Asia-LAC Business Digest — 7 Sep 2017

Up Front

Mexico came out on top at this week’s BRICS+ summit in Xiamen, China, where the host invited five other countries to join Brazil, Russia, China, and South Africa.

While three-quarters of Mexican exports go to the US, protectionist saber-rattling and threatening  to pull out of NAFTA have pushed Mexico to look for new trade partners. 

Mexico’s ace in the hole is what some observers are calling the 'China card.’ President Enrique Peña Nieto has described his efforts to diversify trade with Asia as his “look-East policy,” and he sees stronger China relations as cornerstone of that policy. China and Mexico are natural partners in facing the Trump era. Both get to position themselves as defenders of free trade against the rise of protectionism in the US.

China is seen as a natural market for agricultural exports, which the Mexican National Agricultural Council (CNA) has been pushing, and General Administration of Quality Supervision, Inspection and Quarantine (AQSIQ) representatives visited Jalisco this week looking for “green gold” (avocados), plantains, pork products, and other goods. Other observers in Mexico see the opportunity for greater exports to China and the east of East Asia of electronic equipment, manufactured goods, vehicles, and oil.

China also sees the potential, with President Xi Jinping stressing "China-Mexico strategic synergy.”  In an interview this week China's ambassador to Mexico Qui Xiaoqi noted that for China, "Mexico is more attractive because of its reforms."

The lovefest is not limited to the official sector. As we discussed with our clients, Mexico just inked an MOU with internet giant Alibaba to: hold an event for SME development in Mexico in October; loosen regulations Mexican SME access to Alibaba; and to improve shipping and payments processing for SME goods sold on Alibaba. The MOU complements more regionally focused events, such as the "Billions to Market” event that the Torreón, Coahuila Chamber of Commerce held with the Mexico China Chamber this week. Mexico has become a base for Chinese and Asian countries looking to “near-shore” exports to the US, or even sell into the booming Mexican auto market, where China’s BAIC is the latest firm to express interest in building an assembly plant.

However, Mexico’s hopes to use it’s heightened profile to be considered a permanent member of the BRICS gang is running up against India’s opposition to expanding the group. And Mexico’s entire export-driven growth program could be overturned in next year’s presidential elections.

Top Stories

Brazil's Petrobras, China Development Bank sign cooperation deal — Reuters
China pretende ampliar importação de carnes do Brasil, diz Blairo Maggi — Agência Brasil
Banco de Desenvolvimento da China quer apoiar negócios com Brasil — Valor
China and Brazil sign agreements on football, nuclear power — AFP
Vianna signs agreement with the giant China Three Gorges Corporation in Beijing — Markets Insider
Grupo chinês de mineração quer investir US$ 2,4 bilhões no Brasil — Globo
President Michel Temer also had a good BRICS+ meeting. China and Brazil signed 14 cooperative agreements on Friday, including on football and nuclear and hydro power, including a technical agreement between Itaipu and China Three Gorges. Eurasian Mining, owner of Bahia Mineração (Bamin) said to Temer that it wants to invest another $ 2.4b in Brazil over the next year and a half as the lead investor on the FIOL (East West Integration Rail line) in Bahia. Brazil’s Agriculture Minister Blairo Maggi announced an agreement to increase beef exports to China, but did not elaborate on terms. China Development Bank signed an agreement that will allow Petrobras to seek new financing options in China and make use of the second half of a $10 billion credit line opened last year by China Development Bank and guaranteed by Brazilian oil exports. CDB also indicated it wanted to invest further in Brazil.

China investe menos no país do que anuncia — Valor
A nice little reality check by Valor on what the above announcements really mean. It quotes numbers from the Brasil-China Business Council Study  (CEBC) saying that while $80b of Chinese investment in Brazil was announced from 2010 to 2016; but only $45.5b — or just over half (56.8%) actually ended up happening.

III Semana de Chile en China: cooperación, crecimiento y confianza — People’s Daily
La Franja y la Ruta, nuevas oportunidades de desarrollo económico para Chile — Xinhua
Chilean Delegation Visits BYD Headquarters to Inspect Transantiago’s First Pure Electric Buses — Mass Transit
Ministra Williams sostiene encuentros para profundizar cooperación en materia minera — Portal Minero
Chile se instalará en Beijing o Shanghái el próximo año para elevar inversión — Diario Financiero
The third annual Chile Week took place in China this week, with events in Beijing, Chengdu, Shenzhen, Guangzhou, Hong Kong and Wuhan. Along with panels and presentations, Chilean public and private sector officials travelled to several sites, including the BYD factory in Shenzhen, where the company is building electric buses it is sending to Transantiago. Both the Chileans and the Chinese pushed the potential for Chile to participate in the “One Belt One Road” initiative.  Mining Minister Aurora Williams courted province-owned Guangdong Rising Assets Management as well as China Construction Bank. InvestChile also announced plans to open an office in China next year, and is deciding between locations in Beijing and Shanghai. 

