The Economist takes a deeper look at China’s overseas investment

ODI-lay hee-ho – The expanding scale and scope of China’s outward direct investment

[Source] : The Economist

The remote, tribal state of Jharkhand in eastern India is the spiritual home of the country’s steel industry. It is the site of India’s first steel mill, built in 1908 with Indian money and much national pride. But a new steel plant in the same state takes a different approach. Owned by Electrosteels Steel, it has been built by Chinese contractors and fitted out with Chinese equipment, despite the government’s reluctance to award visas to Chinese workers. Now the plant is looking to expand its capacity. It is hoping China will provide the $250m investment it requires.

The hopes are not unreasonable. China is famous for attracting foreign direct investment (FDI). But a growing amount of investment is also flowing in the opposite direction. According to official figures, China’s outward direct investment (ODI) exceeded $77 billion in 2012, an increase of 12.6% on the previous year, even as inflows of FDI fell for the first time since the height of the global financial crisis.

Yet China is still far from buying up the world. It is a relative newcomer to big direct investments, and has yet to boast a large hoard of such assets. Belgium, the Netherlands and Spain all have bigger holdings. And since 2005, though China has ploughed over $50 billion into America, that sum represents less than 2% of America’s total stock of inward investment, according to the Heritage Foundation in Washington, DC.

China’s ODI would be greater if host countries were more hospitable. The Heritage Foundation reckons that over $200 billion-worth of potential deals have fallen through due to “a nasty surprise of some sort”, including political opposition and regulatory obstacles. In the West, Chinese direct investment is viewed with suspicion partly because it is still dominated by state-owned firms. These are considered a threat to competitive markets and, occasionally, to national security.

Click here to read the complete article

Bajaj Auto eyeing Brazil and ASEAN nations to expand its Kawasaki venture

[Source] : Cartrade.com

Banking on its successful tie-up with Japanese partner Kawasaki in Philippines, Bajaj Auto is looking ahead to introduce the business model in Brazil and other ASEAN countries. The regulating authorities of both the auto companies have approved the proposed venture in the third week of September 2012.

In Philippines, together Bajaj and Kawasaki kicked off their operations in 2004 and have grabbed a market share of 45 per cent till now. The Managing Director of Bajaj Auto, quoted, “Between the developed and developing markets, there are these smaller markets where our bikes are extremely relevant. We believe Bajaj and Kawasaki have reached a right (business) model in the Philippines.”

The model introduced in Philippines will be now showcased in Indonesia by mid 2013. Under this programme, Bajaj designs and develop motorcycles in the Indian Territory and then delivers them to Kawasaki, which further configures them according to the local regulations. The motorcycles are then introduced in the markets under the moniker of Kawasaki-Bajaj.

Click here to read the complete article

Asia Pacífico: una tarea pendiente

[Source] : La Republica – Colombia

Bogotá_En la fase actual de transición en que han ingresado la economía y la política mundial, existe cada vez un mayor acuerdo entre analistas de diversas tendencias, en el sentido de que el mundo de los próximos 50 años tendrá un comportamiento de carácter cada vez más multipolar, aunque no necesariamente más equilibrado.

La causa de esta realidad es el declive que hoy se expresa en el liderazgo de Estados Unidos y de la Unión Europea. Esta tendencia ocurre, además, en el contexto de una gran incertidumbre sobre la eficacia de los escenarios multilaterales para favorecer el avance hacia una gobernanza global que ofrezca certidumbre en temas clave como el comercio, el desarrollo sostenible y la seguridad de las naciones.

El surgimiento reciente de los llamados Bric (Brasil, Rusia, India y China) promete consolidar un sólido bloque de países que, fundamentado en su nuevo protagonismo económico, contribuirá de manera significativa a cimentar, sobre una base más diversa, las deliberaciones políticas en torno a un eventual nuevo orden mundial. Y, en todo caso, incidirá para que las expectativas de los ‘países emergentes’ adquieran mayor peso en las negociaciones del G-8 y el G-20, que hoy se han fortalecido como espacios de convergencia entre las naciones, frente al debilitamiento de los mecanismos formales de discernimiento multilateral.

En este contexto, América Latina podría adquirir una mayor relevancia en las corrientes globales de la política, el comercio y la inversión, dada la caracterización de varios de sus países como economías emergentes. En esta dirección, no deberían existir, a nuestro juicio, plataformas excluyentes de inserción internacional.

Es claro que en una transición global marcada por la incertidumbre, Colombia tiene un amplio margen para avanzar en acercamientos más decididos con los países emergentes de su propia región y, al mismo tiempo, con aquellos del Este asiático que se han convertido en el escenario de mayor dinamismo en la economía global.

