Procter & Gamble Invests $25 million USD in Colombian Distribution Center

Procter & Gamble, the world's biggest consumer-products manufacturer and maker of household brand names, such as Duracell, Pantene and Gillette, is betting on Colombia as a strategic location to help grow its market position in South America with a $25 million USD investment in a new distribution center in the region. The project, which will add 500 manufacturing jobs, is part of P&G’s vision to become the largest consumer goods company in Colombia by more than doubling its business in the country in the next few years.


P&G has been in Colombia for more than two decades and chose Rionegro, Antioquia, for the site of its new distribution facility based on a variety of factors, including proximity to the company’s existing production plant in Medellin, as well as the nearby location of a major highway that runs between Medellin and Bogota, allowing for direct access to the rest of the country. The nearly 500,000-square-foot center is scheduled to open in April 2011 and will accommodate the distribution of P&G staple products, as well as introduce new products to Colombia and nearby countries.

The company’s choice to grow its business in Antioquia extends beyond just strategic location. P&G is also heavily invested in the surrounding community, supporting programs that benefit the region’s citizens, including donating $750,000 USD to be put toward the construction of an aqueduct, giving away 350 computers to increase the quality of education in the area’s public schools, and assisting in building a toy library. It has also helped create a soccer field for local residents to use and has distributed large amounts of drinking water to the region through P&G’s PUR brand.

P&G’s facility was also designed with sustainability in mind. The company plans to install solar panels and energy efficient heaters in the coming months that will reduce its energy consumption by 28 percent each year, as well as fit the building with rainwater collection techniques and devices for treating wastewater, thus reducing sewage system output by more than 50 percent.

FORTUNE, Newsweek and The Huffington Post Report that Colombia is a Country to Watch

The eyes of the world are on Colombia, with its limited debt, growing incomes and young population. Foreign direct investment is flooding into the country. Analysts looking to capitalize on this boom are calling Colombia the “country to watch in the hemisphere” and “a bright star in the Latin American constellation.”

Below are just a few recent stories featuring Colombia’s economy -- ripe for foreign investment -- in the some of the top business outlets in the U.S.:

* In an August 2010 article called, “Snapshots of the Frontier,” FORTUNE says Colombia is among five countries that are “veritable powder kegs of economic growth.” The article says, “A new-found stability, combined with sweeping privatizations in the export sector and the existence of valuable natural resources…translated into GDP growth averaging over 5% per year between 2004 and 2009.” Click here (http://money.cnn.com/galleries/2010/fortune/1008/gallery.frontier_markets.fortune/2.html) to read the full article.

* Newsweek’s July 16, 2010, article headlined, “Colombia Becomes the New Star of the South,” reports that “…against all odds Colombia has become the country to watch in the hemisphere,” adding that the country is…“gaining kudos and clout. Prospering, democratic, and pro-Western – and with a new leader [newly elected President Juan Manuel Santos] known more for his achievements than for his aura – the most conflicted nation in the hemisphere is now coming into its own.” Click here (http://www.newsweek.com/2010/07/16/colombia-becomes-the-new-star-of-the-south.html) to read the full article.

* The Huffington Post featured a July 6, 2010, piece written by Colombia’s Minister of Commerce, Industry and Tourism Luis Guillermo Plata Paez, titled “Colombia’s New Economic Reality.” In it, Paez outlines 10 things that American investors might not know about Colombia’s economy and business atmosphere, including that the “country expects to see a record 10 billion in total foreign direct investment in 2010...” Click here (http://www.huffingtonpost.com/luis-guillermo-plata-paez/colombias-new-economic-re_b_636384.html) to read the full article.

* On July 2, 2010, a Newsweek article titled “Colombia Unleashes the Civets,” said, “…it’s no accident that Colombia gets lead billing [among the CIVETS countries]. In the past eight years, the Andean nation has gone from dud to dynamo: foreign investment has risen 250 percent. Its stock index is up 15 percent this year, and 35 percent (versus Brazil’s 14 percent) over the decade.” Click here (http://www.newsweek.com/2010/07/02/colombia-unleashes-the-civets.html) to read the full article.

McKinsey Quarterly Showcases Colombia’s BPO Sector as a Model for Emerging Countries

In a recent article in McKinsey Quarterly, McKinsey & Company’s business journal, the publication highlights Colombia’s success in helping its business process outsourcing (BPO) sector become more globally competitive in a case study titled, “Colombia’s lesson in economic development.” As part of the country’s Productive Transformation Program begun in 2007, Colombia aims to assist not only traditional commodity-based industries, but also value-added sectors, such as BPO.

For the BPO industry, the program promoted the formation of public-private partnerships, as well as government reforms and initiatives that will help the sector go head-to-head with other countries looking to service Spanish-speaking markets, such as Colombia’s domestic market, Spain, Hispanic consumers in the U.S. and multinational companies operating in Latin America.

After studying various countries with comparative opportunities and examples, McKinsey concluded that Colombia offered lower costs for business processing outsourcing than other Latin American countries and could thus “serve the U.S. Hispanic market and multinationals in the region competitively.” These analyses also revealed that BPO could potentially account for roughly 300,000 jobs in the country before 2020.

McKinsey says that initial results from the Productive Transformation Program for the BPO seem to show that system is working and could serve as a model for other emerging markets, thanks in part to some of the steps that have been taken in Colombia with regard to this sector. McKinsey Quarterly reports several examples, such as:

* Developing the country’s human resources: Colombia has worked with the BPO industry to create a national registry for certified speakers of the English language (www.ispeak.gov.co) to make it easier for companies to find qualified employees; and the city of Bogotá, in partnership with several companies, has created a program to finance English-language education for call center employees.

* Reforming Colombia’s taxes and regulation: In May 2010, the country eliminated the value-added tax on BPO service exporters, getting rid of a disincentive to create offshoring services in Colombia. The country is also expected to approve a new data protection bill that would align Colombian law with stricter European and U.S. data security requirements, making the country a more attractive BPO destination. Colombia also adopted International Financial Reporting Standards, an important step; because financial accounting is one of the processes developed countries are offshoring.

* Promoting the industry within the country: Colombian executives in the sector have established a local chapter of the International Association of Outsourcing Professionals—the first in Latin America—which will help managers stay connected to their peers abroad and keep up-to-date on global trends.

* Increasing BPO infrastructure: Local governments are developing two free-trade zones near Bogotá and Medellín, specializing in BPO. State-of-the-art infrastructure and services will be available to companies that settle there. In addition, the government has already granted free trade–zone status to three new BPO facilities, and three others are under consideration.