Latin Finance - November/December 2010 - 16

latam-china

exploit potential oil fields. China is also Further work also needs to be done Two-Way Street keen to develop relationships where it educating Chinese investors about The potential for both sides to gain from can learn from LatAm companies with the realities of LatAm economics and the experience and expertise of the other expertise in certain areas. politics. “We are still not familiar with is huge. “Latin America’s infrastructure “China has a lot to learn from Brazil local currency markets,” says Sun. “We is seriously lagging. Its ports, trains and about deep water drilling technology,” really need to cooperate with local roads need a major overhaul. China says Chen Weidong, chief of energy banks to get a better understanding of research at CNOOC. “We would also the markets, as we are not familiar with like to co-operate on projects for local currency tools either.” Sun adds renewable energy, ethanol and biofuels that he wants LatAm banks to set up as developments Brazil has made in this offices in Asia to help educate investors. area are very promising and we see them Chinese players are expanding as leaders in this field,” adds Chen. operations on the ground as quickly as A successful relationship between possible. Bank of China will set up what China and LatAm could help expand not it calls a “China desk” in Chile within just trade, but geopolitical strength too. the next year, after opening a similar “There needs to be big picture policy operation in Peru in April. engagement and not just trade,” says Wu Tianpeng, executive manager Doug Smith, regional head of research at the bank’s corporate banking unit for LatAm at Standard Chartered. “If for financial institutions, says the China and LatAm can start to relate institution will then look to build China more on all levels they will also see desks elsewhere in LatAm. He adds that changes in their voting rights also at an while Bank of China has a subsidiary international political level, which has in Brazil, setting up China desks is huge implications.” attractive. China can learn from Brazil: Chen He adds that an increase in “Establishing a subsidiary can presidential visits points to a stronger take between one and two years, but has a core competency in building setting up a China desk can be done infrastructure and can be a big help,” says focus on policy engagement. Smith predicts Brazil’s new president will much quicker,” Wu says. Bank of China Bethel. make a trip to China within the first six is looking to expand its presence in Pemex is one player looking to gain months of being in office, even before a LatAm, in line with clients, as it expects expertise as it expands its commercial to see more of them going into Latin relationship with China. It is working with visit to the US, and expects other LatAm government officials to make more America, due to continued growth and Sinopec on a contract to at least double development in the region. shipments of oil to China, which currently frequent visits. The UN’s Economic Commission Sinohydro opened an office in Lima in stand at 12,000 barrels per day, and is for Latin America and the Caribbean May 2010 and is considering a presence looking to use Sinopec’s technology to (ECLAC) expects China to in Chile, Costa Rica, Venezuela displace the EU as the region’s and Colombia. Brazil’s Itaú LatAm Exports to China by Country (% of all exports) Commodity countries come top second largest trading partner meanwhile has offices in China by 2015. It predicts that exports and BTG Pactual is considering from LatAm to China will reach setting up a Beijing presence, Argentina (6%) Venezuela (8%) 19.3% of total exports by 2020, building on a Hong Kong up from 7.6% in 2009. However, bureau. Peru (7%) ECLAC adds that countries Nonetheless, regular direct in LatAm should improve the flights between China and Mexico (7%) quality of this trade, diversifying LatAm are considered key, as and adding more value to their travel from China to Brazil can Colombia (2%) exports. take up to 40 hours. Expediting Both LatAm and China visas for Chinese citizens need to ensure they nurture looking to do business in the Brazil (47%) what stands to be a mutually region is also necessary in powerful relationship. order to allow frequent travel. Chile (23%) Cooperation and compromise Serious student exchanges on on projects, as well as a large scale may also help to government support, will be boost business between China vital to the success of long-term and LatAm, according to Source: Haver, IMF, Bank of America Merrill Lynch transactions. LF Bethel.

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November/December 2010

Latin Finance - November/December 2010

Table of Contents for the Digital Edition of Latin Finance - November/December 2010