Haga clic aquí para leer el artículo completo

Chian South America Announcement

As summarized in a sub-section of my previous post on Vietnam, I Bennett Reiss (your author and the webmaster of China South America) has decided to formally announce that China South America will officially expand it’s horizons beyond just the scope of China and South America.

As any long time or frequent readers would have already observed I on occasion stray from “China-South America News.”  From now on expect more of the following:

- Articles, news and commentary involving North America, Russia, Australia and New Zealand (Oceania) because of their respective connection and roles in the greater Pacific Region (APEC).

- From Europe, Spain will likely have quite a presence on this site.  Due to its long term influence in the region, FDI, and from the influx of Spaniards arriving in the region seeking opportunities as Spain’s economy falters.

- Lastly, expects posts from time to tome on any news CSA believes is appropriate for the site involving South-South Cooperation – such as the increasing connections Brazil, China and India’s have with Africa, India-Latin America, ASEAN – Latin Ameirca, etc.

- MicroFinance News

Vietnam – Agro Exports in Focus

[Source] Written by Bennett A. Reiss Iberico

South Central Vietnam

From the few days I’ve been traveling the Vietnamese countryside (in large part to investigate their agricultural sector), I’ve thus far come to believe Vietnam can grow to become an agricultural power house with the potential similar to many countries in South America.  In today’s world of 7+ billion people, this untapped agro-potential is invaluable.  Especially in the context of the emergence of a 2nd world food crisis within the short span of 5 years (the first being back in 2008).

Vietnam’s agricultural potential, if nurtured in a sustainable and efficient manner could conceivably catalyze Vietnam into becoming a major agricultural center, capable of feeding its own people and exporting food to countries around the world whose geographic limitations inhibit them from doing so themselves.

Despite this website (blog)’s original purpose which was to focus on China and South America, it’s become apparently obvious doing so is nearly impossible without including the rest of Asia (specifically South East Asia), and the rest of Latin America (from Panama up to Mexico and the Caribbean). Also my inherent interest and passion for MicroFinance, which frequent readers probably are aware of.

China South America, from this point forward has officially expanded it’s own horizons and will now include the Pan-Asia and Latin American regions.  Along with the following:

- At times North America, Russia, Australia and New Zealand (Oceania) because of their respective connection and roles in the greater Pacific Region and APEC.

- From Europe, Spain will likely have quite a presence on this site due to its long term influence in the region, FDI, and because of the influx of Spaniards arriving in the region seeking opportunities as Spain’s economy falters.

- Lastly, expect posts from time to tome on any news CSA believes is appropriate for the site involving South-South Cooperation – such as the increasing connections the countries of Brazil, China and India’s have with Africa, India-Latin America, ASEAN – Latin Ameirca, etc.

To conclude, I hope you enjoy my rare, personal on the ground experiences of the places I travel in the ASIA – LATIN AMERICA REGION. I personally think Vietnam is a country worthy to keep tabs on, and to visit of course. Vietnam is a country, which for the first time in living memory of its people that a generation is going to be able to grow up without having to suffer and fight a war.  Come visit this beautiful country, get to know its people, history, and expand your horizons.

To all regular readers please be patient. Normal news flows will return once I’m back in Ho Chi Mihn City (Saigon).

Shrimp farms, helping to feed global (and local) demand for sea food.

Ride paddies. Vietnam is the world’s 2nd largest exporter of rice after Thailand.

Do you like chocolate? Vietnam is alao a growing powerhouse in Cacao production.

We do indeed live in an interconnected world. Rubber trees (Hevea brasiliensis), originally from the Amazon in South America now flourish throughout SE Asia. They also were a major reason the Japanese invaded Vietnam during WWII

Now it’s time to find me some coffee plantations, as Vietnam is also the #2 exporter of coffee beans after Brazil (yes they even top Colombia)

Cruising the South-Central Vietnamese countryside on motorcycle. After about 20 minutes of riding solo and realizing I’d probably kill myself over the course of the next 48 hours I opted to hop on the back seat of a local Vietnamese driver.

Tomorrow my search of the Vietnamese South-Central countryside continues and i’ll find those coffee bean plantations even if it takes me all day!

The 21st century’s most important trade network – The Asia-Pacific triangle

Having followed, written about and participated in the growth of China – Latin America’s exchange over the past 10 years, I must say it is refreshing to see the increasing awareness around the globe of the growth of Asia-Pacific cooperation.  Every week news media around the world publish news and analysis pertaining not only to China – Latin America, but increasingly about the geopolitical triangle of the greater Asia-Pacific region.

Aljazeera added to the wealth today by publishing the transcript of a interview they conducted with former Peruvian Ambassador to China, and current Ambassador to the US - Harold Forsyth.  In the interview Aljazeera reporter Eddie Walshe discusses with Ambassador Forsyth his perspective on the growing importance of Asia-Pacific cooperation and more particularly, how Peru fits into the Asia-Pacific triangle of the Greater Asia region (with a special emphasis on China), North America and South America.

