#592 – The Expat Files: IKEA, Culture, and the Challenges of Living in Latin America

Automatically transcribed from the original recording; names and wording may contain errors.

[00:00] South of the border down Mexico way That's where I fell in love when the stars above came up to play and now as I wonder Hello there all you expat wannabes. I'm Johnny Mueller and you're listening to the expat files living in Latin America The show that tells you just what it's like to live work play and or retire down here in Latin America It's a mix of the good the bad the ugly and the great and it's all right here. So let's get started So here's a weird question. Well, maybe it's not so weird. Hey, Johnny Are there IKEA stores or anything like IKEA stores in Latin America? You know, I like to buy things that are inexpensive and I can assemble myself. I have no problem with that

[00:45] I'm a do-it-yourself kind of guy. In fact, I used to watch Bob Vila in this old house all the time Guess I'm showing my age, but feels good when you can build something on your own signed Not Bob Vila Bob. Well Bob, I guess you are showing your age a little bit now There are a million and one do-it-yourself or shows all over Latin America. Talk about lag time And when you mentioned Bob Vila the grandfather of all those do-it-yourself thumb smashers What was he famous back in the 1980s actually met the guy and had a cup of hot chocolate with him Kind of a dunderhead if you ask me I had that chocolate. He had something completely different I'm serious that guy didn't know which end of the hammer to use but that's another story by the way He's a Latin guy Cuban and actually was in the Peace Corps in Panama back in the 70s

[01:31] So that's the Latin connection after I talked to that guy for a while. I wondered how the hell did he get that job? Actually, I do know how he got that job. Listen, if you make it down to one of my expat insider seminars ask me about it I'll tell you a good story Well, thanks to his show and a lot of other dunderheaded do-it-yourself shows up in the States It only took about 20 or 25 years for the lag time to hit Latin America And now you see those kind of shows all over the Latin airwaves though I've never been in a Latin household where I've seen the ladies or the guys actually Constructing do-it-yourself projects. They've seen on TV or anywhere else. It's just not a to it yourself culture Why would you want to build a bookshelf a fountain or a bunch of picture frames when you can hire a carpenter for? 20 bucks a day or have your gardener or maintenance man do it and of course the vast majority of lens

[02:18] The middle lower middle class and poor that would be about 80% of the population They're not sitting around watching do-it-yourself TV programs that show them how to install a skylight or a jacuzzi They don't have a lot of time on their hands and they definitely don't have the extra money for frivolous stuff But Bob not Vila's question was about IKEA, you know, that is a good question And by the way, I've never been in an IKEA store. They didn't exist when I left the States 27 years ago But I do remember in and around Chicago anywhere They had these stores called Scandinavian design and Scandinavian warehouse all things Scandinavian that kind of blonde teak and leather furniture stuff was all the rage way back when remember? Yep, unlike the Chinese garbage you see today that Nordic furniture was good solid stuff

[03:03] But some assembly required sometimes a lot of assembly required Yep I bought some of that teak and leather stuff too and when I was assembling it I noticed that the teak came from the Philippines and even back then before people were talking about transnational corporations and outsourcing jobs I was thinking wait a minute They're cutting down teak trees and the Philippines and shipping them to Norway all cut router joined and finished There they'd assemble it into bland but excellently constructed furniture, you know, 50 shades of beige Yep, I remember the early 80s. Well, I was in my beige period don't laugh It was a step up from my late 70s shag carpet period Anyway, they'd assemble that stuff in some Scandinavian country then they'd ship it all off to the states

[03:48] Even then I wondered how is that possible? How can that work economically? It really was a weird business model Well back then it was and now, you know, it wasn't US corporations that invented outsourcing Looks like it was those tall blonde Nordic guys did that but back to that question of IKEA There are three IKEA stores in Latin America and they're all in the Dominican Republic The DR and get this in 2010 when they announced they were gonna put their first store there They put out some huge press releases in the local DR papers saying that first store alone was going to create 2500 jobs And for that positive report, they got some huge tax breaks And now seven years later, they've got three stores in the DR and guess what? They have 400 people employed total So much for extreme optimism, huh?

