India steals a page from China’s playbook?

Up Front

It is said that imitation is the sincerest form of flattery. We are not sure China will see India's ever-increasing interest in Latin America in such a complementary fashion.

This week’s announcement that India’s Sterlite Power won the auction for a $800m transmission project in Brazil is only the latest indicator that India's corporates are beginning to take Latin America seriously, despite what some view as neglect by the Modi administration. Sterlite is only one of several Indian energy companies looking at the auctions for Brazilian power projects, with PowerGrid, Adani, and KEC also expressing interest in what could be up to $4b in assets up for bidding. Seems that State Grid and its Chinese peers are not the only new kids on the block after all.

This follows on the announcement earlier this year that ArcelorMittal would invest $1b in Mexico over the next three years, to construct a new hot strip mill capable of producing 2.5m tonnes of flat-rolled steel. Tata Consultancy Services (TCS) continues to be a significant player in the region, focused on near-shoring and IT. And as the world’s number one consumer of sugar, India has long had interest in production in Brazil and the Caribbean.

But while India is following in China’s footsteps, it’s doing so for different reasons. The limits and inefficiencies of the Indian market forces companies that want to be global players to look to regions like Latin America if they want to achieve sufficient returns. However, Indian firms are running into similar problems that Chinese and other investors have faced. Reliance Industries — operator of the world’s largest refinery in Jamnagar, India — has repeatedly complained about oil quality to PDVSA as Venezuela struggles to meet its potential in the energy markets. This is to say nothing of the struggles for Tata Motors in its long-mooted plant in Venezuela.

To be fair, inefficiencies of Latin American markets also limits the appeal to Indian investors. Renuka do Brasil, a subsidiary of India’s Shree Renuka Sugars is expected to suspend operations at its Revati sugar mill as Brazilian cane supplies run low, adding to financial difficulties the industry as a whole has seen in Brazil.

India sees it’s opportunity in Latin America; but it is not likely to displace China anytime soon. Either way, having two of the worlds rising powers (and their 2.7b citizens) competing for Latin America's business should be a good thing. If managed properly.

Top Stories

Engie, Mubadala, Macquarie groups bid for Petrobras pipelines — Reuters
Brazil’s Petrobras has three bids for pipeline business — Business Live
France’s Engie, Australia’s Macquarie, and the UAE’s sovereign wealth fund Mubadala are all leading consortia that have expressed interest in in Transportadora Associada de Gás (TAG), the Brazilian gas pipeline network owned by state oil company Petrobras. The bids are expected to be worth $5-7b.

Exportaciones de América Latina a China crecen 30 por ciento: BID — Televisa News
Latin American and Caribbean exports to China increased by 30 percent in 2017 — Inter-American Development Bank
Perú fue el segundo exportador de América Latina a China — El Economista América
BID: Perú entre los países que más exportó a China — La República
Jamaica boosts exports to China, USA — Loop Jamaica
Exportaciones de América Latina cortarán racha bajista en 2017 — El Observador
Com Trump em retirada, disparam as vendas da América Latina para China — El País
The Inter-American Development Bank has come out with a new report on trade in the region: “Trade Trend Estimates for Latin America and the Caribbean.” The highlight from the report is that exports from the region to China are up 30%, driving an overall 13% increase in exports. Peru and Jamaica, among others, cheered exports from their countries. Other observers note that the commercial tendencies are exacerbated by the geopolitical impact of  a rising China and a US that is looking increasingly inward.

Trump's 2017 National Security Strategy in Latin America — Two Weeks Notice
EEUU busca contener influencia de Rusia y China en América Latina — HISPANTV
Trump le pide a América Latina que resista a la influencia 'maligna' de China y Rusia — Los Andes
En Latinoamérica China crece y Trump descuida — El Nuevo Herald
China avanza en Latinoamérica, con la ayuda de Trump — El Nuevo Herald
Why is China drawing up development plans in US’ backyard? — South China Morning Post
In the wake of the US government’s announced National Security Strategy, several analyses of the impact it will have on Latin America. The summary seems to be neglect, and one that is not so benign. The US appears to see Latin America just as a battlefield in which it is fighting against Russian and Chinese influence in a zero-sum game. That framing makes it a hard game to win when the US is refusing to reach out to its neighbors, whether by being obstinate with Mexico over NAFTA, or just refusing to appoint diplomats to the region. An example of how the US is losing on it’s own terms comes in the Caribbean island of Grenada (which the US invaded in 1983 on fears of a communist takeover), where the “China Development Bank, at the request of the Grenadian government, is helping them draft a national development strategy.”

