World Cup: China is using football to score big in Latin America

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Russia and Saudi Arabia just kicked off the 2018 World Cup, in what has turned out to be the second biggest spectacle of the week — after whatever happened in Singapore. Here at Novam Portam we’re arguing the merits of Brazil, France, and dark horse Belgium to go all the way. While China (along with the USA) failed to qualify for this year’s tournament, eight teams from across Latin America will compete for what is arguably the most prestigious honor in world sport.

Known to be President Xi Jinping’s favorite sport, football’s popularity has increased exponentially in China over the last decade. Not known for operating via half measures, the sport's ascendency is another prime example of China’s public-private partnership. And how China is looking at the game from a domestic and global perspective.

The Chinese central government has a 2050 plan that includes targets to grow the number of domestic football-player population to 50m by 2020, becoming Asia’s best team by 2030, and win a world cup by 2050. China is spending big money to bring in big names to increase the domestic popularity of the sport, many of them from Latin America. From the $51m spent by Chinese clubs on transfer in 2012, the investment in players has increased 785% to 2016’s $451m. Many of these astronomical fees were spent on players from Latin America, including Brazilians:

  • Oscar (to Shanghai SIPG for €60m), 
  • Hulk (also to Shanghai SIPG for €55.8m), 
  • Alex Teixeira (to Jiangsu Suning for €50m), 
  • Ramires (also to Jiangsu Suning for €28m), 
  • star-crossed Brazil national coach Felipão (to Guangzhou Evergrande until late last year); and
  • Colombia's Jackson Martinez (also to Guangzhou Evergrande for €42m, although he just got released). 

In the cases of the players, the fees were paid to the European clubs who owned their rights at the time. While Europe will remain the acme of world clubs soccer for the foreseeable future, it begs the question could China supplant the traditional powers here too? Could we someday see top talent from Latin America go directly to the Chinese league based on the economics?

And it’s not just at the top. While the Chinese Super League topped the 2016 winter transfer market, spending $337m, second-tier China League One was fourth — ahead of the Bundesliga and La Liga —  splashing out $69m for players. And the Chinese government has made the development of grassroots football a priority, investing in football academies and importing youth coaches from Uruguay and beyond.

But beyond bringing the beautiful game home, China is injecting itself in football around the world. China has practiced Stadium Diplomacy in the Caribbean basin for almost thirty years, with a slew of national cricket ovals — and a baseball stadium in Nicaragua — built a decade ago. But the most prominent stadium deal was the 2011 construction of Costa Rica’s Estadio Nacional in exchange for that nation switching diplomatic recognition to Beijing. While some are calling it "Ping-Pong Diplomacy 2.0” —  hearkening back to China’s soft-power outreach to the US in the early 1970s — it doesn’t always redound to China’s favor: “There was a bit of a hold on that after Costa Rica,” our friend Margaret Myers points out. “But we may see more of it in the coming years.”

Chinese corporates are beginning to challenge the role that incumbent companies have in the most lucrative aspect of football — sponsorship. In addition to an agreement between the Chinese government, the Argentine Football Association (AFA), and the Agremiados and Banfield teams for training programs for Chinese youth in Argentina, Chinese sportswear company Peak Sport will provide the kit for Buenos Aires-based soccer club Lanús.

The 2018 World Cup will feature 4 Chinese companies as official sponsors: Wanda Group, smartphone maker Vivo, dairy company Mengniu, and electronics manufacturer Hisense. That’s up from the only one Chinese brand (Yingli Solar) sponsoring the World Cup four years ago in Brazil. While these sponsorships are undoubtedly focused on the sports growing popularity in China, they are also indicative of the growth of Chinese brands in Latin America. 

In the context of China-Latin America commercial relationship, Hisense represents the most interesting case. In a China vs Korea matchup, Hisense is taking on Samsung and LG in the lucrative flat-screen TV market, targeting countries such as Mexico, where flatscreen sales jump 20% ahead of the Cup.