China-LAC

China Merchants buys control of Brazil's most profitable port — Reuters
Chineses compram porto paranaense por R$ 2,9 bilhões — Paraná Portal
China Merchants Port Holdings has agreed to pay R$2.9b ($924m) for 90% of TCP Participações SA, operator of the Paranaguá container terminal, Brazil’s second largest and most profitable port terminal. The stake was bought from an investment vehicle led by Advent International and other partners including Soifer, Pattac Empreendimentos and Grup Maritim TCB. The remaining 10 percent stake in TCP will be held by Soifer, Pattac and another partner.

Chile y China desarrollan agenda para ampliar TLC — Portal Portuario
Chile and China held a third round of negotiations towards deepening their decade-old free trade agreement. The two sides were able to close the chapters on trade in services, rules of origin, customs, competency, public RFPs, e-commerce, the environment, and technical and economic cooperation; the chapter on trade in goods is expected to be closed this month after technical discussions.

China es el principal receptor de carne argentina con 9.200 toneladas en julio — Portal Portuario
Cerró la feria Anufood en China con buenos negocios para Argentina — Clarín
In July, China set a new record for the most Argentine beef it has imported in a month with 9,200 tons. Helping grow those exports was the Argentine Beef pavilion at the annual Anufood Beijing food fair, which received record numbers of attendees.

First Quantum boosts Minera Panama stake to 90 percent — Reuters
Canadian miner First Quantum Minerals which currently owns 80% of the Panama unit, said it signed an agreement to buy a 10% percent stake from South Korean miner LS-Nikko Copper in a deal valued at $635m.

Colombia aims to realize valuable business at the Pacific Alliance's business roundtable — Fresh Plaza
The Pacific Alliance Business Roundtable in Pereira this year will see buyers coming from Malaysia, Indonesia, Vietnam, China, Korea and Japan, for the first time this year.

VENEZUELA: Country And China Keep Joint Investment Portfolio — London Southeast
At the China-Venezuela High-Level Joint Commission in Caracas, China increases it’s hold on Venezuela, taking an increased stake in the mixed Orinoco oil company Sinovensa through CNPC América.

Odebrecht Peru asset sale hinges on debt payments -minister — Reuters
China Three Gorges wants to get Chaglla free and clear. Apparently the Chinese company will only buy a hydroelectric plant in Peru from scandal-plagued Odebrecht if the Brazilian company agrees to use the $1.45 billion in revenues from the sale to pay the project’s debts, so CTG can buy a clean company.

Non-stop flights to Latin America from Hong Kong ‘five years away’ — SCMP
A Brazil-HK route could be good news for ‘Macau platform’ — Macau Daily Times
Aviation consultancy Leeham Company, which has studied the economics of ultra-long-haul flights, says it “will be possible from airports like Hong Kong to fly such flights [to Latin America]" with aircraft such as the Airbus A350-900 or the Boeing 777-8. The author of that study, Bjorn Fehrm, says however that planes flying these distances would be carrying no more than two-thirds of their standard passenger capacity because of the need to load more fuel on board. Former Cathay Pacific Airways executive James Tong Wai-pong is bullish:

“In our experience, as long as we establish an air link then people and cargo will just increase exponentially,” said Tong, now public affairs director for the airline’s main shareholder, Swire Pacific. “South America is a booming market, and I believe the trade links between there and Asia have big potential.”

Gigante chino propone a Corfo producir autos eléctricos en Chile — La Tercera
As part of an increased push in the region (see top news, above) , BAIC Group expressed interest in building an assembly plant to Eduardo Bitran, the executive VP of Chilean development coronation Corfo. JLD New Energy Technology, China Commodities and Technology Co., and World Capital Corporation also attended the meeting, where they pushed for participating in the Chilean lithium sector, where Chile is evaluating proposals to develop value-added lithium projects in the country.

Lavalleja avanza en intercambio comercial con varias Provincias chinas — Montevideo Portal
Uruguay ships live beef cattle to China — Beef Central
Ahead of the China-LAC Business Summit in Punta del Este this November (the Novam Portam team hope to see you there!), the neighboring department of Lavalleja has signed a cooperation deal with Sichuan Province that they say is beginning to bear fruit for agricultural exports. Uruguay has been importing live feeder and slaughter cattle to China since last year.