[04:35] It was really just a tactic to pressure the government into giving them tax breaks nothing wrong with that After all taxes are just the lifeblood of the cancer we call government So then why doesn't IKEA with its 350 something stores in 37 different countries expand more into Latin America? Well, they've been saying in press releases for the past five years or so that they're going to go to Brazil, Argentina, Mexico And of course Panama and Costa Rica, but they haven't somehow that doesn't make sense Especially when you heard me say that first world franchises when transplanted to Latin America most often just kick ass Well, the thing to remember is that 95% or more of all the franchises that have landed down here in Latin America are convenience and fast food restaurants Where the number one business cost is labor not product

[05:24] Not to mention the average purchase is under 10 bucks and almost every latin can afford that If only once or twice a month Well, the average purchase price of something at IKEA is well beyond the average latin person's means And the fact that real hardwood handcrafted furniture is available down here for the price of laminated particle board junk coming from China That's also part of the equation Even though most latins would rather buy imported stuff even if it's junk for them It's prestige to show their neighbors and friends. They have the means or I should say the credit to do that That's what it's all about down here. You know Yes, it's a shame latin's prefer imported junk Just because it's imported over high quality rainforest hardwood that comes from their own backyard

[06:09] Imagine they prefer machine made artificial wood over the real thing as long as it's got a u.s Or european sticker on it, you know, like for example designed in the u.s We all know how misleading that is Which would seem to make IKEA a shoe in for latin america and it's obviously working in the dominican republic but remember the dr is a vacation hotspot has thousands of first world foreigners living there and Hundreds of all inclusive hotel resorts. In fact last I checked tourism is the number two industry there So yes, just with first world foreigners alone ikea would have a big market But the average dominicana forget about it. They make 300 bucks or less a month Now you longtime listeners have heard me say a number of times that you can bring a franchise down here

[06:57] And it'll be hugely successful But only if the marketing and brand recognition have landed well before your franchise makes it down And that all filters down here through product placement ads In first world cable tv and movies and such that make it down here to latin america and are translated in spanish Again, it's about that gringo advantage The perfect example starbucks who'd have thought a coffee company could come down from the states charge four times as much for a cup Of coffee then a little cafe or restaurant on the corner which uses a fresher better grade of coffee than starbucks ever had Well, it's all about the fact that starbucks is mentioned over and over in tv sitcoms and such and latin's Well, they believe in swallow all of it However in the case of ikea expanding to latin america They have two problems the first is that only about five percent of latin's can afford to buy that stuff and they would

[07:47] Because they see it on us tv. However When they find out the store brand's premise is to assemble your own furniture That's a completely foreign concept to latin americans They've never heard of that before and the truth is about 80 percent of latin families have a hammer a phillips screwdriver and a bent And twisted regular screwdriver around the house and that's about it Probably what most americans have in their junk drawer by the way, too Which is probably why ikea gives you the two or three things you need to assemble the stuff, right? Now I said latin america was not a do-it-yourself culture It's a fix it yourself culture meaning when things break, they just keep fixing them over and over and over again You could say as far as the sweaty masses, which is 80 or 90 percent of the population

[08:32] It's a chicken wire duct tape and superglue society They don't do it yourself with new items like for example assemble things from ikea In fact a couple of months ago. I was sitting in a cafe with a couple of latins and one of them asked me What ikea was and I said yeah, I have never seen one either But i'll tell you you have to assemble everything yourself and he looked at me and said I guess that leaves me out And I said well if you buy something from them, just have your gardener assemble it and he said well That would be fine. But the guy can't read But on second thought who reads the instructions he says anyway, they just go to youtube, right? However, the problem is maize gardeners and cleaning ladies don't know what youtube is either Oh their adolescent kids do because they're tuned in but the parents generation they know nothing of youtube In fact about six months ago. I was involved in a small construction project. I was researching methods to waterproof existing cement foundations and walls

