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July 14, 2000 02:00 AM

Plastics forging Latin e-commerce connections

Sandra Mara Costa
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    SÃO PAULO, BRAZIL (July 14, 9 a.m. EDT) — Latin America is preparing for a boom in plastics-related electronic commerce.

    In addition to the launch of Todoplasticos.com during NPE 2000, at least three other neutral industry portals will air within two months in the region: Latinadvisor.com, Latinplasticos.com. and Echemtrade.com, which includes ChemConnect Inc. as one of its shareholders.

    Todoplasticos.com of Miami has 10 key investors, including four South America-based resin producers, Jerry Murcia, partner and chief executive officer, said in a July 11 interview in São Paulo.

    The partners are Ipiranga Group of Porto Alegre, Brazil, through its Ipiranga Comercial Química SA unit; Inversiones Sanford SA of Bogota, Colombia; Estirenos del Zulia CA of Caracas, Venezuela; and another undisclosed player from the Mercosul trade region, Murcia said.

    Equity fund Vision Asset Management, venture capital fund Glacier Internet Investments and Internet incubator Latin American Access, all three based in Miami, also are Todoplasticos.com shareholders.

    Total investment planned for this year amounts to $3 million.

    "You need to have suppliers backing you in order to be a successful site, especially in Latin America, where four resin groups dominate the market," Murcia said. "If you don´t play ball with them, you will most likely be out of the business."

    Murcia listed Ipiranga Group, OPP Petroquímica SA of São Paulo, Dow Chemical Co. and Brazilian Suzano Group as the most important resin makers in Latin America.

    Murcia is a former executive of Ashland Distribution Co. He and a partner bought Ashland´s export business in January 1999, creating Houston-based Montachem International Inc., which distributes resin in Latin America. Montachem was purchased by Todoplasticos.com investors on a straight stock swap that concluded in June. Murcia officially joined todoplasticos on June 1.

    "Todoplasticos wanted to combine experience in resin production, sales and plastics processing. Montachem is just a vehicle to provide know-how to the new site," Murcia said.

    He added that both Sanford and some of the Glacier fund´s investors own plastics processing facilities in the Andean region.

    Todoplasticos.com has offices in Miami and Bogota and is setting up offices in São Paulo; Caracas, Venezuela; and Santiago, Chile. In a second phase, in 60 days, it will establish itself in Buenos Aires, Argentina; Lima, Peru; and Mexico City. The company is hiring plastics professionals to develop business in these areas.

    Currently, the portal is running only in Spanish, offering exchange and auction sections, as well as catalog prices for raw materials, finished products, new and used machinery. English and Portuguese versions of the vertical marketplace will be added in the next two weeks.

    The company also plans to add technical and executive placement services and online troubleshooting.

    In the short term, Todoplasticos.com will sell inventory from Montachem suppliers.

    "You physically have to have the product to serve the market during the transition period from the old to the new economy. And invest a lot in education, so that you (overcome) the logistics and credit barriers, as well as cultural barriers of leading people to the new way of doing business," Murcia said.

    Miami-based Latinadvisor.com, an initiative of roughly 200 investors from Latin America and the United States, with offices in Mexico City, Bogota, São Paulo and Buenos Aires, is preparing to debut in early August.

    "We will first start with a Spanish and English version covering the Andean region, and then launch material for other Latin American countries, as well as a Portuguese version to serve the Brazilian market," said Paulo Russomanno, a former Brazilian processing executive who heads Latinadvisor.com´s chemical and plastics community in Mercosul.

    Latinadvisor.com encompasses three other business communities — auto parts, construction and the textile industry.

    Russomanno pegged the sales potential for neutral plastics industry portals in Brazil at $1.5 billion to $2 billion, and he expects Latinadvisor.com to handle about 25 percent of that total next year. Brazil´s plastics industry currently generates roughly $12 billion in annual sales, accounting for about 70 percent of Latin America´s total.

    Latinplasticos.com is scheduled to go online by early August, initially only in Portuguese. The portal represents the implementation of a business plan developed in May by five graduates of the University of Pennsylvania Wharton School of Business from Argentina, Brazil, Peru and the United States. Latin American Internet players also have joined the venture as partners. Total investment was not unveiled.

    Latinplasticos.com´s initial target is Brazil. In a second step, after a consolidation period and most probably yet this year, the site will be available in Spanish to serve other South American countries, under coordination of the Latinplasticos.com base in Buenos Aires. Eventually, the portal will have offices in Venezuela, Chile and Peru, probably through business alliances via local partnerships.

    Similar to Todoplasticos.com, Latinplasticos.com was designed to handle all facets of the plastics industry, providing raw materials, machinery, auxiliary equipment, replacement parts, tools, finished products, product design and other services.

    "The focus on plastics is explained due to the fact that most of the founders have been related in some way with the sector, whether as a professional experience, or as a family-run business," said Latinplasticos.com CEO Rodrigo Palma.

    Latinplasticos.com will debut with online catalogs, price quotes and industry news. Auctions and exchanges will come next, and custom Web-based products will be available in a third stage, said Marco Antonio Gregori, director of Latinplasticos.com´s activities in Brazil.

    Echemtrade.com, so far the fourth vertical portal involving plastics with regional plans that cover all of Latin America, has defined the chemical and petrochemical areas as its business target. ChemConnect Inc. joined the company as a partner in late June, said Francisco Gularte, Echemtrade.com´s general director and partner, during a telephone interview.

    The site will go online during the next 50 days and is being built with a $25 million initial investment. In addition to ChemConnect and Gularte, three undisclosed chemical and petrochemical producers are partners in the venture so far.

    "The association with ChemConnect was a means of gaining strength, bringing to the portal a strategic international player," Gularte said.

    He would not reveal the amount that ChemConnect is injecting in Echemtrade.com.

    Abiquim, Brazil´s chemical industry trade association, in late June sponsored the first e-commerce conference catered to Brazil´s petrochemical industry. During a panel discussion at the São Paulo event, industry consultant Thomas Unger, who is also a board member of Latinadvisor.com, pointed out some technological challenges that must be addressed for e-commerce to catch on in Latin America.

    "I don´t know if Brazil is going to be cable wired so quickly. Without cabling, companies can connect, but I don´t think they can conduct (efficient) electronic transactions," Unger said.

    "I see Latinadvisor planning a $150 million investment to create four vertical portals in the next three years. I see five Wharton School MBAs allocating their intelligence to another project, as well as other initiatives. Even among well-succeeded portal firms, acquisitions and consolidations will occur," he said.

    Murcia, from Todoplasticos.com, believes that no more than two players will survive in Latin America´s plastics electronic marketplace.

    "It is not a very big market. It totals $17 billion among resin and finished products, with no more than 15,000" processors, he said.

    "We have to understand that e-commerce is not going to happen from one day to the other. But we also have to consider that nobody, 10 years ago, would imagine the technological revolution we´re now going through," Murcia said.

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