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Chinese enterprises in Latin America

Chinese enterprises in Latin America

Posted by Juan Gavasa on February 20, 2014

In 1992, less than 1 percent of Latin America's exports went to China; 20 years later, that figure has multiplied by a factor of more than seven. HSBC predicts that by 2030 China will surpass the US to become the largest trading partner of Latin America, which had already become China's second largest investment target by the end of 2012. With the growing momentum of cooperation between China and Latin America over the last few years, made possible as many Chinese companies have responded to the "Going out" strategy by introducing their business to Latin America, Chinese enterprises have become an important driver of economic development in the region.

But they have not always sailed with a favorable wind when crossing the ocean. China International Water & Electric Corporation was the first company to enter the Latin American market in the industry. Zhu Xiaohua, deputy general manager of the Corporation's South America branch, admitted that there were tough days at the beginning. "At first, the problematic business customs of some Chinese companies provoked a lot of labor disputes and environmental disputes, and we paid some heavy fines," Zhu said.

But after that, the Chinese companies managed to turn the situation around with better positioning strategies and greater familiarity with local laws and regulations. "Now, most Chinese companies in Latin America enjoy very good reputations around here. We've helped them with a lot of infrastructure projects, and have created a lot of job opportunities," Zhu said. Behind the expansion of the Chinese enterprises in the region is the unflagging support provided by the Chinese government.

"The Chinese government is actively encouraging the country's enterprises to ‘go out', as China becomes stronger economically. The government has offered many favorable policies, including preferential loans, and this has provided a stimulating environment for further development of Chinese businesses in Latin America," said an International finance coordinator at Ecuador's Center for Economic and Social Rights.

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