[09:26] That were built up against hills and slopes because you know That's where you're going to get the seepage and the humidity and stuff and I found a product called cica one Sika followed by the number one that you mix in with cement mortar or grout completely preventing water humidity and moisture from seeping through Kind of a miracle product since that's one of the biggest construction problems there is here in latin america But you knew that already, right? However, you have to mix it right and apply it in various layers You can't just mix it up and schlep it in with one shot like you would for a concrete slab or a sidewalk So I bought a gallon of stuff and had my maintenance guy test it out About 20 minutes later. I looked out the window and saw him struggling with the instructions on the label Like I said people from his generation in his socioeconomic class can't read very well or not at all

[10:16] So I brought him in the house over to the computer looked it up on youtube and sure enough There had to be a dozen videos on that product And you know what he was stunned He's been building houses and on construction sites for years and had never seen one youtube video Didn't even know what youtube was he spent the next half hour watching those little three minute youtubes over and over again Good thing that three of them were in spanish It was as if I just opened up a new world to him The only problem is he doesn't have a computer and if he did he wouldn't know how to search that stuff out anyway Maybe his kids will but he won't so anyway It'll take something like youtube to usher in the assemble your own furniture concept Because you see if you think first world people have problems reading instructions You ought to see how they do things down here in latin america

[11:02] Remember the old saying if all else fails read the instructions Well, the saying down here should be when all else fails learn how to read then maybe read the instructions or Skip all that and go to youtube Now I know what some of you are thinking you're thinking wait just a minute Johnny said they have sears and ace hardware and costco and walmart and they sell a lot of products that need to be assembled, right? In fact almost everything these days that's being shipped in from china is tightly packed and you have to do some assembly Well, here's something i'm sure you didn't know and it's very good news Pretty much anything you buy from a latin american furniture or appliance store that you can't fit in your car They'll deliver it right to your home. No charge and assemble it for nothing And if you buy a washer or a dryer dishwasher refrigerator with an ice maker hookup

[11:52] They'll drop it off and do all the hookups for you, too It's almost always part of their service, but then you might say well, there's a conundrum here. Johnny You're always telling us that latin customer service is non-existent or at best crappy Well, that's absolutely true But it's all about selling you the product and getting their hands on your money In the moment and then of course they'll follow through and deliver the product and assemble it But after that chances are you've been erased from their memory and they won't respond to you unless you come walking in Ready to buy something else from their store unless of course you're dealing with a first world franchise like costco or sears Walmart office depot, etc. Yes, they will have first world standards almost This is the third world, you know an old habits die hard Now I mentioned when you buy the bigger stuff you'll get free delivery, too

[12:39] Unless of course you're way out in the boonies and there might be an extra charge, but it won't be much Now you might wonder why that is why there's free home delivery almost everywhere in latin america It comes from the fact that 10 or 20 years ago almost no one had a personal vehicle and 95 of the people rode the chicken bus Yet even the poorest of latin's would eventually buy a stove or a refrigerator or a tv So how are you gonna get something like that back home on the chicken bus? Well in most cases you just can't thus the tradition of free delivery or almost free delivery So what's almost free delivery? Well, for example, just the other day I was talking to a gringo who was having a garage addition built onto his house now remember down here You don't use stick wood construction We're talking black and concrete and steel heavy duty stuff made to withstand the occasional shake rattle and roll

