Asia-LAC Business Digest — 22 Sep 2017

Up Front

"Is China ready to reshape global agriculture?” is a question being asked across the hemisphere, from the U.S. Department of Agriculture's Economic Research Service to framers and ranchers in the Southern cone. And it’s a question of not just what China is buying, but how. E-commerce intermediation between Latin American agriculture exporters is real, and it’s here.

Traditionally the China-Latin America agricultural relationship is thought of as simply selling more beef and soybeans to the world’s largest population. Certainly moves like the creation of COFCO International out of Nidera and Noble Agri are steps in that direction. But the role of those producers is up in the air, with conflicting messages coming from COFCO. Zhao Shuanglian, chairman of COFCO Corporation, says the “highly-performing” South American grain, oilseed and sugar portfolio would play “a major role” in COFCO International’s expansion. But COFCO International’s Brazilian activities have undergone a reorganization driven by an accounting hole found in Nidera’s Latin American operations. The group is considering selling Nidera’s Latin American seed business.

Away from the bulk commodities, the demand for higher quality and speciality products from China’s growing middle class is creating opportunities for producers who are acting fast.

Chile has been at the forefront of this. Pears are next on their list, while there is a push to diversify to other countries like Korea and Japan.

Other countries are beginning to recognize the opportunity. Peru and China inked their prawn deal last week; Peru is now expected to export $200m in prawns to China annually. And Peruvian companies booked $138m in deals at Asia Fruit Logistica at the beginning of the month. And even Argentine berry producers — long held back by export tarriffs —  made a push last week at the annual International Blueberry Organization summit in Yunnan.

To catch up to these leaders in specialty exports, new players are embracing new platforms. 

As Wu Guoping of the Institute of Latin American Studies at the Chinese Academy of Social Sciences says: “E-commerce is key to facilitating the sale of products to China.” 

Following Jack Ma’s trips to Buenos Aires and Mexico, Alibaba is the one making the strongest push. This week the Argentine International Commerce and Investment Agency (AAICI) and the Ministry of Wines and Agriculture launched the "Official Argentine Wine Flagship Store” on Alibaba’s TMall. Just in time for Single’s Day (Nov 11), any wines already for sale in China will be available; new wines will become available the weekend of Chinese New Year (Feb 18).

The power of the TMall market was demonstrated with Mexico, where ProMéxico pushed a program to sell avocados. After the September 11 launch of the Alibaba-ProMéxico collaboration, TMall Fresh ran a special avocado sale, selling half a million avocados in just two days.

While Alibaba is the largest provider, they aren’t the only game in town — had more revenue than Alibaba last year, and it's Fruit Day is also ramping up imports. There’s plenty of opportunity for savvy exporters.

Top Stories

Panamá: canciller chino se reúne con Varela — 20minutos
Exportadores panameños pactan $38 millones en ventas con China — Panamá América
Belt&Road Initiative new focus for China-Latin America cooperation: FM — ECNS
China busca expandir su influencia en América Latina a través de Panamá — Tele Trece
China y Panamá firman acuerdo para afianzar nueva alianza diplomática — Publimetro México
Interview: Panama can be strategic point to bring Belt-Road Initiative to Latin America — Xinhua
New Chinese embassy a sign of stronger ties between China and Panama — CGTN
Chinese Foreign Minister Wang Yi’s visit to Panama went off like you’d hope - visits to Casco Viejo and a tour of the Panama Canal. And it went off like the Chinese hoped - with lots of talk of the Belt & Road Initiative and trade deals. The two sides agreed to create a Commission on Economic Cooperation and another on Air Transport and Services; as well as deals on $38m in Panamanian exports of coffee, wood, scrap, and seafoods. They also prepped the groundwork for President Varela’s visit to China in November.

China y Costa Rica firman acuerdo para proyectos por $15 millones no reembolsables — Teletica
Costa Rica president, Chinese foreign minister meet on ties — Xinhua
Chinese FM talks up trade on Central America visit — ABS-CBN News
Gobierno no revela detalles de donación china de $15 millones — Diario Extra
Not content with one stop, Minister Wang stopped by Costa Rica beforehand to celebrate the ten years of diplomatic relations between those two countries. They agreed to Chinese sponsorship of $15m in capacity development, equipment manufacturing, and sustainable development projects. However, left unclear was the status of the expansion of Route 32 by China Harbour Engineering Company (CHEC), a project local press notes has been beset with delays.

