Positive side of Beijing's imprint on Latin America

By Zhang Haizhou (China Daily)
Updated: 2009-09-10 08:51

More Chinese investment in Latin America will help enhance the region's competitiveness in the global economy, says Erik Bethel, the Chief Executive Officer (CEO) of SinoLatin Capital.

Located in Shanghai's financial district, SinoLatin Capital is the first merchant bank focused exclusively on cross border transactions between China and Latin America. The firm has two core businesses: financial advisory and private equity.

Before attending this year's Summer Davos, running in Northeast China's Dalian between Sep10-12, Bethel called for more Chinese investors to go to Latin America.

While noting there is "a perception that Chinese goods may hurt local manufacturers", he says "the other side of the equation is that Latin American consumers benefit because certain products will become more affordable".

China's trade with Latin America has grown at an annual average rate of some 40 percent since 2003 - faster than its overall trade.

But China's rise in the region is sometimes seen as having an adverse impact on the region's labor-intensive manufacturing industry.

For Mexico, one of the region's most industrialized countries, China is a competitor, especially in the American market, in industries ranging from textiles to electronics. Between 2000 and 2005, China's share of American clothing imports doubled, to 26 percent, while Mexico's fell from 14 percent to 8 percent.

Nearly all of Brazil's shoemaking and toy-making has been wiped out, or has moved to China, according to recent media reports.

Bethel, however, points out that "there are good opportunities for Chinese firms to invest in manufacturing facilities in Latin America itself".

"Chinese investment could actually enhance the competitiveness of Latin America, as this will provide employment, growth and other benefits," he told China Daily.

Countries such as Mexico have already attracted the likes of Lenovo, a Beijing-based world's fourth largest personal computer manufacturer. And Chery, a leading car-maker in China, has an automotive plant in Uruguay.

Apart from manufacture, Bethel also says Chinese firms have, and "will continue to show strength", in sectors as oil & gas, mining, forestry, agri-business, and infrastructure.

"By 2007, China-Latin American trade was greater than $100 billion, last year it was $140 billion, and this year it will be even higher," says Bethel.

But he also noted that Chinese firms face difficulties, including "language barriers, time-zone differences, and business norms", in making investments in Latin America.

So it is crucial for Chinese firms to "find good advisors" or "business partners" when entering Latin America, he advises.

Commenting on the Summer Davos, Bethel says it is "a tremendous opportunity for Chinese and Latin American companies and leaders to get together".

"There are few places in the world where high caliber people from all parts of the world meet and share ideas," he adds.