Investment Opportunities And Successful Cases Between China And Latin America

Brazil China

Relations between China and Latin America have strengthened in recent years, with the COVID-19 pandemic as a turning point. Nearly $75 billion was invested in the region over the five-year period between 2015 and 2020.  With this in mind, different specialists in investment and the economics of the region gathered for the M&A Latam Community  webinar on 24 November 2021: Investment opportunities between Latin America and China. The subjects to be discussed were: the opportunities, challenges and gambles involved in  Chinese investment in Latin America and vice versa.

Our speakers were:

Ignacio Tornero:  Founder of East Consulting.

Valentina Billeke:  Industrial Civil Engineer at Falabella Retail S.A.

Claudia Martínez:  Senior Associate Lawyer at Rodrigo, Elias & Medrano Abogados.

Juan Sonoda:  Legal Practice Director at Beretta Godoy

How are investment opportunities between China and Latin America evolving?

Ignacio Tornero from Chile asserted that: "China is now South America’s greatest ally ", given that about 30 billion dollars annually have been invested to date, resulting in an FTA (Free Trade Agreement) between China and Chile. He also said that after the impact of the COVID-19 pandemic, China strengthened this relationship, making it Chile's current favorite export destination, and accounting for 40% of total exports. 

Claudia Martínez, speaking from Peru, said that relations between Peru and China have been transformed. According to her, "investment opportunities have changed, but the relationship remains strong". Peru’s main exports to China are minerals and commodities and copper has become more important, which has helped to attract more resources for Peru. Martínez points out that in this area there has been an increase of 60% compared to the same period last year. This indicates a promising future for the relationship since, as Martínez points out, ECLAC reported that Peru was the country that received the most investment (behind Brazil) in 2021, mainly  in energy projects, such as the infrastructure project Puerto de Chancay, the San Gabán II hydroelectric plant. 

In Argentina the situation is similar. Juan Sonoda says that China is Argentina’s  main export destination. Products such as soybeans, meat and other raw materials are the most significant for the binational relationship. Like Peru, Argentina has large infrastructure projects financed by China. Among these are dams in southern Argentina, railway branches such as Belgrano Cargas, as well as energy projects that include a nuclear power plant and photovoltaic installations.

In terms of retail, Valentina Billeke cites the positive relationship between Falabella and China, where the latter has been a loyal ally of the Chilean company. Billeke sees  the automation services provided by China as one of the most important factors in the relationship, in addition to the steadfast business commitment that has allowed a balance to be maintained between the investment, purchase and sale of products, thanks to China’s expertise  in markets, export and import matters.

What are the main barriers to entry that companies encounter with China and vice versa?

Companies from both countries face similar barriers and challenges.  Chinese companies may struggle to gain a foothold in each country. According to Tornero, the greatest challenge in Chile is the cultural differences in doing business as well as the expected regulatory variants between the different types of economy. 

In Peru, according to Claudia Martínez the picture is the same. Chinese companies entering Peru, need a wide knowledge of the political and legal environment, as well as environmental restrictions. So one of the solutions should be to "promote sound knowledge between both parties".

According to Juan Sonoda, Argentina has the same challenges but with additional issues. Argentina provides guidance on how to address barriers  by both parties making their expectations clear and understanding how the binational relationship operates. China's business culture is different, so it is important to see the differences as a challenge. For example, in Argentina you have to take into account the holiday periods, the influence of the unions and the management of public relations, since Chinese companies tend to focus on the government and do not take into account these factors. Sonoda believes it is important to pay attention to political and cultural questions.

For Valentina Billeke, the barriers are both cultural and political. "In fact there is very little knowledge of Asian culture in South America; we know very little about how trade relations are carried out," Billeke emphasizes the need to respect Chinese  culture, since their legal system can be more rigorous. She therefore recommends, as a starting point, finding a partner to help in the tax arena for each specific country.

What are the opportunities for Latin American companies in China like?

