(23 May 2024 – Global) Citi is seeking to capitalise on its local presence in Latin America as Korean and Chinese firms intensify their nearshoring efforts.
Larissa Ku reports for Euromoney that the US-China trade war has reached new heights, with US president Joe Biden announcing plans for unprecedented tariffs on Chinese imports, including a possible 100 percent on electric vehicles and 50 percent on solar cells – two of China’s top export items.
To counter protectionist policies by the US, Chinese companies began moving final assembly steps to southeast Asian countries, enabling products to be labelled as made in Vietnam or Indonesia. Now, there is increasing focus on Latin America. As Mexico capitalises on this strategic role in global supply-chain restructuring, fuelled by the US government's drive to reduce dependence on Chinese goods, it is those Chinese companies themselves that are setting up factories in the country.
“The China-to-ASEAN corridor, particularly into Vietnam, Indonesia, and to some extent Malaysia, has shown tangible and visible growth. Now, we're witnessing a similar trend unfolding between China and Latin America” commented Citi Commercial Bank Asia Pacific Head, Gunjan Kalra.
“We have observed high double-digit annual growth in the Asia-Latin America corridor over the past year, particularly from China and Korea. We attribute this to supply-chain reactions after COVID-19, geopolitical tensions, tariff considerations, cost factors and the 'China plus one' strategy of diversifying international investment.”