Enterprises boost business links between China and LAC countries
By Li Xiaoyang  ·  2023-11-20  ·   Source: NO.47 NOVEMBER 23, 2023
An electric bus manufactured by Chinese automaker BYD in Santiago, capital of Chile, on October 31 (XINHUA)

In 2019, Mexican entrepreneur Andrés Díaz Bedolla visited a small village in east China as part of a program of the Electronic World Trade Platform (eWTP), which was launched in 2016 by Chinese e-commerce giant Alibaba to support small businesses around the world. Residents of Bainiu Village in Hangzhou, Zhejiang Province, once relied on making the long trek out of their mountain home to sell their local specialty goods at fairs. However, e-commerce industrial chains became an economic pillar in the village around a decade ago and have changed their lives for the better.

Bedolla found Bainiu different from the Chinese villages he had imagined as its houses are well-built and many young people have returned to start e-commerce businesses, which inspired him to promote the model in rural areas of Mexico. As founder of Atomic 88, a business company in Mexico, he hoped to develop it into a platform for gathering Mexican producers and selling their products to the world. After returning to Mexico, Bedolla jointly initiated the Mexican Digital Village program with Alibaba in 2020. Over the past three years, his platform has helped around 1,500 local micro firms, businesses employing fewer than 10 people, to start e-commerce businesses. The platform's e-commerce training program has now trained over 8,000 students.

According to Mexico's Ambassador to China Jesús Seade, at the 16th China-Latin America and the Caribbean (LAC) Business Summit, held in Beijing on November 2-3, the increasing presence of Chinese enterprises in Mexico has accelerated local digital transformation. Mexico, with over 60 million e-commerce users as of last year, will become the second largest e-commerce country in the region, after Brazil.

The LAC region will continue to see economic challenges in 2024. China and LAC countries should increase cooperation to empower small businesses through digital transformation to drive the regional economy, Seade said.

E-commerce link

E-commerce is bolting forward in the LAC region, linking its countries with the Chinese market., another e-commerce giant in China, has opened over 100 online national pavilions to introduce high-quality products from other countries, including those from the LAC region. Alibaba's logistics arm Cainiao launched its Mexico-based distribution center last year, the first of its global centers in the Americas. The time for packages from China to reach LAC consumers has been cut from around 40 days to 12 days.

LAC entrepreneurs are also exploring the Chinese market through e-commerce. Tomas Fuentes Benitez, a Shanghai-based Argentine entrepreneur in his 30s, completed a master's degree program in commerce at Tsinghua University in 2016. After graduation, Benitez worked at the Argentine Embassy in China, and learned more about the Chinese market. He decided to start his own businesses after being inspired by China's huge market demands and Chinese consumers' pursuit of healthy lifestyles.

In 2019, Benitez partnered with a food plant in Shanghai to establish his own healthy snack brand Stokes, producing low-calorie products ranging from beef slices to potato chips. With a dozen employees, the Shanghai-based brand now has warehouses in four other cities in China. Its products have been sold in more than 750 supermarkets across the country.

"China's high-efficiency logistics and completed manufacturing chains allow startups to grow fast," Benitez told Beijing Review. He has ridden the tide of e-commerce in China, livestreaming himself and releasing videos of products on Chinese social media platforms to attract consumers.

In many LAC countries, transportation and digital infrastructure are yet to be improved and logistics networks are yet to be expanded. Chinese companies, like ZTE Corp., are providing pivotal support for local digital economies.

ZTE is one of the four largest telecommunications equipment providers in the world. The company entered the LAC market in 1998, with over 20 subsidiaries in LAC countries including Brazil, Mexico and Chile. More than 1,000 employees now work for ZTE in the region, 80 percent of whom are local people.

"In addition to introducing its mobile phones, ZTE has been supporting the building of digital infrastructure, and will promote digital transformation of local enterprises in the LAC region," Yi Yongqiang, Vice President of ZTE, said at the summit.

Localized business

China's ride-hailing company Didi Chuxing (Didi) launched car-hailing business in Mexico in 2018. Its shared motorcycles now have 1 million users in Mexico, Colombia and Chile. It has also introduced car-hailing services catering specifically to women in LAC countries.

Chen Nan, Vice President of Overseas Government Affairs of Didi Global, said on the sidelines of the summit that the company has operated smart transportation projects in Brazil and Chile. The company has around 2,000 employees in the LAC region, over 90 percent of whom are locals. The number of the company's drivers and couriers has exceeded 2 million.

In April 2022, the company formed a partnership with Chinese electric automaker BYD's subsidiary in Brazil, introducing a sustainable transportation program. It is expected the share of electric cars in Brazil's vehicle market will grow from the current 3 percent to 10 percent by 2025.

Didi began delivery services in Mexico in 2019. Over the past four years, the number of delivery service orders on its platform in the country has surpassed 150 million. The company also launched a financial services business last year to provide digital payment and loan services in Mexico and Brazil. "We will keep expanding services to meet local people's daily needs and create more jobs," Chen said.

Chinese automaker Beiqi Foton Motor has entered the LAC market with its fleet of green vehicles. Foton Mini Trucks occupy the largest market share in Chile, supporting local enterprises on logistics. Foton electric buses also hold a large market share in Chile, with the number of its buses on the road there totaling around 1,400.

Chinese pharmaceutical enterprises are also looking to diversify their partnerships in the LAC region. Beijing-based medical device provider SinoVision Technology Co. Ltd. was founded in 2012. Its products include high-definition computerized tomography (CT) scanners, and 5G-connected robots for remote treatment. CT scanners produced by SinoVision are now in use in Bolivia, Peru and Mexico. In 2022, the company's CT equipment was installed at a private hospital in Santa Cruz, the second largest city in Bolivia, which was the first CT scanner in the hospital.

The high-intensity focused ultrasound (HIFU) machines made by Chongqing Haifu Medical Technology, a company based in the southwestern municipality of Chongqing, was developed to treat malignant tumors. The HIFU machines were first exported to Cuba in 2013. In 2017, the machines entered markets of Argentina, Mexico and Colombia. The company has also established medical centers in six LAC countries to support localized medical development.

More partnership

While around 3,700 Chinese enterprises invested a combined $600 billion in the LAC region this year, 97 percent of the investment went to companies incorporated in the United States Virgin Islands and Cayman Islands, and only 3 percent flew to LAC countries, said Ge Shunqi from the Institute for International Economics at Nankai University. During the summit, Ge highlighted that China's investment into LAC countries remains small.

According to Yi, complex tax payment systems and fluctuating currency exchange rates are still major challenges for Chinese enterprises in the LAC region. Enterprises from China look forward to the development of more favorable business environments in these countries.

Pisen, a Chinese supplier of outdoor energy storage systems based in Guangdong Province, has introduced its photovoltaic (PV) portable power bank products to the Brazilian market. According to the company, its PV panels and portable power banks for drones have been used at farms and factories in Brazil to lower their carbon footprints. The Brazilian Government is supporting the development of the green economy by reducing tax on PV products, facilitating the company's expansion in the market there.

"Investment by Chinese enterprises is mutually beneficial for China and LAC countries. The two sides should work together to improve business-related policy and build economic and trade cooperation zones to boost investment and trade cooperation," Ge said. 

(Print Edition Title: Emerging Markets)

Copyedited by G.P. Wilson

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