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

Commentary: U.S. needs bigger thinking on Latin America

ANDRES OPPENHEIMER of the Miami Herald and CNN Español discusses US Foreign Policy towards Latin America

Note the author of this blog (me) does not always agree with what Mr. Oppenheimer says, but his article no less merits a quick read.  Some major points which any reader giving this a quick skim should note –>

1/ The Obama Administration has left the post of Head Latin American affairs vacant for 5 months.  So much for making good on promises back in 2008 to forge closer ties with the region… Big disappointment here, but not any worse or better than the disappointment / let down his predecessor Bush Jr also produced.  It seems the last President to care at all about the region was Clinton who did more than organize summits… He laid the foundation for FTA’s with countries in the region via NAFTA

2/ Obama did not visit Brazil, the growing powerhouse and member of the BRIC club until 3 years into his presidency. When he did visit, he received nothing but criticism for going through with the official visit between the heads of state of the Western Hemisphere’s two largest economies… because the visit happened to coincide with start of Western Military efforts in Libya. For the US media which pointed the finger at Obama, shame on you, the President does not physically need to be in the United States to be “Commander and Chief,” especially for an internationally organized, and initially French lead military mission.  For Obama, shame on you too! It took you three years to visit Brazil!  I think for Brazilians this is an obvious insult, but even for the rest of South America (and Latin America as a whole), Obama, Bush Jr. and the United States… well… Latin America is feeling a bit as if they are being ignored.  One thing is certain – China is not ignoring Latin America, nor is India, Russia or even small players like Singapore which is investing to expand the Panama Canal.  

3/ As Ray Walser,  Senior Policy Analyst for Latin America at The Heritage Foundation very appropriately points in a 2009 publication “U.S Policy toward Latin America in 2009 and Beyond”  From 1996 to 2006, total U.S. merchandise trade with Latin America grew by 139percent, compared to 96 percent for Asia and 95 percent for the European Union. In 2006, the U.S. exported $223 billion worth of goods to Latin American consumers(compared with $55 billion to China). Fifty-one percent of U.S. energy imports originate from Canada, Mexico, Venezuela, Ecuador, Colombia, and Brazil.

Excerpt from Oppenheimer’s article –>

U.S. diplomatic ties with Latin America, which have been in limbo for months, got a small boost last week when President Barack Obama nominated Roberta Jacobson as top State Department official in charge of Latin American affairs. But that alone will not do much to revert the gradual loss of U.S. clout in the region.

Granted, the career diplomat gets high marks from almost everybody in Washington’s small world of Latin American affairs specialists. Unlike her predecessor Arturo Valenzuela, a political appointee whose nomination in 2009 was blocked for several months by Conservative republicans, the Senate is expected to easily confirm her nomination.

Among the most urgent issues Jacobson would have to deal with would be the long-stalled U.S. ratification of the free trade deals with Colombia and Panama, the escalating violence in Mexico, and the April 2012, 34-country Summit of the Americas in Colombia.

On a wider spectrum, she would have to find new ways to improve ties with the region at a time when China has eclipsed much of the previous U.S. economic influence in South America’s commodity producing countries.

Click here to read Oppenheimer’s full article via the Kansas City Star

ECLAC Sees Favorable Conditions for L.America-China Relations

The current economic and trade conditions in the Latin American and Caribbean region are highly favorable to furthering its trade and investment relations with China and the Asia-Pacific, a UN official said Friday.

“China has become a strategic trade partner for Latin America and the Caribbean, and there are many opportunities to achieve export and investment agreements in fields such as mining, engineering, agriculture, infrastructure, science and technology,” said Alicia Barcena, executive secretary of the United Nations Economic Commission for Latin America and Caribbean (ECLAC).

Barcena made the remarks while presenting a report titled “The People’s Republic of China and Latin America and the Caribbean: Towards a new phase in the economic and trade link” to mark Chinese Vice President Xi Jinping’s visit to the region.

The report says China is the main destination of Brazilian and Chilean exports and the second largest for Costa Rica, Cuba, Peru and Venezuela, but the region’s export basket to China remains centered on raw materials.

