Asia-Latin America Round-up — 16 Jun 2017


Why international tech startups are making Miami their U.S. base — Miami Herald
An article based around the eMerge Americas conference highlights that in the last year, nearly half of the tech companies checking out Miami have been international, and the Beacon Council has seen increasing interest from Europe, particularly from Spain and France. In addition to the cultural and global appeal of Miami, daily flights to Europe have been increasing and some countries incentivize their companies to expand beyond their borders.

Chinese investors hungry to get into US commercial real estate market  — China Daily
China was the top country of origin in both the buying and selling of US commercial real estate last year.

"For many global investors-including Chinese buyers-US real estate markets offer portfolio diversification, along with safety of capital and solid yields," [George Ratiu, NAR's director of quantitative and commercial research] told China Daily.

"While top-tier cities like New York, San Francisco and Los Angeles have been attracting investment for a long time, with a shortage of inventory in those markets, many investors have found favorable conditions in mid-tier and small-cap markets."

In an expanding economy like the US, demand for commercial space increases, which helps to attract Chinese and other foreign buyers, he said.

"US commercial properties are well diversified both across geography as well as the price spectrum. Moreover, given the various property types, investors gain exposure to various segments of the US economy-industrial trade and logistics, retail consumption and multi-family housing.

China May Be Loria's Last Chance To Get $1.3 Billion For Marlins — Forbes
A group led by Tagg “Son of Mitt” Romney has been trying to cobble together enough money to buy the Marlins for months and is now looking to China for capital. Supposedly at least one owner of a soccer team is currently looking over the Marlins books. Romney is the only group offering $1.3 billion for the baseball team after the group with Jeb Bush and Derek Jeter pulled out of the bidding two weeks ago because it could not come up with the money. Other people interested in buying the team think the Marlins are worth between $900 million and $1.1 billion.

Panama switches diplomatic recognition from Taiwan to China — AP
侠客岛:与台湾“断交” 巴拿马绝不是最后一个 — People’s Daily
Panama has recognized the PRC as the official government of China, switching diplomatic relations from Taipei to Beijing. China and Taiwan have vied for recognition from other countries, often sweetening the opportunity with aid packages and trade deals. Panama had been among the largest economies to have maintained diplomatic relations with Taiwan. The island now has just 20 formal diplomatic partners, 11 of which are in Latin America and the Caribbean. The move ends what had been a decade long “truce” between China and Taiwan, and People's Daily "blogger" Xiake Dao says Panama will definitely not be the last country to cut ties with Taiwan. This also probably puts a nail in the coffin of the Nicaragua canal plan.

Alibaba Looks to Boost Sales Beyond Mainland With Tmall World — Caixin Global
Alibaba is looking to expand in Chinese communities in Southeast Asia, through allowing domestic Chinese merchants whose products attain certain quality and certification standards to sell through a single platform to multiple markets such as Hong Kong, Taiwan, Singapore and Malaysia. This will be done through Tmall World, that will broaden its scope in these markets with better “logistics, payment and localization support,” the company said in a press release.

Baidu’s Turnaround Strategy — WSJ
An interview with new Baidu chief Qi Lu, who plans to turn Baidu around include a big investment in artificial intelligence for the development of new technologies for search and other businesses—including driverless cars.

Mnuchin Seeks Greater Scrutiny of Chinese Investments in U.S. — Bloomberg
The US Treasury wants to include China among a proposed group of hostile nations whose companies would undergo extra scrutiny for national security risks. The proposed expansion of Committee on Foreign Investment in the United States (CFIUS) would also broaden the scope of the committee to include technology joint ventures and real estate transactions near military bases or other national security facilities.

Not one, but two dueling Chinatowns proposed in neighboring Miami-Dade cities — The Real Deal
Both North Miami and North Miami Beach have districts in the works. According to proponents, the proposed Chinatowns are fueled by Chinese investors’ appetite for South Florida real estate and commerce.

