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Travel to any country in Latin America and you will see the visible hand of China at work: a computer manufacturing plant in Mexico, a copper mine in Peru, a football stadium in Costa Rica. In the year 2007, the thought of China in Latin America would have appeared, at best, improbable. But in a three-year stretch, China signed free trade agreements with Chile, Peru and Costa Rica, inked billions of dollars worth of deals in oil and mining projects throughout the region, and supplanted the US as Brazil’s biggest trading partner. Once almost unseen in Latin America, China’s bilateral trade has risen from $12bn in 2000 to well over $150bn today.

Given the importance of its new Asian friend, Latin Americans are rolling out the red carpets to Chinese business delegations and jumping on planes not only to Beijing but also to Shanghai, Shenzhen, and Tianjin.

Rationale Behind Chinese Investments in Latin America [...]

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In this Reuters article, you can read the perspectives of the following “big shot executives.”

TAKASHI KAWAMURA, CHAIRMAN, HITACHI LTDKWON

OH-CHUL, CEO, HYNIX SEMICONDUCTOR

INCTAKANOBU ITO, CEO, HONDA MOTOR CO

KEITH SHERIN, CFO, GENERAL ELECTRIC

NOBUYUKI SUGANO, HEAD OF CHINESE OPERATIONS, SHARP CORP

JUNZO NAKAJIMA, HEAD OF IT OPERATIONS, HITACHI

RICHARD CARLUCCI, CFO, YUM BRANDS INC

HWANG EUN-YEON, SENIOR VP, POSCO

Read more over at Andina

The celebration was held at Brasa Chicken, notorious in Shanghai for preparing the best rotisserie chicken the city has to offer, and which is owned by Peruvian Chef and long time Shanghai resident, Eduardo Vargas.

The mood was upbeat as friends and family enjoyed a taste of Peru over good conversation on one of the first sunny days with blue skies Shanghai has experienced in weeks. A perfect way to bid farewell to Shanghai’s rainy season, which officially ended only one day prior on July 17th.

Reuters Video

Luxury brands have set up shop in China’s four wealthiest coastal cities, but are moving inland as the number of the nation’s rich grows. (01:50)

The country of Peru has just designated the 3rd Sunday of the month of July as “National Pollo a la Brasa Day!”

Come join us in celebration at Brasa Chicken’s flagship restaurant. Enjoy a feast of the finest chicken in all of Shanghai.

SPECIAL OFFER: 1/4 chicken with french fries, salad, free flow soft drinks and one Pisco Sour for ONLY 25 RMB per person!

When: Sunday, July 18th, 2010 from 13:00 – 15:00

Where: Brasa Chicken — 1/F, Unit 103 Life Hub Jinqiao, 3611 Zhangyang Lu, near Jinqiao Lu / 张杨路3611号， 近金桥路

Tel: 2023 3353

Fax: 2023 3352

Visit the official website of the Peruvian Pavilion of the Shanghai World Expo 2010 to learn more about Peru’s efforts to build a cultural and economic bridge with China.

Following the coming into force of the FTA between China and Peru this past March, Peruvians are being encouraged to invest roughly $5,000 usd on trips to China.

This was the announcement made by Jorge Chiang the Peruvian Economic and Commercial Counselor in Beijing today.

“It’s necessary to have more Peruvian business people in that country, who know their partners and participate in trade shows and missions,” said Chiang.

Click here to read more about this from Peruvian News Agency, Andina

“The project will materialize soon but first we must develop the banking supervision procedures between the two countries,” said Jiang Jianqing.

ICBC’s first activities in Peru will focus on trade between China and Peru, as well as services to help Chinese businesses operating in the country.

Click here to read more about this development from the Peruvian News Agency, Andina.

Labor cost in China

Recently there are two labor unrest cases widely reported in China. This is uncommon as the Chinese media usually do not report such cases involving big foreign MNC in China. Besides trying to demonstrate her openness in news reporting, there could be a subtle change in mindset on how much the government could tolerate the wage abuse by employers. It is a well known fact that the local government is very accommodating to big foreign companies in their prefecture as the latter would provide labor and tax revenue. Thus many such companies could get away with labor abuse and flouting regulations.