“It is possible and necessary to advance on trade diversification, the creation of a trade alliance between the Asia-Pacific and Latin America and the Caribbean, and to increase investment between both parties and enhance cooperation in innovation, education, science and technology,” Barcena said.

Click here to read the full article direct from http://english.cri.cn

CSA – Related News Links of the Day

Ecopetrol (of Colombia) targets Asian Oil Sales – Bloomberg

Ecopetrol SA (ECOPETL), the Colombian oil producer which expects to more than double output this decade, said it plans to ship a greater share of its crude to Asia as growing demand in China competes for supplies with the U.S.

The company may no longer ship the majority of its crude to the U.S. in 10 years because Asia sales will be more profitable, Chief Executive Officer Javier Gutierrez said yesterday in an interview in Bogota. A pipeline the company is weighing that would carry oil to a new port on the Pacific coast to supply Asian refineries may also attract Chinese investment, he said.  Click the link above to access to the full article direct from Blooomberg

Tycoon Clash Means Less Money for Mexico Billionaires as Consumers Benefit – Bloomberg

An escalating confrontation between Carlos Slim and two fellow billionaires is driving prices lower for phone, Internet and TV services in Mexico, a boon for consumers that could boost the nation’s economy.

TV and mobile-phone carriers controlled by Ricardo Salinas and Emilio Azcarraga are pushing into Slim’s turf, and he is responding with better deals for consumers. Slim’s Telefonos de Mexico SAB teamed up in April with a satellite carrier to offer services for a discount, and his America Movil SAB doubled the amount of numbers wireless users can call at no extra charge. Click the link above to access to the full article direct from Blooomberg

Factbox: Chinese banks’ acquisitions over the past five years - Reuters

Is China still price competitive?

Guest post from Calipe Chong, founder of VipoAsia and author of VipoAsia’s blog

Is China still price competitive?

I have not written any blog for a long time as the recent economic and business developments are more political driven. There are no shortage on reports and news about the apprehension and acrimony that many have felt about China on her rise to economic and military power.

The unexpected high rate of inflation, high increase on labor cost and never ending inflating housing bubble also lead us to believe that China is losing out the world factory status to other emerging countries such as India, Vietnam, Indonesia, etc. Many Chinese and foreign owned factories are moving out of China to these countries to stay competitive. So, has China lost her cost competitive advantage?

It all depends at which angle you are looking at. If you are referring to apparels, shoes and household goods, you are probably right. However it is too early to write off these industries from China. The factories, which provide such merchandized goods and mainly located along the coast lines, are moving inland where the labor and infrastructure cost are at couple of years behind the coastal cities. They also brought with them the manufacturing know-how, management skills, customer base and product knowledge with them to these new locations. Many workers at these inland provinces have worked at the coastal cities before and are familiar with the skills and manufacturing processes. Foxconn redeploys many of its workers from the Guangzhou factories to the inland factories that are close to the workers hometown. Thus the last ten years of painstaking and horrific development on product safety and quality is not to be repeated again.

The less developed countries which offer much lower labor cost bear the same remembrance of China ten years ago. Thus you need to repeat the learning cycle and woes from the products newly produced there. Do the end consumers willing to encounter or tolerate same problems they have had with Chinese goods ten years ago?

Let me make an assumption here. We have a household item that cost $10 from China in early Jan 2010 before the onslaught of labor cost increase. It now costs $12 from the same factory or $10.50 from its inland subsidiary. The similar item from a less developed country could cost $9. If there is no quality or safety concern, I am sure most consumers will buy the $9 item. For needed quality on the product, the consumers will probably buy the $10.50 item. The factory that now sells the item at $12 will repackage it with improved design and quality or just simply branding it as a premium product.

Though the cost impact to Chinese manufacturers is great but not to the extent that diminishes her competitiveness and survival. The reduced export revenue actually turns out good as it forces the manufacturers to focus and meet the requirements of their fellow countrymen. That is why China is still able to maintain a remarkable GDP! The manufacturers have been ignoring the plight of the domestic demand for a long time and it is time to realize the “kings” are now residing in the same town.