China-Latin America

Venezuela’s Road to Disaster Is Littered With Chinese Cash — Foreign Policy
From 2007 to 2014, China lent Venezuela $63 billion — 53% of all its lending to Latin America during this time. Beijing insisted on being repaid in oil. When oil dropped to close to $30 a barrel in January 2016, this caused Venezuela’s price tag for serving its debt to explode. To repay Beijing today, Venezuela must now ship two barrels of oil for every one it originally agreed to. With Venezuela a living nightmare for many of it’s people and teetering on the edge of collapse, Beijing faces no good options on collecting it’s debt, and other countries it is courting through the Belt & Road Initiative will be wary of getting caught in a similar situation.

China está lista para concretar TLC con México — El Financiero
China’s Ambassador to Mexico underlined that his country has the “doors open” to a free trade deal with Mexico. The statements were made at the China HomeLife fair in Mexico City, that brought over 700 Chinese textile, machine, and electronics companies looking to expand their business in the country.

China Southern Airlines eyes Brazil, Argentina destinations — SCMP
Fresh off establishing a route to Mexico earlier this year, Asia’s largest carrier in terms of passengers flown plans to establish passenger routes to Brazil and Argentina within the next five years, completing its worldwide reach. China Southern boss Wu Guoxiang declined to comment on reports that it is in talks to sell a stake in itself worth US$200 million to American Airlines, saying only that the two airlines are talking about “how to cooperate in the future”.

Latin America pivots to China on trade and development — American Journal of Transportation
"As the U.S. goes it alone, China steps into the void.” A look at how China and Latin America are trying to shoehorn the Belt and Road Forum into the vacuum left by the collapse of the US’ participation in the TPP.

Asia-Latin America

Singapore, Americas to boost fintech ties — The Straits Times
Abu Dhabi builds a 'fintech bridge' to Asia — Nikkei Asian Review
The Monetary Authority of Singapore (MAS) and the Association of Supervisors of Banks of the Americas (ASBA) signed a memorandum of understanding (MOU) yesterday to bolster fintech ties between Singapore and the Americas. The MOU provides a framework for fintech cooperation between Singapore and the 36 ASBA member countries. Under the framework, MAS and ASBA can explore potential joint innovation projects on technologies such as blockchain and big data. MAS also signed a similar deal with Abu Dhabi.

China Econ/Policy

Culture Clash at a Chinese-Owned Plant in Ohio — NYT
Chinese company Fuyao Glass Industry Group spent more than a half-billion dollars to fix up an abandoned General Motors plant outside of Dayton, Ohio. But with the explosion of investment has come unexpected trouble — Fuyao faces an acrimonious union campaign by the United Automobile Workers and a lawsuit by a former manager who says he was let go in part because he is not Chinese. “Some workers questioning the company’s commitment to operating under American supervision and American norms."

China Engages California on Climate After Trump’s Paris Snub — WSJ
China and the Americas — Trinidad Express
China rolled out the red carpet when California Governor Jerry “Moonbeam” Brown arrived to take part in an international clean-energy forum and meet provincial officials. Brown was received by President Xi Jinping in Beijing’s Great Hall of the People; U.S. Energy Secretary Rick Perry, also in town for the forum, was received by a vice premier. Among the agreements announced during the week included plans by California to coordinate emission-reduction programs with China’s Ministry of Science and Technology and to set up a joint climate research institute between California and China’s Tsinghua University. The deal got positive play in many places, including Trinidad and Tobago.

China’s New Bridges: Rising High, but Buried in Debt — NYT
Spectacular photos of bridges China has built illustrate this article about the dark side of China’s infrastructure boom. China has overspent on infrastructure domestically, leaving it with white elephant projects that most Chinese can’t afford to use and are saddled with debt. Says one expert who found that  fewer than a third of highway and rail projects are “genuinely economically productive”:

“Infrastructure is a double-edged sword,” said Atif Ansar, a management professor at the University of Oxford who has studied China’s infrastructure spending. “It’s good for the economy, but too much of this is pernicious. ‘Build it and they will come’ is a dictum that doesn’t work, especially in China, where there’s so much built already.”

