Business / Economy

China's economic transformation offers opportunities for LatAm to develop manufacturing industry

(Xinhua) Updated: 2016-03-21 13:44

MEXICO CITY - China's economic transformation opens up opportunities for Latin America to promote its business with China in sectors like electronics and automotive industry, experts told Xinhua.

Abraham Vergara, professor of business studies at Iberoamerican University, said that the region has profited from exporting raw materials to China, but it must now pay more attention to China's growing consuming power.

"The Chinese market is becoming very interesting. Imagine the profits that would come from selling a product to just 1 percent of the Chinese population. Latin America lacks this vision and the desire to take risks," said Vergara.

According to the Organization for Economic Cooperation and Development (OECD), only 6 percent of Latin American exports to China represent technological exports, while 75 percent concentrate on raw materials, such as oil, copper, iron ore and soybeans.

In comparison, almost 90 percent of Chinese exports to Latin America are technologically manufactured goods.

Vergara said that very few countries, such as Latin American states, have seized the chance of making electronic components for finished products made in China.

"There are integrated circuits that will be used in products like televisions. We can view them as raw materials that are not natural," he said.

After decades of growth driven greatly by exports, the Chinese economy is now adjusting itself to rely more on its domestic consumption, an expanding middle class and a focus on technological innovation.

The change in diet that is accompanying this new model of growth also opens up the possibility for the Latin American countries to export processed foodstuffs, said Vergara.

Enrique Dussel Peters, coordinator of the China-Mexico Studies Center at the National Autonomous University of Mexico, believed that the opportunities for Latin America to engage more in China lie mainly in the automotive, auto parts and telecommunications industries.

Investments in these sectors could generate technology transfers from China to the region, which would greatly benefit the countries suffering from low raw material prices.

"This requires a clearly designed strategy over the short, medium and long term with specific instruments, constant monitoring and financial aid, so that individual efforts would be part of a larger joint effort," said Dussel Peters.

Vergara said that in a bid to attract Chinese investments to the manufacturing sector, Latin America must increase transparency and improve the rule of law. In turn, China could ease up its regulatory processes to help Latin American manufacturers enter its lucrative market.

"Making this process easier would help both sides' companies," he added.

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