Asia-LAC Business Digest — 12 Oct 2017

Up Front

China remains the next great hope for Latin American agribusiness. Over the past twenty years, feeding the world’s biggest country has driven agriculture exports of commodities such as grains, soy, and more recently proteins.

Agribusiness exports have evolved as the Chinese consumer market has evolved, with a rising Chinese middle class demanding better quality goods. Moving upmarket to meet that demand has allowed for more lucrative exports to arrive on the Chinese market, whether it’s Chilean wines (China sales up over 40% on the year), Peruvian avocados (sales up 73%), or Argentine beef (sales up 65%; but still only 11% of China’s imports, compared to Uruguay’s 30%). Exporters to new to the Chinese market, like farmers in Mexico’s Veracruz state, are lining up to join the opportunity.

Coordinated campaigns like Chile Week and the new Peruvian Super Foods campaign are both seen as touchstones for Latin American exporters of specialty products looking to expand their reach in China’s market. Peru in particular has seen exports to China up 120% over the past year, and food exports to South Korea have doubled since a bilateral FTA went into effect in 2011.

Ahead of hosting next month’s China-LAC Business summit, Uruguay has been pushing the potential for further agriculture exports, with the Vice-minister for agriculture, and animal husbandry talking about “regional synergy in agribusiness” at the summit.

But in order to really drive economic growth and development, countries in the region need to think beyond being breadbasket or fruit stand to Asia. Some efforts have been made to move up the value chain, with the Peruvian Ambassador to China discussing a “digital Belt and Road” to connect the two countries (although so far woefully vague on details). Or, as a article in Uruguay’s El Observador put it, China is “the opportunity to export more than just meat, soy, and wool.” The region should seize that opportunity, and look to business summits with China to talk about design and technology, and not just beef and blueberries.

Top Stories

¿Cuál es la visión de futuro que tiene Alibaba? — Perú Retail
Alibaba quiere ser el puente del e-Commerce mexicano con China — Expansión
Alibaba launches $15 billion overseas R&D drive — Reuters
Alibaba keeps Latin America guessing. Alibaba Vice President Brian Wong visited the ECSE e-commerce conference in Mexico city last week, pushing the opportunity for Mexican SMEs on the digital retail giant. Wong echoed the message that Alibaba has pushed elsewhere in North America in it’s Gateway events, without mentioning those by name. While Alibaba has not officially established itself in Mexico, ProMéxico announced that the company — along with eBay and UPS — will participate in the “México a un click” digital sales promotion program. Separately, Alibaba announced it’s $15b "DAMO Academy” research hub drive, with locations in China, Israel, the United States, Russia and Singapore — but not Latin America.

Sinopec pone en venta sus activos petroleros en Argentina — Clarín
La china Sinopec habría puesto en venta sus activos petroleros en Argentina — Infobae
Buyers eye Sinopec's Argentina oil assets in sale worth up to $1 billion — Reuters
China’s Sinopec has thrown in the towel. After seven years of trying to make a go of their $2.45b  purchase of Argentine assets from U.S.-based Occidental Petroleum Corp, the assets are being marketed to over a dozen buyers for a significant discount - $750m to $1b. The decline in global oil prices and labor headaches are said to be driving the discounted valuation.

Se puso en marcha en Jujuy la construcción del parque solar más grande de América Latina — Infobae
Se inauguró el parque solar más grande de América Latina — Clarín
Jemse breaks ground on 300 MW solar park in Argentina — PV Magazine
Un banco chino financia el parque solar más grande de América Latina — EnergyNews
Provincial company Jemse SE (Jujuy Energy and Mining State Society) has begun construction of the 300 MW Cauchari solar project in the northwest province. The project is one of two PV projects totaling 400 MW selected in round one of the RenovAr program for large-scale solar and renewable energies. The plant will sell power to wholesale electric market management company Compañía Administradora del Mercado Mayorista Eléctrico (CAMMESA) at a price of $60 per MWh under a 20-year PPA. Jemse owns an 80% stake in the project, while the remaining 20% is owned by Power China, Shanghai Electric and Talesun, which is building the plant. The project is being financially supported by Chinese state-owned bank Export-Import Bank of China and by a $210m bond that Jujuy issued in mid-September. 

Negocios con el mundo: el desafío de exportar con la etiqueta Made in Argentina — La Nación
El futuro próximo de Brasil y China concentra la atención — La Nación
La Nación held an event on how to improve the “Made in Argentina” for global sales, with looks at soy sales to China and tech sales to India. The last piece advocates for Argentina to look to Brazil’s experience for clues on how to successfully engage China.

Projetos bilionários em transmissão de energia no Brasil atraem indianos e chineses — Extra Online
Electricity transmission projects in Brazil are attracting Chinese and Indian companies. China’s State Grid is already there, building two transmission projects to bring Belo Monte hydro energy to the southeast. India’s Sterlite Power won two auctions in April. In the hustings for the next power line auction are two new Indian firms: Adani Transmission and Power Grid Corporation. And Shanghai Electric is negotiating for the Eletrosul lines from Eletrobras.

Facebook launches its first innovation school in Brazil — ZDNet
"Estação Hack” opened it’s doors in São Paulo last week, with the aim of supporting about 7,400 people leading projects with social impact potential per year. Submissions for the acceleration program can be made until October 29, with the first group of participants starting in January 2018.

