In the past decade, China’s expanding engagement with Latin America has captivated the attention of the region and the United States. Most of the focus, however, has been on whether the new trade and investment is good for the region’s long-term development, and whether particular Chinese activities, such as military sales and loans to Venezuela and Ecuador, threaten U.S. interests in the region.
Lost are the details and dynamics of how Chinese companies and the Chinese government have adapted to doing business in the region. China’s new physical presence in Latin America is the product of a fast-growing commercial and investment presence. But as a consequence of that deepening relationship, Chinese companies and China’s diplomatic apparatus have become increasingly immersed in the business, social and political conditions in those countries—and in some cases are even shaping those conditions to suit their interests.
Commercial factors have largely driven China’s expansion into the region. As maturing Chinese companies move up the value-added chain and project themselves internationally, they are exploiting a newly successful model of construction in foreign markets that is tied to state-backed loans. Tied to that is the impetus to develop, through Chinese subcontractors, previously acquired assets in the primary products sector.
It has not been an easy adjustment for either side.
The rough spots are concentrated in three areas. First are the technical and cultural struggles faced by Chinese firms trying to enter Latin America’s construction industry and service sectors. Second are the management challenges encountered by Chinese companies in turning their investments into productive enterprises. Labor relations and security are among the biggest of those challenges in a region that is the polar opposite of China’s state-controlled society.
Third is the increasingly visible role of both old and new Chinese communities in Latin America, which the Chinese government has sought to both leverage and protect…
Tags: China, corruption, Economic Development, trade