[13:29] The entire cost for materials for a two-car garage around twelve hundred bucks enough to fill a medium-sized flatbed truck Now the construction materials supply company was around 15 miles from his house He said if he would have been within five miles of the place he'd have got free delivery instead He had to pay get this 12 bucks Now I don't know what they charge you for delivery up in the states on a load like that But I have to think it'd be well over a hundred Oh and one more thing about furniture stores sending people over to set up your washing machine dryer for poster bed Whatever to us gringos. It does seem above and beyond the call of duty Especially since it's free and you know, many of us gringos feel obliged to tip them Believe me if you try to do that

[14:14] They're certainly going to be shocked and surprised because latin's just don't tip for things like that. It's part of the service Hey, they'll probably take it. But by the way, that's another reason why latin's love gringo so much We tip for things that latin's never would tip for In fact many times i've been in a car with another gringo driving a fresh green gringo usually and we'll pull into a gas station Suddenly the little workers in their uniforms are all over the car checking the oil fluid levels and the tires wash down all your windows Just like service station personnel used to do back in the 60s and 70s even into the 80s I mean, why do you think they used to call them service stations? That's pretty much an oxymoron now Anyway, many a time a fresh green gringo driving has turned to me and said johnny How much do I tip him and I say, you know what anything you want?

[15:00] But no one else ever does just the occasional clueless gringo. In fact, when I first got down here, I used to do the same But I digress as usual. Where were we? Oh, yeah talking about ikea and their much publicized Proposed moved brazil back in 2010 which they never did now remember back in 2010 to 2012 brazil was considered by many of the world's economic experts as the Financial power play of the new millennium the place to be the place to invest even alternative superstar guys like doug casey We're saying go to brazil brazil. It's the next big booming giant by the way I was a big follower at doug casey's I still read his stuff But his prestige has taken a hit with me lately not completely but slightly in that he's pushed three big losers in a row

[15:46] Brazil argentina and porterico worst of all for many months. He was pushing investments in porterico Or at least the people he's got working in his organization sending all those recommendations and emails to people We're pushing the place and hard It was about porterico being a territory and therefore you wouldn't have to pay federal taxes if you incorporated there Amongst other things but now you might have noticed porterico is completely bankrupt and in the tank waiting for bailouts I mean the place is an economic wreck Funny how he and others who are promoting it have quit talking about it all together now, huh? As they suddenly quit talking about brazil and costa rica, too I on the other hand have been warning expats to stay away from brazil argentina and porterico along with a few others

[16:34] Like panama mexico and costa rica, of course now i'm not patting myself on the back. In fact, they have a cracked crystal ball It's in the shop right now. Can't seem to find any crystal ball bondo on amazon. I guess anyway No matter what kind of reputation some of these alternative media guys have and some of them have tremendous track records in their own fields The fact is I can't think of one who has got 27 years living in latin america Now some of them may have visited the third world quite a few times even have a house or two Generally in places like costa rica or mexico But they don't have consistent boots on the ground year over year And i'll tell you I have a couple of gringled friends who've got beautiful Condos in the case of belize and they only go down a month or two a year at most

[17:19] And they've owned those things maybe seven or eight years But I wouldn't ask their advice about anything that's happening on the street level in belize. That's for sure They're living in a rich man's bubble They don't talk to the belizeans about what's happening in their country Don't even read the belizean newspapers or journals even though the country's language is english Oh sure They share a few polite words a couple times a week with their maid and gardener But they really have no idea what's happening on the ground with the real people in belize But you know when these guys come back from their month vacation in belize back home to chicago or cleveland And they run into people at work or on the golf course or at the gym Whatever everyone seems interested in a person with foreign holdings like that. It's an adventure, too And guess who suddenly is the expert on belize? Why the guy with the condo let's talk to him. Maybe we'll invest down there, too

[18:08] You get the picture, right? Now as for me, like I said, i'm not clairvoyant, but i've got one thing going for me 27 years continuously down here in latin america and more than three quarters of it way off the gringo tourist trail, too And remember I came down not knowing a lick of spanish And yes, the first five years I was down. I made a lot of stupid mistakes Which means there are certain things I can bring to the party that others can't But where were we? Oh, yeah talking about what happened with ikea and why they did not invest in brazil Even though they had great expectations Well, they found out soon enough that brazil has a 75 Import tax on foreign goods and even though local furniture manufacturers and such face that same problem They sell mostly goods and manufactured items that were produced within brazil