China-LAC

Diplomáticos de Argentina, Brasil y Chile se reunieron con funcionarios chinos para potenciar la relación comercial — La Prensa
"Bloque ABC": Argentina, Brasil y Chile unen fuerzas para captar comercio e inversión china — Economía y Negocios
The representatives of Argentina, Brazil and Chile in Beijing have formed an “ABC Block” to convince Chinese companies to think of them as a group to do business in, rather than individual fragmented countries. At a meeting with companies such as the Chinese Development Bank and Sinosteel, the ABC Block said that their effort was complementary to those of Mercosur, which is expected to begin negotiating a free trade agreement with China next year.

JISCO starts US$1-b spend in Jamaica this week — Jamaica Observer
Gansu Province’s Jiuquan Irons & Steel Company Limited (JISCO) is launching a $1b investment program in the Alpart bauxite refinery in Jamaica. The program will include an upgrade of the energy plant, including a new 230MW LNG plant. JISCO has also committed to invest another $1.5b in an industrial park next to Alpart focused on: processing and manufacturing, with emphasis on exports; modern logistics; mechandise trade; research and development, focusing on technological innovations; professional services; and urban support. 

OPINION: Efecto China en América Latina — Al Momento
¿Adónde va China?, por Sergio Bitar — La Tercera
China keeps Latin America guessing. Opinion pieces looking at the role of China in Latin America. While the first see’s China’s influence in the region waxing, the second notes the constraints on China’s continued growth, and wonders how that will impact Latin America.

Enquanto China prepara lançamento de satélite sino-brasileiro, ciência nacional afunda — Brasil 247
Venezuela lanzó su tercer satélite con ayuda de China — El Comercio
Venezuela launched a satellite this week; Brazil will launch one in 2019. Both will need China’s help in launching them. This is particularly disappointing for Brazil, who in the 1990s had pretensions to a domestic space program that never got off the ground. 

CCJ aprova acordo entre Brasil e China de cooperação entre administrações alfandegárias — Jornal do Brasil
The Commission on Constitution, Justice, and Citizenship approved a Decree Law allowing for closer coordination between China and Brazil on customs administration. The agreement will allow for improved commercial logistics between the two countries.

Aumenta la demanda por jengibre orgánico peruano — El Comercio
An interesting story about a product that Peru is competing with China in supplying. China is the world’s largest producer of ginger, but has had shortfalls in production over the past four years. Peruvian producers have stepped into the gap, and exports to the US and Mexico have increased 70%.

Necesaria comitiva mexicana para atraer inversión automotriz china — Uni Mexicali
Enrique Dussel Peters from UNAM’s China-Mexico Studies Center, argues that the Mexican government needs to take a more proactive approach in attracting Chinese investment in the auto industry.

China, The United States, and the Future of Latin America — U.S.-China Relations, Volume III
New book edited by David B H Denoon, with chapters from Dan Restrepo, Frank Mora, Christopher Sabatini, and Enrique Dussel, among other’s. From reading Denoon’s intro, we’ll be picking up a copy of this soon.

Partidos brasileiros conheceram de perto a realiza — Portal Vermelho
Last month a delegation of Brazilian parties of the left — the Worker’s Part (PT), Democratic Working Party (PDT), and the Communist Part (PCdoB) — all flew to China to meet with the International Department of the Central Committee of the Chinese Communist Party to discuss the Chinese Dream.

Korea-LAC

En firme Acuerdo de Libre Comercio entre Colombia y Corea — Dinero
Colombia’s government notified South Korea that it has ratified the free trade agreement between the two countries, which should come into effect on November 4th.

El secretario de Planificación participará en Conferencia en Lima — Metro Ecuador
Peru is hosting a meeting of regional planning ministers, that will include a day of discussion comparing the planning and development experiences of Latin America with South Korea.

Japan-LAC

Argentina y Japón concluyen negociaciones de acuerdo bilateral en inversiones — W Radio
Argentina and Japan have concluded negotiating an investment protection treaty, which they say incorporate best practices from the OECD and UNCTAD. No date for signature has been revealed.

Buenas noticias para la japonesa Suzuki en México — Milenio
Suzuki cars are selling in Mexico - while overall auto sales are down 1%, the Japanese automaker’s Mexican sales are up 17%. However, unlike other automakers, Suzuki does not make any vehicles in Mexico, and imports them all from Hungary, Thailand, and Japan.

GCC-LAC

Dubai-Colombia non-oil trade hits $138m — Gulf Digital News
Colombia’s exports to Dubai are up 200% since 2012, driven by demand for flowers, fruits, coffee, and cocoa. This information was discussed at as a delegation from the Dubai Chamber of Commerce and Industry (DCCI) visited Colombia last week.

India-LAC

Esta empresa quiere ‘robarle’ el mercado de acero en México a China… — El Financiero
A profile of India’s ArcelorMittal, with an interview with Victor Cairo, head of ArcelorMittal México, which has announced a $1b investment in a hot rolled steel plant at Lázaro Cárdenas, that will increase local steel production by 30%

¿India será la próxima China? — El Financiero
"Is India the next China?” asks El Financiero in a survey whose answer seems to be “probably not, but imagine if it was."

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