The outlook is positive, but investment is currently limited to commodities exports: minerals and agricultural products. Ignacio Tornero emphasizes that the situation in Chile is in line with the rest of Latin America, but highlights that about 1200 companies exported products to China through e-commerce or by exporting products directly. However, of these, only an average of 40 have a permanent establishment there, as it is a bigger challenge to achieve strategic positioning in China.

Peru also has the export of products as the most important aspect of their relationship. In the words of Claudia Martínez, the Chinese consumer likes exotic products; an example of this is the popularity of Peruvian Red Dragon grapes,. So his main recommendation is to use exports as a form of entry, where hiring a distributor in China becomes a valuable opportunity to increase your presence. As for other mechanisms, Martínez points out that you need to explore the online market using China's own platforms. In the other direction China can enter Peru by establishing a representative office, which may have limits on its operations. . Another way is the joint venture or direct entry as a totally foreign-owned company, a route with many requirements that, even if well-managed, can take 4 to 6 months.

For Argentina the key aspect of the relationship is also the export of commodities. However, it is the one country where political changes have the biggest impact, so you have to assess the political landscape, says Juan Sonoda. For instance meat exports were suspended recently, which directly affected the relationship with the market. This is because the relationship between Argentina and China, commercially speaking, has a greater impact on the government front, so, a local company should make use of these relationships and subsequently hire Chinese distributors or establish a commercial relationship with a partner there.

Which sectors are of most interest in the Chinese market?

The Chinese presence in Chile is mostly based on energy and mining, but recently there has been diversification into aquaculture and agriculture. Up to 80% of demand for materials such as lithium and copper, as well as the forestry industry are very dependent on China, says Ignacio Tornero. Nevertheless: "products such as wine, cherries, meat or fish are dominating the market right now, ". 

In Peru, says Claudia Martínez, the most attractive sectors are non-traditional exports, such as grapes, avocados and fish. China’s interests are in addressing Peru's infrastructure gap, and investing in transport, infrastructure and energy.

Argentina’s most popular exports are soya and its derivatives. Juan Sonoda, however, thinks that the ideal relationship would be if China had land in Argentina and grew soya on it but there is legislation that prohibits foreign companies owing land. . Otherwise, China's presence is large, since it is well-established in the search for gold and copper mines, as well as lithium.

The relationship with Falabella has remained stable, demonstrating the importance of keeping a balanced relationship between suppliers and distributors. Valentina Billeke says that: "always dealing with the same suppliers generates trust and strengthens the relationship, so you only look for different suppliers when you want new products. With China we have a long-term relationship that was able to endure during the COVID-19 pandemic and in fact, it expanded, said Billeke, who ended by saying that the important thing when dealing with China is to plan a long-term project that can grow stronger with time.

What are the key tips you would give to a Chinese company on landing in LA?

For Peru and Argentina, the advice would appear to be similar. Claudia Martínez recommends that any Chinese company investigates how Peru deals with legal, political, social and environmental issues. The Chinese are mostly interested in brownfield projects so you need to find places where they already have a presence and there is an established company. Juan Sonoda invites Chinese companies to conduct a survey of conditions in the country  to form the basis for developing a strategy. A Joint Venture approach would be the best route.

Is your country offering any legal or tax breaks to Chinese companies to invest?

According to Claudia Martinez, "Peru has a high level of cooperation with China and this allows for a closer bond. Legally there is a bigger rapprochement with Chinese investors than with other countries." In fact, "China was the first country that the recent government tried to approach to strengthen investments and reinforce the relationship." Peru and China have had an FTA since 2010 and negotiations are currently in progress to expand it. 

In Argentina the government has developed a state-to-state relationship with the Chinese, establishing agreements, treaties and accords and generating a regulatory framework that facilitates Chinese investment. Negotiations seek to establish direct contracts, with financing from China and the hiring of Argentinian labor and suppliers. 

What has been your experience advising companies on opening in China?  