[18:55] So they're not hit with that killer tax So ikea knowing that's the competition they would be facing along with the fact that latin americans are not do-it-yourselfers Well, they smartly stayed out of the market not to mention since 2010 brazil has become A world-class economic basket case with 35 inflation. Come on. How can anyone do business under those conditions? So the question is how many of you out there are invested in brazil? Or should I ask what guru do you want to punch in the face for giving you that sage advice? Hmm Okay, speaking of customer service just the other day I recognized my car needed a brake job as I hit the brakes. I heard that definite squealing metal on metal Yeah Now of course those first metal on metal sounds are just a warning meaning you better get that fixed within the week

[19:43] And if you don't you'll not only have to get new brake pads But have your rotors turned or replaced up in the states that could cost you an extra 100 to 200 bucks Down here in latin america, maybe 15 bucks Anyway, here's something you should know about cars If you live in and around the city, you'll probably be changing your front disc brake pads about every 30,000 miles And the rear brake pads. Well, this might sound weird, but maybe never now in the states A new set of front disc pads installed will probably cost you around 150 bucks That's just the pads not the rotors and down here in latin america If you don't go to one of those big goodyear or might as muffler style shops or the walmart and costco mechanic It'll probably cost you around 30 bucks complete for the front brakes And if you need your rotors turned probably cost you another 15 bucks

[20:32] Figure double that if you go to goodyear costco or one of the first world franchises Now are you getting the differential in prices here? Anyway personal experience last week. I had my front brake pads replaced. I did them myself It took all of about 45 minutes. How many listeners out there have ever done that change your own brakes? No big deal. You get a little dirty Yeah, I know I know young adults and adolescent kids never do that kind of work anymore But if you're a tinkering type or you come from that generation where muscle cars were all the rage Well, we did a lot of our own auto mechanics and repair stuff We didn't mind in fact We got a certain satisfaction of doing it ourselves and saving the dough because there was always a big shortage of dough At least when I was a kid certainly expats could afford 25 or 30 bucks to get their brakes replaced by someone down here But some of us just like to do stuff like that ourselves

[21:18] So anyway, I went to the local hole in the wall car parts store and paid get this a whole 15 bucks For my front brake pads and yes down here They have all the parts and supplies you might need for pretty much every modern car But suppose you had a special kind of classic car. Let's say a 65 mustang with front disc brakes You'll probably have to order online from amazon or hammings and you'll get stuff down here in a couple of days But do note that down here in almost all cities. They have brake and clutch re-manufacturing companies. What does that mean? Well, you take the old brake pads off the ones that are worn almost to the metal And you hand them into one of these shops and they'll put new linings on them. They can do that in a couple hours Yep, they're like original and they're guaranteed too. So how would all those places pop up?

[22:05] Well before the age of the internet It took weeks sometimes months to order replacement parts from up in the first world And since brakes and clutches wear out all the time the niche got filled latins are very good at that kind of stuff And the cost 10 or 15 bucks and by the way same thing with clutches You bring in your old worn out clutch plate and they'll resurface it for you Now, of course up in the first world almost everyone drives an automatic so there won't be a clutch plate like that But down here in latin america probably 70 to 80 percent of cars and trucks Are stick shift and they all have clutch plates that wear out occasionally by the way There are many many hole in the wall mechanic places down here that are dirt cheap In fact the guy I use for various things doesn't even have a cement slab He lays on gravel believe it or not He basically works out of a lean-to that doesn't even have walls or windows

