As we look towards 2024, the business landscape between Latin America (LATAM) and China is on the cusp of significant transformation. The burgeoning partnership between these two dynamic regions is set to unlock a plethora of opportunities. With China’s vast market and technological prowess and LATAM’s rich resources and growing markets, this alliance is not just promising but potentially game-changing. Latin America has significantly grown as a key destination for international and Chinese businesses, achieving a remarkable milestone in foreign direct investment (FDI) with a record $225 billion in 2022, marking a 55% surge from the previous year, as noted by ECLAC (Bloomberg NEF, 2023). This evolving partnership is poised to redefine the economic contours of both regions, setting the stage for a robust exchange of technology, capital, and innovation.
Earl Carr, the Founder & CEO, of CJPA Global Advisors, highlights that Latin America’s shift towards China for development assistance and reliable trade is partly due to less concentrated engagement from the U.S. This shift is underpinned by the appealing nature of Chinese capital and trade agreements. Data from the IMF indicates that for the past two decades, China has been LATAM’s largest trading partner, surpassing the United States.
This context sets the stage for numerous emerging business opportunities in the LATAM and Chinese market collaboration as of 2024:
- Infrastructure Development: Since January 2018, China invited Latin American countries to participate in the BRI at the China–Community of Latin American and Caribbean States (CELAC) Ministerial Forum in Santiago. At the latest count, nineteen Latin American and Caribbean (LAC) countries have signed up to the BRI (Sage Journals, 2021). Although the pandemic has caused a slowdown in infrastructure development between LAC and China, there’s a growing opportunity for Chinese investment in LATAM’s infrastructure projects, including roads, ports, and telecommunications. This aligns with China’s Belt and Road Initiative (BRI) and LATAM’s need for infrastructure modernization.
- Renewable Energy: The LATAM region, rich in natural resources, offers vast potential for renewable energy projects. Chinese companies specializing in solar, wind, and hydroelectric power could find lucrative opportunities in joint ventures or direct investments.
- Agricultural Exports: LATAM’s role as a major food supplier to China is likely to grow. Opportunities exist for LATAM agribusiness in exporting commodities like soybeans, beef, and other agricultural products to meet China’s increasing demand.
- Technology and Innovation: Collaborative tech ventures in 5G, AI, and digital services stand as key focal points in LATAM-China collaborations. These efforts are bolstered by successful initiatives: Huawei’s establishment of Mexico’s largest public Wi-Fi network and Brazil’s primary mobile 4G networks, Tencent’s $180 million investment in LATAM’s fintech sector, and the joint effort of China Unicom, CamTel, and Huawei Marine Network in constructing an underwater cable enhancing data transmission capacity between Africa and South America. (CSIS, 2022). This synergy opens avenues for Chinese tech expansion in LATAM, while providing LATAM with access to cutting-edge technology and investment.
- Mining and Natural Resources: Chinese investments in LATAM’s mining sector, particularly for metals like copper and lithium (essential for electronic products and electric vehicles), present significant opportunities. According to the American Enterprise Institute’s China Global Investment Tracker, Chinese entities invested $149.9 billion in LAC countries between 2005 and 2022, and Energy projects accounted fro 62% of investments and metals/mining accounted for 21%. It is possible to see continuous growth in this sector in the upcoming 2024 (AEI Org, 2023).
- Financial Services and Fintech: With a growing middle class and a relatively underbanked population in LATAM, there are opportunities for Chinese fintech companies and banks to expand their services, offering digital banking, mobile payments, and financial inclusion initiatives.
- E-commerce and Digital Trade: The expansion of e-commerce platforms and digital trade offers vast opportunities. Chinese e-commerce giants could significantly influence LATAM’s online retail market, while LATAM businesses could leverage these platforms to reach Chinese consumers.
- Tourism and Cultural Exchange: As travel normalizes post-pandemic, there’s potential for growing the tourism sector, with LATAM countries attracting Chinese tourists and vice versa. This also opens avenues for cultural exchange programs and language services.
- Education and Training Services: With increasing bilateral ties, there’s a growing market for educational and training services, including language schools, cultural education, and business training programs focusing on fostering mutual understanding and collaboration.
- Healthcare and Biotechnology: Collaborations in healthcare, pharmaceuticals, and biotechnology, including research and development of medical technologies, could be a growing area of interest.
In 2024, LATAM’s business development and opportunities with China are poised for significant growth. The increasing connectivity with China is crucial for LATAM companies seeking global expansion or attracting Chinese investors. This partnership opens doors for LATAM businesses to a vast market and advanced technology, enhancing their global footprint. For Chinese investors, LATAM presents diverse investment opportunities, especially in technology, infrastructure, and natural resources. The synergy between these regions is expected to foster economic growth, technological advancement, and a stronger global presence for LATAM companies.