Economy

Chinese investment in Brazil back on the rise after pandemic

Sep, 06, 2022 Posted by Gabriel Malheiros

Week 202236

In 2021, Chinese companies invested $5.9 billion in Brazil. According to the Brazil–China Business Council, the figure is the highest since 2017 and up 208 percent from 2020, when both global business in general and Chinese investment in particular were impacted by the COVID-19 pandemic.

The figures can be found in a study released by the council this week. The document shows that even amid global instability, Chinese organizations have implemented 28 major business projects in Brazilian territory, resuming the pace of growth initiated in 2016 and halted in 2019.

According to Tulio Carrielo—the council’s director for Content and Research, who spearheaded the study—with the resumption of interest from Chinese entrepreneurs, companies that already operated in Brazil have expanded their presence, and new players have landed in the country. An example of the latter is car maker Great Wall, which bought the Mercedez-Benz plant in Iracemápolis, São Paulo state, in early 2021.

“The company’s internationalization strategy, even for North America, includes Brazil, the first country to produce [Great Wall’s vehicles] in the Americas. We are the gateway to the entire continent, as the company intends to learn how to do business with other continental countries,” said the organization’s government relations director, Pedro Betancourt, underscoring that the company’s business plan envisions a long-term connection.

Positive as it may be when analyzed in perspective, Tulio Carrielo said, Chinese investments in 2021 returned to levels recorded shortly before the pandemic. In 2018, for instance, 31 major Chinese projects were implemented in the country. In 2017, 28. Moreover, with the gradual resumption of economic activity after some countries vaccinated a significant portion of their populations, not only Chinese investments but also foreign investments, in general, have increased in Brazil.

The study indicates that the expansion in Chinese investment in Brazil was higher than the growth of Chinese investment in other countries.

“There should not be new peaks in future investments, and we’re probably going to see stability for at least some time because it seems to me that [Chinese investors] are now prioritizing project quality over quantity,” Carrielo said, citing Brazil as the “center of gravity” of Chinese investments in South America.

Market Sectors

Also, per the study by the Brazil–China Business Council, the electricity sector attracted 13 of the 28 projects implemented in the country throughout 2021, 46 percent of the total. Another highlight was information technology, with ten projects—almost the same number (12) of sectorial undertakings carried out between 2007 and 2020.

Regarding value, the oil sector absorbed 85 percent of the $5.9 billion that Chinese companies placed in Brazil in 2021, surpassing the previous dominance of the electricity field.

“We are reaping the fruits of a years-long relationship,” said economist Tatiana Rosito, a board member. In her view, despite the uncertainties and instabilities, Chinese businesses are making long-term bets in Brazil. The opinion has been shared by José Renato Domingues, corporate vice-president of the country’s energy company CTG Brasil, since 2013.

“In these nine years, we have acquired assets and companies to operate plants and wind farms. The main appeal the company finds is the opportunity for growth. And one of the aspects we observe is the respect for contracts and intellectual property,” Domingues remarked. To his judgment, since the beginning, when the corporation took on the challenge of building and operating the largest hydroelectric plant in the world, Three Gorges, in China, CTG has set its sights on Brazil.

“To this day, whenever we receive our Chinese colleagues, we take them to visit the / Itaipu hydroelectric plant, which inspired the Three Gorges project and continues to inspire the Chinese.”

Source: Agência Brasil

To read the full original article, please go to: https://agenciabrasil.ebc.com.br/en/https%3A//agenciabrasil.ebc.com.br/en/node/1480046

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