Ignacio Tornero was an advisor to two companies that managed to gain a foothold in the Chinese market: the biotech company Crystal Lagoons and the main law firm in Chile: Carey, which managed to open an office in Shanghai., Tornero points out that this is a very challenging route, particularly in terms of regulatory issues since you need to consider the culture and functioning of the country before you get there. So he recommends an in-depth study of the legal, commercial and cultural aspects of China before you start. 

In summary:

Different countries in Latin America face similar barriers in their relationship with China. Cultural and political issues are the main challenges.

There are many opportunities to acquire investment from China  , because the Chinese market wants Latin American products.

Infrastructure development in Latin America has a great partner in China, as it looks for investment and for raw materials for its own country.

This conversation, supported by the M&A Latam Community, helps explain the conditions behind investment trends in Latin America, showing that the strengthening of binational relations, in this case with China, is a significant milestone in the economic development of the continent.

Other Insights

See More
Iberia mna

Iberia M&A Trends Report FY 2021

Brought to you by the M&A Community in association with MergerMarket.  Industrials and chemicals lead the way in a post-Covid surge...

See More
LATAM M&A

LatAm M&A Trends Report FY 2021

Brought to you by the M&A Community in association with MergerMarket.  The devastating impact of Covid-19 was succeeded by a...

See More
Dach M&A

DACH M&A Trends Report FY 2021

Brought to you by the M&A Community in association with Mergermarket.  Europe’s model region is still enjoying a post-Covid boom, with...

See More
USA
china usa
M&A

How the Rise of China changes the M&A Game

While the M&A landscape has experienced significant short-term changes because of the COVID-19 pandemic, investors are very conscious that...

See More
Brazil
clean energy
Energy

According to an expert, clean energy is Brazil’s ace in the quest for foreign investments

Although we are going through challenging times with the water crisis and political and economic uncertainties, the Brazilian energy industry is...

See More
Brazil
M&A Community
Energy

Energy Investment Projections In Brazil

At an event organised by the M&A Community, participants emphasise that the water crisis and the political context are challenges, but they...

See More
Dach
M&A

DACH M&A Trends Report H1 2021

Brought to you by the M&A Community in association with Mergermarket.  Real estate, pharma, industrial and chemicals and technology...

See More
Latam
M&A

LatAm M&A Trends Report H1 2021

Brought to you by the M&A Community in association with Mergermarket.  Led by the financial services sector and big deals in energy...

See More
Iberia
M&A

Iberia M&A Trends Report H1 2021

Brought to you by the M&A Community in association with Mergermarket.  Rapidly expanding opportunities in energy, especially...

See More
China
M&A

China & Hong Kong M&A Trends Report H1 2021

Brought to you by the M&A Community in association with Mergermarket.  As both economies bounce back from Covid-19, infrastructure and...

See More
Brazil
IPO

Prospects for the M&A and IPO market in Brazil

Despite two very challenging years for the Brazilian economy and population, due to the consequences left by the COVID-19 pandemic, the M&A...

See More
USA
digital-USD
Digital currency

Webinar: Are Digital Currencies Disrupting Global Markets? Risks, Opportunities, And Outlook

Cryptocurrencies, once viewed as the province of nerds and dodgy financial transactions, are now becoming mainstream. More countries around the...

See More
Mexico
IPO
M&A

M&A Latam, Facts, Trends, & Insights For 2021

M&A activity is fast recovering from the impact of Covid-19 all round the world. This is especially evident in Latin America (LATAM) where,...

See More
USA
digital assets
Digital assets

Acquisition and Integration of Digital Assets

In the last 15 years more than 52% of US listed companies have disappeared, and while the average life of such a company in 1955 was 61 years,...

See More
Portugal
green energy
Energy

The Ins and Outs of Becoming a Player in Portugal’s Green Energy Market

Portugal has seen a rapid expansion of investment in renewable energy in recent years, especially in solar PV. There has been considerable...

See More
Brazil
spain
Infrastructure

Infrastructure Insiders Discuss Opportunities and Bottlenecks

Cleverson Aroeira (BNDES), Venilton Tadini (ABDIB), Elias de Souza (Deloitte) and Thiago Costa Monteiro Caldeira (PPI) untangled the sector and...

