Sun, Jul 09, 2017 page15

• ‘The Venezuelan factor’ — entrepreneurs adapt to nation in crisis

  • By Andreina Aponte and Frank Jack Daniel / Reuters, CARACAS
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  Unfazed by Venezuela’s political unrest, devastated economy and ranking as one of the world’s worst places to do business, Johel Fernandez two years ago started making sweatshirts emblazoned with icons of Caracas for online customers overseas.

  Fernandez, 22, is part of a small group of young businesspeople finding opportunities in Venezuela’s crisis, building companies in their neighborhoods at a time when many peers are seeking their fortunes abroad.

  “Right now there is a movement of entrepreneurs who have decided: ‘We are not going anywhere.’ Venezuela will always be our center of operations,” said Fernandez, who markets his products with the slogan “Made with love in Caracas.”

  

  Johel Fernandez speaks during an interview in Caracas on June 13.

  Photo: Reuters

  Working out of a cramped basement workshop, Fernandez’s company, Simple Clothing, is tiny, selling a few dozen articles per month to the US, Spain and Britain.

  However, the foreign currency earned goes a long way in a country where many professionals make less than US$40 per month.

  Triple-digit inflation, a recession the central bank said shrank the economy almost by a fifth last year and chronic shortages mean socialist-run Venezuela is not the first place that springs to mind to start a company.

  The World Bank lists it the fourth-hardest place to do business among 190 countries, ranked between Libya and war-ravaged South Sudan. It takes an average of 230 days to open a Venezuelan business and just six in neighboring Colombia.

  Fernandez’s designs of the capital’s metro map, its shanty towns and the country’s favorite candy brands are popular among the growing diaspora of Venezuelans.

  He has opened his production to other designers to help them earn hard currency and ride out the recession.

  Like other young businesspeople he sees running a business as a way of helping Venezuela survive its decline.

  There are even some upsides in the topsy-turvy economy.

  Simple Clothing’s individualized export business is viable in part because distortions created by multiple currency and price controls make the cost of sending a package abroad much lower than in nearby countries.

  “Shipping from Venezuela is currently super cheap and it is something we can offer our clients,” Fernandez said. “We can send it at no extra cost to them.”

  For example, to send a small package to Spain from Venezuela by FedEx Corp costs just US$1.50 at Venezuela’s widely used black-market rate.

  It would cost US$56 to send the same package from Mexico, more than the US$36 Fernandez sells his sweatshirts for. In bolivars, his clothes are unaffordable for most Venezuelans at home.

  Fifteen seamstresses work by contract for specific orders, giving the company flexibility to adapt to occasional scarcity of the right cloth, as well as riots that force them to shutter up several times per week. The flexible hours also give workers time to scour supermarkets for food.

  What Fernandez calls “the Venezuelan factor” means orders are occasionally late.

  One of the couriers Fernandez uses, DHL Worldwide Express Inc, last month postponed flights to and from Venezuela indefinitely.

  DHL did not give a reason, but several airlines have stopped flying to Venezuela because they are unable to repatriate earnings.

  Despite the challenges, Wayra, a start-up accelerator run by Spain’s Telefonica S.A., has helped set up 45 tech-oriented companies in Venezuela over five years.

  Thirty-five are still in business, including MundoSinCola, an app that helps save time in Venezuela’s infamous lines at banks and government offices.

  Wayra’s Venezuela director Gustavo Reyes said there are about 20 start-ups per year in Venezuela and that with better conditions there could be 10 times that.

  Startup Weekend, an organization that runs boot camps for entrepreneurs, last year held six events in four cities in Venezuela, but has postponed this year because of the crisis.

  Ideas at Startup Weekend last year included a mobile app to tell you which supermarkets contained scarce products, said Karina Taboelle, a speaker at the events.

  “The crisis has had a positive side in that it has pushed people to look for alternatives, to find solutions focused on the situation in the country,” she said.

  To weather shortages, chef Carlos Garcia, who trained at Spain’s legendary El Bulli restaurant, travels deep into Venezuela for supplies for his eatery, Alto, the only Venezuelan business on the coveted 50 Best Latin American Restaurants list.

  “Only the olive oil and some sugars are imported,” Garcia said as waiters served meticulously placed vegetables and local staples such as black beans blended into a delicately spiced soup.

  A degustation menu, in which patrons sample various foods, costs 35,000 bolivars, or about US$4 at the black-market rate.

  Critics find it offensive that Caracas’ high-end restaurants are bustling at a time when it is common to see families looking though garbage for food and malnutrition has soared.

  Garcia said the restaurant gives work to 32 people, who are fed twice a day.

  He points to a giant pot bubbling in the kitchen, cooking a soup that will feed 250 children at a local hospital.

  Like Fernandez, he sees building a business at a time of crisis as patriotic, calling it an act of “resistance.”
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