It is too early to use the economic models of Japan, Korea, Taiwan, Hong Kong and Singapore to predict the outcome of China. Japan and the Asian “Four Dragons” had grown too rapidly with cost increase outpaced the competitiveness in a short time and forced the manufacturers to relocate the manufacturing base out of the country. China has a large land mass and population with the economic development so vastly different among the provinces. Shanghai and Beijing probably have the worse property bubble crisis than Japan but will not suffer the same scenario as China can spread out the risks across the country. If Shanghai is a country, she will encounter far worst fate than Japan. China has well developed coastal cities on par with the developed countries while still having some less developed inland provinces. She is like a miniature globe herself. That is why the pessimistic anticipation on the collapse of China economy due to the asset bubble burst will not happen imminently. If the economy does fail, it is probably caused by the inappropriate and unrealistic fiscal policies from the central government.

The reduced export revenue on cheap merchandised goods due to higher cost could spell relief to the central and foreign governments as it will alleviate the trade imbalance. There will be less pressure on pushing the yuan exchange rate further. However I suspect the relief is short live for the Western countries. The foreign buyers could not immediately replace the Chinese supplies with those from other emerging countries immediately and thus the higher priced Chinese goods will cause inflation. It will certainly cause nightmare to these governments. It will not resolve the unemployment crisis as there are probably very few factories in the country making similar products. It is no longer competitive for the well developed western countries to produce cheap merchandized goods. You need factories and farms to resolve high employment and not offices and banks. There are few workers in the high tech factories which are usually highly automated.

I am sensing a change in China factories. In the past with the abundance of cheap labor, many factories and service providers have low productivity in their operations. Not too long ago, you will probably have at least one waitress standing next to a dining table waiting for further instruction from the customers. Likewise in the factory, it is not unusual to find some workers standing idly on the production floor. Now you will find productivity has gone up in many places. Some restaurants are having radio frequency gadget for the customers to summon the waitress, production processes have been optimized to minimize labor wastage and many factories are automating their manufacturing operations. More tooling fixtures have been used to reduce labor. I have visited some factories in some remote areas and astonish to find sophisticated and high level automation in place. I am sure companies offering automation solutions are having soaring business now.

And you know what! This improved productivity will further enhance China competitiveness and product quality. Her competitors and foes will have sleepless night again!

* 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.

China’s Sinopec Group, Spain’s Repsol Discuss Business

China Petrochemical Corp. and Repsol YPF SA, Spain’s largest oil company, are in talks on joint ventures around the world after the Chinese refiner invested $7.1 billion in a Repsol unit in Latin America last year.

The companies agreed to set up working groups to examine new business opportunities following the acquisition of a 40 percent stake in Repsol’s Brazilian unit by Sinopec Group, as China Petrochemical is known, the Madrid-based oil producer said in a statement yesterday.

“There are significant synergies between Repsol and Sinopec, and the relationship between both companies is ideal to continue reinforcing our alliance worldwide in new business areas,” Repsol Chairman Antonio Brufau said in the statement, without elaborating. Huang Wensheng, the Beijing-based spokesman for Sinopec Group, couldn’t be immediately reached by telephone for comment today.

[...] Click here to read the full article direct from Bloomberg

Spainish oil giant Repsol makes BIG nat gas discovery in Argentina

Img courtesy of Wikicommons

Repsol YPF SA, Spain’s largest oil company, found 4.5 trillion cubic feet of unconventional natural gas in Argentina, the country’s largest discovery in 35 years.

Repsol found so-called tight gas reserves at the Loma La Lata area in the Patagonian province of Neuquen after its YPF unit drilled four exploratory wells in the region, according to a statement from Madrid-based Repsol today. The company also said that it discovered so-called shale gas in the province.

Crude output at YPF, the biggest Argentina-based company by market value, climbed in the first nine months of the year for the first time since 2003 as Chief Executive Officer Sebastian Eskenazi seeks to grow in Argentina and neighboring markets. The company plans to invest as much as $3.5 billion a year in countries such as Brazil and Colombia as Argentine output slows.