See More
Russia
Agriculture

Will Smart Farming Make Agriculture More Sustainable? An Interview with the Founder of iFarm

Digitization in agriculture can help use resources efficiently and rationally, allowing farmers to get the most out of the outcome.

See More
Russia
iFarm - vertical farm in Finland
Agriculture

Innovations in Agriculture: A Lucrative Field for Investors

Investor interest in vertical farming surged in 2020, reaching $929M in the US alone.

See More
Russia
M&A Agriculture
Agriculture

What’s Happening in the Agribusiness in Russia? An M&A Point of View

Crop production seems to be the most lucrative segment in Russian agriculture as the demand is substantially higher than the supply.

See More
USA
Health Tech M&A
Healthcare

Telemedicine is Changing the Healthcare Landscape: Expert Outlook 2021

With several new coronavirus strains circulating, it is hardly likely that the healthcare industry will soon escape from this period of...

See More
USA
M&A AI Tech
Tech

M&As in the AI Market: Tech and Deals Explained

The artificial intelligence (AI) industry survived its ‘winter’, in terms of limited hardware capacities, some time ago. Now, this sector seems...

See More
USA
Bruce Molloy
Tech

AI Industry: What Any Business Leader Should Know

Business leaders can understand what AI can do in straightforward ways, including the opportunities it creates, the problems it solves, and the...

See More
USA
Healthcare

The Post-pandemic Health Industry: Tech Is Poised to Play a Much Bigger Role

The next normal presents itself with emerging opportunities, challenges, and new health tech use cases in the US, and globally.

See More
Brazil
Sao Paulo, Brazil
M&A

Experts Show Optimism for the M&A Market in Brazil in 2021

Economic recovery in a Brazilian context will involve greater liquidity and an enormous structural change.

See More
Brazil
The National Congress of Brazil
M&A

The LGPD to Attract More Foreign Investment to Brazil

With the LGPD, the business environment will have more clarity about the regulations to be made a clearer perspective for foreign investors.

See More
New Normal
M&A

M&A: Getting Used to the ‘New Normal’ 

Political and geopolitical tensions worldwide may also hint at the events we might see in the nearest future. What are the main currents in the...

See More
Portugal
Oporto, Portugal
M&A

M&A in the North of Portugal: Tough Situation, Plenty of Opportunities

The outlook of the mergers and acquisitions landscape in the north of Portugal.

See More
Reva Goujon
M&A

‘Strategic Scenario Planning’: Reva Goujon — about resilient M&A Approach, US-China Rivalry, and Cyber Influence Ops 

How to design smart and resilient M&A strategies amidst global uncertainties?

See More
Russia
moscow city
M&A

M&A in Russia: Negative Trends with a Silver Lining?

Despite several periods of turbulence, and downturns, the Russian M&A market ‘is still alive’.

See More
USA
Crossroads
M&A

Global Business Climate, Geopolitics, and M&A: Where we are at now 

Everyone, from small firms to large corporations, has to adapt to the new realities and find new ways to stay afloat.

See More
USA
Tech

‘AI Hype’ and M&A: Artificial Intelligence Strategies and Putting a Value on a Deal

How AI technologies can create value for different industries, and what to consider during any AI-related M&A transaction.

See More
Ignacio Tornero
M&A

China Goes Overseas: The Successes and Challenges of PRC in Latin America. An Interview with Ignacio Tornero

Digging deeper into the Chinese expansion in Latin America.

See More
USA
Tech

Tech, M&As and their Future: Reality and Expectations

From the valuation of AI assets to IoT, blockchain, and ESG (Environmental and Social Governance) in business.

See More
Portugal
Porto, Portugal
Legal

Legal Frameworks for Turbulent Times: Cases of Distressed Investments in Portugal

Are there ways to prevent the wave of insolvencies expected in 2021?

See More
USA
M&A

Geopolitics and M&A: Power Play in the Turbulent World. An Interview with Klisman Murati

How do geopolitics define the long-term strategies of states, and impact the economic actors?