For Chinese in Panama, Ethnicity Eclipses Cross-Straits Politics — Sixth Tone
An interesting article on how the change in diplomatic relations impacted (or, rather, didn’t impact) the 200,000 or so Panamanians of Chinese origin, many of them tracing their ancestry to Huadu District in Guandong. Juan Tam, a Chinese-Panamanian writer and historian, sums up the views of many:

“If Jews and Arabs can do business together in the Colón Free Trade Zone [Panama’s port], why should mainlanders and Taiwanese fight?”

China providing millions for projects in Grenada — Jamaica Gleaner
Per a statement by the island government, China is providing a multimillion-dollar loan to Grenada for the rehabilitation of the Maurice Bishop International Airport and a low-income housing project. The value of the housing project funding is unknown; the statements values the concessional loan for the upgrade of the airport at US$66 million. China is now tendering for a construction company to do the work. 

Government of Jamaica lacks capacity to negotiate with China — South Florida Caribbean News
A Jamaican construction consultant argues that the Jamaican government is giving away the farm in it’s agreement to develop the Government Campus because the Jamaican government is only approving design drawings or the budget, and not doing them themselves.

CDB sees solution to correspondent worries in rise of Chinese renminbi — Jamaica Gleaner
Per the Gleaner, the Caribbean Development Bank (CDB) says regional institutions should consider using it to get around their correspondent banking challenges with banks in North America and the United Kingdom. The CDB’s director of economics cautioned that as regional economies look to correspondent banking relationships with China, they have to be alert to money laundering and other risks, and adherence to AML/CFT standards. But even then, it’ll be interesting to see how the Fed and BoE received this suggestion.

Bridge to Tobago a good option — Trinidad Guardian
Richard Young of the T&T International Financial Centre (TTIFC) sees the potential for Chinese participation in a bridge between Trinidad and Tobago, if local content requirements were adequate:

“Building a bridge to Tobago along 19 miles is not an impossibility, the cost may be prohibitive in the region of US$1.5 billion. But the Chinese have the technology, they have built bridges, highways, airports, new cities, artificial islands and train systems in China and other countries.”

Argentina abrió causa por "dumping" de mercadería china — La Voz
Argentina is opening an anti-dumping case against China for flooding the market with emergency lighting equipment, on behalf of two firms: Atomlux S.R.L. y Gama Sonic Argentina S.R.L..

China desbanca EUA e se torna principal país de origem das importações brasileiras — Portal Brasil
China has now overtaken the US to be the market exporting the most to Brazil, having exported $17.5b in the first eight months of the year, or 17.9% of total Brazilian imports. The US exported $16.8b worth of goods to Brazil.

El complejo sojero argentino debe invertir en China y EE.UU. — Clarín
An op-ed arguing that Argentina’s soybean industry - the best in the world - cannot overcome protectionist measure in China and th'e US. Applying “if you can’t beat ‘em, join ‘em” to the situation, the solution is to invest in soybean agribusiness in the US and China, “transnationalizing” the Argentine industrial soy complex through overseas investment.

Latinoamérica alimenta el ‘China Dream’ — El País
A discussion of the Ecuadorian movie Montevideo, which retraces the Chinese diaspora across Latin America.

Gobierno busca que carne colombiana llegue a China a final de año — Portafolio
Here’s the fact of the day: Beijing by itself consumes the equivalent of Colombia’s beef exports in 10 days. Colombia hopes to be able to export beef to China by the end of the year.

Peru students head to China for Huawei ICT training — Agencia Andina
Huawei lanza en Colombia una academia digital de fotografía con el móvil — El Nuevo Diario
Huawei continues its penetration of the Andes by reaching out to customers and providing them with additional training and education in mobile phones and information technology.

China amenaza el liderazgo en América Latina de las constructoras españolas — El Economista
Spanish construction firms such as ACS, OHL, and Sacyr have all felt the effects of increased competition from Chinese construction firms in Latin America. Where Spanish firms used to dominate the revenues of a growing sector (26%, compared to 1.6% to Chinese firms in 2001), last year revenue for international construction firms declined almost 40%, and Chinese firms (22.8%) got almost as much of the pie as Spanish firms (26.4%).

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China continues to grow in importance for Latin America — Fresh Plaza
China is increasingly important for Latin America — Fresh Plaza
Chilean cherry sector launches $5m dollar advertising campaign in China — Fresh Plaza
Peru launches Superfoods brand at Asia Fruit Logistica — Agencia Andina
A couple of dispatches from the Asia Fruit Logistica annual trade show in Hong Kong this week that summarizes some of the state of play in Latin American fruit exports to China. New to the Chinese market are Uruguayan tangerines, Peruvian blueberries, Ecuadorian mangoes, and Costa Rican pineapples. Argentine blueberries and Costa Rican melons are next. Notably absent: Brazil, where the "Brazilian Trade and Investment Promotion Agency (Apex-Brasil) is currently working hard to develop a fruit trade between Brazil and China.” The Chilean Cherry Committee of the Chilean Fruit Exporters Association (ASOEX) announced a $5 million in a five month-long promotional campaign in China. Peru launched a Superfoods campaign, to highlight blueberries, oily fish, as well as foods indigenous to Peru, such as quinoa, maca, purple corn, and camu camu.