Click here to read the full article, direct from Bloomberg

Wise words, from wise men

Seven Sages - Courtesy of Wikicommons

After reflecting on my walk home today of a few potential pieces I was considering posting, I decided instead to share with the readers of CSA some blogs I believe to be worth following.  These blogs are written by fellow globally minded, intelligent, and wise individuals.

Inca Kola News – Otto Rock (his pseudo name), is wise man #1.  He’s a British national / mining analyst / linguist / comedian / good person, who lives and breaths South America.  He’s far more attune with the country of Peru and the greater South American region than I can ever hope to be.  If you want a English language view into South American politics and economics this is site you you must check out.

Vipo Asia – Written by Mr. Calipe Chong, who is also the owner and founder of Vipo Asia, a Suzhou, China based company which provides a valuable service for small to medium sized businesses throughout North America and Europe who want to do business with China.  Calipe is a honest man of integrity from Singapore, who provides fascinating views on topics ranging from Chinese culture, the role of government, China’s place in the world and more.  These views don’t come from books, they come from his 30 + years of experience working in Singapore, China, the US, Puerto Rico and other places.

Wandering China – Bob Xiansheng’s (Mr. Bob), Wandering China Blog mainly collects articles and information from news sources based in three countries – China, Singapore and Australia. They are then presented with a palatable, easy-to-read synopsis.  Bob’s blog are the chronicles on the journey of understanding the imagination of China by overseas Chinese.  His views are insighful, beautifully written and magically logical. Bob is a 3rd generation overseas born Chinese (in Singapore), who currently resides in Melbourne, Australia .  As described on his blog, he was brought up with Western lenses and in fact considers himself  so westernized that he could hardly speak or read Mandarin. He has now rediscovered his roots and humbly shares his views with the world on Wandering China.

Transcending Culture Shock – Written by my good friend, Mr. Justin Calderon, whom I consider Shanghai’s guru on accessing, dissecting, and analyzing pan-Asian culture and geo-politics.  Justin has traveled in 13 countries and regions in the Far East and lived and worked in many of them for extended periods of time.  He is a passionate journalist who strives to understand the world with unbiased eyes.    In addition to this blog, you can also discover and learn about the incredible places he has traveled  by reading his travel blog, The Expenditioner.

Happy reading folks.

This is scary… and not for the obvious reasons

This is scary because when all is said and done, it instills fear in the minds of the average American when it comes to China.  Meanwhile, the average Chinese person I speak to on the streets of China love and respect US-Americans.  Instead of focusing on what the US as a country needs to do to revitalize itself, we are instilling fear and placing blame on a country we are inherently linked to the hip with economically. Silly and sad.

We should be fostering friendship, cooperation, exchange… yes on a equal footing, and one which America stands its ground and shows it a benevolent and humble world power.  Not a desperate, bitter, power in demise.

Here are a collection of links to other videos, just as bad if not worse.

Moved

His own words

Made in China

A Foreign Worker’s Best Friend

Sinopec to Invest $7.1 Billion in Repsol’s Brazil Unit

China Petrochemical Corp., the country’s second-largest oil and gas producer, will invest $7.1 billion in Repsol YPF SA’s Brazilian unit as the Spanish oil company raises funds to develop offshore projects.

Sinopec Group, as the company is known, will buy new shares in the Brazilian unit and will hold 40 percent of that division after the capital increase, Madrid-based Repsol said today in a statement. Shares in Repsol, which previously planned an initial public offering of the unit, jumped to a two-year high.

The acquisition is the second-largest overseas purchase by a Chinese company as the world’s biggest energy consumer snaps up fields to meet surging demand. Repsol has stakes in blocks in Brazil’s Santos and Espirito Santo basins and plans to invest as much as $14 billion there through 2019. It estimates the Guara and Carioca fields may hold as much as 3 billion barrels.

… Continue reading here direct from Bloomberg