As someone who personally believes the growth of trade and exchange between nations of the Asia Pacific and the Americas (North & South) will be the most important network of exchange this century, I highly recommend giving it a read.

Click here to access Peru’s place in the triangle of Asia-Pacific security, published by Aljazeera

What people around the world define as the Asia-Pacific region varies widely, for your author (me) I consider it to include all nations, cultures and territories on both sides of the Pacific Ocean.  This means “Oceania,” despite being a region in itself must naturally be included.  It also tends to include India, because although India is usually not considered a “Pacific” nation, it is a major geopolitical power in this equation.

Within the Asia-Pacific region there is however a level of exchange and interaction which is far more significant when looking at the greater region as a whole — and that, in my opinion is the triangular interaction of North East Asia (China, South Korea, Japan), North America, and South America.  Of course, one could argue discounting Russia, India, Australia and the nations of SE Asia and leaves many players out of the equation. I only do so because their links to the America’s are relatively small when compared with China, South Korea and Japan.

Why is this triangular network so important you ask?  Let’s quickly review some facts which come to mind pertaining to a few specific categories — Economic output & International Trade, Commodity production/ consumption (energy, metals and agriculture), and geopolitical security

• The Asia-Pacific region includes the world’s three largest economies — The United States, China (PRC), and Japan.
• These three economies make up a large portion of global economic output, commodity consumption/production, and trade.
• In terms of commodity consumption & production you find within this triangle (to name a few):
• Top 5 iron ore producers – Brazil, China, Australia, India and Russia
• Top 4 iron ore consumers – China, Russia, Japan and South Korea
• A few of the top energy producers, Russia (#1), the US, China, Venezuela and ever more significant levels of energy production coming from Brazil and Canada
• The top 5 oil consumers – United States, China, Japan, Russia, and India
• The Top 5 copper producers – Chile, Peru, the US, China, Australia
• 3/5 of the top copper consumers – China, India & the US
• Major sources of precious metal production (Gold & Silver) Russia, China, Australia, Peru, Chile & the US
• Major sources of precious metal demand – China, & the US
• Major centers of global food production – Russia, the US and South America as a whole
• Major centers of food consumption – China, India, & the US
• Finally, the Asia-Pacific region includes many of the 21st century’s most potentially volatile geopolitical security issues. To name a few:
• US-China relations
• NE Asia which includes everything from
• The balance of power between China, Japan, and Korea (and Russia) … and ultimately how the US factors into this region
• The Korean Peninsula and all the related issues from re-unification of North & South Korea to proliferation of arms by North Korea
• The South China Seas
• The quagmire of complex inter-country relations in SE Asia
• Taiwan
• ETC

Documental incredible de los paises – BRIC

Documental incredible de los paises – BRIC-episodio-1

Del canal Argentino – Infinito

China / India/ Russa (ASIA) – Latin America News Feast with a dash of US for dessert

My daily news radar (online subscriptions / searches) for all that is China – South America went off like wild fire today. Here’s some articles worthy giving a read.

Article 1: Russia Lends Venezuela $4 Billion in Return for Oil Projects - By Daniel Cancel of Bloomberg News

Russia agreed to lend Venezuela $4 billion through 2013 for defense spending in return for gaining access to heavy crude and offshore gas fields in the South American country.

Russia’s OAO Rosneft and OAO Gazprom signed a cooperation accord with Venezuelan state oil company Petroleos de Venezuela SA late yesterday at a ceremony in Caracas led by President Hugo Chavez and Russian Deputy Prime Minister Igor Sechin.

“We’re working on large-dimension projects from oil, gas and petrochemicals to finance, banking and trade,” Chavez said on state television.

Click here to read the full article direct from the Bloomberg

Article 2 = China’s JAC Motors to build plant in Brazil - By Vivian Pereira and Brad Haynes of Reuters News

To Note:
* 80 pct of capital will come from local SHC Group
* Government driving up the cost of imported carsBy Vivian

Pereira and Brad HaynesSAO PAULO, Oct 7 (Reuters) – The Brazilian operator of China’s JAC Motors brand announced a 900-million-real ($510 million) investment to build a factory producing affordable cars in the world’s No. 4 auto market.

JAC Motors will provide 20 percent of the capital, with the rest coming from the local SHC Group run by businessman Sergio Habib, SHC said in a statement on Friday.

The plant in Bahia state, expected to produce 100,000 vehicles annually beginning in 2014, will be the second producing Chinese-branded cars in Latin America’s largest economy, where authorities are pushing up the cost of imported cars.

