-turned-restaurateur Marco Rascon.

Famed for previously masquerading as "Super Barrio" — a portly protest leader clad in wrestling tights and "lucha-libre" mask — Rascon has turned his mischievous instincts in recent years toward highlighting the enormous influence of the country's richest man on the national economy and his apparent ability to run roughshod over regulators.

As an example, Rascon's seafood restaurant — Peces, or Fishes — goes by the slogan, "The only one that doesn't belong to Slim." Rascon has tried living beyond the reach of Slim's empire as much as possible by avoiding the billionaire's companies, which dominate the telecommunications sector and have a strong presence in retail, construction, tobacco and banking — among other industries. He's mostly failed in his attempts.

"It's a fantasy," he said flatly of any attempt to avoid patronizing Slim's companies.

"You almost can't breath in Mexico" without paying him something.

Such is Slim's dominance of the Mexican economy, which long has been characterized by the enormous concentration of wealth, monopolies and limited competition in sectors such as telecommunications, broadcasting, cement and brewing, and perceptions the federal government and regulators are unable or unwilling to abate monopolistic business practices.

Slim's dominance of the economy is so expansive that nearly anyone in Mexico making a cellphone call, surfing the Internet, smoking a Marlboro cigarette, sipping coffee in the ubiquitous Sanborns chain, shopping in his malls (anchored by Sears, which he owns in Mexico) or driving on the roads built by his construction company puts money in his pocket.

It's estimated his companies at one point comprised roughly one-third of the Mexican stock exchange's value, while his telecommunications companies — fixed-line operator Telefonos de Mexico (Telmex) and cellular operator America Movil — have been accused of charging some of the highest rates in the industrialized world.

Telmex and America Movil deny charging exorbitant rates, while Slim has denied being a monopolist and says on his personal website that Telemex has more than 600 competitors. Industry analysts credit Slim with transforming a monopoly with antiquated technology and a reputation for surly customer service into a world-class company.

Read the rest of the story at the Ottawa Citizen website.

Dame una Duff!

An aspiring young entrepreneur in Guadalajara scooped up the rights to make beer under the Duff brand made famous by The Simpsons. The lager currently sells in Spain, although it should hit the Mexican market by mid July. Here's the story from today's Miami Herald Mexico Edition: http://www.mexiconews.com.mx/24725.html

Carlos Slim pads his wallet

Telmex czar Carlos Slim padded his wallet by $19 billion over the past year, according to Forbes annual list of billionaires. Slim, whose name miserably describes his wallet's thickness, now trails Warren Buffett by $3 billion and perennial first-place finisher Bill Gates. Slim's net worth now totals $49 billion - more than double its value of just two years ago.

The world's billionaires as group grew even wealthier last year due to stellar equity markets. That certainly explains Slim's growing net worth as Telmex and America Movil (which markets cellular service under the TelCel brand in Mexico) performed strongly.

Anyone in doubt of Slim's ability to maximize profits needs look no further than their monthly Telmex bill. Telecoms in other country barely make money on long distance. Not Telmex, which charges in upwards $1/minute for international calls. Users attempting to escape Telmex's grip by using VOIP services report experiencing lousy call quality and allege - some say they can prove - that the phone giant degrades their ADSL service when trying to phone abroad. (Telmex denies the allegation.) For those ditching Telmex for a cellular phone, Slim's America Movil has around 70 percent of the market and charges some of the highest rates in the region.

In the Forbes survey, Mexico recorded ten billionaires - not surprising since monopolies and duopolies are still rife. Others making the list included Televisa boss Emilio Azcarraga Jean and beer baroness Maria Asuncion Aramburuzabala of Grupo Modelo fame.

Wal-Mart moving in on lucrative Mexican banking sector

Mexicans revile few institutions with as much vigor as the nation's banks, which according to industry insiders, are highly profitable. Not surprisingly then, Wal-Mart plans on entering the fray with bank branches inside its more than 700 Mexican outlets that would cater to lower-income clients.

Wal-Mart brings a track record of upsetting the genteel status quo in Mexican business. It burst on to the nation's retail scene by opening a single Sam's Club in 1991. Fifteen years later, it became the Mexico's largest employer and now dwarfs its competitors.

Like the retailers Wal-Mart put the boots to - Soriana, Comercial Mexicana and Gigante - Mexico's six big banks, five of which are foreign owned, are in need of a shake up. An article in yesterday's Miami Herald Mexico, noted that earnings at Spanish-owned BBVA's Bancomer operations, "Constituted the biggest contributor to (BBVA's) profits," and that paradoxically, "(BBVA) would use those profits to expand their services in Spain." (Bancomer is Mexico's second-largest bank.)

Walmex, Wal-Mart's Mexican subsidiary, conquered Mexico's retail market for a reason. It's poised to do the same in banking, although it will most likely succeed by expanding the market - approximately 80 percent of Mexican's don't use banks - than pummelling the competition.

Dolf Horn, R.I.P.

Mr. Adolf B. Horn Jr., the former U.S. consul in Guadalajara, passed away earlier this week. He was 95. The Cuban-born Horn, a pioneer in Jalisco's expatriate community, founded Helados Bing in 1965 at a location near Guadalajara's Los Arcos and served for more than three decades as the local president of the American Chamber. Horn sold Helados Bing in the early 1980s and later became involved with Dolphy, another chain of ice cream stores.

Over the years Horn became somewhat of a living legend in Guadalajara's business community. A road in suburban Tlajomulco de Zuñiga was named after him, although it was in somewhat of a sorry state in recent years.

Horn also counted friends on all sides of the political spectrum. He was friends with various presidents and governors and was always a proponent of Mexico opening up to the outside world.

I interviewed Horn previously. Here's something I wrote on him for the Miami Herald, Mexico edition back in Oct. 2005. http://agren.blogspot.com/2005/10/ice-cream-pioneer-still-going-strong.html