China is making a big bet that rebalancing the football globe will pay off for them diplomatically and commercially. If it pays off, it may be the cultural connection that has long eluded the China-LatAm relationship. One day soon, Latin Americans could be supporting Team China (中国队) in its bid for the 2034 World Cup.

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China anuncia tarifas antidumping ao frango do Brasil — Valor
China impõe tarifas nas importações de frango do Brasil; BRF despenca 7,5% — Folha
Brasil diz que sanção da China sobre carne de frango não se justifica — Exame
China coloca em vigor sobretaxa provisória sobre frango brasileiro — Jornal Nacional
Maior exportador de frango do país, Paraná será afetado por medida antidumping da China — Comex do Brasil
Brasil pode recorrer à OMC se não houver acordo com China sobre frango, diz ministro — Notícias Agrícolas
Brasil estuda retaliar China por sobretaxar frango do Brasil, afirma Blairo Maggi — Senado Notícias
China’s MOFCOM has imposing anti-dumping measures of 18.8% to 38.4% on imports of Brazilian chicken meat for at least a year, after determining that there was dumping of imported broiler or chicken products. Brazilian exporters — who have struggled with last years’ food safety scandal and last month’s trucker’s strike — took a hit, with chicken giant BRF down 8% on the news. Brazilian Ag Minister and magnate Blairo Maggi has vowed to look at retaliating.

中国银行智利分行正式开业 — Bank of China
Ministro de Hacienda se reúne con representantes del Bank of China — Diario Financiero
Bank of China inaugura sucursal en Chile — China.org
Banco de China anunció que operará en la Argentina — El Cronista
Bank of China is growing its Latin America franchise. It inaugurated its Chile branch this week, and according to Argentine press it will open in that country, soon. This follows on plans announced earlier this year to expand its offerings in Mexico.

金风科技为5个阿根廷风电项目公司提供总计4.75亿美元担保 — Eastmoney
Goldwind Technologies (02208) Provides a Guarantee of US$475 Million for 5 Argentinian Wind Power Project — West Dollar
Goldwind International has agreed to invest in 5 wind power projects at Loma Blanca, Argentina. Goldwind’s holding company will provide project guarantees totaling $475m; unclear what the total project cost will be.

Sturzenegger negocia ampliar swap chino en hasta u$s5.000 M — Ámbito
Swap, carnes y soja, señales de respaldo del gobierno de China — Perfil
China levantó las restricciones y vuelve a comprar aceite de soja argentino — Infobae
As part of its efforts to gain international support in the face of market pressure on the peso, Argentina has turned to China. The People’s Bank of China has agreed to increase its swap line with central bank BCRA by up to $5b, alongside the $50b IMF facility. This is in addition to recent trade deals - state-owned Sinograin has already announced plans to purchase at least 120,000 tons of soybean oil from Argentina.

Japón estipula ley para ratificación del CPTPP — Vietnam Plus
TPP 11 podría entrar en vigor este 2018: Guajardo — El Economista
El primer ministro malasio pide una "renegociación" del tratado transpacífico — Swissinfo
Guajardo concluye gira de trabajo por Japón — Noticieros Televisa
Japan is moving forward with ratification of TPP by the end of this month. With that, Mexico’s Secretary of the Economy Ildefonso Guajardo thinks the deal will be done by the end of 2018. However, Mahathir Mohamad, the once and future Prime Minister of Malaysia, is calling for the treaty to be renegotiated. But it may be too little too late.

El crimen organizado en Chile tiene un nuevo objetivo: el aguacate — El Financiero
Avocado Toast Is Sparking a Chilean Crime Wave — Bloomberg
…and we’re here for it.

Chinese wine market: Still corked after all these years — Wilson Center Argentina Project Weekly Asado
Our own Mike Derham is quoted in the Wilson Center’s Argentina Project informative weekly newsletter:

There are structural challenges, too, Mike Derham, of Novam Portam, told me. Chile, for example, sells its wine duty free in China. But “what is more important is getting it in front of Chinese consumers,” he said. “They’d benefit from taking a page from Chile’s playbook, with in-store samples, pairing menus and the like.”