Click here to read the full article direct from the Reuters News

Article 3: Friction between China & Bolivia

Bolivian energy minister alleges deception by Jindal Steel in big iron ore mining deal, courtesy of the Associated Press via the Washington Post

LA PAZ, Bolivia — A senior Bolivian official is threatening to end the government’s contract with India’s Jindal Steel & Power Ltd. over its alleged failure to meet investment commitments in a huge iron ore mine.

Energy Minister Jose Luis Gutierrez says Jindal deceived Bolivia in failing to honor its end of the biggest mining investment of President Evo Morales’ nearly six-year tenure.

Click here to read the full article direct from the Associated Press via the Washington Post

Article 4 = Ecuador firm wants to sell rice in the name of Gandhi - By Maneesh Chhibber of the IndianExpress.com

An Ecuador-based company has attempted to use the name and photograph of Mahatma Gandhi for marketing its rice. But an Indian lawyer has challenged the move before the Trademark Office of Ecuador. The case is scheduled to come up for hearing tomorrow.

According to Lalit Bhasin, who is also president of the Society of Indian Law Firms, the owner of the Ecuadorian company, Valverde Munoz, applied for grant of trademark for the name and label of “Arroz Gandhi” (Arroz means rice).

Click here to read the full article direct from IndianExpress.com

Article 5: Mitt Romney on Mexico, China and defense – By Dr. James M. Lindsay and courtesy of CNN News

Dr. James M. Lindsay you would think knows about the topic, as CNN makes a special point to note — Dr. James M. Lindsay is a Senior Vice President at the Council on Foreign Relations and co-author of America Unbound: The Bush Revolution in Foreign Policy, and whom writes his own blog, which you can access by clicking here.

By James M. Lindsay, CFR.org

Mitt Romney has taken exception to Rick Perry’s comment over the weekend that he would consider sending American troops into Mexico to help end the drug war raging there. Romney told the New Hampshire Union Leader that Perry’s suggestion is “a bad idea:”

Let’s build a fence first, and let’s have sufficient border patrol agents to protect it. And if the Mexican government wants us to help it with logistics, intelligence, satellite images, I’m sure we can provide the sort of support we provided in Colombia.

You can expect to hear more about Mexico at next Tuesday’s GOP debate. If Romney makes the Colombia comparison again, he probably should explain what the United States did there. Most people don’t know.

Click here to read the full article direct from CNN

India Eyes Latin America – Latin Business Chronicle

Why India can and should become a counterbalance to China in Latin America.

Indian Prime Minister Manmohan Singh and Brazilian President Dilma Rousseff in a bilateral meeting, on the sidelines of BRICS Summit, at Sanya, Hainan, China on April 14, 2011. (photo: Indian PM's Office)

BY JAIME DAREMBLUM of the Latin Business Chronicle

The competition between China and India — the world’s largest dictatorship and the world’s largest democracy — will be a defining feature of 21st-century geopolitics. Because China opened its economy more than a decade before India did, the Middle Kingdom has a clear head start in the global battle for economic influence. Yet the South Asian giant is rapidly gaining ground on its northern neighbor, and over the long term its democratic system seems far more stable than the autocratic Chinese model. When assessing U.S. grand strategy in Asia, American policymakers view India as an important counterweight to China. Closer to home, India may also serve to balance Chinese economic clout in Latin America.

Click here to read the full article direct from Latin Business Chronicle

BRIC Love; Worthy reads about China-Brazil/Latam & India-Latam

1. China Investments: Brazil Top Focus

Brazil and natural resources are the main focus for China’s investments in Latin America writes Kevin P. Gallagher

China’s foreign investment into Africa has been generating a great deal of controversy. Some argue that China is becoming the new colonial power over Africa, others see China as a key source of foreign exchange that may finally help spur long-run economic growth in Africa [...click above to access the full story].

2. India Exports to Latin America

Minister of State for Commerce and Industry Jyotiraditya Scindia has emphasised the need for a shift in export from northern hemisphere to southern hemisphere in line with south-south cooperation. He said that while advanced nations would show an import growth of around 0.9-1 per cent in future, developing economies would exhibit an import growth between 4.5 and 5 per cent.

Mr. Scindia was speaking at a function organised by the Federation of Indian Export Organisations here on Tuesday to present the Niryat Shree and the Niryat Bandhu awards 2008-09. The awards honour outstanding exporters, export promotion councils, commodity boards, export development authorities, banks and other agencies.

Highlighting the potential and complementaries of economies between India and Latin America, the Minister said India needed to augment its exports to Latin American countries as these were vibrant economies. “The government will chalk out a strategy to facilitate exports and investment after an in-depth study which will be commissioned shortly,” he added [...click above to access the full story].