China-LAC

China y Brasil impulsan otra ferrovía — Los Tiempos
Gobierno defiende tramo del tren bioceánico ante propuesta de China — Los Tiempos
Bolivia is having second thoughts about Chinese participation in the Bioceanic Train. On a trip through Europe, Bolivian President Evo Morales is now saying it’ll be done using European technology. This may be in response to Chinese support of a route that would skip Bolivia and go directly from Brazil to Peru.

Chinese Interest for Panama at the 2017 Shanghai Luxury Property Show — Kent Davis on LinkedIn
Concerns about Trump and EB-5 in the US, Brexit in Britain, and foreign-investor property taxes and tightened visa requirements in Canada and Australia have combined with bilateral diplomatic recognition to make Panama much more attractive to investors at this year’s Shanghai Luxury Property confab.

Embajador de China en Panamá consolida relación con miembros del Parlatino — Metro Libre
Chinese Ambassador to Panama Wei Qiang stopped by the Latin America and Caribbean Parliament (Parlatino) in Panama, to strengthen Chinese ties with the regional talk shop.

Chinesa JAC nascerá em Goiás? — Auto Papo
China's JAC Motors to open first plant in Brazil — Xinhua
China's JAC Motors has announced it will open its first plant in Brazil with an investment of nearly R$200m ($61m). The plant in the state of Goiás will manufacture up to 35,000 vehicles a year when it opens in two years time. Goiás is supposed to have agreed to forgo 75% of the ICMS state sales tax to lure JAC away from it’s original plans in neighboring Bahia.

Mercado financeiro: semelhanças e diferenças entre China e Brasil — Administradores.com
Fundação Getúlio Vargas professor Hsia Hua Sheng compares and contrasts the financial markets in Brazil and in China. Brazil compares favorably, with more mature processes, institutions, and control mechanisms built up over decades.

Neymar e Messi para atrair chineses — O Antagonista
Football diplomacy? The tourism ministers of Brazil and Argentina are looking to use their star players, Neymar and Lionel Messi, in a joint ad to promote the two countries as tourism destinations in the Chinese market.

"China no viene a someternos" aclara un especialista argentino — Telam
Jorge Malena, China specialist at the University of Salvador in Argentina, is here to tell us that "China us not going to make us submit,” and that a lot of Chinese activity is in reaction to the US.

La locomotora china detrás del petróleo colombiano — Las2orillas
A discussion of how thanks to then-President Álvaro Uribe’s opening to China in 2006, China’s CNPC, Sinopec and Sinochem are driving demand for Colombian oil and petroleum products in the face of flat demand in the West.

Gigante chinesa avalia compra de áreas de eucalipto no Brasil — Exame
China Forestry Group Corporation (CFGC) is buying 230,000 hectares of eucalyptus plantations in Minas Gerais, Brazil worth $600-700m from French steel company Vallourec. Given 2010 Brazilian restrictions on foreign ownership of agricultural property, it is unclear how the deal will be structured. 

Toyota crecerá 10%, con la mira en Brasil y en Colombia — La Voz
Toyota’s factory in Zárate, Buenos Aires, is expecting to grow production 10% in 2018, with exports of pick-ups to Brazil and Colombia driving demand.

Piñera propone fomentar relaciones con China en inversiones y ciencia y tecnología — Xinhua
President-elect Sebastián Piñera is ready to deal with China:

“We all know that China is Chile’s principal commercial partner, and we are going to strengthen this relationship. We are going to expand and deepen not only our commercial relations, but also in the area of investments, in collaboration on science and technology, or in infrastructure and engineering, and, at the same time, we look with a lot of optimism and hope for the strengthening of relations between Chile and China.