China — LAC

China "necesita mucho" de productos mexicanos — Debate
México y China firman convenio para exportar carne de cerdo y frutos rojos — Marco Trade News
Interesa a México comercio con China, impulsan acuerdos — El Economista
Crecen 54 por ciento exportaciones agroalimentarias de México a China — Vanguardia
54% growth of Mexican agro-food exports to China in five months — Fresh Plaza
China inundaría a México de productos que no puede mandar a EU — Forbes México
México alista exportación de plátano a China: Sagarpa — Azteca Noticias
Inversión China en México alcanza los 200 mdd anuales — Azteca Noticias
En portal de E-commerce México-China,  expondrán 50 mil fabricantes asiáticos — El Sol de Tulacingo
Mexican agricultural exports to China are up 54%, to $320m so far this year, thanks to China’s growing demand and Mexico’s search for a NAFTA plan B. The number is set to continue growing, as the two countries have just inked a deal to allow for the export of Mexican pork and more Mexican specialty fruits and berries, and moved forward plans to open China to bananas and plantains. Chinese investment in Mexico is expected to increase from the current $200m annually, in manufacturing and technology. It’s not all friendly, though, as there are concerns that the soon-to-be-imposed US tariffs could lead China to “flood” the Mexican market with exports.

Corredor mexicano de La Ruta de la Seda generará tensión con EE. UU. — Portafolio
If Antonio Manuel López Obrador (AMLO) wins next month in Mexico, will he play ball with China and the Belt and Road Initiative to create an over $7b rail alternative to the Panama Canal in Tehuantepec? AMLO advisor Gerardo Esquivel thinks so: “This is the type of project in which China will surely want to invest, because these are large-scale infrastructure projects with clearly positive returns.”

拉美和加勒比地区侨汇收入创历史新高 — People’s Daily
The Chinese Academy of Social Science Institute of Latin American Studies (CASS-ILAS) has published their Annual Report on Latin America and The Caribbean (2017-2018) was published. If you have a copy, send it our way.

Panamá cree que otros países centroamericanos terminarán abriéndose a China — La Vanguardia
Panamá cree que otros países centroamericanos terminarán 'abriéndose a China’ — TVN
Panama Believes Other Central American Countries Will Open Up to China — Latin American Herald Tribune
Dictarán conferencia en NY sobre las nuevas relaciones China-RD — Hoy
Migración ofrece reconocimientos a diplomáticos de Taiwán — La Tribuna
CN entrega reconocimiento al consejero político de Taiwan — La Tribuna
According to Panamanian Deputy Minister of Foreign Affairs Luis Miguel Hincapié — on the one year anniversary of his country recognizing Beijing — the economic returns of establishing diplomatic relations with Beijing are so good, that Central America and Caribbean countries that don’t already will do so. The Dominican Republic is mulling what its deal with Beijing will mean, while Taiwan continues to shore up allies like Honduras. We’ll see if it is successful.

Una UTE China y Argentina habría ganado la licitación de la Autovía Anguil-Santa Rosa — El Diario de la Pampa
In Argentina, China Construction America (subsidiary of CSCEC) and local firm Green SA have won the $1.2b mandate to build a new highway between the La Pampa province capital of Santa Rosa and Angel, as well as a ring road around the capital.

专注上海航线十年后,墨西哥航空拟携手东航乏力中国 — Yicai
On the tenth anniversary of Aeromexico entering the China market, the airline still only runs the Shanghai to Mexico City route. But, over the past four months Chinese citizens headed to Mexico has increased by a third. Maybe time for another route?

巴西计划转让13座机场运营权 — Xinhua
Brazil plans to auction operations of 13 airports including Maceió, Recife, Cuiaba, and Campo Grande, with the round launched by the end of the year. The auctions are hoped to bring in $1.1b; looks like Xinhua hopes Chinese companies will be allowed to bid.