See More
Portugal
M&A

Distressed Investments in Portugal: An Economic and Legal Outlook

The number of insolvencies in Portugal is rising and businesses are facing uncertainty in terms of future financing.

See More
USA
Hong Kong harbor
M&A

China’s Gordian Knot of Geopolitics: Regional Expansion or Global Ambitions?

Though Beijing is being careful with international politics, in an economic scene it is more active.

See More
Israel
Healthcare

China and Russia: Behind the Scenes of Healthcare and Biotech M&As

How is the M&A landscape in the healthcare industry changing?

See More
USA
Investment

The US vs. China: How their Geopolitical Game is Affecting M&As

Beijing remains cautious in terms of restrictive measures against the US in response.

See More
Israel
Healthcare

Changing Landscapes in Chinese, Russian, and Israeli Healthcare Investments 

The healthcare and life sciences branches seem to be struggling with the new challenges.

See More
Australia
M&A

Four Human Capital Factors to Consider during an M&A Deal

Without the proper management of human resources, the majority of M&A deals are bound to fail.

See More
Australia
M&A

Extracting Commercial Benefit from Data: Lessons for M&As

Data can be applied and bring value at various stages of the M&A process.

See More
Brazil
Legal

LGPD in Brazil: How the New Data Protection Law is impacting Businesses and Deals

Here are some useful hints and recommendations by experts in the field

See More
China
Investment

M&A Regulatory Updates in China and Abroad 

How can tightening regulations impact the M&A situation in the Asia-Pacific region?

See More
M&A

Global M&A: Is a Recovery in Sight?

The full impact of the coronavirus crisis has manifested itself in Q2 2020. Here’s a brief overview of the global M&A situation in Q&A.

See More
China
M&A

Trends That Are Defining Cross-Border M&A in China

The global M&A market is showing a strong decline: it has more than halved to $0.9T in the first half of 2020.

See More
USA
Inner city investment in the USA
Investment

Three Cases to Describe the Progression of Impact Investing 

Investors wanting more societal changes are fueling growth in impact investing, allocating capital to assets that push positive changes forward.

See More
USA
Investment

Paradigm Shift in Impact Investing: Trends to Influence Businesses in a Post-Pandemic World

While the world is living through turbulent times, businesses and investors cannot stand aside unaffected. To dive deep into the issues of...

See More
China
Energy

Global Energy Investments and M&A: A Quick Guide

The chaos this year on the oil market seems to have echoed into other energy sectors, leaving investors in a state of uncertainty. However, this...

See More
China
Energy

Investment Opportunities and Risks in the Global Energy Industry

2020 looks like being the biggest black swan event since WWII. The global pandemic has affected the mentality of investors all over the world....

See More
China
legal service
Legal

The Role of Legal Service Providers in Cross-Border M&A

In recent years, an increasing number of Chinese companies are seeking international expansion in response to the nation’s “Go Global” campaign....

See More
China
business mna
M&A

How to improve bid success rate in cross-border M&A

Initiated by iDeals and co-organized by several key players in the cross-border M&A industry such as KPMG, Eurasian, and GORG, the China-EU...

See More
China
mna community
Investment

M&A Community In-depth Interview: The Three Key Questions in China-EU M&A

Recently, iDeals hosted the M&A Community: China-EU Cross-border Best Practice Sharing event in Shanghai.

Speakers of this event

See More
Chile
Ignacio Tornero

Ignacio Tornero

Founder at East Consulting
See More
China
Valentina Billeke

Valentina Billeke

Industrial Civil Engineering at Falabella Retail S.A
See More
Peru
Claudia Martínez

Claudia Martínez

Senior Associate Lawyer at Rodrigo, Elias & Medrano Abogados
See More
Argentina

Juan Sonoda

Legal Practice Director at Beretta Godoy

Upcoming Events

Past Events

Get In Touch

Our team is happy to answer your questions. Fill out this form and we will get in touch with you.