JAPAN-LAC

Ecuador initiates exploration work at 50 MW Chachimbiro geothermal project — Think GeoEnergy
Drilling equipment has arrived on the site brought by Mitsubishi Materials Techno Corp, the Japanese consultant contracted by JICA (Japan International Cooperation Agency), which finances the project through a non-reimbursable technical cooperation.

Panamá promueve inversiones en Japón — Forbes
On the back of her trip to Korea, VP and Foreign Minister Isabel de Saint Malo met with her counterpart in Japan, pushing Panama as a regional hub for Japanese firms. The Japanese Foreign Minister noted that the expansion of the Panama Canal has allowed the island nation to access more Liquid Natural Gas sources.

Brasil perde disputa com Japão e União Europeia na OMC — Estado de Minas
Brasil busca reforçar relações comerciais com Japão — Portal Brasil
Could Brazilian trade with Japan be on the upswing? The World Trade Organization’s Dispute Settlement Body ruled against Brazil’s efforts to set up countervailing tariffs on Japanese and European exports of autos, electronics, and high technology goods. Brazil has 60 days to appeal. Separately, Brazilian Foreign Trade Minister Marcos Jorge expressed interest in deepening trade with Japan due to mutual interest in energy and the environment. Bilateral trade was $8b last year, after peaking at $17b in 2011.

Colaborarán Morelos y Japón en materia agropecuaria — La Silla Rota
The Governor of Morelos, Graco Ramirez, pushed the state’s avocados, tomatoes, onion, aromatic herbs, and decorative plants at a meeting at the Mexican Embassy in Tokyo.

KOREA-LAC

Negociarán un tratado de libre comercio con Corea del Sur — La Nación
El Mercosur buscará un TLC con Corea del Sur — Diario BAE
Mercosur expects to open free trade negotiations with Korea “soon,” according to Argentine foreign minister Jorge Faurie at the East Asia-Latin America forum. Efforts at a deal with Korea had floundered in the past “basically due to differences among the members of the block,” but now thanks to the “change in political climate in Mercosur” — particularly in Brazil and Argentina — allowed discussions to restart in March. Amb Fraurie also indicated that Mercosur will be having a high-level dialogue with ASEAN around the UN General Assembly in New York this month.

Korean automakers’ sales retreat in Chile — Korean Herald
Korean automakers Hyundai and Kia grew sales by less than half of their competitors, and the former lost the top spot of market share to Chevrolet. 

Chilean blueberries undergo Korean inspection — Fresh Plaza
An inspector from the Risk Management Division of the South Korea Animal and Plant Quarantine Agency (APQA) visited Chile this past week to verify compliance and begin the export of that country’s blueberries and cherries to Korea for the season. During the 2016-2017 season, Chile exported more than 580,000 boxes of fresh blueberries to Korean,  a 20% increase over the previous year. Korea is the third largest destination for Chilean blueberries in Asia, followed by China and Hong Kong.

Corea mostró interés por la madera de Misiones — Misiones Online
Looking to diversify his country's tropical wood sources from Indonesia, Korean Ambassador to Argentina Jong-Youn Choo visited the northeast province of Misiones, and was impressed with the “high quality” of the wood.

INDIA-LAC

Chile team in India to hard-sell blueberry — The Financial Express
The Chilean blueberry push continues, with a trade mission for Chilean Blueberry Committee — part of the Chilean Fruit Exporters Association (ASOEX) — was in India last week. While Chile has access to the market, and the two countries recently signed a commercial agreement facilitating blueberry and avocado trade, awareness and market penetration is low.

Brazil gains improved apple market access to India — Fresh Fruit Portal
A protocol announced by the Indian government will allow Brazilian apples to be exported to India. The new protocol allows for cold treatment pre-shipment and in transit for up to 40 days. This will allow Brazil to increase it’s exports to India, which last year totaled $253,575.

ASEAN & OCEANIA-LAC

Australia/New Zealand to Latin America: LATAM grows, Air NZ & Qantas consider Brazil — Centre for Aviation
LATAM is going to expand on its Santiago-Auckland-Sydney offering with Santiago-Melbourne nonstop. Air New Zealand is considering supplementing its Melbourne-Buenos Aires via Auckland flight with a non-stop flight between New Zealand or Australia and Brazil.

GULF-LAC

We didn’t see anything this week — what did we miss? Email us at: mtd@novamportam.com

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