As a veteran of international trade, Zou Han first became interested in business opportunities in the Latin America and the Caribbean (LAC) region after meeting a merchant from Peru in 2012. At that time, many Chinese traders focused on European, U.S. and Southeast Asian markets. She traveled to Peru in 2014 and later founded Hiking Technology del Peru S.A.C., a trading agency, there. She has witnessed the increasing presence of Chinese enterprises in the LAC market over recent years.

Zou has been working on connecting enterprises from both sides. "Over the past eight years, we have helped over 500 Chinese enterprises to explore the LAC market, including smartphone maker Xiaomi," she told Beijing Review.

According to the General Administration of Customs of China, China's exports to LAC countries reached 611.68 billion yuan ($89.4 billion) in the first five months of this year, up 15.4 percent year on year. Data from the UN Economic Commission for LAC showed that China's direct investment in the region over the past decade has reached $80 billion. As bilateral trade continues to grow, Chinese enterprises and products are securing a growing share in the LAC market.

"As more and more internationally competitive Chinese brands like Xiaomi and Huawei enter LAC countries, local consumers' acceptance of Made-in-China products has been on the rise," Zou said.

Expanding cooperation

China-LAC cooperation has expanded from minerals, agricultural products and infrastructure to manufacturing, education and culture, providing Chinese enterprises with greater opportunities.

As LAC countries have been accelerating the development of infrastructure such as subways, roads and hydropower stations in recent years, they have great demand for machinery, building materials and electronic products from China. Seeing the huge business potential there, Chinese engineering companies such as the Sany Group, a construction and mining equipment manufacturer, have expanded their presence in the countries.

While baby care brands from European countries and the U.S. used to dominate the LAC market, products from China are taking an increasing share, with many Chinese manufacturers becoming suppliers for LAC businesses, Zou said.

According to Zou, China-LAC cooperation in many emerging fields is thriving. Cross-border e-commerce has seen rapid growth in LAC countries during the pandemic. Data from U.S.-based

e-commerce market analyzer eMarketer showed that LAC e-commerce retail markets experienced the world's fastest growth for the first time in 2020. Retail sales through online platforms reached $84.95 billion in 2020, up 36.7 percent year on year.

"In Mexico, over 67 percent of netizens shop online. Over 49 million Brazilians visit online stores, a number that is close to the population of the Republic of Korea. Peru saw an 87-percent growth in the number of online stores in 2021, ranking first among the LAC countries," she said.

Local e-commerce platforms such as Mercado Libre and Juntoz have emerged. Chinese e-commerce platforms including Alibaba and SHEIN have also expanded their businesses into the region.

China and LAC countries are also teaming up on new energy projects. While China aims to have its carbon emissions peak before 2030, many LAC countries have proposed the goal of increasing the share of renewables in the primary energy mix to 70 percent by 2030. Chile and some other countries have introduced reforms to their energy markets to attract foreign investors.

Chinese wind turbine manufacturer Xinjiang Goldwind Science and Technology Co. Ltd. entered the Chilean and Brazilian markets in 2013 and 2017, respectively. It has established several projects in the countries, with an expanded local staff. In August, it signed a memorandum of understanding with Sinotec, a Chinese multinational integrated technology and service provider, for Goldwind's third windpower project in Brazil. The new project is expected to generate 470 million kWh of power annually, providing over 180,000 households with green energy, the company said.

Rising Chinese players

Many Chinese enterprises have become established in LAC countries.

Data from market research company Canalys, released in December 2021, showed that Xiaomi had risen to third place in terms of mobile phone sales in the regional market, with an 11-percent share. It accounted for 31 percent and 27 percent of the Peruvian and Colombian markets, respectively.

Chinese mobile ride-hailing platform DiDi Chuxing has been building a presence in LAC countries since 2018. As of May 2021, it had developed businesses in over 1,000 cities in nine countries, including Brazil, Mexico and Chile. The company has over 1,500 employees in the region, including engineers and operational staff, of whom 90 percent are local people. During the COVID-19 pandemic, public transportation has been heavily affected in LAC countries, and DiDi's orders have seen further increases over this period.

DiDi established operations in Chile in June 2019. Felipe Contreras, DiDi Chile's Director of Corporate Communications, told Xinhua News Agency that the company's business expanded across the country in just a few months. It currently has almost 2 million users and 190,000 drivers.

DiDi's food delivery service also began operating in Santiago, Chile, in August. Before that, it had already gone online in Mexico and Brazil. Among Chilean restaurants registered on the platform, 60 percent are small and medium-sized enterprises and 13 percent are using an online delivery service for the first time, according to the company.

Despite the distance between LAC countries and China, increasing numbers of China's e-commerce brands are entering the promising market. After two years of branding efforts in Brazil, international fashion e-commerce platform SHEIN's total sales in the country reached nearly $400 million in 2021. The number of downloads of its app by Brazilian users has exceeded 23 million. According to the company, it is working on building factories in Brazil to improve delivery efficiency.

Challenges remain

According to Zou, global economic recovery from the pandemic has boosted China-LAC trade, even surpassing pre-pandemic levels. However, while many Chinese firms see the LAC market as an ocean of possibility and potential, they must conduct due diligence and market research before deciding to get their feet wet.

In some LAC countries, the complex tax system involves multiple levels of bureaucracy, and their environmental and labor protection standards are different from those in China, posing challenges for some Chinese investors. To improve localization, Chinese enterprises need to learn about local customs, laws and regulations, according to Zou.

"For long-term operation and expansion, Chinese companies should improve products and services, and maximize the use of social media platforms for promotion to expand exports to emerging LAC countries and improve brand reputation," she said.

(Print Edition Title: New Potential Across the Ocean)

Copyedited by G.P. Wilson

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