The first case involved Foxconn where 13 suicide attempts were made and caused 10 deaths. Some employees citing to journalists that the tough management and long working hours (80 hours of overtime in a month) are the main stress they are enduring. The victims were young with average age of twenty and unlike their parents, are less tolerable to hardship, ambitious and more solitude which could be the result of the one-child policy.

With the bad publicity and customer pressure, Foxconn increased 30% on the basic monthly wage for most of its 800,000 employees in China. The production operators have their wages increased from RMB900 ($132), which is the minimum wage level, to RMB 1,200. And Foxconn is also considering providing housing allowance for 80,000 employees in its Yantai plant in Shandong province. The annual cost would amount to RMB200 million ($29.3 million).

The second case was the strike by the workers of one components manufacturing plant of Honda in southern province Guangzhou. The strike had caused four other Honda assembly plants to shut down production. Honda subsequently increased the basic wage by 24%.

There were also reports about trade unions and local communities forcing some US fast food chains to raise the workers wage to the stipulated minimum wage level in China and Hong Kong. To shun the bad publicity, many of these fast food chains have reluctantly agreed to meet the minimum wage level for their workers.

Such wage increase in Foxconn and Honda has created severe repercussion to other factories especially those at coastal provinces. The workers may demand wage increase and follow the Honda example. Labor supply at the coastal cities is already very tight and the employers have to increase wage and benefits to attract workers. One Hong Kong businessman commented on a TV news interview that 2,000 to 3,000 Hong Kong companies in Guangzhou would encounter difficulties to match the pay rise by Foxconn and Honda.

The current skyrocketing increase in property price and some inflation on food have put tremendous stress on cost of living for many Chinese. Consequently the pressure is exerting onto the government to address the issue. Without an effective curb on property price increase at the moment, the government may want to increase the income level for her citizen especially the lower income bracket to combat the rising living cost.

China may also want to sway away from a sweatshop industry which she is widely known as. The low cost merchandised goods do not seem to be appreciated by her American and European customers. Not only are the customers putting immense pressure to force China to appreciate the yuan (RMB), the local trade unions and politicians are targeting China as the culprit for their woes on unemployment and loss of competition. Thus it makes better sense for Chinese government to increase labor cost to soothe the trade friction with their US and Europe customers than to appreciate her exchange rate which will cause acute economic and political pains to the country and the people.

Many Chinese I have talked to and also from the Chinese blog websites are showing anger on those foreign countries forcing China to adhere to their demand to appreciate the yuan while insisting on low cost goods as many foreign buyers do not agree to price increase whenever there is an appreciation on the yuan. To further aggravating the situation, some countries are putting up trade barriers to fence off the competition from China. This acrimonious trade dispute will lead to further misunderstanding and hostility not only between countries but also people from both sides.

China is also embarking on her fiscal policy to spur up domestic consumption. This will reduce her reliance on export to maintain economic growth. After all she needs a balanced economic structure for sustained growth and social harmony. Unfortunately the increase in domestic consumption has met limited success other than the housing and luxury goods. Henceforth an increase in income for the masses will boost the domestic consumption.

Thus I sense the Chinese government is giving indirect consent to the trade unions to bargain for higher wages. Though the Chinese government implicitly allows the wage to increase to appease her citizens, the cost competitiveness is not lost. Many of her inland provinces are providing abundant resources and manpower to accommodate the low cost manufacturing. However the price will still be higher than what the foreign customers are accustomed to. The transfer of technologies, management knowledge and labor skills from the coastal cities to the inland industrial parks will ensure their strategic leverage and competitiveness against other low cost manufacturing countries.

This may help China to reconcile relationship with US and Europe with the slightly higher product cost. After all, an increase in domestic consumption would also increase in import too. And this will help the foreign companies to fulfill their goal to capture the immense China market.

* This entry has been published with the permission of the author, Calipe Chong of Vipo Asia.  Please visit VipoAsia to access his blog directly and read more of his insight on Asia and the world.