China State, interesada en entrar en OHL — Intereconomia
China, el 'salvavidas' de las cuentas de las constructoras españolas — Estrategias de Inversión
OHL says that China State Construction and Engineering Company (CSCEC) is looking to buy a controlling stake of the indebted Spanish construction firm. Per a filing with the Spanish regulatory authorities, CSCEC would buy 51% of the firm with a big presence in Latin America (it’s main markets include Mexico, Peru, Chile, and Colombia). Estrategias de Inversión says, Chinese firms with money looking for an international footprint are “lifesavers” for Spanish construction firms that have wallowed in debt since the collapse of the Spanish real estate market.


Brazil’s utility companies put out the welcome mat for China — FT
An overview on how Chinese companies looking at Brazil are now looking less at agriculture and more at industry. BU’s Kevin Gallagher sums it up:

“The boom is over with respect to commodities, but there is now a shift toward infrastructure, banking and some manufacturing… China has been really quick in setting up the $20bn infrastructure fund because it wants to get going [on investments]. Brazil is, of course, very hot to trot because the cost of capital is expensive for it right now. Brazil has major infrastructure gaps that won’t be filled by private capital or even development banks, so those funds are sorely needed.”

Brasil será centro dos negócios da China Mobile na América Latina — TeleSíntese
China Mobile has opened a new office in São Paulo, which will be the telecoms giant’s headquarters for Latin America. While China Mobile has yet to secure a license to operate in the country, it is looking to ink roaming deals with local operators, as well as establish a data center to offer services to corporate clients.

Abrirán en EXPO CLAP nuevos puentes para relación comercial México-China — El Universal
Graco viajará a China para fortalecer lazos comerciales —  Milenio
Empresarios de China llegaron a buscar comercio en Ecuador — El Universo
Gearing up for the China-Latin America & Caribbean Expo in Zhuhai, China, in mid-November, CCPIT and the government of Zhuhai did a roadshow in Mexico City and Quito this week. Governor of Morelos Graco Ramírez has said (previous to the terrible earthquake) he will attend and visit Sichuan Province afterwards.

Argentina busca en China US$ 15.000 millones de inversión — Telam
San Juan ofrecerá cinco proyectos de cobre en la gran feria minera china — Diario de Cuyo
This weekend at the China Mining fair in Tianjin, ten Argentine copper mining projects will be marketed, looking for a total of $15b in investment. Of those, five are from the province of San Juan, and their 10.6b tons represent 71% of the country’s copper reserves.

La solicitud de bonos para el proyecto fotovoltaico más grande de Argentina rebasó 3,4 veces la cantidad de títulos ofrecidos — PV Magazine Latin America
Jujuy issued $210m in five-year green bonds last week. The 8.625% (or 8 and 5/8th, for those of us who remember those days) coupon bonds were 3.4x oversubscribed. The proceeds will go to fund the 300 MW Cauchari solar plant that is being co-financed by the Export-Import Bank of China. Upon completion of the project, 80% of the solar plant with be owned by state energy company JEMSE, with the balance owned by Power China, Shanghai Electric and Talesun.

Peru signs Amazon Hydrovia contract — IJGlobal
MTC suscribe contrato de concesión de hidrovía en frontera con Brasil — El Comercio
Peru’s Ministry of Transport and Communications signed a deal with the Amazon Hydrovia consortium (a 50-50 agreement between Sinohydro and the Peruvian Construcción y Administración S.A.) to provide dredging service for rivers in northeast Peru along the border with Brazil, providing improved navigation for the Loreto region’s 1.1 million people.

Chengdú, la ciudad de la China profunda por la que apuesta Chile — La Tercera
A profile of Sichuan’s capital Chengdu — which has benefited as a logistics hub for food from Latin America — through the eyes of a delegation of Chileans companies around Chile Week.

Saúde: governador articula com gigante chinesa implantação de empresa no Ceará — O Estado
The governor of the northeast Brazilian state of Ceará Camilo Santana signed an MOU this week with China’s Medical Health Company (Meheco) to build a factory for high complexity imaging machines (X-rays, CT scanners, and ultrasounds) in the state’s Pecém Port and Industrial Complex. The governor also courted the China Development Bank for investments.

Llegan a México autobuses chinos para Querétaro — El Financiero
The city of Querétaro took delivery this week of the first 57 Higer buses to help upgrade public transport in the city. Banca Mifel financed the deal for undisclosed terms, and will give the city 222 new buses.

Em busca de investimentos, Mogi quer intercâmbio com a China — O Diário
The Mayor of Mogi das Cruzes, east of São Paulo, has been on a roadshow of sorts. Last month he was in Dallas and Washington, DC. This past week he was in Shanghai, extolling the virtues of the city and looking for investments.

