In 2014, when Alex Tabor made his first trip to Beijing, the Brazilian executive was concerned about communication.
Tabor does not speak Mandarin, but he hoped (with the help of a translator) to be able to convey something: the enormous opportunity for Chinese companies looking to invest in Latin American technology companies.
There, he met with employees of Baidu, China’s largest search engine, hoping to raise capital for its online discount center, Peixe Urbano. Tabor was already focused on moving into a larger business, one that could sell directly to users instead of just posting discounts. Baidu was interested and acquired a majority stake.
While the United States remains in the background, China’s foreign direct investment in Latin America and the Caribbean has skyrocketed in the last 10 years, according to a report by the Economic Commission for Latin America and the Caribbean (ECLAC) of 2018.
China placed close to US $ 90,000 million in the region between 2005 and 2016. With a growing emphasis on telecommunications, China’s investment in emerging technology is increasingly the main fuel of the Latin American technology boom.
In the long term, Beijing wants to make deals with resource-rich countries – a fundamental need for the Chinese industry – that also have an increasing consumer demand. Many times, those countries and their technology companies seek experience (and money) from China.
“When I saw the opportunity to have investment and guidance from China, I was very excited,” Tabor said in a recent interview in New York. “Historically, Latin America looked to Silicon Valley and New York to do business, but there are innovations in China that could be applied even more to the Latin American reality.”
Money
The Chinese giants of technology want to get into the base of the Latin American technological boom and are coming with money. According to a report by ECLAC, Chinese companies were the largest investors in the region in 2017, with about US $ 18,000 million, 42 percent of the volume in the region.
These include the private transportation company Didi Chuxing, which acquired the Brazilian 99 Táxis for an undisclosed sum and expanded to Mexico.
TCL, a Chinese technology company with a subsidiary in Argentina, formed a joint venture with Radio Victoria, one of the leading manufacturers of consumer electronics in the country. Huiyin Blockchain Venture led a round of financing for Ripio, the Argentine bitcoin payment service.
And China’s Tencent invested US $ 180 million in Nubank, a Brazilian financial technology startup with five million customers and one of the five largest credit cards in Brazil.
Nathan Lustig, 33, a partner at Magma Partners, helped launch a Chinese-Latin American accelerator in January last year, with the intention of connecting business owners, investors, and public officials from both regions.
In 2018, Santiago’s venture capital investment company organized 10 workshops in Beijing and Shanghai, and the topics were exposed to companies from Panama to Argentina.
“Right now, we are at the turning point,” said Lustig. “There is a huge tendency to copy China because ten years ago, they solved the problems facing Latin America today: the unbanked without credit rating who did not have a cell phone and suddenly get smartphones.”
Also published on Medium.