Rise seen in delayed payments, anti-dumping probes in Latin America

By Xie Jun Source:Global Times Published: 2015-9-16 0:08:01

Trade getting tougher amid region's economic problems: experts

A Chinese ship is loaded with soybeans at Port of Santos in Brazil on May 19. Photo: CFP

The economic and commercial counsellor's offices of China's embassies in some Latin American countries have been sending alerts via their official websites, recently saying that Chinese firms have seen delayed payments by local business partners.

According to a statement from the Chinese embassy in Mexico on August 28, Chinese firms have seen delays and even defaults on payment by certain Mexican companies lately.

Chinese enterprises have also reported delayed payments by business partners in Argentina, according to a statement from the country's Chinese embassy on August 20.

Delayed payments are not the only difficulties facing Chinese enterprises in their trading with Latin American business partners.

The general business environment is deteriorating for Chinese companies in certain areas of Latin America, experts noted on Tuesday, with local governments having also launched fresh anti-dumping probes against Chinese products.

Chinese companies could deal with the situation by increasing the variety of their trade with Latin American countries, but they will also have to have more patience, the experts said.

Mexico is one of the latest Latin American countries to have launched an investigation against Chinese imports. Mexico's Ministry of Economy announced on September 2 that the country will conduct an anti-dumping probe into steel wire rods from China.

Three Mexican companies had asked the government to investigate, as they claimed that fast-rising imports from China were being sold at lower prices than domestically made steel, hurting the local industry, Reuters reported on September 2.

The Colombian government has also launched several anti-dumping probes into products imported from China, including shoes and steel products, according to China's embassy in the country.

Yue Yunxia, a researcher with the Institute of Latin American Studies under the Chinese Academy of Social Sciences, told the Global Times on Tuesday that trade protectionism has long existed in certain countries in Latin America, but the trend has become "intensified" recently.

Both the delayed payments and anti-dumping investigations are results of the deteriorating economic situation in Latin America in general, Yue noted.

"Latin America's economic slump has been triggered by several factors. First, the falling price of bulk commodities amidst the global economic downturn has severely hurt quite a few Latin American economies, as they are heavily reliant upon bulk commodities in their trade," said Yue.

Another reason for anti-dumping actions is that China's competitively priced exports to certain countries in Latin America, especially in the northern regions, create strong competition for local pillar industries such as textiles, according to Dong Jingsheng, director of the Center for Latin American Studies at Peking University.

But Dong noted that there are also many countries in Latin America, such as Brazil, that have a "complementary" trade structure with China. "China imports primary products like oil from these countries, and exports manufactured goods, such as cars, to them. So there is less trade friction between China and these countries," he told the Global Times on Tuesday.

China's exports to Latin American countries rose 3.7 percent year-on-year in the first half of 2015, according to data released by the General Administration of Customs on July 13.

To cope with the situation, domestic enterprises should increase the variety of their imports from Latin American countries, Dong suggested.

"Chinese companies could consider importing new products, such as Mexican avocados and wine, to alleviate antagonism against products imported from China," Dong said.

According to Dong, China's investment in Latin American countries is too focused on certain sectors at the current stage.

"For example, in Lima, capital of Peru, there are more than 150 Chinese enterprises. But the majority of those companies are in the infrastructure industry," he noted, adding that Chinese enterprises should also invest in industries like tourism. 

Yue said that Chinese companies could take some "technical measures" to reduce the risks in their trading with Latin American business partners.

For example, given the unstable currencies in many of the region's countries, Chinese firms could try to settle trade in yuan instead of in local currencies, she said.

"But what's more important is that domestic companies should have more patience and perseverance during trading with Latin American companies," Yue said.

She also noted that many domestic companies might postpone or give up on doing business in Latin America in the near future, but in the long term it will still be a large market that will be "unavoidable" for Chinese investors.

Posted in: Economy

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