External Expansion Limited

Friday, 7 February 2014

CHINA: A GREAT OPPORTUNITY FOR LATIN AMERICA

China is on track to become the second largest importer after the U.S. and Latin America holds an opportunity of change for these countries if they develop a strategic plan that allows them to benefit from the growth of China's domestic demand. No easy task, but if there are a take consciousness from government institutions, is the opportunity that these Latin countries dream to enhance your wealth.
The commercial breakthrough between China and Latin America is growing every year, so you start to think that the Asian giant overtake the European Union as the second destination of Latin American exports in the near future. This becomes the steady growth of domestic demand China. But for now it is not believed that the first destination of Latin American exports no longer the U.S., as it is a large and nearest market, plus take years in operation, so that this country exports many products already have a road trip entrenched.
If we pay attention to the specific case of Brazil, which is the strongest economy in Latin America, we see that its exports to China even overtook the U.S. after the financial crisis that hit the U.S. market in 2009, and in turn, although the European Union has China ahead of time, Brazilian exports to Europe are decreasing year after year, in favor of exports to China. In 2013 the decrease was not very significant, as they have only decreased European imports from Brazil by half a percentage point, while Chinese imports from Brazil increased by 2.5% compared to 2012. The numbers are staggering if you look at the last decade, since from 2000 to 2012, China's trade with Latin American multiplied by 21, becoming one of China's leading players in the export destination of most countries Latin Americans.
Is yet to be determined what effect the recovery of the U.S. in global exports of this region in particular, but what is very clear it is that China will continue its policy of expanding its domestic market and promote the growth of the income of their population.
Something we should make clear to the Latin American countries is that increased international trade with China has been growing year after year, still benefit their trade balance, because although China increased its imports from Latin America, it also increases its exports to these countries, and how could it be otherwise, the scale is not equivalent. The basket of goods exported from Latin America consists mostly of raw materials, while in the opposite direction, China exports its articles of simple technologies, representing 90% for Latin American imports from this country, meaning this the still classical equation it is under this continent.
Independent studies, notes that China plays the role of Latin America's intracontinental trade attenuate as the Latin countries, given the high demand for comoditys from China, put in the background the intracontinental trade in manufactured goods, while China meanwhile, has an industrial policy that favors the production chain with other neighboring Asian countries such as Malaysia, Vietnam and South Korea, which provide Chinese industries. The data show that the intracontinental trade of Asian countries represents 53%, while Latin American countries represents 20%, since 80% of its foreign trade is with countries outside the region.
Many solutions are proposed in this regard that we are out for these countries to change their traditional way of export. It is necessary that in these countries, with the help of professional experts and the support of governments and business, a long-term strategy that could correct this situation quickly develops, as the increasingly large opening of the domestic markets of the countries Asian, favors increasing demand for manufactured and industrialized foods, opening an opportunity for Latin American countries and their exports of manufactured products that provide added value to their economies. We note that currently there are no meetings about by these countries or are being carried out involving investments have in mind a plan as described. It's a shame, because it will be a new possibility that let you pass and that could mean a big change for all of them.
The fundamentals that support this idea are based on China has always maintained a strategy of import of these Latin American countries mainly raw materials, to cater the ever growing domestic market, where urban areas are growing at the expense of rural areas, as and consumption of food and durable goods. This implies that over the years China will increase its deficit of arable land and water, while Latin America has a surplus. Therefore, it is obvious that there is complementarity between them, because Chinese demand resources that Latin America has to spare, that is where the idea that you should take advantage of this situation and not only export soybeans to feed their livestock or petroleum to guarantee energy and oil fuel, but also start exporting manufactured foods that contribute to changing the current trend and further their own trade balances.
It is estimated that Latin America has a space of 120% to double its food production, while China has excess productive to invest capital, which would be very welcome in countries with low savings rate as the case of the Latin Americans, provided when falling into the hands of corruption and, instead, invest in infrastructure to improve the productive capacity of manufactured goods.
Finally, say what you should remember is that China is not only important for Latin America, but it is to trade worldwide. Whereupon, if countries can not take advantage this new context that is occurring, it will benefit others, which will lead these countries to remain always in the same spot in which they find themselves.
For more information or require services related to this article, please contact through our website www.externalexpansion.net or directly to our email info@externalexpansion.net.

Until the next article...

Leonardo Dufau 
LinkedIn

No comments:

Post a Comment

Dear customer your inquiry has been logged and will be answered within 24 hours.

Estimado cliente su consulta ha sido registrada y será atendida en un plazo de 24hs.