Corfo, por ingreso de Tianqi a SQM: Acusa complot de China para “encarecer precio” de autos eléctricos — La Tercera
The war of words between former Chilean competitiveness regulator Corfo VP Eduardo Bitran and China’s Tianqi Lithium over the latter’s move to buy a quarter of SQM continues. Bitran says China has a “plot” to raise the price of electric cars.

Nectarines chilenos llegan a China con precios similiares a las cerezas — Estrategia
The Chilean fruit juggernaut continues onward, with nectarines as the new cherries.

Brazilian gaming industry eyeing China — The Brazilian Report
They already speak Portuguese in Macau right? But this is about video games, which could be a bigger business.

Chinesa CNPC embarca 1ª carga de diesel de grande porte para o Brasil — Exame
China's CNPC ships first larger-sized diesel cargo to Brazil — The Business Times
China National Petroleum Corp (CNPC) sent 60,000 tons of diesel to Brazil at the end of May, its first move of the refined fuel in a shipment of this size to the Americas.

Samuda ecourages Chinese to continue investing in Jamaica — Jamaica Gleaner
Minister without Portfolio in the Ministry of Economic Growth and Job Creation Karl Samuda enoucrages Chinese companies to continue investing in Jamaica's infrastructure.

Favorito a la presidencia en Brasil modera su visión sobre inversiones chinas — Swissinfo
Candidata brasileña afirma que relaciones con China deben ser ampliadas — Xinhua
Backing away from previous intemperate statements, Brazilian presidential front-runner Jair Bolsonaro says he wants to continue doing business with China, and that China is an “exceptional” partner. Positioning herself as the anti-Bolsonaro, Brazilian Presidential candidate Marina Silva says her country’s relationship with China is very important and has room to grow.

80% de los barcos que pescan en frontera marítima chilena es chino — La Tercera
80% of fishing vessels in Chile’s Economic Exclusivity Zone are Chinese, a survey shows. While this can be beneficial for both sides, Chinese fishermen have gotten in trouble in the waters of the Americas in the past...

Acuerdo Comercial con China potenciará a Panamá como puerta de entrada a América — La Estrella de Panamá
Acuerdo Comercial con China potenciará a Panamá como puerta de entrada a América para grandes empresas Chinas — Presidencia de Panamá
Panama and China have officially begun negotiations on a trade agreement, which Panama sees as an opportunity to make itself the gateway to the Americas for big Chinese firms.

Argentina prepares for first Chinese blueberry shipment — Fruit Net
More than twenty Argentine farms are cleared to export blueberries to China this season, the country’s first with access to the growing China market.

Adex: Trabas logísticas reducen colocación de productos peruanos en el mundo — Gestión
The Peruvian Exporters Association (Adex) laments that bottlenecks are limiting the country’s ability to export to the world.

Rusia y China buscan aumentar su influencia en América Latina — Mercado Militar
A América do Sul no mapa das "guerras do futuro” — Portal Vermelho
Write-up’s of comments by the head of the US’ Southern Command, Adm Kurt Tidd, that China and Russia are looking to increase their influence in Latin America.

China avança no Brasil, no rastro da Lava Jato — Folha
China is gaining ground in Brazil, thanks to the corporate devastation left by the Lava Jato corruption investigations, but Patrícia Campos Mello warns that Chinese firms can also be troublesome partners.

Cuántos 0Km venden las marcas chinas en la Argentina — iProfesional
There are 11 Chinese auto companies selling into the Argentine market, but even Chery — the biggest and longest in the market — only sells 40,000 vehicles, for 0.8% market share.

La agroindustria tiene puertas abiertas con China — El Diario
Colombia está a un paso de poder exportar carne bovina a China — El Heraldo
Colombia is one step away from exporting beef to China - the last step is approval of individual slaughterhouses by Chinese authorities. And the China-Colombia Investment and Commerce Chamber sees more agriculture exports to China ahead.