[22:53] Now that's not to say there aren't a lot of hole in the wall shops where guys do crappy work It's like anything else in the world buyer beware And you pretty much find the good ones the satisfactory ones by hit and miss or by word of mouth So anyway, i'm no motorhead But I do a little basic work on my car now and again when it's necessary By the way up north when the poop hits the ventilator and that'll be really soon I'll bet you after a few weeks of chaos your little community wherever you are would gladly trade 100 lawyers Psychiatrists or politicians for one good car mechanic or perhaps a box of shotgun shells Hmm by the way, how's your plan be coming? Okay. Now for one of those crazy boots on the ground stories that you'll only get to experience if you're down here And even then you're gonna think man did that really happen? If you remember last week

[23:39] I spoke of a guy that brought his family down after attending my expat insider seminar a couple years back Now he and his family live in a gated guarded community and all their neighbors are upper middle class latins People with enough dough to have nice houses and nice cars First world style now since he and his family live way off the gringo tourist trail as do I People you come into contact with are not used to seeing gringos Now that's off the tourist trail now do note if you live in a gated guarded community Everyone who comes into your little subdivision is going to have to go past a guard gate Pull out a driver's license and stick it in a little slot so a camera can take a picture of it That's of course so the guard can have control over who exits and enters the place Anyway, he said he had a recent get together at one of his latin friends gated guarded communities

[24:29] So he pulled up to the guard station handed his driver's license to the guard The guard called the owner of the house as he should do announcing the arrival of a guest And the latin owner of the house says well, who is it? Then the guard said it's a gringo named drivier le sensei Hmm drivier le sensei, huh? Well, here's the punch line the gringo my friend gave him his texas or oklahoma or whatever. It was american driver's license And of course for someone who's never seen an american driver's license before he might just think the name of the guy On that little plastic card was drivier le sensei aka Mr. Driver's license Now just a few days ago when my gringo friend told me this story

[25:15] He said johnny if I got a funny story for you When he told it to me, I said, you know what? I think some listeners will think i'm making this up In fact, there's a lot of stories I don't tell because you'll think i'm making them up Which is why I advise you come down to my expat insiders seminar to see some of this stuff for yourself Then you'll know it's no exaggeration. In fact at times believe it or not. I'm actually holding back Oh and speaking of my next expat insider seminar, it'll be in january 2017. Just go to Www the new expat.com click on johnny's 2017 seminar link at the top of the page for full information We're more than half ill now. You still got a chance to sign up and get in on the early bird discount So check it out I don't want to be the one to say I told you so

[26:02] But if you don't have your plan be in action pretty soon Those kind of preparations will be out of the question because your uncle sam Just won't let the sheep out of the barn Just look at how many extra hoops you have to jump through today compared to just a year or so ago When applying for temporary and permanent residency Whether in latin america or any country in the world for that matter And even though the vast majority of latin countries Bend over backwards to allow us gringos and expats to live in their countries as permanent residents. Meanwhile, it's uncle sam That's putting up the barriers sooner or later. The doors will shut completely. Okay, enough said about that We're getting towards the end of the show now and some people have been saying they're getting what they call a monkey survey A questionnaire asking them about their expat preferences and lifestyle

[26:50] I did not send that it's not coming from me It's just junk mail from expat wisdom a website I used to be affiliated with who I unceremoniously dumped a while back because well They're short on ethics amongst other things So if you get anything at all from expat wisdom like for example this so-called monkey survey asking you about your life It's just a data mining operation and ignore it just round file anything you get from a site called expat wisdom Okay, last but not least don't forget to go to my youtube channel That would be youtube slash the expat files all one word I think there's something like the last 80 shows up there now So do check out the photos and slides and don't forget to subscribe. It's free South of the border You've been listening to the expat files living in latin america coming to you twice a week from somewhere south of the border

[27:42] Email me the expat files at gmail.com And if you want me to help you sort out your own latin american plans schedule a one-on-one consult with me Just send an email and let me know at the expat files at gmail.com. Nos vemos