The US has played its hand in Latin America. Will China’s firms there cash out?

With domestic profits narrowing and production capacity expanding, China’s firms are continuing to widen their overseas footprints in search of new, more lucrative markets. In this series, we examine China Inc.’s next phase of “going global” and the complex, challenging international environment its companies have chosen to enter.

In the days since Washington’s ousting and abduction of former Venezuelan president Nicolas Maduro – an event that sent shock waves through global markets – some Chinese business executives say they are already being inundated with pitches from consultancies offering their services in risk management.

“Recently, there has been a surge in promotional materials from various advisory firms touting overseas risk-mitigation strategies,” said one executive at a consumer goods manufacturer based in China’s eastern Zhejiang province.

He declined to be named due to the sensitivity of the topic, but said overseas expansion has been on the company’s radar for several years, making his company a prime target for the consultants’ entreaties.

The episode highlighted the rising need for risk management among Chinese firms looking to expand abroad, he said, but did little to slow what many see as an irreversible push outward, driven by shrinking domestic opportunities and the growing benefits of localisation.

Chinese entrepreneurs in Latin America, jolted by the political turmoil in Venezuela, said they have become more attuned to geopolitical risks, but also recognise the region is not a monolithic bloc. Each country, they said, must be approached with a tailored strategy.

Local communities in Venezuela are watching the turmoil closely, but as it has not yet amounted to a substantive transfer of power or regime collapse, short-term disruptions have been limited, said businessman He Zuo. Currently in Chile, he spent years in Venezuela, and many of his family members are still there.

South China Morning Post