MULTILATINAS' MIXED FORTUNES IN CHINA.

Author:Ogier, Thierry
 
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Multilatinas are still struggling to expand their business in China. Some of the companies have had a hard time, and their presence is still anecdotal, according to some experts.

The huge Chinese market is still the big prize to be won by fast-growing multilatinas. There have been some encouraging successes. But there have been some frustrations, too, as the learning curve has proved longer than what might have been anticipated.

Vale, the Brazilian mining giant, falls in the first category. Hungry China now absorbs more than half of the iron ore and pellets that Vale is producing (57% in 2016, equivalent to 200 million tons exported to China).

The company has been trying to catch up with Rio Tinto and BHP Billiton to become the country's top supplier. "Vale sees geographic distance as our greatest challenge in our cooperation with China.

But we have worked together with Chinese partners on addressing this issue--such as the partnerships with China COSCO, China Merchants Group and ICBC Leasing," a company spokesperson told Latin Trade.

"These partnerships are great examples of how leading companies can overcome geography to provide innovative logistical efficiencies."

A FEW PIONEERS

The trend towards internationalization has certainly gone far beyond commodities, ranging from Mexican bread to Brazilian aircraft and IT services. But few companies are involved. "Latin American investment in China is still in the hands of a few pioneers," lamented Lourdes Casanova, a senior lecturer at Cornell University and author of the book, "Global Latinas: Latin America's Emerging Multinationals", issued in 2009.

Embraer features at the top of that list of pioneers. Foreign sales currently account for 85% of the Brazilian aircraft manufacturer's business. "The US and Europe are still the main markets today, but looking forward, China and Southeast Asia are the most promising ones," Nelson Salgado, director of institutional relations with Embraer told Latin Trade.

The company has sold a total of 180 aircraft to China and claims to have a 80% market share in regional jets (from 50 to 130 seats) in the Asian giant. Nevertheless, two attempts to set up an industrial base in China have proved short-lived. The company suffered setbacks when the Chinese government declined to allow it to manufacture its 100-seater E190 there in 2011. Its executive jets also ceased to be assembled in China last year. As a result, Embraer has had no industrial installation in China...

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