Pathways to China: The Story of Latin American Firms in the Chinese Market
Trade between Latin America and China has grown at an annual average rate of 25 percent since 2000, driven primarily by strong complementarity between the two economies. While commodities-for-manufacturing trade continues to be the dominant feature of the economic relationship, a number of LAC multinationals have undertaken major investments in China, staking a claim to its fast-growing market. These investments, while small, hold the potential to diversify and add value to the region's economic links with China. This report takes a closer look at Latin American firms that have successfully entered the Chinese market. The focus is on the how: how did firms first explore opportunities in China, how did they gain an initial foothold in the market, and how did they overcome the challenges of doing business in a geographically and culturally distant setting? To answer these questions, we analyzed a sample of 85 major Latin American multinationals with a direct presence in China. The results allow us to propose a basic typology of four categories of LAC firms in China, distinguished by their motivations, activities, and strategies in the country. This work was prepared for the China-LAC Business Summit 2012, organized jointly by the IDB, the China Council for the Promotion of International Trade, the People's Bank of China, and the Government of Hangzhou municipality (Hangzhou, China, October 17-18, 2012).