Entender o papel da China no mundo é estratégico para Brasil, dizem debatedores — Senado Federal
EUA x China: e o Brasil? — Diário do Grande ABC
Brazil continues to debate it’s role in an increasingly multipolar world.

Evo comienza periplo de 10 días que incluye su asistencia a la inauguración del Mundial — La Razón
Evo is taking grief for a 10-day boondoggle to today’s World Cup opening and a stop in Beijing on the way back.

Exportação de soja do Brasil para a China bate recorde face a tensões com os EUA — Observador
Brazil exports 9.76 million tons of soybeans to China in May — Macau Hub
Brazil’s export of almost 10m tons of soybeans to China in May hit records, thanks to the ongoing trade war between the US and China.

China's Hengli buys Brazilian oil ahead of refinery start-up: sources — Reuters
Chinese chemical producer Hengli Group bought its first crude oil cargo from Brazil ahead of the start-up of a new 40,000bpd refinery in Dailan in the fourth quarter.

Korea — LAC

Perú lanzará este año proyecto de Tren de Cercanías para Lima y norte de país — La Vanguardia
Peru is launching a train line for Lima and the north of the country, and thinks that South Korea — with similarly difficult topography — could provide the know-how.

Este año enviarían melón a Chile y Corea del Sur — La Tribuna
As Honduras grows its exports, it begins to send melons to South Korea and Chile.

La autopista para el Libre Comercio entre Corea y México — El Financiero
Korean Ambassador to Mexico Sang-II Kim sees a clear road for free trade between the two countries.

“Perú es ejemplo para la región en crecimiento y reducción de brechas” — El Peruano
Director of the Korean International Cooperation Agency (KOICA) Dae Hwan Kim visited Lima, where he said that Peru is an example for Latin America on growth and the reduction of inequality.

Las extrañas cifras comerciales entre Chile y Corea del Norte — Pauta
Grupo parlamentar de amizade Brasil-Coreia do Norte é efetivado — Senado Federal
Bancomext fue hackeado por un virus de Corea del Norte — El Debate
Banco de Chile Wiper Attack Just a Cover for $10M SWIFT Heist — Threatpost
This week has led to some reflections on Latin American links to the other Korea. Chile exported $1m worth of goods to North Korea in 2016, according to Pauta although Chilean Customs says nothing has been exported there since 2014. Brazilian senators (including ex-president Fernando Color de Mello) have set up a Brazil-North Korea Friendship caucus. But maybe don’t get too friendly — North Korea has been identified as the source of the January Bancomext hack. We have heard that other banks around the region have faced similar attacks, including Banco de Chile.

Japan — LAC

Aguacate de Pacific Fruits iría a los mercados de Argentina y Japón en el segundo semestre — Agro Negocios
Colombia expects to begin exporting avocados to Japan in the second half of this year.

Aprovada nomeação de embaixador brasileiro no Japão — Senado Federal
Autor do plano de fuga de senador da Bolívia será embaixador no Japão — Veja
New Brazilian ambassador to Japan Eduardo Saboya has been a bit of an activist when it comes to Brazil’s foreign policy, having helped a Bolivian senator seek asylum from his country in 2012. We expect he won’t have to do that in Japan.

TECTEL se convierte en el único distribuidor oficial De ICOM en Chile — Portal Minero
Telcel has become the sole distributor of ICOM’s radio communication equipment in Chile.

Gigante japonesa Muji abre primeira loja no Brasil — Estadão
Muji is putting a pop-up store in São Paulo’s Japan House.

India — LAC

Indians made OFDI of $14 9bn in LAC region: Exim Bank — UNI India
According to Exim India study titled: “Indian Investments in Latin America and the Caribbean: Trends and Prospects” India has invested $14.9b in the region

Descubriendo India — El Observador
Ignacio Bartesaghi reports from the Inter-American Development Bank’s Latindia conference last week.

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