Chinese investors target Latin American startups as U.S. VCs shy away — Venture Beat
Are Alibaba and Didi Chuxing the leading indicators of Chinese VC investment in Latin America?

Populism looms over Latin America’s election year — Korean Herald
Our friend Shannon O’Neil explains to Korean audiences that nearly 2 out of every 3 Latin Americans will head to the polls to elect new leaders next year, and how populism still casts a shadow over politics in the region.

Canciller venezolano cumple agenda de trabajo en China — Telesur
Venezuela and China sign agreement for the creation of international oil center — St Lucia Online
Venezuelan Foreign Minister (and Chávez son-in-law) Jorge Arreaza is in China this week, no doubt looking to improve relations after this month’s Sinopec lawsuit. Separately, China and Venezuela signed an agreement for the creation of the Hugo Chávez International Center for Research and Innovation of Petroleum.

China: Asian Infrastructure Investment Bank Expands Membership — Stratfor
Ecuador — along with the Cook Islands, Vanuatu, Belarus — has been approved to join the Asian Infrastructure Investment Bank.

Mexico banks on e-commerce to spur economic ties with China — Xinhua
México cree que comercio electrónico espoleará lazos con China — Xinhua
Interviews (in English and Spanish) with Paulo Carreño, head of Mexican trade promotion agency ProMéxico. Carreño highlights his country’s deal with Alibaba to promote Mexican SMEs on the Chinese e-commerce giant as a big first step. He says a warehouse in China to speed up the delivery of online purchases could be next.

Oi creditors approve largest-ever Latin American restructuring — Reuters
Are China Telecom and China Mobile ready to jump into Brazil? A week after claiming they’d given up on Oi Telecom, the beleaguered Brazil company got it’s creditors to agree (over regulator Anatel’s objections) to restructure R$65b ($20b) in debt.

Atmósfera positiva en Chile por encuentro entre Celac y China — Xinhua
In January Chile will host the second ECLAC Countries-China meeting, and Latin American China Studies Center head Fernando Reyes is looking forward to it.

Mercosur delibera abierto al mundo pero cauteloso ante China — Swissinfo
Mercosur continues to dither on whether to engage with China, even while it finalizes a free trade deal with the European Union. “Coming to an agreement between Mercosur and China would without a doubt have a significant impact on our economies, because of the weight of China. So that requires reflection, information, and studies,” says Argentine Foreign Minister Jorge Faurie.

China establece estándar de inspección para las cerezas importadas de Chile — Xinhua
China has established inspection standards for cherries imported from Chile. No doubt this will increase the flow of cherries from Chile, which last year overtook Thailand as China’s largest supplier of fresh fruits.

PSA replaces China chief amid sales slump — Automotive News
Peugeot auto-maker PSA is shifting head of Latin America Carlos Gomes to run it’s China operations in an effort to boost flagging sales in the Asian market.

Korea-LAC

S. Korea signs customs pacts with Peru, Uruguay — Yonhap News
Perú y Corea del Sur suscriben acuerdo para mejorar sus procedimientos aduaneros — Gestión
South Korea’s Customs Service has inked an agreement easing customs processes with Peru and Uruguay. Under the Authorized Economic Operator and Mutual Recognition Arrangement frameworks of the World Customs Organization, the arrangements call for both sides to speedily clear products made by authorized operators from the other country and give priority in customs processing, as well as setting up dedicated contact points.

Japan-LAC

Colombia y Japón llegan a acuerdo para eliminar la doble tributación — El Economista
Colombia and Japan have come to terms on a double taxation treaty. It is expected to be ratified after review by both countries.

ASEAN & Oceania-LAC

Chile's SQM completes Australia purchase — BNamericas
Chilean lithium and fertilizer group SQM has completed the acquisition of the remaining 50% of the Mt Holland lithium project in Western Australia from Australia's Kidman Resources for a total of $35m. SQM also agrees to invest an additional $75m on achieving certain benchmarks.

GCC-LAC

UAE's Petrofac signs Mexico oil deal — Zawya
The UAE’s Petrofac has signed a deal rolling over an existing project into a 36% stake in a Production Sharing Contract with Pemex in the onshore Santuario block in Tabasco State.

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