Tico Companies Marketing Their Own Brands
by Rod Hughes
We never thought we would ever see it, but Costa Rican companies are outsourcing in order to field their own brands even as the country woos foreign automotive parts firms to settle here. But the lure of cheap Asian labor is too good to resist.
Financial writer Peter Krupa of The Tico Times, Central America´s leading English’language publication, recently profiled three of these small companies that hope to grow larger by importing their own bands. The best example is Luis “Guilly” Cubero whose already successful Santa Ana bike retailer sells between 7,000 and 8,000 road and mountain bikes per year.
But come September he will be selling “Guilly Bikes” to display alongside imported brands like Trek, Cannondale, Shimano and Fox Racing, hoping to raise annual sales to 12,000. It would seem the right time with fuel prices rocketing upward. The bikes are designed by Cubero and manufactured in Taiwan.
Another such Tico Tirm is Cococo (Campania Costarricense de Computacion) t6hat now has its own laptops to sell alongside its Hewlett-Packards and Toshibas. Ditto BTC which is adding laptops assembled in-house from imported technology to its line of PCs already made at their Los Yoses plant.
The advantage for the company is obvious. “If you don’t have cheap labor from Asia, you can’t…compete,” Cubero told reporter Krupa. His bikes will range from a child’s model at $50 to more than $1,000 for top of the line models. And a Cococo laptop will go fore $500, 5-7% lower than equivalent imports.
But there are other advantages for the local buyer than just lower price. Getting a manufacturer to honor his warranty is often nearly impossible when the firm’s headquarters are on another continent and the local retailer is unhelpful. But parts and service are local with local companies.
But that trend is not stopping Foreign Trade Minister Marco Vinicio Ruiz from trying to attract foreign auto parts firms to do their outsourcing here. They would not feel lonely. Bridgestone-Firestone Tires set up the first automotive-related firm way back in 1967 and now turns out 12,000 tires per day, notes Tico Times reporter Leslie Friday recently. “Hutchings, Deshler, Continental AG and Daewoo are just a few among the long list of other companies who have in-country sites proving anything from assembly and electronics work to packaging,” Friday wrote.
The sprawling Bridgestone-Firestone plant alongside the PanAmerican Highway north of San Jose on the way to the airport is not the only example these days. In 2007 the country exported $240 million in automotive components and final products, Friday discovered, a whopping 214% over the 2003 figures. Costa Rica’s advantages were outlined by Gabriela Llobet of the Costa Rican Investment Promotion Agency (CINDE): Strategic location (proximity to U.S. markets), skilled workforce, political/economic stability and its incentives (e.g., free trade zones).
Besides giving evidence that CINDE has been doing an excellent job of aggressively marketing the country among foreign companies, interest in this country shows that the lessons of the Bridgestone-Firestone and Intel have sunk into the minds of companies. It was only 40 years ago when Ticos turned up their noses at a “made in Costa Rica” label. Today a product from this country is respected–even if it is made in Taiwan.