China infrastructure projects in T&T employed 12,700 over last decade — Trinidad Express
Highlighting some of the benefits of China’s role in Trinidad and Tobago, this article notes the two studies out earlier this month by the International Labour Organisation (ILO) and the Caribbean Development Bank (CDB). They found that China infrastructure projects in T&T employed 12,700 over the last decade, T&T has the highest connectivity with China in the region, and China-Caribbean relations are forecast to intensify with Guyana oil discoveries.

Bidding opens for China Fishery Group’s Peruvian subsidiaries — Seafood Source
Four of China Fishery Group’s assets are up for sale.

Indústria aeroespacial chinesa busca parceiros na América Latina — Diário Comércio Indústria & Serviços
China Great Wall is looking for partners in Latin America for a global satellite data collections project. 

Trump’s Rhetoric and the Sino-Latin American Relationship — Charged Affairs
Por incertidumbre con TLCAN, México debe abrir mercados comerciales en China y UE: académicos — Diario de Xalapa
Everyone says Mexico should look to China (and the European Union) in the era of Trump.

Colombia y China preparan acuerdos a nivel futbolístico — RCN Radio
Sadly, Carlos Valderrama is not being traded to China. But the Colombian Football Federation is discussing allowing Chinese investment in Colombian soccer teams.


Pymes tendrán apoyo tecnológico de Corea — El Peruano
Peru and Korea have agreed to set up a Peru-Korea Technical Exchange Center (PKTEC) in Peru, that will allow for technology transfer from Korean firms to Peruvian SMEs.

Mexico, Korea bolster commerce, security ties — Korea Herald
Aeromexico began a new direct flight connecting Mexico City and Seoul in July.

Vientos de cambio — La Nación Colombia
An op-ed highlighting how the Korea-Colombia free trade agreement that kicked in last year nay start with small things, but can grow into big things for Colombia’s exports, like coffee.


Grenergy vende a la japonesa Eurus dos proyectos solares en Chile — Cuatro
Gigante japonés de energías renovables entra al mercado chileno con dos proyectos solares — El Mostrador
Japan’s Eurus Energy America Corporation — a JV between Toyota Tsusho Corporation and Tokyo Electric Power Company (TEPCO) — has bought two Chilean solar power projects totaling 21MW from Grenergy.

Japan's Mizuho quietly withdrew from Chilean hydro project — NASDAQ
Amid concerns over the project's financial viability, Japan’s Mizuho Bank quietly withdrew from the Alto Maipo hydroelectric project in Chile earlier this year, writing off about $20m that had been disbursed. The decision underscored cost overruns surrounding AES Gener’s $2.5 b project near Santiago. Mizuho's loan to Alto Maipo - a project opposed by many environmentalists and politicians - was never publicly revealed as it formed part of a larger $200 million loan package from the Inter-American Development Bank (IADB).

Cuáles son los tractores japoneses que llegan a Argentina, de la mano de una firma cordobesa — Agrovoz
Japanese tractor company Kubota will begin selling into the Argentine market via Mojón Uno in October.


UAE, Mexico: Sharing excellent relations — Khaleej Times
Events marking Mexico's Independence Day provided an opportunity to reflect on the strength of the bilateral relationship the country now shares with UAE. While diplomatic relations date back to 1975, the opening of a Mexican Consulate in Dubai in 2008, followed by the UAE Embassy in Mexico City in 2010, and ultimate the Mexican Emabssy in Abu Dhabi in 2012 have helped the connection flourish. Mexico's Ambassador to the UAE Francisca Escobar notes that:

"bilateral trade has increased an astounding 473 per cent over the span of ten years, from $90 million in 2006 to $519 million in 2016. According to Mexico's Ministry of Economy, the UAE is Mexico's principal trading partner in the Arab World, and the UAE's second most significant trading partner in Latin America, behind only Brazil. "

Arabs have bought 2.7 million shoe pairs from Brazil — Agência de Notícias Brasil-Árabe
Middle Eastern countries continue to be a major destination for footware produced by the Brazilian Footwear Industry Association (ABICALÇADOS). The article states that 60% of the Arab market has bought from Brazil, with the United Arab Emirates represented the largest buyer with 930,000 pairs, followed by Saudi Arabia with 738,800 pairs. 

Brazilian Investors eyeing $32bn GCC projects — Gulf Digital News
A report by Dubai-based market research firm BNC Network points to continued interest by Brazilian firms in the UAE; in particular opportunities in the construction sector. 801 urban construction projects with a combined value of $32b are currently being tendered across the region. That number is expected to rise to $66b by 2019 as large projects such as Expo2020 Dubai and economic diversification policies push more opportunities into the pipeline. 

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