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The Chile-California Council

What do Chilean writer Isabel Allende, actor Cristián de la Fuente, politician and entrepreneur Fernando Flores and economist Sebastián Edwards have in common apart from being successful in their respective fields? The answer is that they are all based in California and are members of the Chile-California Council, an initiative launched last year by Chile’s Foreign Affairs Ministry to increase trade and business ties with the United States’ most populous state.

Chile and California have much in common including warm climates, long Pacific coastlines, fruit exports, wine industries and their susceptibility to earthquakes. California’s economy is the eighth largest in the world and more than ten times Chile’s size, but they have a history of cooperation going back half a century.

In the early 1960s Chile and California signed an agreement as part of John F. Kennedy’s Alliance for Progress program. This accord was re-launched in 2008 with the creation of the Plan Chile-California: A Strategic Association for the 21st Century, which has been supported by AmCham.

When President Piñera led a mission of ministers and businesspeople to California in September 2010, he created the Chile-California Council under the auspices of the Foreign Affairs Ministry, and appointed Agustín Huneeus, a Chilean winemaker now based in Napa valley, as its president.

The Council’s strategy is divided into three main areas: developing human capital, promoting research and development, and increasing trade and business opportunities. Comprised of 30 members including artists, businesspeople, academics and government officials, the Council held its first meeting at the Ritz Carlton Hotel in San Francisco on April 15.

AmCham Chile’s president, Javier Irarrázaval, attended along with Chile’s Undersecretary of Foreign Affairs, Fernando Schmidt, and its Ambassador to the United States, Arturo Fermandois.

“This was one of those meetings where you come back feeling that good things were accomplished,” Irarrázaval told bUSiness CHILE on his return to Santiago.

The members agreed to create a private foundation in California, a board with up to 14 members and an executive committee to manage the Council’s operations. Once the team is appointed and staff hired in both countries, committees will be created to focus on specific areas of cooperation such as education, technology and innovation. The new structure will help channel financial resources from the Chilean government, companies and individuals into promising new initiatives, said Irarrázaval.

The day before the meeting, the Chilean delegation visited Sacramento to meet with state officials including California’s Governor Jerry Brown, who replaced Arnold Schwarzenegger in January. Brown’s father helped launch the original Chile–California agreement in the 1960s and he is keen to build on the progress made by his predecessor.

Over 20 agreements have been signed in areas such as energy, biotechnology, entrepreneurship and education, but the Council needs to decide which to support, promote and adopt, said Irarrázaval.

Some progress has been made already. For example, Chile’s emergency services agency, ONEMI, took part in a simulation with its California equivalent, Cal EMA, last year to improve earthquake preparedness, and seminars have been held on topics such as renewable energy and organic farming, but more needs to be done, said Irarrázaval.

In January, AmCham brought a group of leading Silicon Valley venture capitalists to Chile to share their experience and meet with young Chilean entrepreneurs. The mission was a follow-up to the September 2010 meeting between U.S. venture capitalists and Economy Minister Juan Andrés Fontaine.

Organized in partnership with the Economy Ministry, the Chilean Economic Development Agency (CORFO), the U.S. Department of Commerce, NGO Endeavor Chile and the Chilean Association of Investment Funds (ACAFI), the mission was a success and AmCham plans to bring another group of venture capitalists to Chile in 2012.

Ending the brain drain

Human capital is another important area of cooperation considering that California has some of the world’s best universities. Today, hundreds of Chilean students are studying in universities like UC Davis and UC Berkeley under the Becas Chile scholarship program.

For example, the University of Concepción signed an agreement with UC Davis in 2009 to promote joint research in science and technology focused on agriculture, which has given students from Concepción a chance to study in California.

“There are a lot of young, bilingual, talented Chileans studying in California, but many of them will never return to Chile or, if they do, it will only be for a short time,” said Irarrázaval.

Becas Chile requires students return to Chile to work for at least two years after completing their studies, but they are often head-hunted by foreign companies while still in California. Even if some do return, most Chilean companies are unaware of the talent being nurtured in California.

As a case in point, Irarrázaval met two Chilean PhD candidates at UC Davis who are working on preventing salmon diseases that have cost Chile’s aquaculture industry some US$2 billion in lost exports. However, they have not been offered financial assistance by any of Chile’s 35 salmon companies so Irarrázaval predicts they will end up working somewhere else.

“Chileans want to come back to Chile but there is no connection with the private sector, it’s really a waste of talent,” said Irarrázaval.

To put an end to this brain-drain, the Council proposed creating a headhunting agency that would match Chilean graduate students in the U.S. with companies in Chile. Luring graduates back home could bring a great benefit to Chile with relatively little effort. In other words, they are what Irarrázaval calls California’s “low-hanging fruit”.

The Council also aims to promote research and development in areas where Chile has a natural advantage such as astronomy. With over half of the world’s telescopes in northern Chile, the Atacama Desert has the potential to become a top destination for astronomers and tourists. “We already have a wine route in Chile, what if we created an astronomy route?” said Irarrázaval.

Fernando Flores, the president of Chile’s National Innovation Council, is focused on leveraging the country’s leadership in astronomy, but each councillor has a different area of interest - Isabel Allende, for example, is interested in fostering cultural cooperation. This is important because the councillors must feel passionate about new initiatives to invest time and money in them, said Irarrázaval.

The renewed Plan Chile-California is an opportunity for Chilean companies to benefit from the West Coast state’s outstanding universities and experience in innovation and entrepreneurship. Now the Council’s challenge is to transform its members’ ideas into action.

“The connection between two countries does not get stronger by signing MOUs, it gets stronger when people connect, relate and talk to each other,” said Irarrázaval. “That’s when good things will happen.”

Julian Dowling is the editor of bUSiness CHILE