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Page 1 of 9 SolutionsAbroad's mascot, Sam, the voice of our editorial and management team, writes a monthly correspondent column featuring topics of relevance to life in Mexico. Open this site to review his current and previous columns. Mexico’s Slim: World’s Fattest Cat October 2007  According to the Associated Press, after 13 years as the world’s richest man, Bill Gates has been supplanted by Carlos Slim*, a Mexican businessman with a net worth of around US$59 billion. Unlike many people here, as a Mexico enthusiast, Sam is proud to know that this country can produce world-beating wealth. Many Mexican talking heads are not so sure. They point out that the majority of his wealth comes from his ruthless wielding of monopoly powers based on his ownership of Telmex, Mexico’s dominant fixed-line telecoms supplier and América Móvil, not only operator of around 80% of the country’s cellphones, but also the second-biggest in Latin America.
Mexican intellectuals, mostly of the leftist persuasion, decry his political connections, especially his ties to Carlos Salinas, the former President who handed Telmex over to “El Ingeniero” (“the engineer”), as Slim is sometimes called. Nevertheless, as far as Sam has been able to tell, Slim does not prove the old adage about there being a “great crime behind every great fortune.” Sources among the Mexican remember Carlos Slim as a young, bright heir to a small Mexico City real estate fortune who was able to win the respect of his father in-law. He, in turn, was a Lebanese immigrant with top connections in the old country, such that when the Lebanese civil war broke out in the 1970s, his contacts looked to him to help them safeguard their investments. At the beginning of the 1980s, the usual recipient of Christian Lebanese money, France, was governed by a new Socialist president called Francois Mitterrand who implemented “redistributive” economic policies. Thus, Mexico, via 40 year-old Carlos Slim, was seen as a good bet. Slim’s abilities led to successes in paper manufacture, real estate and cigarettes. Telmex’s privatization in 1990 was not the slam-dunk that many portray. There were many restrictions placed on the buyers, including keeping a bloated workforce with a militant union. Of course, after reading about how overpriced Mexican telecoms are, and how Telmex and Telcel (América Móvil) truly dominate, it is natural to grumble. Slim’s strategy of using stolid previous-generation technology and always taking just a little longer than the competition to lower rates keeps Mexico from the cutting edge and affects the country’s competitiveness. Nevertheless, Mexico’s government should not be let off the hook for not being more active in policing its monopolies. Lastly, Mexico’s telecommunications sector is open to other investors, but no one has come up with a business plan robust enough to seriously challenge Telmex. It would be expensive, but it can be done. Sam’s verdict: Carlos Slim is not a social visionary and his business practices impact Mexico’s competitiveness, but he’s a brilliant businessman who (surprise!) acts in his own interests in a weak regulatory framework. For our community, Mexico’s top billionaire brings up an important point, which is that this country, which is often seen as a picturesque, bucolic vacation spot, is not only economically sizeable, but also socially diverse. Out of over 200 countries, Mexico is between the 10th and the 13th largest economy (depending on your yardstick). For the United States, it is the 3rd most important trading partner and the world’s 7th tourist destination. On a more prosaic level, it has the second-largest fleet of private aircraft in the world, after the US, and its middle class is about the same size as Canada’s (although with 20 percent less income). Socially and ethnically, the preponderance of mestizos (those of mixed European and Native American ancestry) obscures the fact that between 10-15 percent of the country’s racial makeup is white. Among these 10-15 million whites, there is a rich variety, including people of European, Jewish, and Christian Lebanese descent. It is this last group that Mr. Slim belongs to and it is an ancestry he shares with another famous Mexican of Lebanese descent, Salma Hayek, Hollywood powerhouse and wife of France’s most successful businessman. Mexico has world-beaters among its ranks and the savvy visitor would do well to expand his or her horizon beyond the beach. In terms of investments, the Mexican Bolsa (stock market) is a place where you can find not only Telmex and América Móvil, but other top-notch organizations, like CEMEX, the world’s largest cement company and Televisa, its largest Spanish-language broadcaster. Its returns in the past 12 months have exceeded 40%. The Mexican son of Middle Eastern immigrants is now the richest person in the world – there’s got to be opportunities here for the rest of us. *On Oct. 29, 2007, Carlos Slim lost the title of the world's richest man to Indian businessman Mukesh Ambani, who is currently worth US$62.3 billion. Return to top
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