Cheesegrater financing deal completed — Property Funds World
The Leadenhall Building, otherwise known as the ‘Cheesegrater’, a 46-storey tower in London was bought earlier this year for £1.15 billion ($1.5 billion) by C C Land Holdings Limited, a Hong Kong listed real estate company. It was the largest acquisition of a single building in the UK since December 2014.

Chinese Tech Firms Forced to Choose Market: Home or Everywhere Else — NYT
This article from last August and the accompanying video provide a good outline of the dilemma facing Chinese start ups:  the “Great Firewall" has forced them to choose — either create something that caters to China’s digital population or focus on the rest of the globe. "In many ways, the split is like 19th century railroads in the United States, when rails of different sizes hindered a train’s ability to go from one place to another."

Singapore offers to help bankroll China's global ambitions — Miami Herald
Singapore is offering up its financial industry to help bankroll China's ambition to develop a network of ports, railways, power plants and other projects across a broad swath of Asia, Europe and east Africa. Singapore has traditionally looked to the US for support (the US Navy has a support facility at the Port of Singapore since 1992 and periodically holds joint exercises with Singapore's navy), but the isolationist rhetoric has caused the island state to strengthen it’s connections with China. "Singapore has been a believer in China's rise," Singapore Foreign Affairs Minister Vivian Balakrishnan said after meeting with Chinese officials in Beijing on Monday. "This is a wonderful opportunity to restore, in a sense, these ancient trade links."

Anbang Insurance Chief Wu Xiaohui Said Detained Since Friday — Mingtiandi
Chairman of Chinese Firm Who Tried to Forge Ties With Jared Kushner Is Detained — NYT
Anbang’s billionaire chairman Wu Xiaohui steps aside amid probe reports — SCMP
Anbang Rout Turns China's Stock Giants From Heroes to Zeros — Bloomberg
Anbang's Woes Deepen as Banks Are Told to Halt Dealings — Bloomberg
The Anbang crisis deepens. Last week the company confirmed rumors that had been circulating for over a week that Chairman Wu Xiahui had been taken into custody by the authorities. The exact nature of Wu’s detention remains a mystery. Per Bloomberg:

Wu faces questions in a probe that includes looking into the sources of funding for Anbang’s acquisitions overseas, possible market manipulation by insurers, and “economic crimes,” people familiar with the matter said. The questioning doesn’t mean Wu is accused of any crime or will face charges, they said.

While this could be seen as just the latest and most high-profile move in Xi Jinping’s ongoing corruption clean up, Anbang itself could be in trouble:

Chinese authorities have asked lenders to suspend some business dealings with the insurer, according to a person with knowledge of the matter, who didn’t provide further details. At least six large banks have stopped selling Anbang policies at their branch networks, with some taking action before the government notice, people with knowledge of their operations said.

“It’s like having your legs broken,” said Grace Zhou, a Hong Kong-based analyst at ICBC International, referring to the reported block on Anbang’s bank channels. “It’s their main source of revenue.”

China-backed fund in third bid for U.S. to approve chip deal — Reuters
Canyon Bridge Capital Partners, the China-backed buyout fund that agreed to acquire Lattice Semiconductor Corp in November for $1.3 billion, will submit the deal for U.S. review by CFIUS for the third time. Vacancies left in senior positions at several government agencies since the inauguration of President Donald Trump, have reduced CFIUS' capacity to review cases expeditiously, and are weighing on its decision-making ability, according to Reuters' sources.

Chinese firms in the US worried about Trump, but it won’t impact their investment strategies: survey — The Real Deal
Sixty-three percent of respondents to a Real Deal survey said they expect government oversight of mergers and acquisitions involving Chinese firms will be tightened under Trump, and 53% said they expect tightened government oversight of their activities more generally. However, the CEO of Bank of China USA blames “reasonable” capital controls — and not US policy — for the drop in Chinese investment.

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